NORWALK, Conn. — Health care costs appear to be increasing $6 million for Norwalk Public Schools in the coming fiscal year budget if an alternative is not found, NPS Chief Financial Officer Thomas Hamilton said Wednesday.
On the other hand, NPS employees will contribute $1 million more via their premiums in the coming year, he said. But contractual wage increases will add about $4.3 million to the budget.
This was the Board of Education’s first look at the coming budget cycle. Superintendent of Schools Alexandra Estrella has new initiatives but NPS is “scrubbing the budget as thoroughly as humanly possible” to fund them through savings, Hamilton said.
“The purpose tonight is not to sort of release the budget, or to present the budget in any way, shape or form,” Hamilton said to Finance Committee members. “It’s really just to give you a heads up as to what are the, you know, what are the major financial drivers behind the budget? And then what are some of the new things that we’re looking at and working on? …We’re not prepared tonight, certainly, to lay out actual numbers. It would be premature for us to do that, frankly.”
“We are finding that the health insurance is likely going to be a major driver of next year’s budget for us. And there’s a number of factors that are really coming into play,” Hamilton said.
NPS switched from self-insurance to a state health care plan, Connecticut Partnership 2.0, in June 2017 to resolve that year’s budget crisis. At the time, it was noted that the state was using the same rate for every community but Hamilton said Wednesday that the state has “decided that that was not a sustainable and ultimately appropriate way for them to set the pricing on this health plan. And they have now moved to a regional, regionally based premiums based on the counties.”
“Our health insurance consultant is saying we should anticipate a three and a half percent increase,” just based on that state wake-up call, and it will also go up next year as the state phases in the increases, Hamilton said.
That’s in addition to the 8 percent increase indicated in the preliminary projection from the school district’s health insurance consultant, so the total increase is 11.5 percent, “which translates into about $4.1 million of additional expense,” Hamilton said.
“We also have more employees who are on the health insurance plan. A year ago, we were carrying 1,454 employees were now up to 1,502 employees. So that’s 48 additional employees, which translates into an additional cost of about 1.1 million,” Hamilton said. “So that’s another factor that’s driving health costs.”
NPS has been using what’s left from the self-insurance fund, and “in the 2020-21 budget, we were drawing down the last portion of that insurance fund where there roughly $2.7 million available in the insurance fund,” he said. That money’s been used and won’t be available to help with this budget.
“Now there are some offsets because if you add those numbers up, it adds up to more than 6 million,” he said. For instance, the employees premium cost shares are going up 18 percent, “so we are anticipating our employee premium cost share will be going from approximately $5 million to $6 million.”
Then there’s about $400,000 in grants, but “the long and the short of it is… we anticipate in the range of about a $6 million increase in health insurance, which is, you know, obviously, pretty significant.”
There’s another budget trick coming home to roost: this year NPS carried over $1.5 million in unspent funds from the previous year but the NPS Finance Department is not assuming there will be a surplus this year, according to Hamilton.
“If that assumption ultimately holds true, then that’s another $1.5 million adjusting factor between the current year budget and next year’s budget,” he said.
Estrella wants to have literacy and math specialists in all of Norwalk’s K-8 schools, Hamilton said.
“These would be certified employees working directly with students to make sure that students are reading on grade level reading and helping students who are not reading where they need to, and also helping students with math, who may not be mastering basic core skills that they need to be mastering,” Hamilton said. “…We are going to need to add some additional certified staff to meet that standard.”
“Another area of priority for the district, going into next year’s budget is parent engagement,” he said. “… Of course, a focus on equity and diversity and inclusion is an important initiative that the board is certainly well aware of and, and looking at what that might mean, in terms of any potential needs, that would need to be budgeted next year.”
The district is also going to focus on student attendance and on instructional leadership and development, he said.
“Our objective is to fund program improvements, through reprioritizing existing funds through identifying areas and ways to save money in the existing budget to cover those costs,” Hamilton said.
“There’s a lot of moving pieces, currently, at this stage in the budget,” Hamilton said. “…And, you know, it’s not settled. But we certainly have a direction that we’re moving in.”
Board of Education Chairman Colin Hosten responded, “Even the high level, you know, big picture, look at what’s kind of driving some of the major budget decisions is very helpful.”
Hosten said it was great to hear the steps being taken toward equity, literacy and math specialists in in every school and efforts to improve parent engagement. As for health insurance costs, he said NPS was going to examine what results might be gained by going back to self-insurance. He asked if NPS could collaborate with the City and seek bids for an insurance program for both City and NPS employees.
“There’s a number of options that we can look at, and I have asked our health insurance consultant to start to evaluate those options for us,” Hamilton replied. “… And I absolutely agree that it does make sense to, you know, to talk with the City. I’m not sure that there’s going to be any better place for us to be than the state partnership plan. You know, that may, in fact, be the best place for us, even with the increased costs that we’re looking at, but it is certainly something that we need to take a look at.”