Racine Unified Insurance Claims Blast $3 Million Hole In Budget

The has a $3 million hole in its budget this fiscal year because of staff health care insurance claims.

However, David Hazen, Chief Financial Officer for Racine Unified, said he expects the number of claims in this fiscal year to be less than in the previous year, which could offset the $3 million gap. If everything proceeds according to what Hazen is thinking, there would be virtually no net increase of claims between last year and this year.

Hazen presented these findings as part of a monthly financial update to the Board of Education Audit Committee on Sept. 12.

In anticipation of sharp cuts in state school funding, RUSD increased the deductibles that employees would pay starting July 1. The district’s unionized workforce approved the high-deductible plan in March.
The District expects to spend about $45 million on health care this fiscal year as opposed to the $57 million spent last year. RUSD budgets about $52 million a year for employee health care.

“Now no one is making claims,” Hazen said, adding that he expected the net amount of claims between the two fiscal years to even out.
The current fiscal year began July 1. The District pays for health care claims from premiums collected from employees. United HealthCare administers the program.

The budget gap was due indirectly to the state’s new Budget Repair Bill, which became effective as law on June 29.

As a result of the law, public employees are required to contribute more to their pensions and pay at least 12.6 percent of the average cost of annual health care premiums from $2,000 to $8,000. RUSD is self insured and increased its deductible for employees. This led to an increase in health insurance claims in the previous fiscal year, something that was not budgeted for.

In other news:

• Hazen asked the board to move its October meeting to Tuesday, Oct. 25 in order to vote on a final budget. Final amounts of state aid and tax levies would be known at that time, Hazen said. An audit of the District’s budget will be complete in mid-October.
• Hazen also provided an update on the transition to the District’s new administrative offices, at 3109 Mt. Pleasant St. in Racine. He said the District expects to close on the sale of its old building, at 2220 Northwestern Ave., on or around Sept. 30. Personnel have started to move offices to the new building, Hazen said, but the majority of offices with which the public would interact will be housed at the old location for a few more weeks. “We haven’t spent much money lately,” Hazen said of costs related to the move. “I don’t know of any new money spent.”