By James Lomuscio
UPDATE After more than three hours of discussions, debates, some contention and going in circles, Westport’s Board of Education voted unanimously tonight to defer, perhaps until June, its planned request to the Board of Finance for a healthcare insurance appropriation for this year.
The Board if Education meets tonight about its healthccare appropriation request. (CLICK TO ENLARGE) Dave Matlow for WestportNow.com
One of the reasons is that the school board has more has more pressing matters on its plate—the proposed $110.3 million school operating budget for 2014-15, which the Board of Finance will pore over Thursday night.
Another reason is that the school board was at odds over how much to fund health insurance risk corridor, a reserve that acts as a buffer against skyrocketing claims.
Elaine Whitney, school board chairwoman, proposed a 5 percent risk corridor, and school board member Paul Block argued that the school board did not need its own reserve, but should tap into the town’s $22 million reserve if needed.
Schools Superintendent Elliott Landon noted that “it is unheard of for a school system” not to have its own reserve, and at the same time he suggested a 10 percent risk corridor if claims increased.
For the past three months, health insurance has been the focus of the school board and its Health Insurance Fund Review Committee ever since Business Administrator Elio Longo reported an almost $2 million budget blunder this year due to a drawdown of reserves and unexpected claims topping six-figures.
Tonight, however, school board member Michael Gordon said that the projected $2 million shortfall is actually a $293,000 surplus. The reasons: thousands of dollars in positive variances in the board’s health account over the past couple months, as compared to its projections based on surprisingly negative variances last year, the driver of the deficit.
“This year is turning out to be the opposite, so now we have a surplus in our health account,” Gordon explained after the meeting. “That’s also why we don’t need to seek a special health care appropriation right now.”
In addition, $240,000 has already been shifted out of this year’s budget to cover what was expected to be a shortfall, plus the fact that the incurred but not reported (IBNR) claims, an accounting matter, should not have been in the mix, he said.
Still, to avoid future shortfalls caused by exorbitant claims, board members supported a reserve corridor, the amount of which will be decided after the school board holds discussions with the Board of Finance.
“The truth of the matter is that we had a one-year aberration due to health claims, and at the same time we had been drawing down our reserves,” Landon said. “It never happened before, and it might never happen again in another 15 years.
Whitney said a revised $407,325 supplemental appropriation would be need to maintain a 5 percent risk corridor for this year. But that amount will be determined at a later date after next year’s operating budget is finalized.
