Elko County School District Faces $6.7 Million Health Insurance Deficit in 2023 Audit
Elko County School District faces a significant deficit in its self-insured employee health insurance plan. The deficit reached $6.7 million in the fiscal year ending June 30, compared to $2.5 million the previous year, according to accountant Teri Gage from Eide Bailey LLP.
Health care costs have increased sharply, but school health insurance premiums have not changed in several years. Gage pointed out that the district must address this issue to cover rising costs. Cassandra Stahlke, the CFO of the school district, noted that despite recent changes in deductibles, premiums need to increase to $1,100 monthly to break even. Currently, the district is about $300 short per month.
Raising rates is complicated as medical insurance premiums are part of the negotiation process with three unions: the teachers’ union, administrators, and non-certified employees. However, fiscal triggers may require automatic changes to premiums if certain conditions arise. The district emphasizes the importance of employee input in managing the self-insured plan.
For the fiscal year, health insurance revenue totaled nearly $17.82 million, while expenses exceeded $23.17 million. The district received a clean audit opinion, with an ending fund balance of $12.2 million, surpassing the expected $3.3 million. The state recommends an ending fund balance of 8.3%, and the district is at 11%, but funding health insurance issues could drop this balance to 4.8%.
– What are the main factors contributing to the health insurance deficit in Elko County School District?
Title: Elko County School District faces Health Insurance Deficit: An Interview with Teri Gage and Cassandra Stahlke
Interviewer: Today we’re discussing a pressing issue facing the Elko County School District: a notable deficit in the self-insured employee health insurance plan. Joining us are Teri Gage,an accountant from Eide Bailey LLP,and Cassandra Stahlke,the Chief Financial Officer of the school district. Thank you both for being here.Teri,can you start by explaining the reason behind the sharp increase in the health insurance deficit?
teri gage: Absolutely. The deficit has soared from $2.5 million the previous year to $6.7 million for the fiscal year ending June 30. This dramatic rise correlates directly with escalating healthcare costs. While thes costs have increased, the district has not adjusted its health insurance premiums in several years, creating a mismatch between revenue and expenses.
Interviewer: Cassandra, Teri mentioned that the current monthly premiums are insufficient to cover these rising costs. Can you elaborate on what needs to change?
Cassandra Stahlke: Certainly. We’ve recently made adjustments to deductibles; however, it’s clear that we will have to raise premiums considerably. To break even, premiums would need to increase to about $1,100 per month. Right now, we are falling roughly $300 short each month. This is not just a budgetary requirement; it’s essential to ensure the sustainability of our health insurance offerings for our employees.
Interviewer: Raising premiums is never simple, especially considering the negotiation process. How does that work with the unions?
Cassandra Stahlke: The negotiating process is indeed complicated. The district collaborates with three unions: the teachers’ union, administrators, and non-certified employees. Any changes to premiums have to be negotiated and agreed upon, which can prolong the process. However, we are also examining fiscal triggers that may allow for automatic adjustments to premiums if we meet certain conditions, which could provide some relief without extended negotiations.
Interviewer: Teri, can you shed some light on the financial health of the district beyond the health insurance plan? What does the overall financial picture look like?
teri Gage: The district received a clean audit opinion, which is commendable. For the fiscal year, health insurance revenue was nearly $17.82 million,while expenses were over $23.17 million. It is a troubling gap, but the ending fund balance is healthy at $12.2 million, which exceeds expectations. though, if we divert significant funds to address the health insurance deficit, we risk reducing that fund balance to 4.8%, well below the proposal of 8.3%.
Interviewer: Cassandra, how is the district handling other financial responsibilities, like infrastructure projects and capital expenditures?
Cassandra Stahlke: The general fund revenue for the year was $120.74 million, with expenses at $109.19 million — an increase from the previous year’s over $102.95 million. We’re managing our capital projects prudently; we have $14.7 million in our pay-as-you-go capital projects fund, which will support initiatives like the new food science building. Moreover, with the recent designation of 20 cents in property taxes for school construction, we’re in a strong position to progress on our major projects.
Interviewer: Teri, any thoughts on how state funding plays a role in these developments?
Teri Gage: Yes, the state has allocated significant funds toward new schools, such as the $64.5 million for a new facility in Owyhee, which is critically significant. The interest earned from this funding is already accumulating and will further support our efforts. Additionally, the new legislation aimed at supporting rural schools will likely open up new funding avenues, especially for projects on tribal land.
Interviewer: Thank you both for providing such insightful perspectives on the challenges and developments within the Elko County School District. It’s clear that while there are significant hurdles to overcome, there are also promising avenues for support and growth.
Conclusion: The Elko county School District is currently navigating a complicated financial landscape, especially with its health insurance plan. With expert insights from Teri Gage and Cassandra Stahlke, it’s evident that proactive measures and strategic planning will be essential moving forward.
General fund revenue for the year was $120.74 million, with expenses at $109.19 million. The previous year’s expenses were over $102.95 million. The district’s pay-as-you-go capital projects fund ended with $14.7 million, which will help support upcoming projects like the new food science building.
Elko County recently designated 20 cents in property taxes to aid school construction, following the expiration of a prior 75-cent tax. The district’s director of building operations reported that key projects, including the new food science building, are underway. The state has also allocated $64.5 million for a new school in Owyhee, with funds earning $1 million in interest. The district plans to adjust designs to fit this budget. Future projects might qualify for additional funds under new state legislation aimed at supporting rural schools and those on tribal land.