Board of Education Budget 1-17-23

001[Music] tonight's finance budget presentation one of the many thank you for being here before we get started Mr zenske I have a call for quorum here thank you Ashley Stanford the Pledge of Allegiance I pledge allegiance to the flag of the United States of America and to the Republic for which it stands one nation under God indivisible with liberty and justice for all thank you for joining us this evening uh this is one of the first two or three or more uh public budget reviews we do every year uh so this is a finance committee meeting of the whole Board of Ed so I'm going to turn this over to Mr gripple you can have fun thank you Mr chair um I guess uh according to our agenda we'll begin with any audience comments so

002we even begin proceedings maybe there's comment on uh superintendents presentation last week hearing none we will move along to the next part of the presentation [Music] good evening everyone my best part of the presentation you met me right to take over okay whoops yeah it is a bit of a question well well thank you um for those of you who are in attendance the superintendent presented his budget last week and so tonight we'll begin the process of reviewing the budget in more detail so there's a lot of information that we'll be sharing this evening and the agenda for tonight is to review specific sections of the budget we'll do an overview which includes the budget assumptions we'll talk about salaries we'll talk about employee benefits as well this evening next Tuesday which is our second

003Workshop we'll be covering instructional expense including special education services which Robin and Carrie will be presenting on and then Support Services maintenance and Ops and we plan to conclude next Tuesday at next Tuesday's meeting so I'm I will jump right into the into the presentation because we do have a lot of ground to cover this evening as we go along if there are questions I know the board members you're not shy about asking so you know this is intended to be interactive there's a lot of information that's also available in the budget book so as we go through each sections if there are questions around the budget book we'll address them as we go in terms of the budget process and how we we come up with the budget I did want to talk about

004a couple of important things first of all we begin preparing the budget in September every year this year was no exception the process um includes you know input not only from you know the the departments in School District Operations but all the school principals administrators and department heads as we look through the budget though a couple of important things the salaries come from the existing payroll records plus any staff editions that we've made and we'll cover that medical benefits which are part of tonight's review those are based on preliminary projected renewals which we do have those were based on the claims we had through October this evening I am you know pleased to let you know that Tom qualcek from USI uh USI is a benefits broker he'll be helping and answering some questions this

005evening making part of the presentation on medical benefits the administrators and now department managers as as far as preparing the budget they put into the non-salary line items things like equipment textbooks software things that they need for their individual schools a new program and new staff requests are submitted separately all that information is taken as a whole it's reviewed by the superintendent and assistant superintendent Ms Solano and then we come up with the budget recommendation that the superintendent presented 12th at this point in the process the board of education is beginning its review the board must pass a budget by February 15th and then it gets transmitted to the town manager Town manager reviews it with the Town Council the council has to approve a budget by April 30th and any changes to that budget

006come back to the board of ed for line item adjustments and so we usually finish the budget process in May so that's not different I just wanted to go through the process one more time as far as creating the budget Dr Solon presented this in his presentation last week but there is a balance that we have to strike when we prepare this budget we look at Staffing we look at programs we look at the services that need to be provided to achieve educational goals and that's balanced against fiscal prudence and again the district's primary goals of complex thinking and social emotional learning are built into the request for this budget we're going to move into the to the numbers thank you so let's start with the budget assumptions these are critical to the numbers that

007um will be going through in more detail first of all enrollment that is a large driver of our budget this year you'll see that on the slide we have a net enrollment of 41 students that's the overall increase but importantly pre-k through sixth grade that's an increase of 73 students 7th and eighth grade increases by 19 students and the high school drops by 51 students so that's how we got to the net of 41 but that pre-k through six increase that requires us to add four Elementary classroom teachers in order to keep the students per class at 18.8 which is where they are this year the 18.8 on a relative basis is a little bit higher than what we've seen in recent years at the elementary level we like to keep the average around 18

008lower than 18 at the kindergarten first second grade levels and then a little bit higher than that at the fifth and sixth grade levels Dr Solomon did review during his presentation that in the upper grades fifth and sixth grade It's Not Unusual to see 22 or 23 students but at the kindergarten and first grade you'll see the numbers more in the 16 through 18 range the second Factor that's driving some staffing increases has to do with enrollment growth we're also seeing enrollment growth on the special education side so included in this budget request is a special education teacher that's needed at Highland based on increased special education population there we also needed to increase the behavioral analysts support for the district to 1.4 there's a halftime speech language pathologist that's needed that's being added and

009it's carried in the budget and then we um this through the course of this current year 22 23 we saw staff additions to the para Educators that support special ed students so those are added in this year's budget that are carrying into next year's budget so they're incremental to this year's approved budget that's why we have to carry those into 23 24 and then also on the nursing side because of increased enrollment at the elementary level we need to add a basically a 25 hour per week school nurse that nurse will be based in Doolittle but will serve the district when we have any type of Staffing shortages we do not like to leave any school uncovered without the presence of a school nurse when there are students in the building we'll talk tonight about

010medical benefits this year's request the medical benefits count is about a 1.5 million dollar increase and that's essentially to fund the expected increase in claims next year we'll again we'll be talking through that some more detail this evening and then an increase in operations and maintenance this year um you know I know that everyone is familiar with higher inflation costs but those are particularly affected utility electricity primarily and heating costs as well so those are built in to next year's budget plus our buildings are aging the fact that we understand on school modernization that we will be building two new schools um doesn't mean we we stop investing in the existing schools in fact we may have to pick up the pace a little bit now that we know which schools are staying online so

011those are the assumptions good to go okay a few things that I wanted to touch on this is not new mandates continue this we've got you know over the years we've built up three different slides you know with mandates these are the newer mandates that we spoke about last year I didn't want to touch on the newest mandates that are either starting in 23 24 or as in the case of the first one we know that right on the horizon there won't be any cost impact this year but the first one on the list is a requirement to have zero Mission bus fleet by 2040. this is a long-term Adventure that we're already working on in the planning committee again there's no budgetary impact for this year but that is a state mandate that requires

012all schools to have zero Mission buses which essentially means electric buses by 2040. and the rest of the items on the list I won't go into into a lot of detail because they each have some um varying degree of cost impact but the point is that mandates you know do continue these typically come unfunded if there is a cost required to um to meet the mandates and so we've done our best um to build a budget that would enable us to fulfill these mandates but you know none of these mandates are requiring significant dollars in this year's budget state and federal grants this is uh more of a of a reminder that we do receive about two million dollars in in state grants per year um the only thing that's really changed over the in

013the recent years has been the Esser fund Grant so for next year we have about 449 000 that will be remaining in the professor which is the last of the Esser funds that we received during cobit so we will be utilizing that through the 23-24 budget year that we're working on so that's roughly well it's exactly half the balance of that Grant so we we do have that as a as a Federal grant that will be available um other than Esther the grants really haven't changed and these are paid directly to the district and they cover part of the cost of Education that differs a little bit from revenue revenue we do budget um and this revenue is paid directly to the town but the town accounts for it on the books so that they

014know it's coming and that's why we do need to budget it not much change from the current year the largest revenue Grant we receive is educational cost sharing from the state that's 9.4 million dollars and then the second largest is the special education excess cost that only kicks in if we have a student whose cost of the district is greater than four and a half times the average per pupil expense and that is a reimbursement Grant a little bit different than educational cost sharing which we just receive automatically that 10.5 million is an important number because it does help reduce the impact to the taxpayer you could see there's some math down at the bottom but had we not received the 10.5 million dollars that's budgeted or predicted for next year the average taxpayer cost

