Act 85 Reduces Ed Fund Reimbursement

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Thursday August 24, 2017

During District and SBEA negotiations, the item of health care costs always comes to the fore. This year is a little different, however, as a result of the passing of Act 85 by the Vermont Legislature. Act 85 is a statewide initiative designed to save millions of dollars from school employee health insurance costs. Along with districts throughout the state, the South Burlington School District has been awaiting figures from the Agency of Education (AOE) related to Act 85. At the August 16 school board meeting, members were apprised of the target reduction in reimbursement from the education fund they would receive. The school district is being asked to “claw-back” their current FY ‘18 budget by about $304,000 and in FY 19, by 35 percent or $164,000. According to School Board Chair Elizabeth Fitzgerald, “the “clawback” is based on the districts’ share of the actual 2017 healthcare costs as provided by the business office. The $50,000 which was included in the approved budget for this fiscal year is in addition to this charge.” According to the the letter released by the Agency of Education August 15, nearly all Vermont public school employees will be covered by new health care plans, beginning January 1, 2018. This could generate savings in local school budgets due to lower premium costs. Act 85 directs the Agency of Education to calculate the projected amount of savings for each supervisory union or district in accordance with a formula and to deduct those amounts from the education payments made in the second half of FY2018 and in FY2019. The letter states that, “Public school districts and supervisory unions provided AOE [Agency of Education] with their share of the actual FY2017 health care costs plus counts of employees on three tiers of health care plans as of April 1, 2017. The amount of potential savings to recapture is the difference between the FY2017 health care costs and an estimate of the FY2018 costs, with FY2018 costs being based on the employees as of April 1, 2017, the Vermont Education Health Initiative (VEHI) Gold Consumer Driven Health Plan (CDHP), and a contribution to an HSA or an HRA. The estimates for the first and second half of FY2018 were summed by district and then subtracted from each district’s actual FY2017 health care costs. The difference was the amount to recapture in savings.” Unfortunately, neither Business Manager John Aubin nor Superintendent David Young were present at the board meeting on the 16th to offer their perspective and recommendations, but many discussions lie ahead, especially as the board begins the budget development process in late September/early October. The impact this could have on current and future budgets will be top of mind as contract negotiations continue, and will likely be on the September 6 board agenda for discussion. Fitzgerald added, “The District needs to evaluate opportunities to deliver required savings from Act 85 while maintaining access to affordable, high-quality healthcare plan options for employees and their eligible dependents.” SOURCE: Corey Burdick, Correspondent