Board of Education 1-19-21

001okay mr grippo here ms hallen here miss ham here ms harrigan here mr martelly here mr parachini here mr waite mr koram thank you um uh welcome to our first finance committee meeting of the whole um where we will be discussing um the uh uh part one of the budget this evening um so i will just oh excuse me uh let's all stand for the pledge my mistake i pledge allegiance to the flag of the united states of america america and to the republic for which it stands one nation under god indivisible with liberty and justice for all okay so where were we ah yes mr maciana i believe you have a wonderful presentation for us this evening part one of many budget part one of many i do did we need to do a

002roll call or did we do that oh we did that already you did we're all set yes okay well thank you welcome everyone i do have um you know the first of the two workshop session presentations you know ready to queue up and so tonight we're using you know the same technology that dr solon used in his presentation so as i share this you should be able to see the presentation which the board members have a copy of and you should see me in the corner of the presentation the thing is when i'm looking at and doing the presentation i can't see all of you so if there are questions that i don't get to because i don't see you somebody needs to just shout out you know and i'll stop and and we can

003take questions i i will do this in sections so i'll pause in between as the plan and uh you know without further ado let's see if i can get this to work okay do you see the presentation with the two students in front of the bus and me in the corner yes yes we do all right very good well thank you this is the presentation of the 2021-22 superintendents recommended budget and again dr solon showed this wonderful picture of two very happy students in front of norton school earlier this year sheridan and colton this does serve as the budget book cover this year and we're you know thankful to sheridan and colton and their parents for letting us use this image um the presentation uh tonight is again the first of two workshop sessions and

004so here's the agenda for tonight we will go through just a high-level budget overview the budget process which i think is important to explain as well as the assumptions in preparing this budget we'll talk about revenue and just an account summary the specific budget sections we're going to go through are employee salaries both certified and non-certified and employee benefits and our second budget workshop is next tuesday january 26th where we'll be going through the remaining portions of the budget which are instructional expense which includes special education services and so that evening robin ann carey our new director of pupil personnel will be making the special ed presentation we'll also work through the support services maintenance and operations including some discussion around the capital budget which the planning committee um has started working on and then

005we'll conclude uh assuming we get through all those sections on the 26th so to jump right in the budget process you know i'd like to begin with just an overview this this budget process preparation began in september so you know we've we've been at it for quite a long time here within the school district um you know that that process begins with the series of steps um and it involves a lot of different people and i would like to acknowledge you know certainly the staff members at the school district who played a role in getting to this getting to this evening and putting out a budget including greg gibbons who's our supervisor of accounting and fiscal services heather sante who's our operations assistant and all the department managers the school administrators principals and assistant principals

006secretaries there's just a lot of prep work that goes into developing our school budget every year and so as we go through the budget and in particular tonight where we're looking at these two sections i just want to remind the board members and i know this is everybody that's that's on the board now was was with us last year so there's not changes here but when we look at salaries salaries are based on actual staffing from our payroll records and and plus or minus any additions to staff which we'll talk about later we do have two additions to staff this year and then medical benefits which i anticipate is going to be the bulk of this evening's discussion is based on the preliminary projected renewals which we get from usi our insurance broker who works

007with cigna our insurance carrier to provide those projected renewals then kind of talking about some of the other way the budget is put together our administrators and the department managers such as our facilities manager our technology manager human resources manager they input their non-salary line item requests into the budget we also separately ask for all department managers and administrators to provide program new program and staffing requests so those are submitted separately and i'll show you some of those this evening and then we package up the budget details they're reviewed discussed and then when i say discuss meeting with all the department heads and then we work with the school superintendent who you know as he explained in his presentation on the 14th adjust you know the budget to meet the district goals and the fiscal

008realities the superintendent dr sullen presented his recommended budget on january 14th that was last thursday the board of ed's detail review begins tonight the board of ad must be completed so that the budget approved by the board gets submitted to the town manager by february 15th according to our bylaws we usually do it earlier than that and then the town council meets and has to review and approve its budget by april and if the council makes any changes to the board's recommended budget that comes back to the board of ed for line item changes because the council can only make adjustments to the total budget and then finally the board of education after they've made the line item changes would vote and so the budget process wraps up in may after having started in september

009so um you know we're we're certainly you know in kind of in the middle of the sequence but we we certainly do have a lot of work to do over the next few nights um again this is um the the budget is grounded in the district's priorities which continue to be complex thinking and social emotional learning needs for our students and so the budget's been developed you know with that in the back of our minds and so we'll go through some of the um you know these are the most important budget assumptions that i wanted to spend a few minutes focusing on first of all projected enrollment as dr solon explained last week we are expecting enrollment to decline by a total of 18 students next year to 4052. you know that's as reported you

010know by the new england school development council who we use and who we pay as a service provider to provide those enrollment projections for next year if you look though at the places where enrollment is changing in the pre-k through six grades our enrollment is going up by a total of 85 students while seventh and eighth grade decreases by 45 and 9 through 12 decreases by 58 but because pre-k through six does increase by a total of of 85 students projected we did include in this budget the need for two elementary teachers um and in doing so that keeps our class size consistent with you know where you know our educators and our community believes that we should be around 18 students per class in the elementary grade so you could see on the screen

011here that we would go from 17.8 this year to 18.3 so we're going up a little bit by adding those two teachers but you know certainly within a reasonable range for our school district this is important we did not include any covert 19 pandemic related costs in the budget that was presented by the superintendent and that we're going through tonight so what we did and i'll show you it in a minute we did prepare what we're calling a supplemental budget for covert related expenses for next year and that that totals 1.13 million dollars the reason we're presenting it as a contingency is based on a couple of things first of all we can't predict the future so we're not sure what where we'll be with the pandemic next year but what this contingency budget assumes

012you know month by month over the course of the year where are we going to see potential expenditures and it's in the area of ppe and sanitizing and tents and the things that we've encountered expenses for you know in this current year as well as as part of last year and the second reason we're presenting it as a contingency is we don't know if there will be continued federal and state grants to offset the pandemic-related costs of educating our students so the board will need to to weigh in on you know certainly the numbers in that contingency budget and decide you know how to how to transmit it to the town council and because we finish our budget process relatively early will be done by february you know the council by the time they receive

013and review the budget they'll have two additional months of time and they may have some further insight you know from the state and federal authorities if there will be any funding that's coming to offset pandemic-related costs okay so again we've got no cost related to the pandemic in the budget that we presented the the big news this year as the board members are aware is we need to increase the funding to our medical benefits account and i will go through quite a bit of detail on this this evening and answer any questions but we need 1.87 million dollars which represents just about half of the requested budget increase to increase funding for medical benefits accounts also important to know and the board members because you haven't seen the december claims yet you will at the

014thursday night board meeting but our reserve fund for medical benefits has dropped from 2.8 million when we started this year down to 970 000 so the month of december we saw claims of just a little uh more than one million dollars again unfortunately and so the reason that that reserve dropped as much as it as it did is it's twofold you know first because we had a strong reserve fund going into you know this current year we intentionally budgeted a contribution rate that was below the expected claims so we budgeted 725 000 claims are expected to be 800 000 so we would have expected that we would drop about 75 000 per month eating into some of that reserve we started the year with unfortunately instead of our expected claims coming in at 800 000

015they've been coming in at 1.1 million dollars the first six months of the year so you know we've essentially uh used about 1.8 million dollars of our reserves that's how we get to 970 000 so again we'll go through that in some more detail but we'll need a significant increase to fund medical benefit accounts and that's reflected in the budget the next two items are relatively brief the good news is special education enrollment and costs are consistent with 20 20 21 as as we budgeted it so tuition out placement and um pupil services expenditures for consulting and related services for special education student needs are flat to last year and we've only budgeted a modest increase in instructional assistant hours and salaries so that's that's some good news that those costs are expected to be

016flat and then we did have a modest increase in operations and maintenance which we'll go through on the evening of the 26th so those are the assumptions i i wanted to show you this and then we could pause and see if there's any questions so far but this is the supplemental request for covert related expenses for next year and although i'm showing you here quarter by quarter i do have this broken out by month i just rolled it up into the quarters because it's easier to see so you could see on the left side here these are the expense expense categories that we have additional substitutes to cover for teachers and instructional assistants who are who are out you know continuing unemployment claims which are higher than we've seen in previous years due to the

017pandemic bus monitors isolation room monitors you could see the categories here the the typical things that we've been seeing and spending you know funds on throughout the year so all rolled up we're looking at about three hundred thousand dollars per quarter a little bit more as we start the new year you know to bulk and buy up for the needs for the school year and it does drop off so it's one million one thirty three eight hundred is is what we believe to be a good supplemental request uh assuming that the pandemic continues as it is today we don't know that that's going to be the case but that's why we're calling it you know supplemental request and then what we don't know is any cost savings that we would earn for example if we

018have reduced transportation because we're not running field trips again or we don't have as many sports charters and then the second potential offset is any federal and state grant funding that we that we do receive so i will just switch back and stop presenting my screen here for a moment okay um okay so i guess we'll we'll take a few questions um tim go for it are you ready uh yeah sorry i was uh first point what page was that about on where we were because i was following on the screen not on my not in my book uh what page were we on the 1.1 million yeah let's see it's not in the book tim oh no it's not in the book but it's not it's the powerpoint it's the powerpoint that i sent

019earlier oh okay okay we don't have it um yeah so then i guess um with regard to the unemployment i'm just curious have we has the cheshire cps laid anyone off no no but we're we've seen quite a few and we're still getting unemployment claims a lot of that are from substitutes that were eligible unemployment during the early part of the pandemic right so our substitutes were not engaged but they were eligible for unemployment and so i'm assuming that we may continue to see that occur that's why we budgeted it that way okay so there's some sort of like long term or sort of continuing arrangement you say substitute and i always think of like the daily one time the one day substitute that's a per diem did they get unemployment yes they were eligible

020under the uh under the pandemic exceptions that were made for unemployment um and even if people have have reduced ours they can file for and receive unemployment right now okay okay i was um and then uh with regard to uh the birth sort of in relation to next year's kindergarten but also a bigger picture on this i'm just curious do you have the 20 20 birth numbers yet don't have the 20 20 birth numbers i know that um jeff was gonna double check on that but i i don't believe we have them i'm not sure they're they're available yet okay and uh i think this is the last one the bus monitors are we using bus monitors right now no we've stopped at what i did in that covert supplemental budget for next year is

021we just put bus monitors in for the first couple of months of school just to get us through and make sure that you know people uh and students are wearing their masks and we're following whatever guidelines are in place at the time so no it's a contingency i understand it completely i'm just trying to understand if some of these things are actually happening right now right now we have no bus monitors we haven't since um i think the third week in september um and we've reduced the number of isolation room monitors you know down from seven to three and we may reduce that um we may eliminate that altogether actually at the end of this month because we're just not seeing the the demand parents when they get a report that you know their child

022may be sick at school have been very prompt in coming to pick up their students and the goal with the isolation room monitors was that they would need to stay with any children until the parents could come and pick them up so yeah i mean things are working pretty smoothly right now okay all right thank you okay kathryn go ahead okay i only had one question um the continuation of furniture and equipment storage goes up from eighteen nine in the first three quarters to forty four six what yeah what's going on there so the we're budgeting 6300 a month for storage but we're assuming when we hit next june we have to take all the furniture out of storage and have the mover put it back into the school okay all right great question but

