Rising Health Care Costs - A Persistent Problem
January is budget month for the MERSD School Committee and balancing the FY19 Budget presents a challenging task. Over the next few weeks, the School Committee and district team will continue to work collaboratively with the towns of Essex and Manchester to refine the numbers and reach a final budget request. The challenge before us is addressing back-to-back double digit increases in health care.
As we outlined at
the Tentative Budget Public Hearing on December 13, 2017, the
district is facing a projected $735,000 (16%) increase in health care
costs. This increase follows a 28%
increase in fiscal year 2018, for a total increase of $1.5 million dollars in
two years. The cause of the increase is
not due to changes in plan design but rather a significant and atypical
increase in catastrophic cases. The
increased cost of health care will exceed available funds under a level
services budget, leaving no additional funds to manage annual increased costs
and program investments. Our current
fiscal situation will require us to make some difficult choices going
forward. In the short-term, to manage the FY19 budget, we are looking at
efficiencies in the areas of services, fees, staffing and program. Long-term we
will be looking at the structure and sustainability of the current health care
benefits plan.
Health care costs are an annual challenge. Here’s what we have been doing to manage this
difficult issue.
- Established a joint school-towns budget collaboration
team.
- Worked collaboratively with the Manchester Essex
Teachers’ Association to
- Reorganize health care benefits and establish an OPEB
(Other Post -Employment Benefits) Trust Fund to fund state mandated
retiree health care obligations.
- Introduce higher co-pays and deductibles for insurance
plans
- Reduce employer contribution rates based on standards
in comparable districts
- Negotiate annually with multiple insurance
providers. Prior to 2018, the
average increase per year in health insurance rates for MERSD was just
3.3% over six years.
- Require all eligible retirees to migrate to Medicare
as their primary insurer instead of MERSD’s plan.
- Outsourced services in non-academic areas such as
custodial and cafeteria services.
Although we continue to seek internal
efficiencies in order to maintain class size and program offerings, we will
have some difficult choices to make in the coming months. Shifting enrollment is working in our favor. Although
we are still managing a cohort of students with record high class sizes, these
students are now at the secondary level and entering elementary class
enrollments have declined due to a demographic decline in school age
children. This population shift has
allowed us to reduce classroom sections at the elementary level while
maintaining class size benchmarks and shift resources to the secondary level to
address the larger cohort.
Serving our students well is the driving force
behind our budget development process. The communities of Manchester and Essex
have long had a reputation of excellent academic achievement, high quality
faculty, a commitment to small class size, and strong academic and
co-curricular programs. Our program is well respected, as are our communities.
We encourage you to visit the MERSD Budget
page (www.mersd.org – Quick Link: Budget) to review our presentations and to learn more about the
goals and the challenges we are facing. We also hope that you will
consider increasing your involvement with the schools. We welcome
your participation and input as we work to address our challenges.
FY
19 Tentative Budget At a Glance
|
FY19
Tentative Budget = $25.2 million
- 3.18%
($777K) spending increase from FY18 budget
- Includes
$354K cut to level services staffing via attrition/known retirements
- Relies
upon $550K of yet‐to‐be‐identified spending efficiencies
FY19
Operating Assessment = 3.29%
- Measures
cost increase to towns after deducting “Other Revenue” (e.g., State Aid) from
- spending needs
- In
line with recent year assessment increases of 3.32% (FY17) and 3.20% (FY18),
- following override/revenue correction
from Towns
FY19
Capital Budget = $2.108 million
- Pays
for MS/HS project debt service
- Decrease of $48K (2.2%) vs. FY18
|
A great way to join the
conversation and learn about what's going on is to attend a School Committee
meeting. Here’s a look at the topics being addressed in the next
month.
Upcoming Meetings - MERSD School Committee
|
Date/Time/Location
|
Presentation
Topics
|
January 30 /
7:00pm / Essex Elem.
|
Public
Hearing - FY19 Budget
|
February 6
/ 6:00pm / MERMHS LC
|
Adoption
FY19 Budget
|
February 13
/ 7:00pm / MERMHS LC
|
Joint
Board Meeting w/ Memorial Building Committee
Approval of Preferred Option
|
MERMHS
LC = Middle High School Learning Commons – 2nd Floor
