As internal auditors, one of the recurring themes we see across school districts is how decisions made today, especially in collective bargaining agreements (CBAs), can shape financial realities for the next decade.
When negotiating new contracts, it’s natural to focus on immediate needs: fair wages, competitive benefits, and the impact on next year’s budget. But CBAs often cover a multi-year period, with some as long as ten years. That means what feels sustainable now may look very different five or eight years from now when enrollment shifts, state aid changes, or health insurance costs continue their steady climb.
Recent reviews highlight why this matters. In many districts, salaries and benefits already make up nearly three-quarters of the total budget. Add in transportation, special education services, and rising health insurance premiums, the flexibility to absorb new costs quickly disappears. Even small changes like step increases or lane movements in salary schedules can compound into millions of dollars in additional obligations over time. Similarly, provisions that lock in fixed-dollar employee health contributions may appear manageable today, but as premiums rise 7% or more annually, the district’s share balloons.
It’s not just about payroll. Enrollment changes, the opening of a charter school(s), or unexpected spikes in transportation costs can all strain budgets in ways that were not anticipated when contracts were first signed. Without a long-term view, districts risk committing to promises that future revenues may not support, leading to tough choices down the road.
So, what can be done?
- Adopt multiyear financial plans that model revenues and expenditures over the life of a contract.
- Run scenarios — best case, worst case, and realistic middle ground, to test how resilient the budget is under different conditions.
- Track demographic and enrollment trends closely to anticipate where services (and costs) may increase.
- Revisit healthcare contributions and benefits structures to ensure they remain aligned with actual costs.
The goal is not to avoid making commitments, but to ensure those commitments remain sustainable, so that the district can continue to meet its obligations to staff while still investing in programs, classrooms, and student success.
Long-term planning is not just the best practice, it’s a safeguard. By looking beyond today’s numbers, districts can make sure that the contracts negotiated now don’t inadvertently limit tomorrow’s opportunities.
Erin Teta, CIA
Director
Erin is a Director of Cerini & Associates, LLP and works primarily within the firm’s education department. She has a robust background spanning over 15 years in Internal Audit, SOX compliance and Claims Auditing. She has worked with school districts, villages, nonprofit organizations, telecommunications and higher education.Â
