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Spotsylvania schools use instruction funds to help cover deficit from insurance claims
By PAMELA GOULD
The Spotsylvania County School Board agreed this week to use $1.2 million in instructional funds to help cover the cost of recent health-care claims.
The board was faced with finding $2.8 million to cover employee health insurance costs for the plan year that ended Sept. 30.
That bill is due Dec. 1, and division Chief Financial Officer LaShahn Gaines recommended that the board use $1.5 million in carryover funds from last school year to cover part of the debt.
The bulk of those funds--$1.2 million--had been budgeted for instruction. The remainder had been designated almost equally for technology and transportation, according to figures released during a board work session on Monday.
Board member Amanda Blalock asked Gaines during the meeting whether the division made a mistake in switching to self-funded insurance, which the county government also uses.
The division's insurance claims for the plan year that ran from Oct. 1, 2011, through Sept. 30 exceeded health premiums collected, Gaines said.
Covered employees and their families made claims totaling more than $30 million, whereas the division collected $27.3 million from premiums.
The number of claims over $50,000 jumped 68 percent over the past two years--from 38 claims in the 2010-11 plan year to 64 for the year just ended.
The division just completed its second year of operation under self-funding.
Gaines told Blalock that Spotsylvania was one of the last large school divisions in Virginia to switch to a self-funded insurance plan, and that it is considered a "best practice."
She noted that the Stafford, Prince William, Loudoun and Hanover county school districts also are self-funded.
She expected self-funding to prove a wise financial move over the long run, and emphasized the importance of building a reserve fund to cover future problems.
Board member Jim Meyer echoed those points and said the shortfall is especially painful for the division now because it switched to self-funding without a reserve fund in place.
But he said the decision was prompted by more than anticipated savings.
"We want to be in the driver's seat as far as types of plans" offered to employees, he said.
The board approved Gaines' recommendation to use carryover money for part of the claims. The remainder will come from funds meant to cover claims that have been incurred but not yet reported.
She expected that fund to quickly be restored through collection of premiums.
The division raised health insurance premiums by 17.3 percent for the 2012-13 plan year with the recent spike in claims in mind.
Pamela Gould: 540/735-1972