The Schenectady school district’s self-funded health insurance plan cost far more than its funds could cover last year, an internal audit shows.
A teacher asked the district to investigate the plan to see whether members were being asked to pay too much into the plan. The theory was that the district didn’t need all the money it was collecting from members.
If that were true, it would have meant the district could stop putting as much taxpayer money into the plan as well, and everyone would save.
But the truth was as far from that as possible.
In the first year that the district separated out all of its self-funded collections and payments, the plan posted a $371,000 deficit.
Director of Business and Finance Kimberly Lewis said the district will handle such deficits by increasing the premium paid by each member so that the fund can pay off the deficit over the next year.
She’s not sure if that happened this year — she was not working for the district when this year’s premiums were set.
For now, the district paid the extra out of money from the general fund. That money will be paid back if the fund collects more than it spends this year — which is not yet known.
“It’s too early for me to say,” Lewis said.
The fund’s year ended June 30, but it will take another month to reconcile accounts, she said.
For 2012-2013, the premiums are going up, but not by much: 3.5 percent for medical and 1.5 percent for dental. It’s not clear whether that will be enough to cover the rising costs of health care.
Lewis said the district’s goal is to eventually predict such costs well enough that the fund is self-sufficient.
“It’s going to take us some time to do those projections,” she said.
In the past, it was much harder to see whether the plan was running at a loss. The plan was part of the general fund, rather than in a separate fund.
Last year, for the first time, the plan was separated.
“So it would be very clear,” Lewis said. “We accounted for premiums, employer’s share, employees’ share, and pay expenses out of that fund.”