015would be 996 dollars higher in order to support schools through their taxes that covers Revenue yes um is our first degree program polling funded it is it is so it's included in our operating budget as an expense and that town gets that funding gets paid directly to the town but it's all netted out so it doesn't cost the taxpayer anything it's just the way the operating expense versus the revenue works I'm just looking at Miss Hamp because there may be a question there I just want to all right so um thank you all right so um the request is for roughly 85 points um eight right um so then we're taking in 10.5 projected revenue and then 2.03 in Grants so our total operating budget including all of this is going to be 97.33 roughly

016well let's just talk that through so the the operating budget is 85 million this 10 million offsets that so you don't add it on right so that's enough we take it off so it's 75 million that plus the 2 million so excuse me 95 million plus two so 87. the way you're looking at it and then you subtract the 10 million correct all right good all right next topic um this is something that the board members are familiar with but we do look at what are our pupil expenditures you know across uh District reference group b which is communities that are similar to Cheshire social economically and you could see that the range is South Windsor's per pupil expenditure is 16423 this is as of last year and on the high end is Greenwich at

017a little over 26 000 and this is something that Dr Solon covered in his presentation but what I'd like to add here is this green bar that shows up on the bottom that's the the educational cost sharing grant that we receive from the state and so you could see that there's a few communities that get a lot more than the rest Greenwich gets practically zero as does Madison as does Fairfield but you'll see South Windsor Cheshire Granby and West Hartford they get a fairly large um ECS contribution so if you take that and look at it a little bit differently what it does is if it weren't for ECS our cost per student would be over 18 000 but considering that educational car sharing brings us down to sixteen thousand five thirty two and so

018you could see where we rank relative to the other Derby Community so as Dr Solon you know made in or stated in his presentation we give excellent value for our taxpayer dollars here in Cheshire on the education side so here we go into the budget presentation the request this year is 6.46 percent it's an increase of 5.208 million and the total budget request is 85 million 872 591. so now we'll go through the details of each of the sections of the budget and talk about those and address any questions so if we look at the total budget request broken down by the main budget categories um our 85 million dollar budget 62 percent of that or 52.8 million is for salaries of our staff that's all salaries teachers as well as administrators and our non-certified

019staff such as secretaries and custodians and our power educators employee benefits are the second largest piece of our budget it's about 16.5 million as a request this year so these two pieces total account for about 80 points seven percent of our budget salaries and benefits and then you can see Support Services which include student transportation that's nine percent of the budget instructional expense which includes some of the special ed costs related to app Place tuition as well as pupil Services Consulting that's about five percent of the budget and then our maintenance and operations including utilities and cleaning out buildings is another five percent of the budget so that's the holistic picture of the budget if we look at how those costs break down in terms of are they contractual mandated or related to overhead are

020these things that we have to have to educate the students and keep the lights on in the buildings and meet any other obligation we have that's roughly 95 percent of the budget so if we look at it from the perspective of the cumulative percent of the budget salaries are 61 and a half if you add benefits that takes us to 80.7 then if you add the cost of student transportation Fuel and insurance and those providing transportation is mandated that takes us to 85 percent of our total budget um and on top of that special education and Consulting Services that's the tuition special education and then utilities heating energy contract payments and finally facilities cleaning maintenance supplies and repairs that gets us to about 95.2 percent of the budget so these expenditures Accord to just maintaining

021the district the other 4.8 percent which is the purpose of this slide these are the items that I call variable but they're not really variable costs um they total 4.1 million and you could just look quickly from the slide other Professional Services you know at 880 000 and then down to mailings and Communications 51 000 a year so this portion of the budget the board knows that as we work to manage our budget every year one of the things that we do is we do put a cap on expenditures that we begin the Year this year we started with a cap of 30 of these expenditures that the the schools could use or the Departments could use but we didn't want them to spend any more than 30 percent this is the only buffer we

022have to make sure that we meet our budget boards obligated to meet its budget every year you can come under but you can't go over so this is the group of accounts that we use to manage our budget and as of as we go as we progress through the budget year we increase the expenditure cap so right now we're at 50 percent which is in line we're at about 50 percent of the budget year completed so these expenditures are taking place up to this fifty percent cap as we go into April and May that cap keeps getting raised so that we make sure that we haven't had any budget surprises that would force us to cut expenditures we manage our budget you know through these line items and they're important line items obviously textbooks and

023supplies computer Capital Equipment new and replacement equipment staff training all things that we do but we just control our budget through these lines so um I appreciate your bringing that up because it is a question I've had um and I know it's gotten to you um so thanks for because I think the public probably wants to know okay so you can hold back 30 or cap at 30 percent then why not why not keep it at 30 through the year and I get it I I get what you just said but what happens if we um if the budget if we have to keep it at 30 at 30 or 40 or 50 as opposed to the total allocation what what um you know we we hit a budget crisis we just live with what

024we've got or what do you do you move funds around what do you what we would do is what anyone would do you know managing a budget whether it's a household budget or in this case a school budget we would prioritize what we have to have versus the things we can wait on until the next budget year if things got very severe we've been since I've been here which is 13 years actually on Thursday night we've never had we've certainly had some budget surprises but not that we had a limited expenditures you know to more than a 20 hold back so we've always been able to expend 80 percent of our budget since I've been here if we have a real crisis and we had a hold at 50 right now the people in this

025room working with the superintendent and myself would make decisions on on what we can push off and what we have to have right now so you know if we had to put off the purchase of certain textbooks we would do that if we had to put off certain staff training we would do that uh we're fortunate this year we have some some grant funding through our besser so we're talking this budget year not next year so this budget year we know we have 449 000 left in our professor at the end of the year so we might be able to use some of the grant funding if we you know to kind of address your question if we don't spend this money there is an impact to the student and it's just a question of

026how big is the impact so we we think we budget these um line items pretty carefully to have what we need but not have more than we need but there'd be a trade-off decision that would have to be made and it'd be a collective decision as my point does that help thanks okay well good on this section okay so now we're going to dig just a little bit deeper um now instead of looking at the whole budget we're looking at how is the 5.2 million dollar request being allocated and of the 5.2 million 2.67 million is for salaries and so what's in here are not only wage increases for existing staff based on their bargaining unit agreement but also what's being carried here are those staff editions that we spoke about before elementary teachers the

027special education teacher at Highland 1.4 bcba the school nurse Etc so this increase is 5.33 percent total this year of the 52 million dollar line item or 2.67 million benefits is 31 of the 5.2 million and benefits is a 10.63 increase or 1.587 million maintenance and operations at the 12.82 percent increase being requested and that represents about 10 percent of the 5.2 million and then you could see Support Services that's a 4.61 percent increase and instructional expense is 2.37 we'll we'll go through the detail of each of these line items but that's just a view of how are we allocating the 5.2 million dollars being requested so with that we're going to move into salaries and there's a question proposed both General and special education are any other state or federal funding or is it

028all just no this is operating this is all operating budget you know if it and you know there if you look at the 1.4 bcba as an example um there we had to move one of the bcbas from the grant into the operating budget believe it or not that had to do with our Medicaid ability to collect Medicaid Revenue which we do have to claim and submit for but net net those positions are being added into the operating budget they are incremental to the budget and it's exclusive of anything in the grant okay so with respect to salaries I'm going to go through just a couple of details first and the the first piece of this if you just focus on 23 24 which is the budget Year we're working on you'll see that there

