Sometimes money does fall from heaven. SAU 55 is getting back more than $1.55 million dollars from surplus medical and dental plan contributions with Local Government Center HealthTrust, LLC. The 2011 surplus was distributed on August 2, 2013. The 2010 surplus, which is currently being challenged, will be distributed on August 26, 2013. Participants in the plan can opt to take these surplus payments in cash or as a contribution holiday. Electing a contribution holiday directs the refund to future insurance payments. Which would you choose: cash now or a reduction in future payments?
I’d like to see a debate about the merits of holiday vs. cash. I suspect most people would take the cash, but our SAU opted to take a premium holiday for the 2011 distribution of $423,301. There are still a few weeks to decide how to take the remaining $1,132,250 (a figure which could be reduced because of a challenge to eligibility requirements for receiving the surplus). I personally hope Mr. Stokinger and Dr. Metzler decide to take this giant refund in cash.
A cash refund would become a budget item as one-time revenue and should be rolled over into the next budget year as surplus. Clean, clear and simple. A contribution holiday, on the other hand, will artificially reduce the insurance line. When that line item goes up the following year, it could be argued that we need to raise more money from taxpayers because insurance has gone up! The holiday option will also free up money that could be spent in other ways rather than being put directly into the surplus.
In other interesting budget news, last year’s food service contract guaranteed a $81,000 surplus subject to numerous conditions and assumptions. Somehow Timberlane food service is in deficit more than $100,000. The 2013-2014 contract has the same food service management company, Whitsons New England, Inc., guaranteeing financial break-even subject to the same conditions and assumptions as last year but with a 10 cent increase on reimbursable meal prices and a 5% increase on mutually agreed upon a la carte items.
Perhaps you wonder, as I do, why a school board would agree to a contract that promises a sizable surplus. I’ve been on the budget committee just one year and members were told that contracts were none of our concern, so with no experience with contracts I nevertheless have to wonder what budget committee oversight can be done for a surplus we didn’t even know was supposed to be there? And how was that surplus to arise in the first place? I’m happy to see that the 2013-2014 contract, which at the time of my reading was awaiting state approval, aims for break even.
From my point of view, surpluses are problematic things. They should be completely transparent to the budget committee, they should be taken in cash and they should not be encouraged in contracts.
As I’ve said before, I am struggling to understand Timberlane’s budget. If I have missed some salient point, I invite Mr. Stokinger, Mr. Collins and Dr. Metzler to respond to this at any time. I will be happy to post their response and I certainly invite corrections and education from any and all.