BOE Braces for High Health Costs

“One… huge surprise that we’ve already seen is the increased employer’s portion of healthcare. That was something nobody projected,”

Superintendent Mark Henson said at a Strategic Planning Meeting for the school district last week. While reviewing the district’s financial status in preparation for the FY13 budget, Henson expressed grave concern when it came to health cost increases mandated by the Patient Protection and Affordable Health Care Act (ObamaCare). The increases have been incremental so far. However, the price hikes on the employer’s part for the new fiscal year, exceed the county’s estimates.

“The BOE is required is pay 18.534 percent of each employee’s state salary, above what the employee’s portion is, for health insurance,”

Henson said. He added that the Board has always paid this amount for contract or contractual employees, but this April the Department of Community Health will decide whether this cost to the Board will remain the same or increase. As of now, no increases have been confirmed for these employees. Non-contractual employees, however, is another story. From December 2010 to May 2011, the county’s portion of the health insurance for non-contractual employees increased $70,000. Last September, it increased $125,000. This July the county’s portion of the health care cost for these employees will increase $375,000 a year. By the time of the legislation’s full implementation in July 2014, the increases for the employer’s portion for non-contractual employees will soar to $1,460,000. But, the shadow of health care cost from Obamacare is not just the increases.

In contrast to private employees, public employers, like local school districts, receive a significant portion of funding from state and federal government, where private employers are not monetarily beholden to government. As such, the health care problem for the Fannin School District and other districts is not only the mandated employer’s portion of the health insurance increases, but the additional austerity measures coming from the state and federal government for FY13 and presumably beyond.

Superintendent Henson explained that since FY03 $8,721,203 has been held back from the state and for FY13. As such, Fannin will not receive an increase in QBE (Quality Basic Education) state funding. Additionally, though, the county expects a possible two to 10 percent decrease in non-categorical funding in such areas as nutrition, transportation, school nurses, and special needs scholarships, and a possible two to 15 percent decrease in federal funding. These potential cuts come against the backdrop of a recessional economy.

“Clearly,” Henson said, “FY12 was not our worst financial year; FY13 is going to prove to be that. We don’t know what FY14 will look like.”

He explained that the district is currently surviving financially by using the reserve fund. However, he suggested the county can not use the reserve fund forever.

“We are still healthy financially,”

Henson assured the Board,

“But if we allow our fund balance to dip extremely low, (then) how will we be expected to meet unexpected costs, cuts, or increased spending cost that may arise?”

The other end of the equation is plan coverage. With the recent controversial HHS mandate for religious institutions, will public schools see a similar mandate? In a recent conversation with FYN, Henson said he did not know what the FY13 insurance plans would cover and would only know a few weeks prior to open enrollment for employees. The Department of Community Health handles the plans, Henson said.