The 2022-23 school year is well underway, but at the Board of Education there are always some concerns about the costs of providing for students, teachers and staff.
One item noted by District Chief Operating Officer Vincent Masciana in his finance report at the Sept. 15 Board of Education meeting concerns the power supply. The District’s current electricity contract with Constellation Energy, which has been in place since 2018, is set to expire in December. The District had a favorable supply rate of approximately 8 cents per kilowatt hour, but any new contract is “likely to be double.”
“The market has not been favorable,” for finding a new supplier with a similar lock rate, according to Masciana, but he is confident that the District can find another option. This may include, for example, going back to Eversource, Masciana mentioned.
For now, “We are not giving up on trying to find a rate that’s better than the market rates right now,” he said. Those current prices are as much as 16 cents per kilowatt hour, but the hope is to settle somewhere in the area of 12 to 14 cents. At those prices, the District would seek to lock in for a year or two at most, Masciana stated.
The result of locking in at the higher rate would be an approximately $100,000 increase to the budget. This negative impact could be offset by reducing expenditures elsewhere in the budget, said Masciana.
“It’s not going to blow up the budget, but we never like to see variances that large,” he added.
Board member Tim White inquired as to whether any of the District’s electrical budget costs were offset by the Town’s solar generating facility located near the dog park on Waterbury Road — a project that White helped initiate back in 2014 as a graduate student at Yale University’s School of Forestry & Environmental Studies.
Masciana replied that the District doesn’t see any direct benefit from the solar farm.
“That’s not factored into any of the schools’ operating budget,” Masciana stated.
But as state mandates for green power, including one that requires zero-emmission bus fleets across the state, come into effect next decade, planning for transitions away from fossil fuels has already begun.
Higher costs for heating oil and diesel fuel are also a reality. To account for the effects of inflation, the District has put a cap on non-payroll expenditures. “That’s at 40% of the approved budget, and we’re going to leave that in place probably through December just to be on the safe side,” Masciana informed the Board. “We’ll continue to assess it as the year goes on.”
“The purpose of the cap is just to make sure that if something really goes above budget that we have a sufficient cushion. We try to balance and make sure we’re not depriving students of the things that they need in the classroom,” he added. “As long as people are within the parameters of their budget, our staff is really good about prioritizing.”
A second area of budgetary concern lies in health care expenditures, specifically medical benefits. These claims, as explained in Masciana’s budget report, were at $1.1 million for July and $1.4 million for August — including an extra week — against a budgeted $1 million per month. Masciana said he’s “not particularly concerned about the trend yet, but we’ll have to keep watching it and we’ll see how the year goes.”
Board member Faith Ham expressed her concerns about the cost overruns, asking, “When are we going to start going to the providers, the hospitals, and asking for cost data? Because something’s going on here and we can’t get a handle on it.”
“The rates that are paid to a provider for any given procedure, whether it’s a doctor’s visit or a surgery, those are negotiated in advance, in our case by Cigna,” explained Masciana. “What’s been driving up our costs are claims that are above the $25,000 threshold that don’t hit the $175,000 stop-loss cap.”
“Insurance costs are always a topic among superintendents and business officials around Connecticut,” said Superintendent of Schools Dr. Jeff Solan, before asking rhetorically, “How do hospitals in Connecticut turn a one-and-half-billion-dollar profit in a year?”