023of course that's the answer okay thank you faith go ahead um thanks tony vin um of our 85 new students coming in um do we know how many our special ed students um do not know that i certainly don't have that information offhand and i'm not sure that we probably could could figure what some of the pre-k's that are in our system now would move into kindergarten but how many total special ed you know i can check but i don't have that you're not worried about a us um you know we have a fabulous special ed program it attracts families who need the services and and so you're saying that special ed costs are pretty much holding consistent with 20 20 20 21. um so you're you're confident even though we have 85 new elementary

024specialist com special ed students 85 new students coming in that it is not going to place we're not going to have so many special ed students that's going to place a burden on or an excess cost on the special program that we're not anticipating do you see what i'm saying i i do and so let me just break it out so if it's a it's a special ed student that you know can be um can receive services within our school district and we do have students that migrate in and then students that graduate out right so there's always a flow right so any students that stay within our classrooms and in our school buildings uh those we don't expect that they will cause any un undo high costs it's students that are moving in that

025are outplaced and those could be a hundred thousand dollars or more so as of right now we're not anticipating you know more than we have and and we have somewhere in the neighborhood of 20 outplay students so we expect that to be flat next year obviously you know we adjust if it goes up or down as we need to during the budget year but for now it it looks like we are going to be flat to this year okay all right and um with regard to the supplemental budget forgive me for asking a really simple question but so this will have to be approved by town council um and we just hold it in reserve i mean it is how is this going to be incorporated as we go along that's a great question so

026i talked to sean kimball at the uh obviously you know sean's out town manager about how to do this and he because the same issue will exist for the town department um so you know although the council hasn't started you know and sean i don't believe has started working on his his budget yet because he's his isn't due until march um sean did talk generally about setting up some type of special revenue fund to accommodate the board of ed and the town potential expenses related to covet so yeah i i don't know exactly how this would be approved ultimately you know by the town council you know i think the the best thing to do would be for the board to to evaluate the recommendations you know i'll certainly have further discussions with jeff and

027the town manager as to how this gets transmitted and potentially incorporated but ultimately it is the town council's decision how this would work you know the the reason that we separated it out is it's a lot easier to keep this separate than folding all these costs into the recommended budget and then having to strip them out you know so again it's an it's a pandemic so we're kind of making yeah making up some some new rules here or at least trying to you know be intelligent about you know how we look at these expenses because it is real it's very uncertain as to what it's going to be next year yeah if i could ask just one more um so just in you maybe you said you're going to spend a lot of time on

028the on the benefits but i mean even if we had proved approved that eight hundred thousand dollars as opposed to the seven twenty 7 30 last year we would have been hammered still i mean we're you know 20 40 or you know 30 whatever um 25 more was going to deplete our fund and is the 1.1 to hear that it came through again in december is that our new normal i you know we were going on five years of data and suddenly we're we're hit with 1.1 per month consistently month after month i i'm worried that there's something happening that that we have to be aware of that that we may never go back to that five-year average well i'll answer it this way the projection we received and i did just get an update

029yesterday from usi uh when we don't need to budget 1.1 million per month next year you know they're showing us a renewal of about 900 000 a month which is where we're budgeting and we we do see this in fact you know in the presentation um you know towards the tail end of this evening i'll show you because i looked back and it's actually in your budget book if we look back to 2004 there's actually a cycle to this you know we go through a few years where we're not increasing out our budget for medical benefits we're not increasing those contributions because we are using the reserve and then we get a really bad claim here like we're not only having this year but the tail end of of last year was was relatively high

030claims as well so you get that bad budget year while you're trying to work down the reserve you've built up and we wind up having a request like we have this year where you know we need a 20 increase so i hope it's not our new normal the rolling 12 month average which is what our broker uses to to determine uh future budget for claims is not showing 1.1 million it's about 900 000 a month so that's where we need to increase our budget to some of this is um you know hoping for the best as always you know and again i know we talked about this the last couple of board of ed meetings these are not you know these are not covert related expenses that we've been incurring it's just one of those

031bad claim years where it's a lot of different things some high claims some high claims that aren't quite at the level of stop-loss reimbursement um and plus what's built into our budget is increased premiums for stop-loss because you'll see that later this evening you know we you know the the insurance companies don't like when they pay you more than you've paid them in premiums so they tend to adjust up the premiums right okay thanks okay vincent quick question done on the supplemental uh chairman gripper that's okay i have a question yes go ahead um so by the time the board of ed has to adopt the budget by february 15th we'll have some guidance um on what if any some type of reserve account would look like for code expenses um and how that would

032operate right you know how to board available to draw from it likewise tom council and is the goal to send over two motions to the town one for an overall operating budget and another one for the supplemental code account i mean that would be my that would be you know my thought i only say that because it's been 10 years i think since we looked at a reserve account to capture uh ticket sales remember that back in yes 2011 and there was all kinds of um hurdles to set that up and you know who has access to it i i don't know it's gonna be that complicated for a covet account or if the town council come back and says you know maybe create a special account in your operating budget just for that line

033item to manage it that way it'd be good to know what that is so we have time to review that and discuss it as a board and agree to it before the 15th so i mean i'll certainly have some more discussion with the town manager about it and then at some point you know i think it is a discussion with the council in advance of us you know or the board approving a budget okay just curious yeah andrew you're up next yeah my question was got it was related to the covet contingency account um just how that was going to work up i think we just talked that through hopefully i just think it's super important to keep that separate and however the town's able to do that especially when it comes to reimbursement um

034for cover-related costs have you heard anything tony from other districts or vinnie rather from other districts about how they're accounting for are we in line with the costs you know oh what the cost themselves across and with how they're documenting and what they're planning for their because i'm sure everybody else is going through budget season now too and it's kind of a wild card yeah the business managers i you know i i talked to they kind of liked what the way we were doing it so but i haven't heard of anybody you know with any other you know way to do it so it is early in budget season so i'm not sure but i'll reach out to the uh to our cosmo list server and see what people are doing for their covert expenses

035for next year and then you mentioned we we hire or we use somebody to that does enrollment projections for the beginning of the school year who was that new england school development council so if you look in the budget book in that enrollment section you'll see that there's um there's their report it's there's a they do a letter of analysis and the enrollment projections and we've been using them for years i know you know as serving on the school modernization committee we hired milan and mcbroom to do you know a more detailed you know school by school enrollment study for the next 10 years so nasdaq does the same thing you know for us every year not as thorough most of nasdaq's work is based on you know birth rates and statistical trends okay is

036that where the 85 students is coming from yes okay but they don't have the birth numbers yet for 2020. no okay because that's that'll be several years out anyway so exactly right so the birth you know the incoming kindergarten is based on birth rates from five years ago good all right thank you you're welcome and i guess the other thing that i should uh mention is and we got this from from my lorna mcbroom part of the reason we're seeing you know 85 new students this year part of the reason is that you know milan and broome determined that we there's two factors one we did have a bit of an increase in birth rates five years ago for those students that would be coming into kindergarten and number two because of their pandemic parents

037held back their kindergarten students last year because they didn't want to send them to school during the pandemic so there's those two factors that are helping to bump up you know to the enrollment projections and that's you know not even mentioning that you know during the pandemic there with more people working at home there's this migration out of the cities into you know suburban communities like ours so you know that might be another factor as well and you had your hand up yeah thank you um then if i could take you back to please the medical benefits reserves so you you mentioned an average monthly 900 000 somewhere around there um but we'll be budgeting for slightly more than that because we need we're building our reserves back up or can you explain that yeah

038i'll i'll explain it and then i'm going to show you the detail you know when we look to that section um i can wait i can wait then yeah well i mean let me give you this quick answer you know the 900 000 does not serve to rebuild our reserve that's not what's being requested here i mean certainly that's something that we can discuss if we wanted to increase the budget request but just hold that thought for now the 900 000 just gets us even claims contributions so we don't dip into reserve or have to do any any other dramatic things next year thank you that answers my question okay um looks like tim you have a question thanks adam uh this is probably a question from marlene uh so the kids who are getting

039held back there's a good chunk a good number of kids who are getting help back out of kindergarten do you have any idea right now do you expect those kids would go in decay some of them would go into first i'm just curious would they all start in kindergarten as far as you're concerned or would tim do you mean the the kids who the parents have held them out this year is that what you mean yeah so it depends on their their age and their abilities we'd be having some conversations about where those kids would be placed okay you haven't had any of those conversations yet i mean first not yet because we're just going to be doing our kindergarten registration in february okay all right thank you sure and um i will ask one

040question before we move on um so the uh enrollment projection of 85 is that um primarily in the kindergarten class or is that spread out amongst several grades and uh and i'm assuming and where would you anticipate you you added uh two teacher positions there where would you anticipate that those teachers would be utilized okay so let me start with with this answer because it's a little bit um it's gonna affect different grades and different schools and and um you know this i am looking at this it's in the certified staffing section of the budget book on page three so chapman there is no change in the number of teachers too little again because of of the way the enrollment projections were doolittle would actually go down by two teachers next year highland would go

041up by two teachers norton would go up by one teacher and darcy which houses the kindergarten for doolittle goes up by one teacher so the net of the pluses and minuses is two additional teachers needed next year so the ones that are going up are highland norton darcy coming down as doolittle and chapman has no change so this is based on the projections obviously as you know parents enrolled as students um and then we moved the students that you know finishing first grade up to second grade second to third vice versa you know we'll you know potentially need to make adjustments like we do every year so um this is not unusual that you know you see projections that cause fluctuations in each of each of the schools and what the ultimate outcome will be

042you know we'll know as we roll into you know probably by may june we'll have a much better idea but the you know certainly based on the number of students coming in and keeping the class sizes to 18 you do need to increase by two in the elementary grades thank you are there any other questions right well uh finn if you wouldn't mind uh moving on to the next section thank you okay i'll be glad to trying to get oh here we go getting there okay right now you should see the covert 19 supplemental request and me up to the right yes yes yeah excellent i love when technology works okay so i'm not going to spend a lot of time um on the next couple of slides but obviously the board members know that

043you know we have a lot of mandates you know it's just a function of you know what we do you know as a school district here in connecticut um some are some are funded by the state some are not funded at all and some are partially funded i did want to just point out the what you're seeing pop up on the screen here so there's there are a couple of things that will impact 21 22. the first is connecticut state uh raising the minimum wage to 15 per hour by june of 2023 so what we accounted for in this budget year 2122 is that the minimum wage went up to 12 per hour on september 1st of this of 2020 and then it's going up to 13 an hour effective august 1 of 21. um

044and where that had direct impact was on the rate that we pay our teacher substitutes and our ia substitutes because even though they are paid a flat rate um that flat rate based on the number of hours they work cannot be below minimum wage so you know we did have to increase the substitute rate of pay as we started this year to account you know essentially for a 13 an hour minimum wage as of august 1st and then you can see here in july the minimum wage goes up to um 14 per hour that's july of 22. and then the last increase 11 months later would get us to 15 per hour 91 20 23. the other you know relatively new requirement is i believe the board members know that we have to do two

