LINN — Linn R-2 board members approved health insurance rates for the 2026-27 school year through the Ozark Schools Benefits Association (OSBA) during its February meeting, adopting an 8.5% increase while maintaining the district’s current employer contribution.

Superintendent Bob James said the recommendation was difficult but necessary given competing financial priorities, including salary increases and uncertain revenue projections.

“This is probably my least favorite recommendation,” James said. “Health insurance rates have gone up 8.5%. For three years, we didn’t get an increase at all, and last year we covered a small increase at a cost of about $50,000. Covering this year’s increase again would cost just short of about $50,000.”

James emphasized that insurance pricing is determined through a structured process involving actuarial analysis, regional pool performance, and trend forecasting through the OSBA.

He explained that claim utilization, demographic risk, and inflation in medical services collectively drive premium adjustments each year. “The process is data-driven,” James said. “Rates are based on claims experience across the pool, projected health care costs, and actuarial modeling designed to keep the program sustainable while minimizing volatility for districts.”

He added that the OSBA has historically mitigated larger increases, noting that Linn R-2 experienced several years without adjustments.

According to board materials, the district will continue its employer contribution of $549.41 per employee, meaning staff members will absorb monthly increases estimated between $40 and $53. “I hate passing that along to anyone, but if we cover that, it takes about 25% of my effort to $40,000 for teacher base salary,” he said. “I don’t think I’ll make it if we cover everything. And, I guess if I were to say, if every increase is always covered by us, I don’t think I’m going to be able to continue making the best base salary increases. I cannot stress enough that moving them to $40,000 just ties us for last place. It is the minimum base salary.

“I’ve used this example in other discussions,” James continued. “Minimum wage is not intended to support a family. It’s for entry-level jobs, right? Well, we are on a minimum operating levy, and I think we’ve done really well. We went from $32,500 to $37,000; we’ve covered all healthcare increases; we’ve increased our stipends; we’ve become competitive for facilities work; we’ve caught up on maintenance — all on that minimum. But now we still have $3,000 just to get to this year’s minimum base salary, and starting in 2027-28, that’ll increase 3% every year, whether we like it or not.”

The mandate means that even if assessed valuation increases, the first new $100,000 in revenue will be allocated to pay for the state’s requirements.

James noted that absorbing the healthcare increase would see Linn R-2 approaching a quarter-million dollars in additional costs.

Ensuring a competitive salary is important, and James noted a lot hinges on the outcome of the April election.

“If we pass the operating levy, then it’ll be $41,200, and we’ll move our classified schedule, and that’ll cover these costs,” he explained. “We won’t actually cover the health insurance, but they’ll get an increase. Without it, we have to prioritize. Which one do you want me to do? Move the base salary or cover all health insurance costs? I don’t feel great about not recommending that we do, but I can only spend $1 once; I can’t spend it twice.”

James also cited additional financial pressures, including rising special education costs estimated near $50,000, which he said illustrates how quickly budget conditions can shift. He hopes that increased enrollment will help with funding through the Average Daily Attendance (ADA) calculation.

However, the legislative process may negatively impact school funding.

“You hear the same rumors I hear, which is that the budget chairs in the House and Senate are looking for more money,” said Board President Dr. Shawn Strong, who serves as the State Tech President. “Elementary and Secondary Education, and Higher Education are two of the easiest places to take it from, so I fully expect we’ll both get hit. You need to protect yourself from that.”

James agreed. “I think the state budget is precarious enough that we should be concerned,” he said, adding he does not believe the school will see all potential funding. “I strongly believe that they’ll fully fund the formula, but it still has to make it through appropriations. That’s an important distinction. Just because they fully fund the formula doesn’t mean that they’re going to give us all the money through appropriations. I suspect a shortfall with transportation.”

James explained that when the state fully funds transportation, it covers 75% of costs. “They don’t give you all of your costs,” he said. “Full is considered 75%. I’m very leery of that, and I know that programs across the state have been asked to look for room in those terms. We’re doing our budget predictions already, and I’ll keep you guys updated with that.”

Of particular note, James said, is the district’s transportation contract for next year. A review of what to expect in the coming year is based on the last three-year contract. James noted the district is looking at a 35% increase in transportation costs compared to 2022 contract rates, which translates to an additional $1 a mile for an activity. “That’s a huge difference,” he said. “I’m anticipating some increased activity costs.”

The superintendent plans to watch finance workshops and cues from other superintendents, and determine whether presenters are truly optimistic. “I want to see if they believe what they’re saying,” said James. “Every year, we work to overestimate our expenditures, underestimate our revenues, and keep ourselves in a conservative position.”

Through it all, the district has maintained fiduciary responsibility. “We’re very healthy financially right now,” he said. “But the question becomes how quickly you want to expend any cushion you have, especially with uncertainty surrounding state funding and levy outcomes.”

Board materials indicated that while certified teacher salary increases could add $250-$300 per month for some employees, the district has also implemented significant classified wage growth, averaging 14% increases over four years.

James said the district may revisit insurance contributions during the 2026-27 budget cycle if additional funding becomes available, particularly if the operating levy passes.

“If the levy passes, we can reevaluate moving classified salary schedules and potentially addressing insurance contributions,” James said, adding that maintaining fiscal balance requires long-term planning rather than reacting to single-year fluctuations.