INDIAN RIVER COUNTY — Three Indian River County School Board members on their way out of office in November are set to break a promise made to employees two years ago – that the District, not employees, would pay off a $7-million deficit in the health insurance fund.
During several budget sessions over the spring and summer none of the Board members questioned then-Assistant Superintendent of Finance Carter Morrison’s plan to renege on a $1.56-million payment into the fund, the third of four to be paid each year from 2016 to 2020.
At the first of two public hearings on the budget, held on July 31, School Board candidate Stacey Klim broke the ice. “You might have to pay this,” she said, reminding the Board of their promise. “It’s not fiscally responsible to leave zero for this line item — it should be in the budget.”
During School Board discussion, Member Laura Zorc said she wasn’t on the board when the four-year plan was devised. She asked School Board Members Charles Searcy, Dale Simchick and Shawn Frost—who were on the board two years ago, “What was the commitment from the board at the time?”
No answer was given. Searcy, Simchick and Frost have opted not to seek re-election.
She said any decision to forego payment should be a Board action, if Board action put the plan in place.
Simchick replied Zorc was given the same information given to the Board by Morrison. The fund is in good shape, the deficit is gone, no payment is necessary.
“But the fund is filling up from the [employee] premiums,” Frost acknowledged. “It could be that we reduce premiums and put $1.56 million in the fund,” deferring the decision to a future date.
Simchick and Justice said the matter would be discussed at an upcoming Superintendent workshop, and were willing to delay any decision about the $1.56 million until after the budget is passed.
All five board members approved the tentative budget with the zero place holder for the third, $1.56 million payment.
Morrison said two years ago the Insurance Commission approved the District’s four-year payment plan but the Board did not ask for documentation. The Insurance Commission’s view of abandoning the third payment hasn’t been inquired into either, as far as the public knows.
Laura Zorc and Tiffany Justice weren’t Board members at the time the promise was made, but Shawn Frost, Charles Searcy and Dale Simchick were, and they vowed the massive hike in employee insurance premiums that went into effect at the same time would be used to make the fund solvent going forward, paying for future employee healthcare, not for retiring the old debt, which was accumulated due to District mismanagement.
Two years later that is not the case.
The fund ended the year, June 30, with a $3.8 million balance, gaining nearly $8 million over the last two years. Part of that gain came from the first two of the promised four payments, when the Board transferred $2.33 million and then $1.56 million into the fund, adding $3.9 million to the balance sheet.
Now, instead of lowering premiums or paying back employees, Board members have remained silent while Morrison said the third $1.56-million payment is not necessary because the fund is healthy again.
In other words, the 56-percent premium hike imposed on teachers and other District employees that lowered their take home pay significantly, has not merely balanced the fund. Instead the extra money has bolstered the fund by approximately $4.1 million. That amount, combined with the districts’ $3.9 million contribution accounts for the $8 million increase that recovered the nearly $4 million negative balance and then into the black by $3.8 million. The state requires a two-month or $3 million “safe harbor” reserve, which has been met and exceeded.
All five School Board members and Superintendent Mark Rendell were asked to comment on this breach of trust, but only Laura Zorc responded: “To build trust we have to honor our commitment — period,” she said.
Nine candidates running to replace Frost, Searcy and Simchick seats were asked to weigh in, as well. Teri Barenborg and Randy Heimler facing off for Searcy’s District 4 seat responded, as did Merchon Green, running for Simchick’s District 2 seat.
“It is important to honor any arrangement made to repay the School District’s debts,” Barenborg said. “If a modification of the original agreement is necessary, it should be negotiated with the Insurance Commission immediately.” Misunderstanding the situation and failing to mention employees, she went on to say, “I believe it is critical to get the self-insurance fund fully funded as soon as is fiscally possible.”
“It seems to me that they have no intention of making any more payments, now that the fund has $3.8 million in it,” Heimler said. “My opinion is that it is time for new leadership, starting with the top and working its way down the line. Maybe this is why all three incumbents are not running again!”
“I think the Board’s silence is unfortunate,” Green said. “The Board’s job is to be the check and balance of the District. They are to ask questions and ensure the District’s obligations are being met and tax dollars are being used responsibly.
“I would hope that the District hasn’t passed their duty of paying back the deficit onto the employees through increased premiums,” Green added. “That would be dishonest, predatory, and destroy what little employee morale we have left in our District.”