045hours of sexual harassment training for all employees um you know this was based on an act that was passed by the state legislator and and took effect in 2019 however it was the start date was pushed out because of the pandemic to february 9th so it's just a couple of weeks away you know we are on track to have our employees trained following you know this this mandate we are doing that through safe schools which is our you know online video based training platform um and then covert 19 has you know increased and added some specific requirements around the pandemic some we talked about already such as bus monitors and isolation room monitors but we've been able to pull back on on some of those expenses you know the requirements for social distancing and um

046intraday cleaning sanitizing and disinfecting all items that you know we're continuing to do this year and as we discussed earlier we anticipate potentially having to do it next year as well so mandates you know are something that are integral to what we do as a school system but i did want to you know point this out as i do to the board members every year ben can i just ask a quick question on that sure um so there are there are two mandates in there i had questions about um firstly was the the written assessment for um for gifted students um is that something that you have to do for every student or is it just a a parent is requesting an assessment how how does that work is that we'll have to defer this

047to tomorrowland or mr or dr sullin because that's beyond my um i believe what that is referring to is an assessment that we do administer to all of our third grade and sixth grade students or at least we we have administered that for years in the district it is one piece of the puzzle in which another piece of data that we have on our our kids and it has been used in the past to help determine eligibility for academically gifted program okay um and then secondly was the um the the um uh do you have this the slide if you could go back uh i'm sorry is it this was it the newer one adam yeah the graduation requirement the bat mastery base based assessment i know that had been discussed in uh curriculum for

048geez well a couple years now i think um and so when does that take effect and i noticed that uh on your uh wish list uh uh i think was on just wishlist was um some sort of coordinator for that uh too i guess to kind of put everything together for that assessment um if there were no coordinator um how do you plan on managing this new uh assessment and is it just for the i'm guessing it does it begin with the senior class this year or is it being phased in it's being phased in um we've been working and with other districts to see how they are doing it as well it's sort of along the lines of our senior project that's happening now we it will be a challenge to get that coordinated

049but we're looking at a number of different options maureen reed and dr gad have been spearheading that as well as working with the ilt team so yes that's something that's not required for this year's senior class but will be coming down the pike okay so um staffing isn't necessarily needed for this budget year but it's more of a plan for perhaps 2022. yes okay thank you so i did want to highlight the revenue which is you know there is a section in our budget book for revenue but i did want to just focus on this for a couple of minutes um so the way we budget revenue and you could see the largest portion of revenue that we budget you know consistent this year with previous years is educational cost sharing this 9.3 million dollars

050which is essentially the funding that the state provides for education here in cheshire just remember that 9.3 million dollars because in the next slide i'll just show you the significance of the amount that we receive in cheshire as a derby district we are among the highest in terms of what we receive special education excess cost whenever we have a student that we need to place out of district and the cost of that student's educational needs exceeds four and a half times our average per pupil expenditure of roughly 75 thousand dollars the state reimburses us for that so we we budget for that expected revenue birth to three is three hundred sixty thousand dollars the birth to three program uh is fully funded by the state actually um so whatever we spend the state reimburses us

051just about dollar for dollar it's it's one of the few programs that the state does fund dollar for dollar special ed excess cost as an example the state has been funding only about 70 percent of their obligation you know certainly for the last you know couple of decades so um that's not the case with birth to three and then you see that there are some you know other smaller revenue items 140 000 is for our preschool smart start program and you'll see that we receive some revenue for adult ed and and we budget revenue for rental fees the important thing that i wanted to say is is two things this 10.3 million dollars we budget that that revenue is budgeted for the town you know we do not receive that directly to offset costs but

052we budget it because we're budgeting the gross amount the town's expected to receive that revenue and this revenue is important because without it as you could see along the bottom of this slide that if you um take the average cheshire taxpayer who has one home and two cars assessed at 223 000 if we didn't receive that revenue based on the school's budget their taxes would be 829 higher per year i won't you know on this slide i just show you how i i calculated that math um so the revenue that we receive is obviously important and the bulk of it comes in the form of educational cost sharing what i was referring to a moment ago is these are all the schools in district reference group b that are similar to cheshire socioeconomically dergby um

053was is determined by the state and you could see here some of the names you know they range from south windsor cheshire farmington avon madison newtown you know greenwich what you see at the top of these bars is this is the average per pupil cost and dr solon you know referred to this in his presentation and i know the board members have seen this before but cheshire's average per pupil cost is seventeen thousand seventy five dollars so you could see being on the left we are on the low end of the per pupil cost because we're very efficient here in cheshire even though we provide an excellent education and and our test scores are reflective of the student achievement we have we do that in a very value-oriented way on top of that what i

054wanted to highlight are these green portions of each of these bars because these essentially what this represents is how much educational cost sharing grants each of these districts receive so you could see that south windsor granby cheshire west hartford which was a is a much bigger district actually you know we have the highest amount of um revenue received from educational cost-sharing grant you'll see some communities like madison greenwich fairfield theirs is near zero you know less than you know um a hundred thousand dollars in in each of those districts so the educational cost-sharing grant that we received from the state is very important to us so even though cheshire ranks fourth lowest on per-pupil expenditures in dirt b if you look at the next chart what this does is it shows if you took the

055per pupil cost and then subtracted from that the per-pupil educational car sharing grant we receive cheshire drops to third lowest so if you do the net you know cheshire's average per pupil cost if you subtract it out the educational cost-sharing monies we receive is about fourteen thousand dollars per student and you could see the middle of the pack here is avon farmington there at seventeen thousand and greenwich is up at twenty three thousand dollars per student again greenwich receiving near zero in terms of educational cost sharing so this definitely helps you know the education services that we provide in cheshire you know we rely on that that revenue from the state and the last point that i'll make is that part of the reason that our educational cost sharing grant is as high as it

056is is because included in our town's population is the prisoner population in in the correctional facility here in town and so you have you know roughly 1500 residents with no income so that brings down the um wealth of the community as determined by the state and that leads to a higher educational car sharing grant for us so that's good news it's the the other good news is that the grant for next year doesn't seem to be changing although the caveat here is you know the state is going to be entering its biennial budget process you know in the upcoming legislative session the state we know you know did report recently that they expect to have a surplus of about 70 million dollars for you know the fiscal year so hopefully that spells good news and

057and we continue to receive educational cost sharing at the current rate next year it's something that's always threatened you know when the biennial budgets are done unfortunately okay so now we're going to hold on uh faith had a question okay thanks uh you are muted faith i promise i'll be quiet after this until well to the next one but okay so um i understand dergs i understand they are a creation of the state do we ever look at an analysis of um what the cost per pupil is in surrounding towns because someone who has a job in hartford is not going to live in greenwich uh you know they're going to move they're going to look around us i'm just curious how we compare with with school districts around us also i mean if we

058looked at wallingford and and meredith even over into district 13 down you know they're um hampden you know closer communities i and again i i don't know if those numbers exist but um that's the reality of of our geographic area there has to be some kind of geographic comparison we have um i can share that the state you know the education excuse me the per-pupil expenditures is provided by the state so they use a consistent formula we know that the state average is about two thousand dollars higher than cheshire and the surrounding communities you know i would say other than than meridian are in the same range as us possibly higher but we could share those those um you know those details just um again i we're we're in the thick of this so at

059some point you know going down the road if you could if you could do that thank you okay okay so now we're going to you know start hitting the uh the budget recommendation this is what dr solon presented you know current this year's budget is 74.59 million the recommendation from the superintendent is to increase that to 78.4 million it's an increase as you could see of 3.9 million and it's a 5.22 increase um i did want to just touch on this um pretty briefly what is not included in our budget and what you're seeing on this particular slide and the next slide is these are the work these are the new program requests that we received from across the district um and you'll see that there's over on the left there's categories new equipment replacement

060equipment there's an other there and you could see the school that it's attributed to or where the request came from um you know things like you know a couple of new teacher desks and file cabinets and teacher chairs and the replacement equipment you know we did not incorporate those requests into the budget there just was no room to do so because um primarily because we have such a large increase needed to fund medical benefits we we pushed those requests off and did not include them in the budget you know however you know we do revisit those items you know throughout the year and we'll do so next year you know if we have room to make those expenditures we will you know there's a request here for you know a new 10 passenger van to

061replace you know the one of the vehicles that's used for student transportation um you'll see that there's some digital microscopes that were requested for cheshire high school so these are the items that didn't make it in the in the budget and just anecdotally i will tell you that um dr solon reported that earlier this week the cheshire education foundation is providing funding for these digital microscopes so you know we we thank them for the um you know for donating the cost for those digital microscopes and then just moving on to the to the next slide you'll see that we have some staffing requests and some technology software requests these are all items that all totaled were about 490 000 um couldn't could not afford them in this year's budget uh we'll keep them as potential

062items that we'll we'll have to prioritize and make expenditures against at some point in the future but we we could not accommodate these within the budget request this year and then this list dr sullen presented last thursday this was his you know what if or his wish list if he did have you know funding this is is dr solon's prioritized list again he reviewed this um a couple of uh a few nights ago and i'm not gonna you know bore you with doing that again but there are certainly needs that can be addressed and this is part of the budget process that you have to make the decision as to what you can and cannot do as part of the superintendent's recommendation this year okay so let's look at this year's total budget request again

063these these numbers at the top are what i just reviewed there's 5.22 percent salaries and employee benefits are the first two categories 80.2 percent of our budget is for salaries and benefits and then you could see that support services which is where we budget student transportation which is about three million dollars a year is nine percent of our budget uh instructional expense which includes a portion of special education specifically outplaced tuition for those students that we cannot provide services in district and then maintenance and operations which includes utilities is just under four million dollars it's about five percent of our budget um and then if we take it a step further 95 of the budget is what is being identified as fixed costs you know not fixed costs in in the traditional accounting sense but

064more costs that were contractually obligated to and so salaries of 49 million to 50 that's what's budgeted that's 62 percent if you add benefits which is 13 million now the cumulative total of salaries plus benefits is about 80.2 percent of our budget and then if you add in transportation plus fuel and insurance related to transportation it's actually four million dollars that gets us to eighty-five percent of the budget um special ed tuition and consulting services gets us to 89 utilities heat and energy contract payments gets us to 91.8 percent and then it finally if you had facilities cleaning maintenance supplies and repairs that's 95 of our budget which you know are items that either we have to provide because they're mandated its salaries and benefits for our staff or it's the types of items that

065we need to keep our buildings running including you know utilities heat and uh facilities maintenance so what does that leave that leaves five percent of the budget and so five percent of the budget are for much smaller categories and you know this shows you the same approach where if you take the budget request and then you accumulate it here's where you get five percent of the budget and you can see these are much smaller line items instructional supply 463 000 textbooks and software for the district 450 000. so this five percent unfortunately is typically where if we do have um either budget reductions or if there are events during the course of the year that we need to place spending restrictions on these are typically the line items you know that that we have to

066reduce expenditures on so um i will tell you and you'll see that you know as we go through our workshop on the 26th primarily you'll see that a lot of these categories textbooks and um new and replacement equipment testing curriculum and adulthood supplies we've really tried to hold the line on not increasing those next year just keeping them flat to this year because again you know the the lion's share of the budget allocation is going to be funding medical benefits was there a question yeah can i ask a quick question on that slide that you just showed so what what percentage was that last year um it was a little over five percent um and i want to say it was about five and a half percent so this is getting smaller and smaller each