029are Union contract wage increases for the para educators uh the teachers and the administrative Personnel you could see 2.7 2.79 2.65 the reason we we have TBD for the secretaries and the facilities group is those contracts expire June 30th of 23. and so we don't know what the new contract wage increases will be that we need for the budget so we assumed a three percent in our budget for those those to bargaining unit groups but wages that are built into the budget are based on the bargaining unit agreements and just some other information here the administrator's contract that was negotiated in 2020 that does expire at the end of next year June 30th of 24 teaches contract expires June 30th of 25 as does the para educator agreement which we just negotiated and went into

030effect July 1 of this year so wages are governed or wage increases are governed by the bargaining unit agreements so we're looking at certified salaries first certified salaries are for these groups teachers administrators we include substitutes as part of this overall budget account Student Activities homebound tutors and adult education the total number of certified employees that are budgeted in this group you'll see in red is about 421.9 that's full-time equivalents and you could see on a relative basis the teacher is no surprise are the largest dollars because they're the largest group followed by the administrators about 8.6 percent and then substitute Student Activities homebound tutors are relatively small so that's how the certified salaries are budgeted certified salaries represent about 48.4 percent of our total budget and then if we look at this from a

031line by line point of view there's just a couple of things I want to point out on this particular slide um for the teachers in particular that's a 5.1 seven percent increase so the actual wage increase is 2.79 for the teachers group the reason this is 5.17 percent is because of the new positions that are being added and they're listed in purple there um the other thing that I did want to um mention here is substitutes we are looking to increase that by 55 000 that's an eight and a half percent increase but the substitute line we're really careful with how we budget that line because what happens is when we have vacancies in a certified and uncertified groups power Educators our wage costs go down but our substitute costs go up so that's why

032you'll see like in in 2122 we had one point almost one point um to 1.126 million in substitutes versus a budget that's been around 650 000 that budget is a little too low that's why we're looking to increase it but I just wanted to point out that substitutes are offset by some of the vacancies that we do experience during the school year any questions on this okay so certified salaries kind of um this slide and you'll see this for each budget section as we go through certified salaries as a as a percentage of budget you know have decreased from 53 percent back in 0.405 to about 48.4 percent and that's because a couple of things are happening one is that we have been experiencing quite a bit of retirements which has brought out teacher salary

033costs down over the last three years and part of it is because other budget categories like medical benefits are taking up a bigger portion of the overall budget okay Thon certified salaries I'll run through this so the largest group of non-certified is our para Educators our non-certified salaries represent about 13 of our total budget the para educators uh secretarial and clerical maintenance employees and support Personnel those are by far the largest four groups of non-certified employees and then you'll see that in the small sections we have school nurses the Board of Ed has its own bus drivers and we have a small Fleet we do that because it is very cost effective it would cost us more if we Outsource um the services that these bus drivers provide is cheaper than if we Outsource the

034todaco and then managers and supervisors is a small group it's basically the the managers and supervisors that work in School District Operations they're not certified and so we budget them separately if we look at the line item increases for each of these you can see our para Educators that's about a nine percent increase it's a three hundred thousand dollar change from this year's budget most of that is well it's two things that are happening there one the para educator group um they were below the minimum wage and in the last contract which we just negotiated that took effect this year we had to make sure that we got them up to minimum wage as the board knows the minimum wage in Connecticut went from ten dollars it's going to be 15 as of June 1st

035of this year and that happened over a four year period of time so we had to move those wages up accordingly so that and the other part of what happened is what I said earlier we added para Educators this year that were unbudgeted that were carrying into next year based on student needs so that's what's driving you know that increase which is the largest dollar increase and then Support Services that's 11.7 increase the the two people that are driving most of that are the two the 1.4 bcbas that we added they are not certified they fall in that support line so that explains why those two are as high as they are and then lastly drivers increase 5.08 percent again we have to keep them current with the minimum wage requirements what I show here

036is just a about a seven year view of what's happened to non-certified salaries you know para Educators you know had the highest growth rate about 8.1 percent it's that same combination I just said a requirement to meet minimum wage plus an increase in the number of paraeducators to service our students and that's followed by um our secretaries which you know that's driven we did have an increase in the staff on on the secretary line and we're our drivers our drivers up incrementally but that's a relatively small percentage of the budget and so that's snapshot of non-certified salaries you could see that it's relatively flat even though we dipped you know back in 1213 you know the certified salaries are around 13 of our budget excuse me non-certified salaries we're good I don't see any questions

037so I'll keep moving employee benefits I know everybody's really looking forward to this this portion of the presentation so employee benefits has several different account line items Medical Dental which we'll talk about a pension plan which we'll talk about social security workers comp life and disability those categories are not changing much so we won't be spending any significant time on those total benefits are about 19.2 percent of of our budget again most of that being Medical Dental but also pension these are the changes in line item you'll see that the medical benefits requested increase is 1.5 million dollars that's about a 12.7 increase over the current year um there is a little bit of good news in here but we'll wait till we get to that slide um in terms of our medical benefit plans

038nothing's changed from the last couple of budget year we offer several different plans HSA HMO PPO most of our employees are in the HSA we also offer a Bare Bones plan that meets the requirements called elements choice we do have some employees that participate in that and the dental plan just a couple of things that um I want to touch on on this slide one is that you know a total cost of medical benefits is is not just borne by the Board of Ed our employees through payroll deduction and their co-share they're paying for almost two million dollars of the total cost of medical benefits and that's again governed by the employee bargaining unit agreements but about 12 and a half percent of our total medical benefits cost is paid by our employees through their

039co-share contributions um we did hit a high of about almost 79 in our HSA we continue to grow the HSA as the plan of choice and then we have been focusing on our Wellness initiatives we did make some changes to one of our bargaining unit agreements this past year which I'll talk about briefly but also Health College health fairs and more you know we we know that health and wellness are an important contributor early detection in particular on the wellness side is something that we are always going after so we've made some significant strides this year I won't spend a lot of time this is in the copy of the presentation but we did have our second annual health and wellness fair this past November as well attended we had 135 employees we had 47

040employees who completed their biometric screenings we had quests there the Biometrics screenings included height weight blood pressure sugar and cholesterol testing so again early detection can save significant claim dollars not to mention improve the health you know and the extend the life of our employees which is something that we'd like to see so these are investments that we make however most of what I'm sharing with you on the health and wellness side that paid for through cigna's Wellness dollars they provide about eighty thousand dollars per year for us and the town combined because we are the bigger of the two employers most of those funds do come to us but we do a lot of joint programs with the town so that we take advantage of those dollars we announced earlier this year a road

041map to Wellness challenge which includes a number of components including meeting with the health coach that Cigna pays for and is here three days a week as well as you know working through and participating in different programs that we have through wellbeads which is an online fitness program and taking advantage of deer Oaks which is our employee assistance provider so this the goal of this was to try and get employees involved in all the different aspects of Health and Wellness that we offer so that they become familiar with it um and then these are the things that are coming in the next few months you know we are doing yoga partnership with the local Studio two times a week free to the employee paid for by Wellness dollars from Cigna this one is important Hartford

