The Indian River County School Board got a break on the School District’s employee health insurance debacle, and now a majority of members seem determined to find out why it occurred.
After years of mismanagement that allowed the School District’s self-insurer’s fund to go $7 million in the red, the Florida Office of Insurance Regulation a month ago approved a four-year pay-back plan, spreading the expense out to make repayment less onerous.
But Superintendent Mark Rendell barely mentioned the resolution of this major financial problem at the Nov. 22 School Board meeting, repeating what he has said before. “We haven’t, for several years, been operating the self-insurer’s fund properly.”
While that may have been enough of an explanation for the prior School Board, newly-elected members Laura Zorc and Tiffany Justice, along with member Shawn Frost, now want more of an explanation. They are calling for a deeper examination of how this happened in the first place.
Frost said staff told him that the School District’s hired actuary, Brown & Brown Insurance, gave the district “bad poop.” The company has since been replaced with Aon Hewitt.
“I would like to invite the former actuary to come and explain how this happened. There is such a thing as malpractice,” Frost said. “The district should not be on the hook for all of this. And if it was a staff issue, we need to make sure they don’t have their hand on the tiller going forward.”
Justice asked the deficit be slated as a “board discussion” on Dec. 13. Rendell said it should be a superintendent workshop, but Justice said the board will take the lead in getting to the bottom of this. Zorc added, “This is very important. It will take several discussions.”
The old board was warned in March there would be a deficit in the self-insurer’s fund, but the multimillion-dollar magnitude of the problem wasn’t known until May.
There are two parts to the deficit. Self-insurers such as Indian River County School District are supposed to put aside 60-days expenditure as a “safe harbor fund,” to cover unexpected claims and expenses. In the district’s case, $3 million is the set-aside amount, but all that money was spent, leaving no reserve. The rest of the deficit – $4 million – was the result of claims exceeding premiums.
The district pulled $4 million out of its general fund to pay the $4 million, and then took out a loan to cover the gap in the general fund until property tax revenue enables repayment of the loan. Borrowing costs were nearly $40,000 in interest and fees.
“We accepted the district’s corrective action plan and they don’t have compliance issues anymore,” said Office of Insurance Regulation Chief Actuary Eric Johnson.
Johnson acknowledged the state-approved plan assumes district employees will agree to premium rate hikes to keep the fund solvent. There are about 2,100 employees in the district, most represented by two unions – Indian River County Education Association and Communications Workers of America. The district is seeking $5.8 million more in premium revenue this fiscal year, with the district kicking in $1.6 million while employees pay $4.2 million.