067year yeah as a percentage of the budget it is be it is because salaries and benefits and the benefits cost is going up next year significantly so it does you know it does shrink the percentage of the budget this is for although the total the raw dollars are essentially being held flat right wind up being a smaller percentage right thank you you're welcome um vin um on that section uh what is your your um restriction plan for next year i know this year you started at 40 um on these variable costs um as you're planning to start at 40 again next year because of the just the uncertainty or are you going to go a little higher what's your thought on that yeah i mean i i would probably start the year at that you

068know 40 mark you know as i sit here today you know assuming that the pandemic you know is still um you know forcing us to operate in the mode we're in and as we get closer we can adjust and by the way was we're still kind of holding at that 40 percent right now just because of of the uncertainty of where we are although you know we you know we we're hopeful that the state does provide additional funding for the second half of the year in the form of a grant just like the coronavirus relief funds that we got through december 31st expenditures um they you know there is money coming to the state i just don't know what the allocation for cheshire is going to be so van are you saying that there's a

069potential for um money to be put back into the the holdover reserve count for next year or are you saying that you for the remaining 60 you have those expenditures encumbered and they would be ready to go if the if the need was there if the state does provide additional coronavirus relief funds for the second half of this year then i would take that 40 percent hold you know push it up probably to about 60 percent you know through february and then bump it up to 80 percent so it'll give us some some breathing room you know which is obviously important does that answer your question yes it does thank you okay moving right along then in terms of the if we take the budget increase of 3893 126 um and i just want to

070highlight here so salaries the overall salary budget is a 2.3 increase overall benefits budget that's a 17.58 increase so of the three million eight ninety three two million forty nine thousand thirty five dollars is in the benefit lines which we'll be reviewing in short order here um maintenance and operations as a 10 increase but you could see it's 10 of 3.9 million so that's 370 000 support services would go up by 4 to 282 000 in this recommendation and then instructional expenses would increase 1.65 again we'll go through the detail of of each of those increases but this is what i was saying earlier 2 million 49 thousand fifty three percent of this request of three point eight million dollars is in the benefits category and one point eight million of the two million is

071strictly for medical benefits so we'll jump into salaries now and i'll start with um just a quick preview here so highlighted in yellow is the budget year that we're we're talking about 2122 and these are the wage increases that have been agreed to in the bargaining unit agreements with each of these respective groups the two newest contract that have been negotiated are here teachers and the administrative personnel and you could see that their wage increases for next year are 1.75 and 1.75 for the administrators so overall wage increase based on the bargaining unit agreements is 2.4 percent and you can see that is you know certainly a bit lower than what we've seen in the years leading you know into 2122 including this year we were at 2.75 and then very quickly here the instructional

072assistants will be negotiating a new contract with them um effective for july 1 of 22. and then the year following that the secretaries and the facility staffs contracts expire so we'll be negotiating new contracts with them but because we just settled with the teachers and the administrators we know what those salary increases will be you know through the next two fiscal years following the budget year we're working on now okay and the 2.4 percent it's important to note that number because that's what's built into the salary projections that we'll be reviewing now certified salaries so certified salaries cover teachers our principals which are the administrators and assistant principals our directors and supervisors so for example that would be uh robin ann carey who's our director of pupil personnel it also covers substitutes student activities are

073primarily stipends paid um you know and it's it's typically paid to teachers but not all our coaches are teachers so they receive a stipend out of this account we also pay for homebound tutoring and adult ad but the lion's share of the certified salaries are for teachers you could see here it's about total increase requested is 2.17 for this category um this is this particular chart that you see here in white where my cursor is this is exactly what's in the budget book for certified salaries again you see the 2.17 percent here [Music] i did want to point out just a couple of things here you see that this where this um where my electronic laser pointer if you could see that is at the directors and supervisors it's a 0.76 percent increase and the

074reason that that looks so low is because we did have a an administrator who retired three years ago actually four years ago and that particular administrator based on over 30 years of service was receiving 12 000 a year in a retirement payout that's part of the contract for the administrators so because that went away or that's going away in 2122 they brought this change from what we budgeted uh for this year to what we're requesting next year you know it makes it look lower but i guess it's a good thing but that's why this category just looks oddball at 0.2 at 0.76 percent so the the point that i want to make is that included in each of these salary lines for both certified and non-certified staff would be you know any kind of incentive

075you know any kind of longevity payout shoe allowances for our building maintainers you know over time not for any of these categories but for non-certified staff so when when we look at salaries i just wanted to you know make mention that it includes all types of pay for the respective groups um so there's really not a lot more you know to add that the teachers is the biggest increase at 746 000 you see it's 2.24 so that would include their 1.75 wage increase plus the addition of two teachers at sixty thousand dollars per year those are the two teachers that we would hire for the elementary um and that's that's really the long and short of certified salaries again the total request here is 2.17 percent i'm gonna move on and do non-certified and then

076you know we could pause for question on salaries um this chart which you'll see as we go through all of the major budget sections this shows certified salaries as a percentage of our total budget and you could see as a percentage of budget you know over the years the the starting year here is the year 2000 so over the last you know 20 years the percentage of budget from certified salaries you know has decreased really two-fold part of it is because other budget categories um represent a larger portion of our budget and because enrollment has dropped you know the number of total teachers has dropped as well so that's that's certified salaries as we look at non-certified salaries we've got about you know 352 full-time equivalents and you can see very quickly instructional assistants are

077the highest number of employees it's about 3.2 million or 32 percent of this request secretaries and clerical staff as a group is 2.2 million support personnel which includes technology staff it includes occupational therapists it includes other support staff like library media specialists that's about 17 or 1.7 million our maintenance staff about 18 1.8 million and then you can see these are our nurses our board of ed bus drivers and the managers and supervisors so non-certified salaries represents about 13.1 percent of our budget it was 13.4 percent last year thank you marlene just came down and brought me water and i appreciate that marlene uh so this is the uh again budget book the non-certified salary section you could see that total non-certified salaries are increasing 2.89 percent the only couple of things i wanted to

078highlight here is this 4.54 in instructional assistance this has you know predominantly this has to do with additional hours that have been uh authorized and you know to serve student needs in the budget year that we're anticipating will carry into next year so we're not adding additional instructional assistance in the budget but we are supporting additional hours the text was getting old the um um these other line items are you know pretty much on par with with what's been negotiated as part of the union contracts and you can see here that the the different wage increases that the tas are the teaching assistants lunchroom playground aids and study hall monitors so the raises are 2.25 the highest group is 3.25 for special ed ias and hall monitors secretaries 275 uh and our other staff and

079maintenance is 275 and anybody that's not in a bargaining unit was budgeted at two and a half percent i think it's pretty straightforward um the the salaries the one thing that i did want to show for the non-certified is this particular chart and if we look back over the last seven or eight fiscal years you know the the highest dollar amount of increases are for two categories instructional assistants and drivers and what's driving that is uh special ed student needs these drivers are our board of ed bus drivers that do our in town routes uh predominantly those are students that have special education needs um so this is the average annual growth rate over this period of time managers and supervisors are 3.7 percent this is driven really by just one thing it was the

080project manager that was added that's a shared employee with the town that provides support for the capital projects that we do and this gentleman's name is dan barbaro he was actually on the planning committee uh video meeting that we had last week so the rest of the groups um you know relatively modest growth rates in terms of total salaries and you know i will add that you know the other thing about salaries is to the extent we um have positions open that we don't replace you know which which we do do that would drop that's why you see some of these lines are below you know two percent as an average annual growth rates and to the extent we've added staff or added hours that would be above the you know two to two and

081a half percent that you would expect let me see here and then this is the um really the last slide in this section this is non-certified salaries also as a percentage of total budget and you could see that we're hovering around 13 percent you know we did dip down um getting into 12 13 and then over the years the number of special education students and needs have increased you know we we have increased the number of non-certified staff members but again based on the previous slide that's predominantly in the area of instructional assistance so i will pause and stop sharing my screen here and answer questions on salaries tim go ahead thanks adam yeah i'm off man um a few minutes ago vin you had mentioned that there was an administrator who retired sorry i

082went back up you're talking about percent increases yeah and one row you were talking about only went up 0.76 yep and you said it was sort of um the normal increase is sort of being masked by an administrator who retired four years ago so the salary or the benefits now dropping off yeah it's they have um the administrators have a retirement incentive based on total years of service and education and this particular administrator was over 30 years so was getting 12 000 dollars per year for three years and so that runs out 21.22 so com it was carried in last year's budget it's not in this year's budget so it you know that it looks like our our budget actually dropped by 12 000 plus whatever increase which is 1.75 for the group remaining so

083that's why you get these unusual swings sometimes because of oddball items like that oh so that's but so i guess my question is that's baked into the contract yes the administrator's contract yes it's been there for years okay okay thank you um let me see uh one question going back a little bit before salaries just to be clear you were talking about revenue sources and saying that uh you mentioned like the birth to three is a hundred percent funded by the state so that's the operating budget i'm just curious is the capital budget 100 funded by the state if we did new construction is it covered fully by the state the birth of three just for just the birth to three program is a program that you know we run in cheshire and actually supports

084not only cheshire residents but other communities um and the state we budget the dollars in our operating budget yeah the state gives us revenue and we budget the revenue to the town but the point i was making is we spend 360 we get revenue of 360. so the state fully funds bert iii yeah no no no i understand that i just want to distinguish between like operating budget and capital budget is the capital budget 100 if there is anything related to it no it's just the operating costs related to teachers instructional assistants the administrator for the program okay thank you um yeah the other the other question will take forever i think so i'll skip on it for now all right actually let me let me just highlight let me just highlight this it doesn't

085need to get into a big discussion it's just my observation so i am concerned between last year uh the you know the the pandemic what's happened what happened last year with education and what's happening this year and through no fault of anybody in the school system no teachers or anything like that but i definitely feel like uh this year is not a normal year and i don't think the students in general are going to get out of this year that they would in another normal year and so what i'm wondering about is um how do we if that is the case what can be done next year in terms of staffing now i saw that the superintendent put in something about like a high school math interventionist um but there's i just want to put

086that out there that this is a concern for me like i said this could be a whole big discussion that's not the point right now i'm just highlighting it for for for discussion purposes or to put it on the record okay that's it thank you you're welcome are there any other questions for this section okay go ahead vin you sure you're ready for this this is benefits coming up bring it on vin all right i'm bringing it on here it comes all right you should see me again and the big pie chart on employee benefits yes okay great benefits is comprised of the following categories you know medical dental 10.6 million dollars is the work is what we're requesting for next year and that is you know 21.48 increase over the current year gonna spend

087some time on that but also included in in the benefits category our social security for our non-certified staff so this is the employer portion that we have to pay for um social security pension plan um we are um this category does need to increase by about 4.43 this year it's kind of modest and i'll spend some time on that workers comp and unemployment that's an increase um and i'm going to show it to you on the next slide i'm not going to spend a lot of time on it because we write a touch that it's not workers comp that's driving this increase it's budgeting for unemployment which has increased because of the pandemic and you know the ability for people to collect unemployment during the pandemic where they weren't ordinarily permitted to collect previous to