042Healthcare has a take the time mobile mammography bus basically and the person that does our health and wellness Addie Figueroa some of the board members know her she did a presentation on Student Activity funding did a survey to find out how many employees would be interested if we were able to get this mobile mobile mammography unit deployed here in Cheshire and surprisingly she had a lot of interest this can only accommodate 11 people per day and we had a response that's equal to four times that so that was surprising to me because we would think that mammography screenings are you know part of you know what every woman does routinely but we've got a lot of employees that are going to take advantage of this because they haven't done it recently so we're excited about

043that and hope it goes well and then we're moving to a new virtual Fitness platform in April apparently this is a big deal because it features Jillian Michaels does anybody who know who that is okay so I see some head shaking but I didn't know but now I do know so we'll be rolling that out to our employees again the idea is to do everything that we can to help them stay healthier and get some early detection um this just summarizes each of the employee groups and how they participate but I did want to point out that the new contract with the para Educators they have a wellness incentive that if they complete three of the screenings required they get a one percent reduction in the cost of health benefits their co-shares this year and

044it goes up to two percent next year so we'd like to incorporate that into all our bargaining unit agreements going forward again try and improve Everybody's Health Wellness early detection um as I said almost 79 of our employees are in an HSA this is the breakdown by unit and this number is always important the number of retirees and our plans continues to decrease the 60. most of those are employees that are not Medicare eligible so they have to stay on our plan by state law and then we'll start moving into specifically medical costs this is just a summary from aeon which is a a large company that provides information on a number of different Human Resources fronts including medical cost Trends and this might be a little bit hard to read but um you know

045the global inflation rate for medical costs is about 9.2 percent fortunately in the United States it's a little bit lower than that it's about 6.6 percent expected for 2023 it's 6.6 percent in 2022. so I use that as a baseline for the next slide which is this is the last 10 years of medical cost Trends in the United States it averages about 6.3 percent and then if you take that six and a half percent if the Cheshire Public Schools had been following that trend we would have needed or we would have been spending about 16.9 million for claims so the good news there is that we've been beating the trend although not for the last four years or so unfortunately but had we've been just meeting the trend we would need a much higher medical

046benefits budget this is our our gross claims change year over year and you could see that we had some years where they improved which is shown in green and some years where they have worsened which showed up in red and so I'm just going to keep moving on because I think you got the point where we've been beating the overall inflation rate for medical costs except in the last several years if you look at what we've been contributing every month for the last several years going back to 2012. you could see that our average monthly contribution Grew From 554 000 uh to 2122 where it was 961 000 a month so we needed to raise that over the years because of our claims have been increasing these have been the average monthly claims over that

047same period of time so you could if you just do some simple math if I take those contributions um and I take our claims you could see if it's a negative we had more claims than we had contributions okay so you could see these last four years were pretty expensive part of what's in this monthly contribution and I know this is a refresher but I'm going to go through it anyway some of these contributions were lower than we expected claims to be because we had a healthy Reserve so during this period of time we were not funding to meet our claims we did change that in 2122 right that's the first year that we were really running low on reserves that we fully funded based on expected claims so now if I take on top

048of if I take these claims and then I factor in well there are there is revenue that we receive against our claims stop loss if there's a medical claim over 175 000 that gets paid in plus we get prescription rebates through Cigna um and then we have other adjustments including interest on some of the funds that we have in the in the reserve so now if I take that you'll see that the picture changes slightly so you know in these one two three four years the net annual increase in our reserves you could see was as high as 1.5 million and over on the far right this shows the ending Reserve balance so here's the good news that I have for you tonight the last the prior three years going into 2122 we continued to

049deplete our Reserve fund but last year 2122 where we funded properly to meet our claims we actually increased the reserve from 924 000 for 2122 the reserve went up by 410 000 to a million 335. and so the current budget Year we're in 22-23 we did the same thing we built a budget to meet expected claims so I'm going to take you through where we are right now and I don't want anyone to panic but I'm going to explain why we're not at budget right now all right but before I leave this slide this last year 2122 was good and we we did meet um a budgeted meet our expected claims then can you explain so but we've got we got a 1.5 billion dollar contribution from the town yes and I include if you

050look at the 961 I added that 1.5 million as part of the monthly contribution so that 961 000 includes the 1.5 million dollar Edition this 961 000 that I show is the average monthly yeah that includes the 1.5 million dollars from the town so I when we budgeted it we budgeted to include that 1.5 million even though it was paid in as one lump sum I broke it out to okay what our monthly contribution was okay and then um one of the questions so we depleted the stop losses or a lot of years it's like three years over a million dollars our our staff I mean that's that's because the claims exceeded by significant claims over 175 000. so and just to give you some round numbers our stop-loss insurance is a million dollars a

051year roughly it's going to be a little bit higher than that next year because we've had claims that are in some years exceeded our stop loss payments we've got more than we've paid in and it doesn't work well that way we have to pay based on expected claims so the last couple of years we've paid a million a year for stop loss and got you know payments in the neighborhood of eight hundred thousand dollars so that's headed into this column here okay okay thanks so my question is are our staff sicker or is are our charges yeah so that's a good question and I'm gonna kind of give you some perspective on that in the next few slides so this is showing for the four years ninth 2019 through 2022. this is showing claims not

052for the full year just till July to December and it's claims over twenty five thousand dollars which has been the driver of why our claims experience has gotten worse over the last few years significantly so if you look in 2019 we had 25 claims that were over twenty five thousand dollars from July through December that's six months of the claim here and I used July to December because it gives me an opportunity to explain where we are this year and you could see that it increased to 45 claims dropped a little to 43 claims in 21 and this July to December we're at 51 claims over 25 000. so it's increased by about a hundred percent over those those four years if you look at the dollars of those claims we went from 1.4 million

053in 2019 to 3.51 million this delighted December so it's up 143 so well what's happening and the answer is people are getting sicker or have significant illness so now I take that information and I break it down and I'm sure you remember this from last year but this is July to December of 2019 where we had 25 claims over 25 000 they totaled 1.4 million the average claim was 57 000 and then the breakdown for 2019 we had seven cancer claims totaling 584 thousand we had five claims that were related to Bone and Joint totaling 232 000 but clearly cancer was was the largest at 584 000. if I look at the same oh and I do want to point out that we had no stop loss reimbursement expected in 2019. now I'm going to

054take that same data for this year today July to December and the picture is um pretty Stark and dramatic so we had 51 claims instead of 25. nine claims were for cancer there were seven in 2019 the dollar amount though is a million 28 000 so the average claim is a lot higher at about a hundred fourteen thousand and most of this is related to treatment immunotherapy or chemotherapy you know plus any other diagnostic costs related to someone who's being treated for cancer the one that's that really um jumps off the page which is different is this one here heart arterial blood um and and stroke unfortunately that increased to 896 000 we had 11 claims for that in this year if I flip back we had only four claims totaling 236 000 four years

055ago so I can't tell you why that's happened but it's happened and even Tom who's here with us to talk a little bit about some of his anecdotal experience with his other clients um it's some I don't know if there's anything more to that more to it than that you know I don't think our you know the age distribution the population is different than any other District that hasn't changed dramatically for us either but it does seem to be that we do have employees that have more severe illness now certainly the cost related to treating illness you know over not only the last four years but you know the last decade or so you know there are improved treatments there are improved drugs they're also more expensive that's part of what the factor is here

