The Town Council dove into the biggest line item of their yearly operating budget this week, as attention turned to the education budget request for the upcoming fiscal year.
The budget of $78,487,052, recommended in January by the Board of Education and again by Town Manager Sean Kimball in March, calls for a 5.22% increase in spending over last year, with a majority of the funds set to replenish the District’s medical benefit fund, which school officials state has been under funded for a number of years.
Chief Operations Officer of CPS, Vincent Masciana, walked the Council through his data from the past year, and explained to them how the medical benefits fund became so depleted.
“We’ve been in this situation before where we’ve had a large (in terms of funds) medical benefits fund, and we tried to reduce the number and then we get a bad claims year, like this year, and we find ourselves having to budget for a substantial difference,” Masciana explained. “The total amount we have budgeted for next year for for funding the medical benefits fund is $10,617,983.”
Masciana explained that the fund is broken down into various categories, such as the funding for claims, stop loss prevention insurance, employee contributions, administrative fees, and employee waivers.
“As a team, we’ve struggled with budgeting the medical benefits fund over the years...” Masciana admitted. “Over the past fiscal year, from July 2019 to February 2020 ,we’ve had 32 claims that were over $25,000...”
Masciana listed the types of claims were filed in the past year and how much each cost the town. According to his data, during that time period CPS had six cancer related claims, 10 bone, joint or spine claims, nine GI (gastrointestinal), ENT (ear, nose and throat), endocrine, organ or other claims, three heart, arterial, or blood related claims, three childbirth and fertility claims, and one counseling claim. In total, these 32 claims cost the town $2,146,077. There were zero COVID-19 related claims in that time period.
“In this current fiscal year, from July 2020 to February 2021, so far we’ve had 57 medical claims over $25,000 totaling about $3.7 million, which is roughly a $1.7 million increase from what we had last year,” Masciana stated
The category that was the most expensive in the medical benefits claims this year is the “GI, ENT, Organ and Other” category, which has 19 claims and counting, totaling $1,182,185 alone.
“Essentially, what you are saying is that, at some rate, this increase was expected because every few years we have this issue?” asked Council Chair Rob Oris. “But what I think I heard you said earlier was that the expected run rate was $725,000 per month last year, and in a six month period it ran to about $1.1 million, is that correct?”
“The expected was $800,000 from the actuary medical benefits program. We budgeted $725,000, and the actual claims came out to be $1.1 million,” Masciana clarified. “The reason why we budgeted the $725,000 instead of the $800,000 was because our reserve balance was about $3 million.”
When asked how to potentially avoid this discrepancy in the future, both Masicana and Board of Education member and Chair of the BOE Finance Committee Adam Grippo explained that, ultimately, there is no way.
“During our budget deliberations, this was obviously the largest issue...but the actuaries couldn't give us any good reason as to why this happened and why the increases happen when they do,” Grippo said. “We were incredibly disappointed to see these large expenditures and we are at a loss of how to prevent it going forward…”
“It's really the luck of the draw with these claims,” Masciana added.
The other budgetary drivers this year are certified and non-certified employee salaries, instructional expenses, support services, and maintenance and operations.
“Employee salaries is the next budgetary driver, with that line item being $49,250,431,” explained Solan. “The BOE recommends no staffing or programming that would advance our services. The priority is maintaining the staffing ratios that our community holds sacred.”