As the St. Clair R-XIII School District continues to discuss options on how to handle providing health insurance benefits to its classified staff, finances are proving to be the most difficult ingredient of the mix.
The board of education continued to look at the issue during its November meeting.
“The challenge has been to frame what we need to be considering from a budgetary aspect,” Superintendent Mike Murphy told board members. “When we design our budget for next year, we’re going to have to consider the health requirement.”
Currently, R-XIII does not provide health insurance for its classified staff. Last month, Murphy said adding it for classified employees who work at least 30 hours per week would be at least $350,000 annually.
“This will be a recurring cost,” he said, adding that his latest figures put the expenditure at $356,988 based on what insurance costs are for the district during this academic year. Adding in part-time transportation and miscellaneous other employees, the cost increased to $462,576.
“Those costs are directly in front of us for the next budgetary cycle,” Murphy said.
The local superintendent repeatedly has mentioned President Barack Obama’s Health Care Reform Law, which will require most U.S. citizens and legal residents to have health insurance starting in 2014. Obama was re-elected to a second term in November.
“We would have an expenditure out here that would be new,” Murphy told board members last month. “And we have three options.
“The third option would be to do nothing, not spend any money on this,” he said. “But if we attempt to gain compliance, we have two other options. First would be to recover the expense through budget design or, the second option, the flip side, we can look at how we can generate the money to cover the expenditure.
“But we definitely would have to plan for an expenditure that will exceed $350,000.”
The superintendent said the board’s discussion would not include the insurance for the Franklin County Cooperative. That would be handled in a different way, he said.
Murphy, who started the health insurance discussion in August, said if the district would opt not to provide the insurance, it would have to pay a penalty of about $1,200 to $1,400 per employee annually.
He said his opinion is for the board to take action on the issue in December or January so the district “can prioritize how we’re going to balance the budget.”
Board member Mike Drewel said the district “can’t just absorb this into the budget” without taking away services to students or reducing staff numbers.
“I just don’t see how we can do this,” he said.
Murphy suggested the board continue to think about the issue, mull over facts and figures and come prepared to address the issue again in December.
One option to obtain the funding would be to discuss taking a tax levy increase to voters.
Currently, the school district’s overall tax levy is $3.37 for every $100 of assessed valuation, but Murphy said the 62-cent debt service levy would not be in this mix, leaving the $2.05 incidental, or operations, levy and the 70-cent teachers fund.
Murphy noted that St. Clair R-XIII currently has established an operations tax levy at the state minimum $2.75. He also said for each penny the rate would be increased, with current valuation levels, about $15,100 would be added to district coffers.
“In looking at the idea of where we would have to go, we’re looking at a quarter increase,” he said in October about covering the expense through a tax increase.
Doing the math, a 25-cent tax increase would pump in $377,500 if current assessed valuations remain the same. The increase would have to be approved by voters.
Murphy provided information to board members that showed St. Clair R-XIII currently has the lowest operations/teachers fund tax levy in the area. Information also indicated that the state adequacy target level for that levy is $3.43. A 25-cent increase to $3 still would fall below that threshold, Murphy said.
If the board would opt to recover the expense through the budget at current levels, programs and/or staff reductions would have to be considered, Murphy said. In any regard, the superintendent said with the financial constraints the district is facing, some tough decisions will have to be made.