Budget cap might signal more school cuts
A 4.83% increase in school spending? Not so fast.
A 2.5% cap on all municipal spending, enacted by the Connecticut legislature last year, could put the brakes on Superintendent Karen Baldwin’s proposed $97.1-million budget for the 2018-19 school year.
To get under the cap, the district is considering changing health care providers for the second year in a row and joining a state partnership health benefits plan that could yield savings of more than $2.8 million.
The switch will take time, Baldwin reported to the school board Monday night.
“It’s a process,” she said. “If this is a direction the board wants to go in, we have to meet with every union … they would certainly need to engage with their own health insurance consultant, they would need to engage their legal counsel.”
It would also require a vote from all the unions — another process that takes time.
“That does not happen overnight,” Baldwin said.
Education board members said that both the Board of Finance, and the Board of Selectmen had indicated to them that the budget should remain under the 2.5% spending cap.
School board Chairwoman Fran Walton said at the board’s Jan. 22 meeting the board’s budget request is “totally out of alignment” with what the town had asked it to do.
First Selectman Rudy Marconi confirmed in an email to The Press that the cap is still in effect for the town’s overall budget. Baldwin also said she believed the district and town would be operating under the cap.
Notably, special education costs are exempt from the 2.5% cap, which in Baldwin’s budget accounts for $987,860 in added costs — or a little over 1% of the total increase.
“The district can determine special education costs that can be carved out of the operating budget,” Baldwin said in an email to The Press.
“Last year our budget was 3.48%, and when we carved out special education costs, we reached the 2.5%. Nevertheless, the Board of Finance took action to reduce the BOE budget by approximately $850,000 to achieve the ‘true’ 2.5% increase.”
The district’s current health benefits plan through Anthem is up for renewal in April, and could be shopped out for a less expensive option. Anthem’s most recent renewal rate for the district includes a 12.3% increase in costs, according to estimates from Brown & Brown — the district’s insurance consultant.
Baldwin’s proposal budgeted for a 10% increase.
To get costs through Anthem down to 10%, Michael Cavallo of Brown & Brown explained, he would look at self-funding the district’s vision plan, review the life and disability contracts, and possibly shop dental insurance for a new bid.
Walton also raised the idea of the district self-funding the health benefits plan, essentially becoming its own insurance company. But according to Cavallo, that wouldn’t work for next year’s budget, because of the high number of health claims — 18 of which have run over the $100,000 mark in the past year.
State partnership plan
Switching to a state partnership health plan could net the district $2,851,554 in savings, compared with renewing with Anthem.
Besides the time crunch, that plan is riddled with obstacles — not the least of which is being chained to the state partnership plan itself.
“We have concerns about how sustainable this is,” said Cavallo. “Even the underwriting that they’re doing makes me nervous.”
Cavallo explained that since the state plan relies on Hartford-area pricing — and more and more organizations are joining from Fairfield County, where medical costs are inherently higher — the costs of the program are likely to rise.
“Costs are expected to rise significantly for the state partnership plan in the next 12-24 months,” Cavallo’s report said.
‘Out to sea’
Other negatives: The state partnership plan takes away a lot of the flexibility that the district enjoys under a private health plan. The schools would lose their ability to bargain for plan design and rates.
And there’s the question of what will happen to the state benefits plans once a new governor is elected.
The plan also essentially locks the district in for two years, with a penalty if it opts to leave early — Walton likened it to a cell phone contract.
“The thing that scares me about it is that you’re basically putting your plans in a bottle and floating it out to sea, and waiting to see what you get back,” said Cavallo.
He did not recommend that Ridgefield Public Schools join the state partnership plan.
Baldwin noted in her presentation that the request for a 4.83% budget hike was not out of the norm among surrounding districts. The combined Redding-Easton school district submitted a request for an 8.97% budget increase for next year. Brookfield asked for 6.4%.
New Milford and Darien were on the bottom end of the spectrum, but both also submitted requests above the 2.5% line, at 2.59% and 2.75%, respectively.
Ridgefield’s request falls somewhere in the middle, below New Fairfield (4.87%) but above Westport (4.19%).
Wilton has a proposed 1.98% budget increase for 2018-19.
What hasn’t been discussed yet is just what the board will cut if the Board of Finance hacks the budget proposal back to 2.5%, as it did last year. Pushing the budget back to meet the cap would trim some $2,161,052 off Baldwin’s proposal, down to a total of $94,949,382.
Board Vice Chairman Doug Silver said a cut of that nature could be “profound.”
“This budget cycle is going to require some decision-making,” said Walton, “especially if we’re held to the 2.5%.”