By James Lomuscio
During more than three hours of grueling numbers crunching tonight, the Westport Board of Education in a joint special meeting with the Board of Finance and other committees tried to fathom how the school system wound up $1.9 million in the hole this year and how to avoid future health insurance shortfalls.
The shortfall consists of a projected cash equivalent of $595,009, plus $1,307,400 of incurred but not reported (IBNR) claims.
Members of the Representative Town Meeting’s (RTM) Education and Finance committees, the school board’s Health Insurance Fund Review Committee, and Robert Pernicka, senior vice president of Segal Co., the school system’s actuarial consulting firm, all dug deeply into the school board’s intentional draw downs of health insurance reserves and a sharp increase in unreported claims since 2012.
Elio Longo, the school system’s business manager, noted earlier this week that for 2012, six claims exceeded $100,000, one of them more than the stop loss of $225,000. For 2013, the number of six-figure claims jumped to 16, he said, with six exceeding $225,000.
“Is there any way to get information on a claim that is building but hasn’t been billed yet?” Charles Haberstroh, a former selectman who serves on the review committee, asked Pernicka. “Is there any sort of early warning sign that can be employed, forewarning of things to come that can affect the budget cycle?”
The shortfall has not only affected the school system’s $104 million operating budget this year, but it has caused Schools Superintendent Elliott Landon to request a 6.5 percent, as opposed to a 4.5 percent increase next year, to make up the loss.
“Until it is actually billed by the provider, there is no way we can see it,” responded Pernicka.
Several times throughout the evening he stressed, “I don’t have a crystal ball.”
For example, he said someone in need of a lung transplant could be on a long waiting list, and the bill would not be immediately predictable.
“How does the town do it?” Landon chimed in. “Can that be applied to what we do, knowing in advance who is going to be on a high claims list?”
School board member Paul Block, who serves on the review committee, pointed out that “the data has tell-tale signs” of which employees would have high insurance claims.”
“We have to look at more trend analyses,” he said.
Tom Lasersohn, a finance board member, seemed to agree, saying that an employee who requires $15,000 per month in medication would give the school board some indication that over a 10-moth period the claims would reach $150,000.
“And what if they were to have an aortic aneurysm (early on) and drop dead?” Landon retorted
Finance board member Jennifer Tooker, who had previously served on the Board of Education, argued that the school board should not get caught up in trying to predict who will have high claims, but be careful not to draw down its reserves.
“We want to make sure we have statistically accurate information, and that’s what we get from Segal with a 5 percent buffer each year,” she said.
Landon, for one, seemed to be optimistic about avoiding future shortfalls.
“The board and Elio have developed a template that will help keep us informed,” Landon said. “All of the pegs are in place as we move forward.
“We have to keep ahead of it, so we don’t wind up in the hole again,” he added.
