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School system faces budget cuts

By Brad Hicks

The Unicoi County Board of Education does not yet know whether finances will allow the school system to continue with its current employee health insurance contributions, but that did not stop the board from meeting last week to discuss what may be awaiting the system on the insurance front.

The board met in a called work session on Wednesday, May 17, to review possible insurance options. By the end of the meeting, the board decided it will first consider approval of the school system’s budget for the 2017-18 fiscal year before finalizing a decision on insurance since uncertainty as to exactly how much funding Unicoi County Schools will receive in the upcoming fiscal year remains.

Because actual revenue totals, such as the school system’s cut of local sales taxes, will not be known until after the first of July, the insurance numbers crunched ahead of last week’s work session and discussed during the gathering represented the “worst case scenario,” as the information was compiled without the use of such revenue projections, according to Unicoi County Director of Schools John English.

Unicoi County Schools currently pays 100 percent of the premium for employees on single coverage plans. For family plan premiums, the school system provides the same amount as it would to cover the single coverage premium plus 45 percent.

According to English, the school system currently pays approximately $2.3 million annually toward employee health insurance costs.

The Unicoi County Schools system is on the state’s health insurance plan. Local officials were previously aware that percentages on that plan are set to increase in the future. Some plan options could see costs jump by around 7 percent, while the limited option could possibly realize a 23 percent spike.

These increases are on the horizon as a decrease in school system funding looms. A decrease in Basic Education Program (BEP) funding the school system receives from the state is anticipated for 2017-18. In the 2016-17 fiscal year, the school system experienced a loss in BEP funding in the $500,000 range.

BEP is the formula used to figure out how much revenue the state will provide to a school system each year, as well as the revenue local governments need to provide as a match. Student enrollment is the primary determiner of these funds.

Student enrollment again decreased in Unicoi County Schools during the current school year.

The school system is also expected to lose around $100,000 in federal Title I money. These dollars have previously been used to fund state-mandated Response to Intervention (RTI) positions. Although English said legislators are working to possibly restore at least some of this funding, the loss of this money has, for now, led the school system to have to pick up the RTI positions out of its general purpose budget.

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The loss of funding has prompted school officials to take a closer look at how to bring the system’s bottom line into balance, with employee insurance being one of the items explored.

And different options are being discussed. Board of Education Chairman Tyler Engle said a fixed subsidy for insurance could be a feasible option. Information on the costs of the school system covering certain percentages of the insurance premiums was presented last week. Under the partnership plan option, the premium for a single coverage plan currently costs the school system $717.18 per month with the employee paying nothing. If the board was to cover 70 percent, the employee on a single coverage plan would pay a monthly premium of $215.15. If the board covered 75 percent of the premium, the employee would pay $179.30 per month. The employee would pay $143.44 per month if the board covered 80 percent of the premium, $107.58 monthly if 85 percent is covered, and $71.72 if 90 percent is covered by the board.

The possibility of joining a consortium with surrounding school systems was also briefly discussed. This would require Unicoi County Schools to remove itself from the state plan for at least two years.

English said he has recently discussed the potential changes in insurance costs with employees.

“Nobody wants to see anything change, but I think folks get it,” he said. “You see a lot of nodding heads and see, ‘We didn’t expect this to be able to go on. How could it?’ They realize that other systems have already made this move, and nobody likes to see their checks change, but I do think a lot of our folks realize the situation.”

Aside from the insurance aspect, the school system’s proposed budget for the 2017-18 fiscal year, which currently includes a 2 percent raise for system employees to help offset insurance cost increases, is more or less complete, English said. Although the new fiscal year does not begin until July 1, the Board of Education is required to pass the school system’s budget for upcoming fiscal year by June 1.

As it currently stands, approximately $680,000 would need to be pulled from the system’s reserve fund to balance the 2017-18 budget, English said. However, he said this could change after actual revenue figures are made available after early July.

“We know by the time June 30 gets here, that’s not going to be $680,000 anymore,” English said. “That’s not considering anymore revenues like sales tax. Anything like that is not considered in that. So we know that’s going to come down. That’s just what we have right now.

“At this point, anything we get revenue-wise is going to come off of that $680,000.”

The revenue numbers may also determine how the school board approaches the insurance issue.

Because the budget must be passed by June 1 and open enrollment for employee insurance does not begin until October, English recommended that the board meet in a called session to consider approval of the school system’s budget for the upcoming fiscal year.

That special-called session will take place on Tuesday, May 30, at the Unicoi County Schools Central Office.

Because open enrollment is still several months away, a decision on employee insurance will be made at a later date once the actual revenues the system will see in 2017-18 have been obtained.

“I know for budget purposes, we have to have numbers and we have to have the budget approved, but the insurance decision, I personally don’t think it should come until we have all the facts, until we realize what all of our expenditures and revenue is come June 30, which we don’t know what that is right now,” English said.