056but you know it has been clearly from a claims perspective it has been a difficult four years for us keep moving yes never mind you're going to cover my dislike so just to review just remember that we the budget that we have for medical benefits we contribute every month into this medical benefits Reserve fund and then we pay claims out of that medical benefits Reserve so we like to have a Reserve balance so that we never run out of funding to pay our claims you know what we put in is controllable claims are uncontrollable you know we do our best you know working with with Tom and Cigna to estimate what claims will be but it's not foolproof so you know the rule of thumb is the healthy Reserve covers two to three months worth

057of claims and you could see you know back in 2018 we had um five months worth of claims with a four million dollar Reserve but that's dropped and our recent balance is 884 000 as of December 31st and I did provide the updated December medical benefits report you know the good news is that it was actually lower in November we were down about 700 000 but you know we had a we didn't have a a significant reduction in claims was about 1.1 million dollars in December but we did have stop loss that kicked in so we have about 234 000 of stop loss plus we received additional prescription rebates so that actually helped us increase the Reserve balance when we hit January through April we should see how claims go down because we start the

058new HSA plan year so hopefully we start building that Reserve balance back up we in theory should end with about 1.3 million in our Reserve because we budgeted claims or contributions to equal expected claims so right now we're running behind but as we go through the next few months you know we hope and we always keep our fingers crossed when it comes to claims that those claims will drop so that the money that we put in every month which is a million dollars will start to buoy The Reserve balance back up um this is just a kind of a graph showing what I just explained you know ideally we would have a Reserve balance of 2 million I will add that the budget that we're requesting is not intended to build up our reserves it's

059just to try and keep claims and contributions equal so we don't deteriorate our Reserve balance and if there's any well there's another piece of good news 800 000 is far from the low we got down to 205 000 when one month so kind of feel good about that well four times higher all right so how do we get to this 13 .325 million that we budget and we do budget and that here in in Cheshire so if you look at what we need for claims next year it's 13.2 million that's our expected claims so we're expecting claims you know based on the information we received from Tom at USI we expect claims to go up about 10 percent next year so that's why we need 13.2 million we're going to pay about 1.4 million for

060stop loss premiums to protect us from any large claims over 175 thousand employees do receive an HSA contribution from the board that 711 000 we pay Cigna administrative fees we're budgeting 300 000 for that we do have employees that are grandfathered that if they waive medical insurance with us they receive a payment of a thousand to twelve hundred dollars per year based on their bargaining unit agreement and then I mentioned that Cigna gives us about eighty thousand dollars per year for wellness money but we do pay for the employee assistance program which they don't fund and that's what that eighty three hundred dollars represents so if you take the total of all these expenditures that we're budgeting it's 15.79 million that's before we subtract for the 1.9 million that our employees paid through their co-share

061contribution and we are expecting or budgeting stop-loss reimbursement of 500 000 against that 1.4 million in premiums so that's how we got to the 13 million dollars given our our total cost is higher than that it is offset by those two items well how do we get this number we got it from the rolling 12-month average which we which Tom provides for us um and I'm going to introduce Tom here in a second he's going to go through just some information that I think will be helpful to look at the last two years so this sheet I know it's hard to read but this is the sheet that we received from Tom you know every year this is the renewal this is the projected renewal based on 12 months rolling claims and then adjusted as

062needed for the realities of what's happening in the medical world these days but this is as of October we will continue to get updates as we move through the budget cycle you know as a board the budget cycle ends in February but we'll continue to get updates up until the Town Council approves its budget in April so this number can go up or down I don't want to predict but we're budgeting based on what we believe will be our expected claims based on October and with that I do want to introduce Tom Tom if you you know stand here the mic gets picked up for the public and Tom is going to walk through a worksheet that I provided to all the board members it's on it's a legal piece of paper and and with

063that Tom thanks for being here and thank you yeah so I got one of them thank you everyone um so I'm gonna run through some of these slides tonight and again if you have any questions at all just stop me and ask me um I think Vin did a great job of summarizing a lot of the stuff I mean we meet many times throughout the year and talk about stuff and he's absolutely right the past few years it's not just in Cheshire we have seen whether it's covid whether it's different things that have been happening definitely seen especially in the municipal world the claims have kind of gone up and been pointed out a definitely a couple areas like heart stroke areas like that I mean the cancer the cancer areas have always been high

064but some of the area of those other areas are those things that were preventable and that people weren't seeking treatment for and stuff again that's not that's not something we can pinpoint right now but those would definitely jumped up the other one that he before I get into my slides that you know I wanted to when he pointed out was uh the mental health unfortunately we are seeing a large increase in that in all groups not just in the miscible side but on all of my groups commercial you're seeing a lot of the mental health substance abuse really where it might have not been top five before it's moving up there and everybody knows why and so it's causing a concern and it is increasing over time because people are seeking treatment for it um

065so again this might be a little hard to to see but what we try to do every year is just compare fiscal years so this is showing fiscal year 2021 versus 21 22 and we're just showing employees stayed relatively the same 712 to 7 or 11 and I apologize when we run these it is the town and Board of Ed so it's a little combined but obviously the Board of Ed makes up 80 percent of the total population at least members you'll see that so when you go to the Cross summary the gross claims and again when you're looking at this this doesn't take into account loss premium admin fees anything like that so when you're like well why is this combining with the town this is just claims for this time period so again

066we look at this um you know we're looking at total net claims it looks like they're going down Pharmacy looks like it's going up slightly and when you look at it it's a net going down but again to this point when we look at it year over year in the past when we have had the healthier reserves and everything when we're doing the projections and looking at it this is the decision that can be made and said hey based on where the reserves are and everything instead of budgeting you know 10 we're going to budget a little lower so again this number this number can look a little deceiving from the fact that year over year hey our claims are going down why do we have to budget increase again it can just be it

067can be a little deceiving uh when we look at this the average Risk Index again this is this is actually pretty good we met with the town and Board of Ed at the beginning November when we reviewed this again we've seen claims have been jumping up but actually what we have seen is that the risk that has come off your plan versus the risk that is coming on your plan is a positive so again we're not going to see that right away we're not going to see these in in the next maybe a couple months but again based on maybe retirement people terminating leaving new hires what we're seeing is when you look at age sex the risk all the different risk factors we're seeing the risk that is coming on to the plan is

068again actually a better risk so any questions so far so again we just go through there we just look at the medical per employee per month is about per uh is basically flat the pharmacy again up about 5.8 percent which would make sense um everybody knows I mean there's the Vin's point is was perfect again as far as Trend and everything goes when you talk about treating conditions and everything really when you talk about medical trend is it's the cost of everything's going up so the cost to treat somebody for a certain condition the prescription that can control or cure a certain condition costs money and that's really what's going into the trend and everything um on this page we're just looking at kind of different things like your inpatient days per thousand eight outpatient

069days so the ones in red are where things really jumped up so again when you look year over year the one that really does jump up as a skilled nursing where you know it's a 68 increase that again can be associated with the uh on the slide where we showed The Strokes the heart conditions things like that obviously if somebody has a condition like that a lot of times after that there's a skilled nursing or a rehab that's associated with it so that is something that's jumping up emergency room again that's something we have seen people are you know worried about they feel something instead of going to urgent care whatever they go into emergency room they want to make sure they're getting their treatment so we get it um but again there there's education

