Posted on June 10, 2012 @ 9:30 PM – MORE evidence that relying on “one time money” is bad.
The Finance Committee of the Manchester Board of School Committee will review a report received from Business Adminstrator Karen DeFrancis indicating the district will need to increase the amount needed from Expendable Trust money by more than $1.2 million to balance this year’s budget, a whopping increase of nearly 40% over projected budget estimates.
When school and city officials cobbled together the current fiscal year’s school budget, they agreed to using some $3.1 million in Expendable Trust monies to bridge a shortfall in last year’s budget. Today, thanks in large part to higher than expected health benefit costs, that number has swelled to well over $4.2 million. The district also expects in exceed budgeted salary line items by nearly $200,000 as salaries year to date are running 5.5% ahead of last year’s expenditures.
Using this amount will leave less than $4 million in the district’s expendable trust funds, an important consideration given this year’s tough budget numbers.
When asked why the health benefits budget was running well ahead of projections, DeFrancis wasn’t sure. “We’re working with our consultants to figure out what’s driving those numbers,” she said, noting that claims weren’t running ahead of projections. “It could be that more teachers took the HMO instead of the PPO, so they’re paying less for their premium,” she said. Teacher’s currently pay a mere 6.5% of the HMO cost and pay nearly double that, 12% for the PPO plan.
This overrun is expected to have an impact on the school board’s discussions over whether or not to budget the use of these expendable trust fund dollars in this coming budget year’s operating budget as the $3.1 million budget hole created by the use of these funds grew by another $1.2 million.
Speculation has run rampant that the school board will reconsider its decision to not use these dollars as a way of filling some of this year’s budget gap, perhaps as soon as tomorrow (Monday, June 11) night. However, more than a few school board members are worried that using the expendable trust funds will not only put them back in this year’s “budget hell,” but also leave the district without funds to handle any future health benefit cost overruns.
School Board members contacted by Girard at Large were adamant that the school needed to get a handle on these “runaway costs.” Said one on the condition of anonymity “We spend over $600,000 a week, $87,000 a day on health insurance benefits…of course there’s no money for anything else.” According to the figures provided by DeFrancis to the Finance Committee, health insurance costs are expected to push $35 million this year.
“That benefit line item went up 10% all by itself for the coming year’s budget” said a school board member who was contacted by Girard at Large about reports of an audit done by the state of New Hampshire about the city’s schools. “That’s about what we need to spend to get our technology infrastructure up to speed. As long as we have contracts with those automatic escalators, it’s hard to see how we find the money to pay for the things the teachers and kids need in the classroom.”
It remains unclear whether or not the school board will take up the matter of using expendable trust dollars at Monday’s meeting. There is nothing on the agenda, but that doesn’t mean a motion can’t be brought up under the board’s new business item on the agenda. Board Vice-Chair David Gelinas, the committeeman from Ward 7, is said to be in favor of using up to $2.5 million from these trusts and may bring the matter up on Monday night.
Sources tell Girard at Large that even if he does, it is unlikely to pass before the Aldermen “give us a number.” Many on the board believe that the tax cap allows the schools an appropriation of $152 million plus, two million more than allocated under the budget proposed by Mayor Ted Gatsas. It appears that there may be more votes in favor of using expendable trust dollars for this coming year’s budget after the aldermen decide what to appropriate to the schools.
That continues a conundrum in the standoff between the boards given the expressed desire of some aldermen, notably at-Large member Joe Kelly Levasseur who has accused the school board of looking for a “bailout” instead of using its own funds, that the school board tap those trust funds to help with this year’s budget shortfall. Levasseur even persuaded his colleagues to put off further talk on the budget at last Tuesday’s meeting until after the school board met this Monday, saying that their action on the use of expendable trusts might “change a few votes on this board.”
Stay tuned to Girard at Large for details as they develop.