In what universe is it acceptable in this day and age for one of the most troubled school districts in the state of Ohio to have one of the most expensive health insurance plans?
The answer: In the universe of the absurd.
If that appears overly harsh, consider what the Cadillac of plans has brought forth. Last week, the state mandated Academic Distress Commission voted to take control of the Youngstown City School District’s budget. That means all expenditures over $5,000 and all contracts will have to be approved by the panel.
Why? Because just 21 months after the system emerged from state-imposed fiscal emergency, there are storm clouds gathering.
According to Mark Paprocki, the commission’s fiscal monitor for the Youngstown district, the current financial forecast projects expenditures exceeding revenue by $432,000. A majority of the deficit comes from health-care costs.
The district’s self-insured plan has been underfunded since 2008, and it will take about $1.1 million to replenish the fund.
If there isn’t the money to pay the claims, which are expected to increase, the district would be forced to tap into the general fund.
“I think it’s time to get this right, moving forward,” Paprocki said, as the academic distress commission took control of the urban school system’s purse strings.
But it isn’t just the poor management of the health insurance plan that is cause for concern. The overall cost has Paprocki expressing disbelief.
How expensive is it? Compared to a Stark County schools health-care consortium, the Youngstown City School District spends $4 million more a year.
But the fiscal atrocity doesn’t stop there. In the view of the commission’s monitor for the district, employee benefits are also out of this world — compared with other plans.
“There’s a $225 per year maximum out of pocket expense” for employees of the Youngstown system, which Paprocki characterized as “peanuts.”
“Nobody has that,” he said.
Other plans require participants to pay between $1,000 and $1,500 a year.
“This plan is the richest plan I’ve ever looked at,” he said.
Think about it: One of the worst school districts in the state in terms of academic performance, and one of the poorest districts in the state in terms of the socioeconomic status of the student population, has one of the richest plans.
Indeed, officials of the Ohio Department of Education and the chairwoman of the academic distress commission, Adrienne O’Neill, have made it clear that the district must show very real academic progress next year to avoid a possible state takeover of the system.
The emergence from fiscal emergency in March 2011 was a watershed moment. It meant shedding the restrictions the state had placed on the district in 2006.
It was a long, arduous journey that resulted in the elimination of red ink and a five-year forecast that showed balanced budgets each year.
Now, with the health insurance cloud hanging over the system’s budget, the future looks bleak.
The academic distress commission, which is charged with lifting Youngstown out of the cellar, has decided to explore the possibility of the district joining a consortium for health insurance.
As it does, we would also urge the panel to ask state auditors to investigate how the health insurance plan came to be, and how the employees have been able to get away with paying “peanuts” for a Cadillac of plans.