070and stuff that can be involved there because a lot of times these days everybody knows there's a I think there's an urgent care right here now right you know there's the urgent cares and stuff so if it's truly not an emergency that is an education process that hey maybe it's maybe it's urgent care do you wanna you wanna jump in here with me on this or just yeah a little bit about how you calculate your you know the expected claims year over year I know that we talk about rolling yeah how you guys do it yep so it's it's not just suicides everybody so the way when you're looking at how to develop your self-funded so obviously 90 of what you pay into your Medical Reserve that pays out everything ninety percent of it is

071claims so when we look at it every year and we start the budget process what anybody does is you have to take the most recent 12 months of claims and that's it so you take the most recent 12 months of claims you take into account large claims you have to add in Trend then show you the slide talking about National Trend I believe Cigna all the National Carriers they're still using in the eight and a half to nine percent medical Trend when you talk about that so again you know for the request of in the 12 12 and a half percent range is above what medical trend is yes but again to to Vin's Point what happens is we have to start looking at this in November the farther out you're from July even though

072we're saying nine to ten percent annual Trend the more you have to add into that number because the farther out you are so the closer you get the closer you get to July 1st the more you can reduce that number so again as we can look at updated claims basically if you run exactly the same the next couple months that's a point that can drop off every month just Trend so even if claims don't run better if you just run the same as you've been running your Trend number lowers because you're getting closer to July 1st so if your Trend number lowers then the projections can lower now again that can go the other way obviously Claims can go up and we can see things again we have seen in the past two to three

073years we have seen a jump in some of the larger claims we have seen higher utilization and you know we've been pinpointalized things um again they're the Wellness Plan has been put in place to get people to get their early screenings I mean the the mammogram is a perfect example you know and we've and we have looked at this when we sit down and we look at what the specific cancers are we do look at where these cancers that could have been caught by an early screening you know um Again The Strokes and heart conditions were those things where if people had been doing certain screenings and everything could it those those are the kinds of things that we do want to catch and to stop but again the past two three years you've definitely

074seen it not just here everywhere that people maybe have stopped doing some of the things that they were doing um going to see their doctors on a regular basis and you know you're starting to see some of it unfortunately probably catch up um you know can we 100 say that's what it is no but I would say you know if you look group to group that it's pretty consistent um you know the only thing I would say that was a little different with Cheshire that I saw on the trend is that again Ben did a great job pointed out that you've had some larger claims over the years and obviously during covid if you had a serious condition you still weren't going to stop going to the doctor and everything so whereas I saw a

075lot of groups go like this Cheshire kind of stayed like this because they had some of the large claimants and stuff that were still seeking their treatment and everything and then obviously after some of the restrictions with covet and everything then you start you know the people that didn't get their knee Replacements hip replacements you know surgeries that they needed on top of the large claims you started seeing this so as groups where again I'm seeing it where I'm seeing a spike for things that weren't done with Cheshire yet again some of the large claimants plus some of the spikes and services that people put off because of covid yes sir um for the uh the claims that increase for uh for cardiac stroke yeah did you find that there was a uh a change

076in age profile were they younger or were they it was it more of that you were saying that um uh conditions were perhaps put off for whatever reason might not be able to access Healthcare the pandemic lockdown this is sort of a backlog of that or a uh no we saw we saw your your age Factor that's until last I guess like I said until we reviewed it recently we did see your a tractor was pretty was pretty steady and everything so I'm not sure when I again that's what I'm saying we're not seeing anything just now when I say your risk profile started to improve I mean literally it's probably the last six to eight months where we see maybe like you said your age sex factor maybe if it was average of 45

077that we've seen it go down now so that no I wouldn't I wouldn't say that was necessarily I would I would look at that that unfortunately that might have been some of those conditions where listen a couple of them when we look at them we're definitely just unfortunate probably circumstances but do I truly when I look at the stats and stuff think there's some people in there that weren't treating certain conditions that maybe could have been caught early yeah I think it's a combination is that sorry is it answer your question I believe so okay can I can you um I don't want to perpetuate this but could you just um explain some of these acronyms like pepm um um p.m P.M so p e p m is per employee per month okay so per

078employee per month would be yeah if you have 600 people that work at the board of ed on the insurance per employee per month they might have children and fan and uh spouses on the plan they it could be 1200 so it's not belly buttons that's just employees so that's if they're single two-person or family per employee per month if per member per month so that would be belly buttons that would be the dependence and the spouses okay um just personal um a couple years back my husband gets near poison ivy he eat balloons and so I'm a good student and I say go to the walk-in clinic because it's going to be cheaper than the emergency room and um we got the bill and he was charged in emergency room right and I called

079him and I said why did you do this he went to a walk-in and they said well it's now affiliated with Mid-State so you're going to get charged an emergency room right so if they're doing that what difference does it make how much you educate it so it's a that's a good point you make and unfortunately there are some of the health systems that will do it but then a lot of times there are non-affiliated urgent cares too so I guess I live in I live in I live in Woodbridge so I'll just use an example in Orange there's Stoney Creek Urgent Care and um they're not necessarily associated with they might have a loose affiliation with Yale in them but they might be a little different but again you're totally right next to town

080hall there's Hartford is that an urgent care right there now Hartford Healthcare and so they are you're right they're affiliated with the hospital are they going to charge an emergency room rate if your husband goes in because he needs an EpiPen because he's blown up because of poison ivy yeah but there are some urgent care centers that don't aren't necessarily associated with the hospitals they might have a loose affiliation but again it's all about education and especially people with HSA again an emergency situation your husband has to go he's going to go you know what I mean is it going to and somebody feels like they're having a heart attack they're going to go um I mean listen my son broke both his wrists last year my wife called me and they were going to

081put him in I said no we're taking them to we're taking them to Earth and Urgent Care at Orthopedic Urgent Care because I knew he was it wasn't that bad and we did we took him there and it was it was different so it's everybody's situation is different you don't have time to check obviously when it's an emergency situation but there are different prices for different urgent cares and people can look it up online but again you're not going to look it up in an emergency situation but unfortunately to your point some of these hospitals are building these urgent care centers and you don't know until you get the bill exactly so that came up in the periodic meeting with Cigna that very issue that um you know we kind of have to count on

082our employees who are in the HSA to tell us when that's happening it happened to me during covid my wife went to get tested this was before the home kit and she just got swapped got a I happened to notice that the bill was for basically a doctor visit plus a swabbing and you know certainly I followed up through our benefits person and yeah they would there was no doctor that was really involved somebody walked in the room and basically you know talked to my wife for a minute there was no diagnosis because it was just a test so you wouldn't know what was going on there was no prescription so I think the the world of Health Care is changing and we're trying to be diligent and we did talk to Cigna about you

083know what are the types of things that we can do you know to to know about these issues and not have to rely on our employees to let us know and I think and I think that's why you obviously you have Cigna or one of the medical carries they are trying to keep up with it and you know address those situations as they happen because they do have I mean they do have I mean Vin's making a perfect point it happened during covet it happened a ton again before home tests I ran into the same situation a bunch of times where I'd have to go get one of my kids tested and uh you know all of a sudden I got a bill for a doctor's office plus a test you know what I mean

084and I had to question it and say what are you doing what are you billing us for you know what I mean and then yeah I just don't know how we're ever going to fix it if we can't get them to cut it out and it this is gonna we're gonna get deeper and deeper and deeper into the hole I bet this is a bunch of talk it's not a problem it's a it's a reality and I do think that we do have a good provider with Cigna you know we do meet with Cigna every still every two weeks we have a service call with the Cigna Representatives both part of that and town staff to talk about any kind of issues that come up so we we have an open forum and a mechanism