088the pandemic and then life insurance and disability is part of employee benefits but that's just about flat it's only a 332 dollar increase so this is this is the breakdown that's in the budget book again you could see that the biggest dollar change is the 1.87 million needed for medical benefits um pension will go through the unemployment line you could see we expended 107 000 345 in in 1920 so that was the the pandemic year from march through june where we expended the bulk of that thousand dollars uh you could see going into the the budget that's in place for this year we had budgeted twenty five thousand uh but we need to take that up to a hundred thousand for next year assuming that we still have um you know pandemic unemployment related costs

089so that's why this is going up 300 percent you know because it's 75 000 on what was previously a 25 000 line and then social security just increases in line essentially with wage increases so that's how we get to the two million forty nine thousand you could see here benefits in this budget year are 17 and a half percent of the total budget and last year they were about 15.6 of the budget so again explained by the increase in medical benefits that's included so here we go into into middle into the medical benefits portion of the discussion um nothing has changed here we have several different types of of programs available for our employees they're all with cigna as the insurer we have the high deductible better known as the hsa plan internally we have

090an hmo a ppo plan a basic elements choice plan that meets bronze level coverage requirements uh and also when we talk about medical benefits we do include dental our employees do pay for um you know certainly a portion of their health benefits and it varies by the different bargaining units which i'm going to show you in just a second just a high level grid um and the things that we've we've done over the years to try and and manage our health care costs you know one is that we you know years ago launched a high deductible health savings account um and then over the years we've increased the deductibles we've increased the co-pays on our ppo and hmo plans and the employees pay for a portion of their coverage through co-share rates the other things

091that i did want to highlight is the hsa deductible is currently two thousand four thousand for all of our bargaining units except for the teachers teachers are slightly higher they have a two hundred fifty dollar deductible for individual and four thousand five hundred for two person and family coverage um in all our bargaining units so that means for all employees the high deductible hsa is the core plan and if they want to stay in the ppo and hmo they pay the full cost difference to keep those plans um you know our employees you know they've been given ample opportunity to move out of the ppo and hmo plans most have but the ones that stay in it's cost neutral to the board of education if they do that because of the way the pricing is

092structured and i did want to highlight that under the new administrative contract that was just negotiated and approved by the town council actually last week in the year 2020 22 23 so that begins july 1st they no longer will have ppo and hmo as options only the high deductible hsa so this is each of the bargaining units the secretaries instructional assistants our facilities group our teachers our administrators only thing that i want to point out here because the plans work the same they all have the hsa ppo and hmo but this is their co-share rate so the secretaries uh this year they're at 11 co-share the instructional assistants because they are primarily employees that work less than 35 hours per week some less than 30. their co-share rates are higher so they're at 22 this

093year our facilities group they're at 11 um this year and and 12 next year and our teachers will be at 16 starting in 2122 and our administrators are going to be at 12 and 21 22. so the cost share rates vary but you could see based on this chart that they are all increasing and have been increasing and you'll see as we get to the medical benefits detail those percentages are important because employees pay about 1.7 million dollars towards the cost of the total cost of medical and dental benefits okay so the hsa again high deductible plan 73 of our employees are now in our high deductible health plan you know this was when we really started tracking this closely in 2010-11 5 of the employees were in that plant type now 74 are in

094the hsa plan 14 remaining in the ppo it was over 70 and about 12 in our hmo was 23 again all these plans do wind up being cost neutral to the board but not cost neutral to the employees that stay in the ppo and hmos it's costing them more to be in those plans but that is their decision we do provide them with the information they need at the beginning of each open enrollment period so they could make the best decision for themselves and we'll continue to do that you know we do have a goal to have all our employees in the high deductible health plan it it turns out to be a better plan for them financially and this is the same information just broken down with details by each of the groups and

095then you know we do have you know some retirees that are still remaining in our plans um they depending on the year that they were hired for example you know teachers hired before 1986 actually we're not paying medicare so we have to cover them within our plan that's the bulk of these 51 individuals that are retirees uh and you could see 33 percent of them are in the hsa and you can also see that you know back in 2010 we had 75 retirees you know that number is is dropping out of 51. so what you see is just showing up on on these bullets are just some of the other you know measures that we've taken to try and either contain or reduce costs so our hmo plan was fully insured as of july 1

096of 2015. we moved our stop loss which we'll talk about later from symmetra to ct prime back in 2016. you know certainly has saved us money we moved all plans to cigna in july of 2019 and in doing so you know we didn't change the benefit structure to our employees but we did reduce our fees that we were previously paying and was anthem prior to cigna and then the last point here is that the affordable care act you know most of the provisions of the affordable care act that would affect either us paying a premium tax as an employer or us have us having to provide for a cadillac tax which has been repealed there's really not much left in terms of cost concerns from the affordable care act so that's really a non-issue at

097this point in time so now we're going to really jump in and get deep with medical benefits so you see here that this year's budget for medical benefits is eight million seven forty ten million six seventeen nine eighty three is what we're uh recommending the budget to be for medical benefits so we're gonna look at how we get to that number because it isn't exactly straightforward so there's the 10 million 617 you see it here down at the bottom we budget medical benefits net well what does that mean it means that after we account for the 1.7 million dollars that our employees pay it brings it down to 10.6 million and i'll talk about this 500 000 in a minute so if we look at the core components that make up this medical benefits budget

098number we're providing 10 million 786 936 next year for claims that's roughly nine hundred thousand dollars a month it's just a hair under that um we also have to budget for stop loss premiums that's a million twenty six thousand eight hundred for next year hsa contributions that's the funds that the board as an employer places and pays into the employees that are in the high deductible health plan for their hsa these are the administrative fees that are budgeted to pay for cigna as well as the flat fee we paid to our broker from usi 78 151 employee waivers these are employees who are eligible if they don't take our medical benefits as they have the right to they receive either a 1 000 or a 1200 dollar payment depending on the bargaining unit that they're

099associated with um we did phase this out you know in the teacher contract in the prior teacher contract for all new employees so you know the bulk of these waivers are paid to our teachers but it is going that number will continue to drop as the years progress and you know we have an employee assistance plan and the 8127 on this line reflects the the fees that we pay to keep that plan and make it available to our employees so really the cost of medical benefits in all those categories is 12.9 million dollars but again employees are estimated to contribute through salary deduction the 1 million 794 011 what i'm also including here to get to the my 10 million 617 983 number is stop loss reimbursements so this million 800 that we pay is

100a premium to have stop loss coverage stop-loss coverage protects us from any individual claim for one person whether it's an employee or a dependent when that claim reaches 175 thousand 000 the insurance company pays for everything above the 175 hence the name stop loss so 175 000 is our maximum exposure you know per covered claimant the average that we've been receiving in stop-loss payments over the last you know decade roughly um is about 500 000. so i use that as an estimate for payments that we will receive in the 2122 budget year so that's how i got to the 10 million 983 i'm going to take you through a little bit more nauseating detail here and show you well you know where does this 10 million come from well that's the funding for claims 8.7

101million for medical 1.5 million of that is for prescription and about 543 000 is for dental so now you're going to ask me well where does that number come from okay that number comes from ultimately usi which is our insurance broker who puts together renewal projections it's based on running 12 months worth of claims so this is looking at a renewal date of july 121 and it includes our running claims through december okay so it's december and the prior 11 months so that's how they they come up with these renewal rates now you know it's only obviously it's only january now you know this includes you know claims over the the 12 months prior as we get into march and april as we get closer to meeting with the town council we'll have more updated

102renewal projections but at this point in time you know this is this is what we use this is what we use every year it's the best information that we have so that's how we got to the budget of nine hundred thousand dollars per month which is the question that um ms harrigan had earlier you know is 900 000 enough so we're going to go through a little bit more detail here um and i'm going to start with talking about the medical benefits reserved this is this is kind of a review but the way we actually pay for medical benefits um just to eliminate high claim months low claim months making our budget look all distorted is we use a medical benefits reserve fund so the money that we have budgeted and we're going to talk

103about next year's budget so nine hundred thousand dollars per month assuming this budget is approved as is that's a contribution we take 900 000 out of our operating budget and put it into this reserve fund and then to pay claims comes out of the same reserve fund so money's going in and then money's coming out and then over time if you're making more contributions than you have claims your reserve balance increases which it has in some years and then it's decreased so what you see here is well what's controllable the contributions because that's controllable through our budget what's not controllable is claims they're unpredictable um at at times and in in this current year it was really wasn't predicted that we'd have about 1.1 million dollars in claims for the for the sixth month ending

104december 31st um so even though we use a projection you know based on 12 months running you get a bad claim here every now and then sometimes two years in a row and you can't control and you can't predict it so what this shows is what's our reserve fund balance been as we began each of the fiscal years going back to 2011. so you could see we range from 3 million 225 0.94 in 2011. we dropped to a low in 2014 of 643 000 and then we made some adjustments to the contribution rate and that started to build and then you know here we are this is the latest information i have as of december 31st our trust fund balance reserve fund trust fund synonymous um we're down to 970 000 even though we started

105this fiscal year at 2.8 million so what you see down here at the bottom is the goal and the objective is to try to always have two to three months worth of claims as part of your reserve so if your claims and this year's expected claims were 800 000 per month you would want to have at least 1.6 million dollars you know unfortunately claims are running 1.1 million so that would be you know 2.2 million that you'd need to have in reserve you know by any measure right now we're a little over um you know we're certainly under the two months worth of claims um and not to talk too much about what's going to happen the rest of this year but we do expect that you know the the claim months now that we're

106in january february march because it is a new high deductible health plan year the initial payments will be made through the employees deductibles and not from our claim account so i i would expect and certainly hope that we'll start to see claims drop well off that 1.1 million dollars we've been averaging okay so that's high level how the reserve fund works so now i want to show you a little bit of history and this is a history from 2013 to 2017. this red line represents claims and the green line represents the contributions into the reserve fund so during this period of time leading into 2016 we saw claims were exceeding contributions and that's because we had a healthy reserve back then we didn't fund our contributions in line with claims the reserve fund started to

107drop like it is now and we had to make an adjustment in 2016 and because we did that we increased the contributions and the claims even though they were going up they didn't go up as fast as our contributions increased so the difference between this green line and red line represents growth in the reserve fund whereas when your red line exceeds your green line means that your reserve fund is going to drop okay so that's history 2013 to 2017. so now we're going to look at 2017 through 2021. so as we moved here into 20 you know 17 we still had claims uh we had claims that were lower than contributions and then we started to pull back on the contributions and our claims have started to exceed our contributions so this period of time

108represents decrease in the reserve fund there's a general statement i'm going to take you into a little bit more detail because there's you know the the stop-loss uh reimbursements does play a role in our reserve fund balance okay but i i think everybody gets the idea i'm sure because it's not the first time you've seen this type of information and then here's the net result so during this period of time 2011 our uh reserve fund balance peaked we pulled back on the contributions had some rough claim years you could see that our reserve actually dropped as low as 000 around january of 2015 and then we started to increase the contributions claims leveled out and you could see we had a nice run up here and we peaked in 2018 with about four million dollars

109in the reserve fund and then we started to pull down our contributions and the trust fund was starting to drop gradually and then you know as we hit this year it really started to drop off so this takes us to the 970 000 we where we are at the end of december so if we look a little bit closer at the moving parts i'm almost done here so we'll pause for questions in just a couple minutes so this is really the the picture that i just want you to see so you understand that you know there are other moving parts here that we take into account as as we as we budget and as we actually run our plan so this is just a snapshot this is one year 2013 here we were making monthly

110contributions on average of about 554 000 that's what was budgeted our claims were higher than contributions 000 a month was the average so the annual net between contributions and claims was a minus one million seventy one thousand five seventy eight but before you get to the ending reserve balance for that year of 2 million 178 you have to add back 344 000 in stop loss reimbursements plus we get prescription rebates at this time we were with anthem of a hundred eight thousand and then there's some interest and miscellaneous adjustments of fifty seven hundred so that's how we ended with a reserve balance of 2.1 million so even though the net difference between the contributions and claims was a million 71 thousand the reserve fund balance that year came down about half of that 564 000.

