"Our biggest issue is we've built a budget, we're tooling along and doing fine, and then all of a sudden [The Georgia Department of Community Health] is going to give us about [a] 300,000 some odd dollars [cost increase] that we didn't know about," Superintendent John Harper said during an August interview. "It's horrific."
Chief Financial Advisor Todd Hooper explained the board will have to pay an additional $340,000 in insurance costs for employees with an increase from $246 to $296 for each classified employee and an increase from 18 to 24 percent of a certified employee's base pay. Separately, dental premiums will decrease for employees based on their individual plan and the annual benefit will increase $200 with no late penalty for delay in acquiring coverage.
Hooper explained the cost of employee health insurance is borne by the taxpayer as the board relies on its fund balance for the summer months and faces weak sales tax revenues at the start of the school year.
He reported during Monday's work session the board is about 16 percent of the way into the fiscal year and has taken about $6.2 million from the fund balance.
"When you begin to look at [cost] you understand how important it is for us to maintain some semblance of a responsible fund balance," Hooper said. "Typically we've talked around 10 percent of our general fund budget which is about $10.1 million."
Hooper said the board is sent funding on the last business day of the month from the Georgia Department of Education. He said the board is required to pay into teacher retirement within five days, but in July the GDOE changed the process in which funds are distributed, creating a gap in how costs are paid.
"The [GDOE] withholds 95 percent of that health insurance funding for certified employees. They send it directly to [GDCH] so ... we have five days to get it to them, but if they're sending [the funding] to us no longer as an expense to the department of community health, there's obviously a cash flow issue from the standpoint of the [GDCH] to be able to continue to pay employee's health insurance claims," Hooper said. "That doesn't really affect us one way or another since it's an accounting transaction, but it is a thermometer of the health insurance fund."
He added, "...We have a fund balance to take care of that [cost], but it's a fund balance that we would have to gain interest on and to meet short term obligations."
He said this increase may be compensated for at the end of the year, but at this point it again creates a financial gap for the board.
Both Hooper and Harper said they are concerned with receiving the news of the increase after developing the school budget back in April and said the increase is not due to overall inflation of insurance costs.
"There have been no conversations [about healthcare inflation costs] at all," Harper said.
The Daily Tribune News is currently awaiting comment from GDCH on the increase, but an August press release addresses a shortfall in Georgia's State Health Benefit Plan, which does cite benefits in the Affordable Health Care Act of 2010 as one of the factors contributing to the increase. The department reports increases over the last four years being at 4.1 percent compared to the national increase of 8.3 percent during the same period.
According to the press release, "[The State Health Benefit Plan] is facing a projected deficit of slightly more than $800 million during the next two years a -- projected deficit of $280 million in FY2012 and projected deficit of $535 million in FY2013. The deficits are a combination of increased costs due to the expanded mandated benefits in the Affordable Care Act and decreased revenues resulting from several years of tight budgets, the manner in which employer contributions are paid, and an increasing number of retirees."
SHBP's budget for FY 2012 is $3.08 billion.
For updates on the Bartow County School System budget, continue reading The Daily Tribune News.