085to deal with any type of service issues including issues that individual employees have that you know has nothing to do with cost but it's it's what the billing issues do come up and we do bring that up to your point that's your example of somebody it has come up on the call now how it is somebody went to Urgent Care somebody from the town might bring it up some somebody went to Urgent Care and said they got charged you know some people aren't on the HSA and they still have the emergency room Urgent Care copay so it comes up on the call hey they got charged uh emergency room copay versus the Urgent Care and they went to Urgent Care so we to Vin's point we are addressing it and looking at it but again

086and I always tell people this because I I get phone calls all the time the insurance carrier is going to bill is going to pay based on what the provider bills so again it goes back to a lot of times we had calls on hey this is supposed to be preventive care you know how come I'm getting charged for it because preventive care is covered 100 but all depends on how to provide if the provider bills is preventive it's going through it 100 you know what I mean if they bill you go for your doc your preventive care and you're like hey my shoulder feels a little creaky too and all of a sudden you know you see all those line items 100 100 and then you see that oh 150 I owe 100 because

087you ask the doctor about your shoulder you know what I mean so again that's the insurance company's going to take you know obviously they are they are monitoring everything for again lack of a better term make sure there's no fraud or anything like that but at the same point in time they have these contracts with the doctors and they're going to pay based on what they what is submitted to them you know just actually on that point I wanted to to mention two things that come to mind one is that you know we did a throw a review last year of all our claims internally you know by employee independent to make sure that all the claims that were paid you know through Cigna were for our employees or their covered dependents and that didn't

088reveal any issues and we're working through CT Prime you know we which we are a member of they provide our stop-loss insurance but they provide other it benefits you know to us and the other uh eight towns that participate we are doing a claims audit with Cigna and some of the CT Prime members are with Anthem so that will actually be a you know a statistical review and a detailed review of you know a small group but a statistically valid sample of claims just to make sure that Cigna is paying claims in accordance with our contracts and that that's a good point I would say you know for a little history to that is that you know uh a town and board the size of Cheshire within the past 10 years you didn't audit twice

089of Anthem and now you're doing an audit of Cigna I don't most groups your size and the 7 I don't see them often doing audits which is a good thing but what I'm saying is you again in the past 10 years you've done three this will be your third where you're checking the carrier and you're looking and you know and again we did the first two for you and again to Vince point we didn't we went in we sat there for you sit there for a couple weeks you get all the things you look at everything you look through the claims you match up everything and you know again we found found nothing just like in CT Prime now is doing it on the Cigna side and we're also on our side USI we are

090taking the claims and we are repricing them versus Cigna versus amp to take a look too to see what discounts and everything look like so besides the audit of what you've actually paid to make sure you paid we're also taking a look at too Anthem versus Cigna versus repricing that and it takes a little while we started it about forth right after Thanksgiving somebody that so again we we are we are looking at everything making sure the dollars are going to the proper places and and making sure that everything's being allocated and again I think it's you know when you look at the the information that Ben's put together I can provide you more information it's literally we've seen the past three or four years we've just seen in particular and when I've seen claim

091spike is the large claims particularly on the board of edside seen over the past three or four years of Spike and then what you what you had on top of that for a couple of the years was increased utilization too so sometimes when you have a spike of large claims but utilization stays flat it doesn't necessarily mean a big increase but then when you get the you know what maybe we're looking at now is the increased post covid people you know utilizing plus the large claims you kind of get a jump you kind of get a spike your first details uh it's very insightful and I appreciate the analysis because you know for a few years now Vince has been getting some detail too we're trying to figure out you know um are we just

092unlucky is there it's it's you know unfortunately cancer is cancer you can't predict it right um I'm happy that the employees are getting the treatment they need to get that's you know first and foremost you know big priority but you mentioned earlier uh claims mothers I I worked for a healthcare insurer for a number of years and one of the areas uh used to head up was the analytics side and what what we would do is uh helping a small large I mean employers try to predict potential future member needs at the most rudimentary level you know if you have patient history or a subscriber history and all of a sudden you know you see claims come through in a month where they have an A1C test they never had before or any treatment that

093could be an indicator that there might be more diabetes related treatment and they would do an Outreach to get folks to do wellness and screenings and health literature is USI doing any of that is doing any of that because there's two parts of that sure one is one one is you're absolutely right Cigna is doing that USI doesn't get that so I don't I don't see if somebody's not getting there UNC so Cigna is supposed to outreach and we have these meetings all the time and they will provide statistics the statistics hey we reached out to 100 people only 10 picked up the phone call where USI does come in from what you're talking about and we didn't put it in these slides and I can provide it to then he's had it and you

094can is that we do have a model for the large claimants so to your point and when we met November we said that we take we are my we can we get all your data fed into our system and then to your point we can go through we call it Model people call it but it feeds all the claims in and it can to your point it might have somebody that's got only a thousand dollars in claims but because of the diagnosis code that's associated with that again no names nothing like that just but with that diagnosis code it might say in the next year they expect three hundred thousand dollars in claims for that person now again we can't Outreach that person to your point but so again cigna's doing Outreach they're looking at

095specific things what we're providing is again hey based on the data we see and that's where in one event slides where he took five hundred thousand dollars out for for reimbursements you know for stop loss next year we'll respect that's one of the things we look at because we look at that we take those top diagnosis we say what do we expect for those next year and that's what we look at and that's where we get it and the 500 000 is probably actually a little conservative because that's we we say okay well this claim next year is going to generate 300 this one's going to generate 250. unfortunately this one's not going to be on like so yeah so it's kind of too long answer sorry there's kind of two sides that we look

096at so I I asked because uh I think uh most folks don't realize the analytics that have man scenes to tell managers on this too and um understood because we have some large claims particular you know oncology I suspect that the specialty drugs prescriptions are also way up there too yeah yeah and they we look at that too and then that's part of when we sit down with Cigna that they've done some analysis and you know listen it's something we're going to look at again because again I will say the thing about Cheshire Board of Ed and town that you've always been is we are always looking at everything so again for instance you were one of the first towns and Boards years ago that carved out your Pharmacy so you took it away from

097the carrier and you went direct and had your own Pharmacy contract well we went to Cigna and said hey what can you do they matched the opt-in contract you know we did that but again does that mean we have to keep it with Cigna moving forward no so again it's something you look at and say hey Cigna time for you to get more aggressive on your prescription contract again or we're going to go and find another vendor so that that's always looking at the stop loss again perfect example carved it out we went to direct to a few vendors and then joined a collaborative so you know it's always looking at ways to save money yeah I have one last question on stop loss and maybe I'm just oversimplifying it but if I look at

098the numbers earlier so our stop-loss premiums are budgeting about 1.4 million this coming year for a potential payout of 500 000. as Tom said it's conservative we're paying 1.4 to maybe get 500 yeah here's what I could say again CT Prime Works a little different but what I what I'll say about stop loss in general is they don't look at it like when you're a fully insured plan premium where you pay them 5 million in premium and they pay out four million in claims and we do the calculation and hey that should be a zero percent increase they look at it as what they call pooled product so even though you could be a 5 000 person employer they pull you all together and that's what they look at every year so instead of having