111okay so if you get the idea there i'm gonna bring in all the succeeding years okay including year-to-date 20 21 i know there's a lot of numbers here so i'm just going to try and focus on this first column so the red arrow means we reduced the contributions and i want you to look at those red arrows and align it with what's happening with the net of claims and contributions so as we brought the contributions down our claims then come down so these two years we had a net minus you know in favor of claims so the reserve fund balance dropped 564 000 in 1213 a million 550 in 1314 and then you could see here we started to fund up through our budget the contributions because we needed to because the reserve was running

112low and you could see in those two years we went from 539 a month to 644 a month in contributions claims actually dropped from the prior year and so that year our fund balance grew by 121 thousand and then in the following year we increased the budget again a little over 100 000 per month claims didn't go up on a monthly average very much so that year all in the reserve balance grew by 1.5 million and then you could see here we started to shave off the contributions from 754 000 a month down to 748 down to 728 down to 700 000. last year 1920 we were as low as 699 000 512 a month in contributions and then we did agree to increase it for the current budget year but you could see we

113had four years of decreasing contributions and even though we did okay these two years the fund balance actually grew and i'm gonna talk about why in a minute but then in these two years our claims started exceeding contributions by quite a bit and this year is a really tough year so you could see that you know we've we've lost quite a bit of um a reserve balance really over the last two and a half fiscal years so what happened in in these two years i'm going to focus now on our stop-loss for a minute so in these two years 1617 and 1920 our reserve bounds really was bullied a lot because a lot of our monthly claims were high cost claims over that 175 thousand so we got 910 000 back in stop-loss reimbursements in

1141617 and 828 595 in 1920 so you know in this particular year the reserve balance actually increased a million and here even though the net of contributions versus claims was a minus one million nine the reserve balance only dropped 921 000 because you got this boost from receiving stop-loss reimbursements for your high claims um so that that's good but there is an impact to pay having to do with your stop loss right so if you just remember these two years 1617 and 1920 i've highlighted them here so this is and this is 1920. the green line represents the premiums we paid the red line represents the reimbursements we received so you know the loss ratio there for every dollar that we paid in premium we got a dollar back in reimbursement you can't sustain that

115for too long without your premiums increasing right like i'm sure everybody realizes that same thing in 1920 and in fact if you look at the history here in you know these four years we were with symetra which was carrying out and then starting in 1617 we were with ct prime and you'll see that you know it fluctuates the best year we had from our perspective was this one where we received almost a million dollars in reimbursement and paid less than 600 000 in premium and the best year the insurance company had was this one where we paid let's call it 450 000 in premiums and they had claims that were below two hundred thousand so the you know these percentages represent essentially the loss ratios for the insurance company you know unfortunately these four years

116are not very strong in our favor with the insurance company we are fortunate though that we're with ct prime which is the stop-loss captive insurance company that's formed by connecticut boards of ed and municipalities i still serve you know on the board and i'm president of ct prime so our premium increases during the ct prime years were actually pretty modest considering that our reimbursements were so high and then i'm going to strip out the actual reimbursements here and just show you this that you know these are the premiums that we've paid starting back in 2012 13 with symetra and then with ct prime so clearly the stop-loss premiums have increased but it's justifiable because you have been having stop-loss reimbursements that exceed your premiums and two out of the last four years so i'm going

117to bring you and kind of end this section with this which i i think is important just to put a little perspective around history you guys all still with me okay last slide on this section um so yeah this is this is a bit of deja vu and you know this is what you're looking at here is in the benefits section of the budget book on page 10 and i i wanted to highlight this history for you because i think it kind of speaks to where we are which is is not that unusual historically but it it does happen in what seems to be a cycle so this is 20 the year 2001 through 2003 for you see that here that you know we had only modest increases to the medical benefits budget and then

118we got hit with a large claim year and we had to fund up the contributions so you know in 0.304 this budget line item had to go up 23 percent and because we raised the contributions we went through one two three four five years of really you know moderate growth at best in this budget line again reserves tend to build up when you increase your contributions and then you get another bad claim year and that happened in 2009-10 this is the year before i got here but you could see it was a 26 and a half percent budget increase then we went through one two three four years where in a couple of those years you actually decreased the overall budget um and then 14 15 rolls around and i do remember this particular you

119know budget year two years in a row where we needed a nineteen percent increase followed by a seven percent increase and then we went through one two three four years where we actually decreased the budget last year we increased it by 7.7 percent and here we are on 21 22 and we you know we're basically winding down our reserve fund which we hope would be gradual but you get a bad you know in this case claim uh not year but half year and we're looking at having to increase the medical benefits budget line by 21.5 so that really is um medical benefits and i don't know you may have some questions so i i think maybe i'll stop now uh i'll kick it off yeah i'd be in this time um all right so going

120back to the um i'm looking at the slide so the closer look at moving parts where you go where you're looking at the the stop-loss reimbursement so all this year we were waiting to see how much stop-loss was going to come in and so when you're budgeting for this for the new uh ask of uh 1.8 million um you're showing a stop loss of 35 000. that's year to date this year year today and year it looks like you're anticipating another 500 000 is that how you're calculating that in your um i think it's the next slide where you're we're kind of figuring out the total cost for 20 uh for 2021 yeah so what i did in the 2122 budget is i used an assumption based on the prior year's averages of 500 000

121that's that's where that number came from if we if we strip that out and say you know what we don't want to budget in any stop-loss reimbursements then we would have to increase the line by the 500 000. so you know i mean i did it because you know it is a projection that seems to be valid and by the way the 35 000 which is this year to dates reimbursement you know we i do expect that we'll be getting more reimbursement it just hasn't hasn't come to fruition yet right so uh i'm i so are you confident that we're gonna at least hit our average in in stop-loss reimbursement and i guess uh so parts two and three to that are are you confident that our claims are going to and i think i

122asked this uh i think a meeting ago that we're not going to be at the 1.1 million dollar level again and have the claims that have come in been analyzed to find out why we went so high if it was was it a matter of volume of claims or was it the kind of claims and will and have those claims been resolved or you know even with because even with the the uh deductibles that um our employees have i think it's only at uh what does it go as high as 16 000 if i recall or something to that effect maybe it's a little higher um i mean once you get past that i don't know how we're getting to 1.1 million after you know we blow through after the employees spend their deductible i'm

123not quite sure how that's all adding up and has you know has the insurance company kind of given us a breakdown of that well that's that's a lot of questions in there so let me address the confidence level you know with respect to the 500 000 um what i'm confident about is that's that's the average of the prior years whether or not you know we're going to come in at 500 000 you know it it's a projection that's that that i'm using um so i have i don't want to say that i'm confident about it other than it's an average you know it'll be something we've never had a year where we've had no stop loss so 500 000 i think is a reasonable number is the way i would explain it you know as

124far as you know what's happening this year with claims um it's still you know it's still still a bit early to get um detailed analysis but now we've got six months of claims under our budget you know i will i will be able to get some insight you know i will tell you that we've got a few high cost claims moving through but it doesn't seem to be as many as last year just yet and it's know the the best explanation i could give you is that we we see this you know every five to six years you get a claim here that's out of line with what you've been you know running in terms of average it's not unusual it's unusual for us it's not unusual for any you know self-insured employer provider of

125our size i know that last year the analysis that was done you know we did see quite a few surgeries we had some extremely high cost claims we see that you know the typical ailments like diabetes and heart and hypertension you know are driving the bulk of the ordinary claims um and the the one trend i i can identify is that you know high cross high cost um medications drugs not just for cancer treatment but even for non-cancer treatments you know some of these news these new types of you know you know bio medicines become very expensive you know and and so we have seen that our prescription costs have increased but that's all factored in with um you know what what i've been presented and what usi is providing as a projection so you

126know it's it's tough adam because we're trying to to base projections on history but sometimes those projections don't halt to the historical average and that's what's happening to us this year so i don't know if i answered all the components of your question but i tried um you did um i guess the one thing that that still bothers me is i guess do you feel that the risk analysis that is that is being done is adequate because when i'm looking at that chart it's going up and down and up and down over through the last 10 15 years and when we when we we set our funding level last year we were under the assumption that we had uh at least four years uh before we were in any kind of emergency zone and now

127it just fell off the cliff and so i'm you know i'm just honestly i'm i'm concerned that 1.8 million isn't enough um so i i'm just wondering if if you feel confident in the risk analysis that this company is giving us yeah now i'm confident in the analysis because it's it's it's standard you know what they're using this 12-month rolling average you know as we go through the next two to three months and get more experience you know it's kind of what i'm saying as we hit january february march what happens in those claim months you know because if claims don't drop and they continue to increase then yeah there's risk that what we're budgeting isn't enough for next year so i think the analysis that's being done you know is in line with what

128should be done you know but you know you can't really you know predict what happens sometimes the protection that we have is the reserve fund and the stop loss insurance right those are the those are the two main protections we have and so we you know built up our our stop-loss reserve to uh excuse me medical benefits reserved to a good number and now it's it's been depleted so far this year at a rapid pace so it's time to start rebuilding it under you know any under any scenario adam you would have to just look at the at the reality of where we are and and say okay well we've got to start increasing the contributions the there is risk in the projection that you know you see here but i don't think it's unreasonable

129to use 900 000 as a good number for next year's contributions we've increased the stop loss premium by 15 but i think we need to we we could talk more about the risk and you know i i certainly can have tom um tom qualcek who is our usi representative you know join either for one of these budget workshops you know or a separate meeting of the finance committee um because he's he's our subject matter expert in in this and he provides those projections but yeah it's following standard industry practice okay thank you um let's see um is uh let's see i'm looking uh tim i think you have the first question thanks adam yeah so following standard industry practice then are you do they look at do do they look at the demographics i mean

130has our workforce aged in the last five or six years is there any sort of trend that sort of mirrors what you were talking about before where we could possibly predict the future a little bit um yeah you know that's a that's a good question about our workforce and you know and the you know potential impact um and that's a good question you know for tom you know to pull some more detailed data you know we did have i just i'm just kind of thinking out loud you know with our workforce we did have a fair number of people retire yeah last year and typically the teachers that retire they are replaced by you know employees who are you know younger you know law and you can just tell that by looking at the salary

131scale that they're on um you know but younger doesn't always translate to lower claims you know if if employees are of child bearing age then you know you you take on additional costs related to childbirth so did the teachers who retired do they still get the medical plan for a couple years some well it depends there was a retirement incentive yeah if they took it some did not all some some did take the cash payout i'm just wondering if whoever took it and got the medical plan you know has a bunch of treatments right now and then it's something that disappears after two or three years they'll roll off um and they'll roll off in two years max but you know again not to i mentioned teachers but you know i will tell you that