099to give you an 70 like some of those years like Ben said where on the stop loss premium you paid a million and they paid out 2 million in claims and they'd have to give you 100 increase they pool the product so stop loss I always say there's a dirty little word they call leverage Trend that's what the underwriters like to say so even if you run really good so again you pay 1.4 and they only pay out 500 000. well guess what the underwriter is going to make the argument they're gonna say yeah you only paid 500 000 this year but leverage Trend and our actuaries tell us next year is going to be 1.6 you know what I mean so it's stop loss is uh that's why I think you know getting into

100the collaborative it's been pretty steady versus this you know and carving out and doing things but yeah stop losses is always going to be a bit of a roller coaster whether you're carved in or carved out we did last year we did get 800 000 a little over that on the board side and stop loss um payments but I don't want to budget it that way because I'm actually lowering the budget request by taking into consideration the 500 000. yeah stop loss is again it's dicey yeah and it's it is something I agree where listen when you when you again Chester's always been very good about on the town and board side analyzing everything when the pro when the move was made to CT Prime at first at the Time Michael Malone said hey Tom

101can you put something together and I showed like eight years of here's what you paid in premium here's what you paid and here's what you got in reimbursements and was like Hey this makes total sense you know we should do this so again you never you guys have always been very good about looking at the details and the analytics and everything before you make decisions yes sir that um the stop loss calculation is predicting that we are going to be in a work position next year I don't 100 know because again Vin deals with CT Prime more than me I'm I'm just going to say like what I'm getting from the carriers for my other municipalities and stuff again what they look at yes they look at it and they say hey based on our

102pool this is the percentage we need in our pool then we add in Trend just like they would in medical and and yeah exactly and they might say so for my other group so again CT Prime is a little different because you're in there with a bunch of bunch of people that different decisions can be made and everything and again vims on the board so I mean if you want to talk to a little more on that but again on the what I'm talking about is just on my side with my experience with carriers and everything I mean the latest update from CT Prime because we did look at the numbers through I'm not sure we had all of October but CT Prime stop loss pull is running better this year than it was at

103the same time last year so we hope that that continues and if it does continue and we don't you know have a large group of claims then the renewal won't be 15 but you know from a budget point of view that's been our experience you know more years than not we've we've run worse in terms of stop loss what we paid versus what we've received and and that's the advantage of being in a collaborative you know some of the other towns picked up the freight for us so to speak so good all right I'm just going to kind of wrap up this this section so the I think we've made most of these points um I did want to point out this last bullet that this budget increase even though it's it's significant at 1.5

104million it is lower than last year's budget increase last year's budget increase was 2.235 Million because we needed to get the Run rate of contributions to equal claims we did that last year so now this year incrementally we are adding 10 percent expected increase in claims to the budget and then we're adding a little bit more to cover stop loss expected premiums but it is better than last year's budget request and we need to continue to stay on this track where we're at least budgeting to meet expected claims into the future pension is next and it's the last section tonight so are we okay to proceed to pension okay so pension um this year's budget request for our pension is a twenty thousand dollar increase It's relatively small but it is estimated we do not

105have the um numbers from the actuaries yet for the pension plan the finance director for the town Jim jascot does expected by the end of the month but we didn't have it in hand you know at the time we prepared this budget or as of uh this evening but we do fund 1.3 million dollars into the pension or retirement plans for our employees we closed the town of pension plan to new employees in 2012 so all new employees hired after 2012 are in a defined contribution retirement plan which is helpful because it's a lot easier to budget and again when it comes to pension we only provide pension benefits to the non-certified staff teachers administrators our certified staff they pay for their own pension benefits you know directly to the state through their own salary

106deduction so when we talk pension just remember it is not including certified staff and there's no new news here the pension plan contributions have increased over the last you know 10 years plus now because of two factors one there was certainly a downturn in the markets in 2008 2009 which triggered a you know a drop in assets back then but what it also did is it caused the actuaries to look at what pension plans and as in particular were expecting in terms of returns and said you know you can't expect eight and a quarter percent returns into the future you have to expect seven percent excuse me seven and a half percent and then they lowered it to seven percent and by doing that on the pension plan it raised the amount of money we

107needed to fund in order to make sure that the pension plan could meet its obligation to pay its retirees upon their retirement up until the point of you know their demise or their spouses and demise if they're on joint Survivor so that's why you could see that our pension contributions have you know grew quite a bit since the last 10 years um although last year it did go down by 29 000. so you know we're hoping that this year we don't see a significant increase but I will give you one no one caveat here that when I did speak to Jim jascot the actuaries spoke to him about potentially trying to bring the return rate down to 6.75 percent which again would cause us to have to increase the contribution and just um just to

108put a little perspective around it there's 72 employees that are still actively participating in our pension plan so they're working and and they're contributing some and we're contributing the remainder but there's 212 employees in the defined contribution plan so we've got a lot more employees that are that are no longer in the pension plan so at some point that liability does go down but not soon enough for this budget certainly and I put this into the presentation because it has come up as a question in the last couple of years but this is the pension fund portfolio as of September 30th the pension fund for the town Board of Ed is managed by the Cheshire Retirement Board these and their minutes are available online but this was the report that they received from their consultant

109I believe it's called great Consulting um that shows the portfolio value of 77.9 million dollars and this chart just shows what their allocated percentages are it's only about 19 in fixed income so it's fairly um aggressively invested I would say um it's not overwhelmingly and fixed income and equivalence which is a good thing that's how you get the long-term returns but again rough numbers it's about a 78 million dollar pension portfolio that is being managed by the Retirement Board and the returns last year I just happened to notice in the minutes there were turns were down around 15 or so which isn't bad considering where the market was the market was down more than that but let's hope that things get better soon and this year from a return point of view is better but

110you could see this is what's happened to the Dow Jones Industrial Average from 2010 it's gone up which is what we like to see but it doesn't go straight up so Market fluctuations are a reality as a percentage of budget the um you know with this year's budget request employee benefits represent about 19.2 percent of the budget so unlike uh certified salaries which have gone down as a percentage of budget I don't think there's any shock here but the medical and employee benefits as a percentage of budget have increased since 2004 five and so the summary on salary and benefits is here certified non-certified total benefits the requested increase is about 6.55 percent so 4.26 million out of the roughly 5.2 million total budget request is right here in these line items any questions on

111pension uh potential return adjustment now you're saying yeah that could happen between now in may if they do that it wouldn't necessarily be for the next budget year and when they made the change down to seven percent the council elected to phase that in over a period of time you don't have to do it instantly so even if that return assumption is adjusted and I I don't know that it will be but the Town Council will deliberate on it if that is actually the recommendation that's made so I'm I'm more worried about the number changing dramatically but then we do not know and they're waiting on what the exact percentage of the obligation that is actually funded okay and we may not know by the time the board has to pass its budget but we

112will know by the time the council adopts a budget and just like last year I think last year we budgeted uh zero initially but then it actually dropped 29 000 by the time we got to the council so we incorporated that adjustment when we applied the overall net reduction in the budget after the council lowered our budget foreign we're done so we've got one checked off that's tonight's public budget review the next public budget review is next Tuesday there's a board event meeting Thursday um and then the following Thursday January 26th there's the public informational meeting and the board if they I like to can adopt a budget and if not there is a special Board of Education meeting that's uh on the on the calendar for February 2nd and then again the board must

113pass its budget by February 15th so they can as a board the board you can deliberate so then thank you turn it back to you Mr Griffo thank you Mr maciano um that concludes the presentation for this evening um were there any additional questions or thoughts uh before we adjourn no emotion please second all in favor we are adjourned thank you thank you everyone