132you know i know that you know a few of our high cost claims are not teachers that don't mean that none of them are but yeah just i don't want to get it's across the board you know and the high cost claims and you could see that from the years that you have those extraordinarily large stop-loss reimbursements you know that you had some high-cost claims that were driving quite a bit of the claim history okay thank you um i think these two should be relatively quick you mentioned biomeds i'm just curious like i hear about rare diseases you know alexion doesn't it's not like a pfizer that go or whoever goes after a cure for the flu it's like going after a cure for rare diseases is uh is that what these biomeds are some

133of them are cancer treatments some of them are to your specific ailments um you know and and we do get a report on that you know periodically and we we do review it with our provider um you know you're talking some prescriptions that are ten thousand dollars a month so you know those are that's all embedded you know within within our claim history and you know some of those meds are proliferating and that's a growing trend um nothing that that's what's driving our claim volume this year but yeah there are a number of factors that do affect medical benefits okay thank you um and the last thing uh i don't think you touched on it at this point do you think self insurance is still a good choice well i do because you know the

134and this is again another question that we could pull tom in uh from usi but you know i did i did talk to tom after you know i did see an email you know with this question so if you just subscribe to the premise that you know claims are claims i mean what we pay in our medical benefits is our claim costs you know plus the cost of protecting our stock our high claims with stop loss plus administrative fees right those are the core components of just the medical benefits coverage if we pay a third party to provide that plus a profit then you're going to pay more if you just accept what i'm saying at face value the thing that's been difficult when we were fully insured including with the hmo which ended in

1352015 is you'll get a premium increase that's not necessarily in line with your own claims the premium increase is in line with the provider's experience with other groups or so they say and and that's been you know the difficulty i think with any organization that is still fully insured you know and most municipalities and boards of ed you know in connecticut are not they've gone the self-insurance route because you do have better control over your costs not claims cause claims are claims but you know what um [Music] you know what i talked to tom from usi what he said is you know he's been seeing you know this year the average renewal is somewhere you know around 20 you know in prior years have been in the nine percent or so range on average um

136but you know we did you know the other thing i will tell you is that even with our stop-loss you know we used to have our stop-loss with anthem when we were with anthem and then we started getting these absurd increases in the stop-loss premium which is why we went to simetra eight years ago and then the same thing happened with simetra that we started to see a couple of years where we knew what our stop-loss reimbursements were and the premiums were going up much higher than they should have you know and eventually we wound up moving to ct prime for that reason so you know by being self-insured you you have clear visibility over what your claims are if nothing else but admin administratively how many ftes full-time equivalent staff do you have related

137to medical benefits do you have any idea or is it like one person like 10 hours a week type of thing well we have one benefits specialist in the district who you know is responsible to help administer the medical plans also does you know new employee orientation all the non-medical plans right so we have the pension plan and we have the defined contribution plan and also she um supports payroll so it's one person it's really not even a full-time person doing medical benefits and then there's me okay yeah okay thank you certainly um faith looks like you're up next um okay so a totally non-healthcare question um our retiree uh pension is fully funded correct the retire you mean the retirees that are still on our plans it's not fully funded it's part of our

138self-insured plans either they're in the high deductible health plan or the ppo or the hmo no no i was no i was thinking the retiree um the retirement um then we have ace never mind nevermind i'm gonna no no no finish finish your question on that question i'm going way back i'm sorry that's okay so we have about 50 retirees in the health plan correct yes okay i was thinking of never mind never okay we're talking apples and oranges and i'm just gonna so okay um on your closer look at moving parts um under plus interest miscellaneous adjustments um what happened in 1920 with a negative 107 or is that a typo no no the i mean there are some years that we have um you know included in some of the adjustments are charges

139that um we have to pay for certain costs related they charge back through the state um there are there are some offsets that we have from prior years claims there are some claims that have to be manually paid through that account so that's kind of a miscellaneous account i'd have to look back faith i don't remember exactly you know what happened with the 107 000 that year is a combination of a few different things um and we get that information you know it's reconciled by donna ollette who um is deputy finance director so because we share the you know the cost of of the plans and servicing with the town donna does that reconciliation for us okay you know i mean there was something oddball for a couple of years we actually went negative um

140easy enough okay and then um so ct prime is a is district isn't it many many school districts involved in ct prime obviously i was just gonna yeah does it make sense to shop again yeah we shop it every year okay yeah we shopped it um you know last year and the year before with cigna and they couldn't touch the premium and but again because i'm on the board of ct prime ct prime actually shops it out so you know this year ct prime when it's it's not self-insuring it's actually purchased um stop-loss insurance through gerber life okay okay and then um so with this 900 000 per month that you're that you're asking for in the budget we will when will we hit our 2.5 months of reserve by the by i'm losing you

141yeah no you're not losing me that 900 000 that we're budgeting get it gets us even it's not a request to build up the reserve it just keeps the reserve from being further depleted so there's again going back to adam's point you know is there risk well yeah there's risk if we if we want to mitigate that risk further you do need to increase it some more okay so can we take a before we sign off and send this away i mean i i'm as concerned as adam i mean can we uh make sure that we take a look at we have to make a decision but will we get numb will we have an idea of what's happening in january before we i just hate signing off on this because i'm as i'm as

142panicked as adam is this is going on too long almost well you're certainly not deciding tonight you know tonight is the initial review and i i think it does need you know further discussion in prior years when we've had a fund up you know the last time we did it we did have to fund up a second year before we got to a point where the reserve started building back up so you know again i think we we budgeted reasonably here but we there's clearly a case that could be made that we need to further mitigate the risk and and budget up higher however we do that okay and when you said something there are large claims working their way through what part of the snake are they in are they close to the head

143working toward the tail are we at the tail are we yeah no i mean you know the way the the stop-loss reserves runs from july 1 to june 30th right so typically when you have a large claim it doesn't happen all in one month you know if somebody for example if somebody has cancer and they need treatment you know that is one claim that goes on for a month over a month and it accumulates because one claim for one individual so we're halfway through the year if there are individuals this is what i meant by they're working their way through so as we get into second half of this claim year that's when you'll start to see those stop-loss reimbursements increase we typically get the bulk about stop-loss reimbursements in january through june even though

144the plan year for the hsa begins in january that that stop-loss coverage is is july to june so okay it's a little longer okay yeah just take me a couple of quick points going back to pins priors i'm sorry a couple of quick points going back to them prior slide the one that basically shows control is what we can uh what we can manage putting into the account you know whether or not people get sick is an item outside of our control even if somebody comes off of cancer treatment which we certainly hope you know will happen we can't control if somebody else goes on the one thing i mean just looking at it if we were to increase our contributions let's say 20 000 a month and so now we're at 9 20. that

145builds a little bit of a a little bit more into a cushion i mean it's not a huge percentage but it's something that's an additional roughly quarter million dollars in the budget 240 grand so you know it could be adjusted in evaluating all this and i don't think it's a bad subject suggestion to have tom quality come back and and give from an expert opinion from somebody who deals with this everyday statewide market based on our data 900 grand what's the probability that we break even or do better but no but it is like predicting the stock market i mean nobody can guarantee past performance doesn't predict future results you know it's just it's the best professional estimate and i think this is what we've tried to predict is the best professional estimate based on

146a decade plus of data what's going to get us to not hemorrhage money what's going to get us to break even and so you know hopefully we can nail it okay there's no guarantee hey if i could just clarify my brain freeze question in the beginning i was asking about the pension are we fully funded in that no okay but we're getting closer okay i'll i'll take that as a win i'm actually pension as the is the next few slides and there's not many so okay you know and and that'll probably wrap up the evening okay thanks done okay um and did you have your hand up yes i did yeah go for it i'll be really quick i don't have a question i just want to just say wow then you've outdone yourself and

147along with that thank you because that histori seeing that historical trends the ups and downs in for me is really useful and it it it does put the whole big picture in perspective so thank you for crunching all those numbers every which way but loose and um and that's all i have to say yeah okay well you're welcome thank you andrew i think you're up and my question was answered tim asked it but um it's just i can't imag i understand this is the way that this is done but this is only my second time going through this but this is just such a large part of the budget and it's such a wild card and we could sit here and talk about historic data and claim years and things until we're blue in the

148face but there's no better way to to do this i mean this is this is this is the way that it's done because tim asks questions it's better to go with somebody else and i guess we can't control policy premium increases but at least we know what that might be year to year versus funding and running i mean ones if we run out of money mid-year i mean well if we run out of money mid-year we're either going to have to save it somewhere else in the budget you know and or you know request a you know an emergency infusion from from the town that there's really our only two choices um and it you know listen it hasn't happened over the last you know decade since i've been here we did get down to

149200 000 and you know i mean some of the some of the board members are still with us you know that was kind of scary that that we would run it that close i see mr peregini shaking his head um and you know listen it's easy enough to get a quote you know to go fully insured but claims again claims the claims yeah you know whether or not you can predict them the quote is going to be based on what's the expected claims you know plus covering overhead you know plus profit in the case of a third party so there's no great answer i mean medical benefits no i i mean i'm not looking for an answer i have to say it i know we're just kind of you know talking it through here there's

150there's no great answer when we were you know fully insured we had a lot of the same questions well what do you mean my premiums going up you know 20 and that ultimately that's why we moved the hmo out of being um fully insured to self-insured and you know part of the reason that we were able to reduce our budget in a couple of years following 2015 is is because we saved quite a bit over fully insured premiums that we were paying to anthem so it it becomes it becomes sort of a comfort question because if you know that you're paying let's just use the numbers you know that you're paying a million dollars a month for your coverage and it cannot change during the course of the year because you had a lot more

151claims than the million dollars covered but the following year you're gonna make it up in higher premiums you know so even though your once your premiums are quoted they can't change they will change in the following year up there higher than what you basically paid for in your fully insured premium and in their in that model the insurers now have history of clean experience with our population and the actuarials will use that to adjust the premiums accordingly so that's always a lot of fluctuation um i'm sorry to cut you off andrew no i'm good when you mentioned 100 000 a year i i remember how and why we got to that but the town council if i care if i'm wrong i thought the the subsequent year they funded 900 specifically for the short the

152medical reserve account i could be wrong yeah i don't remember that being the case tony left 200 000 by ourselves well we got down to 200 and then you know claims started to subside so we closed that year even though we got down to 200 we closed that year with like 650 000 so that kind of the low point was in you know probably december after the h you know the high deductible plan year ended and then we kind of built back up to 600 000 by year-end and then we got a budget increase for the following year so that's how we started to build it back up the budget increase there was money specifically earmarked for the reserve fund yeah i mean it goes in the same way right it goes in that medical

153benefits line and you fund it monthly to the reserve i think that was uh if i remember correctly back when david schrum was still on the town council good old days no i had that that's all along though i mean not that it was an agent ago yeah yeah no council that now they had a short back up and yeah that helped that budget that year tim you have another question uh yeah just a quick comment that so i'm okay i mean given two bad choices i'm okay staying with you know the self-insurance if you think it makes more sense but i will just point out that you know like you were talking about comfort before budgetary stability uh if we got increased budgetary stability from from an insurance company there is a value an

154intangible value in that i think from uh from a taxing perspective um you know when the council has to levy the tax rate for homeowners who are paying the taxes to have that more stable i think is uh has a certain value to it but with regard to my one question the wellness program so it's not something that necessarily helps us next year but off into the future you know you have a pretty low turnover among employees have you talked to is it tom kowalczyk about wellness yeah increasing funding for the wellness program like with the benefit you know is it is the benefit does the benefit outweigh the cost of an increased budget there yeah so there's a couple of things the the you know the 8 100 we have budgeted is for the

155employee assistance program that you know we provide to all staff you know and the services that are available under that you know include counseling services you know for any employee who needs it if they're you know having you know some type of emotional distress um or other life events i mean it includes things like financial planning um seminars you know smoking cessation things that would help the employee and that's something that we pay for and it's predominantly to get those counseling services for when the employees need it beyond that though as part of our arrangement with cigna they have a much broader wellness program and they fund us you know between us and the town combined you know they're funding 55 000 a year for wellness programs to be used you know basically as as

156we see fit working with them so we've done some you know competitive you know exercise you know like walking challenges some recipe challenges we actually are looking at launching you know with them again this is paid out of the wellness dollars that cigna's providing um we're looking at a video based you know pretty comprehensive workout exercise program and that's on top of some of the integral programs that cigna has built in for diabetes management pre-diabetes management you know pre-hypertension management so within the scope of what cigna offers there is a whole wellness component that we receive and that's one of the reasons we went to to cigna is that they had a more robust offering than anthem did okay thank you and is is any of this is any sort of wellness wrapped into the

157contracts our employ our employer you're talking about the bargaining unit yeah the union contracts yeah we do not okay put that on your to-do list yeah i mean i think that is a i think that is relatively commonplace with union contracts isn't it where it's like you need to simply go for your preventive checkup correct okay so just looking forward yeah there is um you know i mean they come in the form of a carrot or a stick so the carrot is you know if you go and get your dental cleaning every six months you know you reduce your coshare or your your whatever payment you make toward your medical benefit um if you do that if you don't do that you get dinged so i'm familiar with what what um you're talking about i'm

158pretty sure the state has that incorporated into their program now as well but yeah that's that's a great suggestion it's not just that the state like i i know the police and that's a different thing but like the police have that wrapped or have some things or used to have stuff wrapped in their contract now they really need to be physically fit to run after somebody different from you know other other jobs but anyway that's it thank you okay faith you had a comment yeah um i i'm a big fan of screening so anything we can do to get everyone their screenings but that's not why um so you know tim your comment about the stability of a third um uh yep going off of self-insure versus going with a carrier you're not going to

159get any stability all you have to do is pick up the paper from one year to the next and see what happens with insurance premiums i think vin's on the right track with self-insuring it is risk it says it's hair-raising but when you start to see 20 and 30 premium increases which is what a lot of these companies are facing um i don't think we want to be in that ballpark or be playing that game so um just bite your nails everybody but i i then i i applaud you with what you've done and how you're controlling it and um i really don't want to be beholden to an insurance carrier it's my opinion okay thanks um just to close out this section i'll just say uh vin i did uh i also very much

160appreciate all that he stole the historical data that you gave us to hopefully better come to come to a good decision uh this time around and um we will consider having um the was it the broker or the uh forget the gentleman's name yeah it's tom from usi he is our insurance broker benefits broker yeah for additional information if we require it um we'll we'll see what what comes of it during our deliberations uh and also and just as a clarification um all of these claims or almost all of them did didn't even deal with the pandemic right we had good fortune where we weren't having our employees you know end up in the icu or any there were at least very few where there we had any life-threatening situations to date uh that covet

161that's correct and i didn't see december's report but the year to date through november covert related expenses was 60 000 and it's primarily testing so yeah we've been lucky on that front none of the large you know claims or we haven't had any large claims related to covet and let's hope that continues especially now that we've got the vaccine you know that is starting to be distributed i'm sure that you know there's been a lot more testing over the last couple of months but right um okay are there any other comments or questions on to the all right last second right home stretch i'll try and make this as quick as i possibly can and it is the it is the pension um there's not you know a lot of new news here it's kind

162of a repeat of last year with a just one small update so um you know we in in a nutshell pension comes in two forms either the town pension plan which was which is available only for those employees that were hired before 2012 and that's what this number is showing i'm assuming everybody could see that little laser red dot we've got 90 employees participating in the pension plan those are active employees that are still contributing we had 102 last year so as people retire that 90 employee number is going to continue to drop so this year's contribution to the town pension plan for those 90 employees is 864 627 and it's really not just for those 90 employees because part of what you're funding in the pension is for the employees that are currently retired

163and living longer and and receiving their payout for longer periods of time and and we'll get to that in a minute and then the second for employees hired after july of 2012 they're eligible for a defined contribution plan we've got 172 employees that's up from 161 last year 280 000 is the contribution for those employees so we're looking in this budget to increase by forty eight thousand five thirty eight to one million one forty four six twenty seven for next year you know what you see here noted at the bottom is that teachers and administrators they fund their own pension through salary uh deduction and so we only pay for an annuity for our administrators as part of their contract but teachers and administrators are not eligible for either of these two pension plans that

164i mentioned um nothing changed in terms of you know how the funding works the board contributes five percent of the non-certified eligible employees you know five percent of the wages if the employee puts in at least one percent we match it the secretaries have a slightly different offering based on the arbitration award from 2018 but some the important thing is in the defined contribution plan we pay a piece as long as the employee contributes we add either another one or three percent match um what's driving really our pension costs are two things one is the decline that we saw in the in the stock market um and that's what this next chart shows and i've used this in previous years so you know back in 2000 a 2009 you know when the markets you know

165took a significant hit it was right around this time frame you could see that the markets dropped and then the markets started to come back by 2012 but you know that caused a lot of pension plans to be severely underfunded and you could see since 2012 the market and this is the dow jones industrial average so this is you know just uh you know kind of a an indicator of you know where stock investments have gone since 2012 you know we're we're eight years in now you know the dow was at a low of 6500 and you know i'm pretty sure the market closed over 30 000 again today so it seems that the markets have certainly recovered but what happened during this period of time is a lot of the actuarial experts started to

166rethink because so many pension funds were underfunded they started rethinking what the rate of return assumptions are for future years and so that affected us and that's what what this bullet is and this is probably the more important thing that's driving our pension costs right now so you know back around 2012 we were carrying an eight and a quarter percent return assumption in the town pension plan and so the actuaries recommended and ultimately the town council who uh you know does have responsibility for this determined that we should reduce our return assumption in future years from eight and a quarter down to seven and a half percent which requires additional funding not only for active employees but also for all the employees who are retired and collecting their pension and then in in 2020 the

167actuaries recommended and the town council proved a further reduction in the return assumption so as of the end of this fiscal year the return assumption being used is seven percent so we went from eight and a quarter down to seven and by doing so that requires additional funding which offsets some of the gains we've had in the markets okay so i'm just showing you this chart it's a little bit busy um and it's also this eight and a quarter next year will read you know assumption down to seven percent so these are the these are the contributions we were making from our budget way back to 2006. so you could see here you know we were budgeting under 250 000 per year as pension contributions and then in 2011 was the last year before we

168started this pretty rapid increase in the pension contributions again driven largely by the the need to fund hire because we reduced our return assumption so you could see in these years we had significant increases to the funding kind of leveled off for a few years 2020 it dropped but you know the reason that that dropped actually is because that was part of the pandemic year and wages decreased we didn't have overtime you know we didn't have additional hours for a lot of staff because we were remote for three months so this was a bit of an anomaly this year's this is 2021 this year's budget is a million ninety six thousand and next year's budget is a million one forty four six twenty seven so this is again that request for forty eight thousand five

169thirty eight it's a four point seven percent increase um however the actuaries still i think do need to do some additional work so even though this is what we budgeted i don't have the final number yet it may change and that kind of wraps up pension this is just that same chart showing the percentage of total budget represented by employee benefits and you can see there has been if you did a trend line you know this has been increasing since the year 2000 it's been a little bit up and down and the driving factor you know this year even though we came down you know for three years in a row we just have to drive it back up so that contributions equal claims and then this is the overall summary for this you know

170section tonight that um total salary and benefits is an increase of 5.3 percent but of this 3 million 166 as we just looked at you know two-thirds of that is strictly for um for benefits and primarily medical benefits this is the budget calendar and we'll go back you know for any questions certainly but you know this i think concludes january 19th this is the first of the two administrative review of accounts the next meeting of the finance committee for public budget review is january 26th january 28th we have the public informational meeting and possible adoption of a board of ed budget there is a special board meeting to adopt a budget scheduled for february 4th if needed and again these are the you know dates that we have to meet related to the budget process

171and so i will go back and see if there's any questions on pension or anything else from this evening tim thanks adam uh yeah and pensions van uh so we have i don't know how much we have in our investment funds and our pension funds do you have do you have any idea is the is the dow jones a reasonably good indicator i mean is it a decent majority because i know we do like when i've seen it before those like rights and private capital equity i yeah all sorts of different investments i'm just wondering if the dow jones is a like a decent share of it it's probably not reflective of um we have a much more conservative investment profile than as reflected by the dow so that's really just kind of an indicator

172of the market um and you know all that information related to the pension is disclosed in the yeah you know in the kafir that the town provides you know we do rely on the actuaries to tell us what to fund to the pension but yeah that's a good point tim that you know had we gained all of that you know return you know from you know back around 2012 you know the pension probably would be funded a lot higher but it is you know pretty high fixed income percentage in our in our investments okay um and i may have asked this question last year i don't recall the answer if i did ask can we buy out pensions could we offer people buyouts i don't think we could do that within our structure it's not

173permitted within the struct so is it illegal or just within the structure we have no it's it's just not in accordance with you know our planned document okay yeah i mean the employees that you know retire have the right to you know take you know a pension based on their single life joint life those are the typical you know options that were offered in a pension but you know to to buy out somebody's pension no i can i can confirm that with jim jascott but i've been through the pension document i definitely do not remember seeing anything along those lines i'm just thinking all things being equal you ultimately could get rid of like an administrative fee i mean what you're doing is you're shifting risk away from the schools of the town and over

174to the employee but risk could be good or bad yeah so some may want to do it and if you can just reduce the administrative administrative burden you're getting closer to that zero number there's less work to do anyway just a thought thank you okay uh faith uh vin off dan do you know what the um the portfolio balances and if not could we get that yeah thanks you're talking the retirement the total retirement investment portfolio right well in the balance of the funds equity to bonds just how they apportion things you said it's a conservative fund i'm just error conservative yeah and if we could see that thanks you're welcome um then uh mike my question is um at what intervals do we reassess with the actuaries well they do um they do an

175update every year um and every two years they provide a more thorough valuation so they did one i believe it was last july um and as i said we'll we'll get an update from the actuaries on as to what we have to fund but i can talk to jim jascott to get the latest and and greatest valuation and the portfolio information as well so i'll provide that either you know at the next meeting or you know by email uh and the reason i ask is my concern is that you know i've moderately educated in in finance and from what i've seen we're coming to the top of a really incredible stock market and if we were to suffer a prolonged correction um what does that do to this pension plan because from what i'm seeing

176we're at like i don't know 60 funding maybe a little higher no no we're definitely higher than that yeah if i recall the cash value of that fund we could what tim was suggesting if we wanted to cash out and buy buy current pensioners out we couldn't i don't think there's enough money in there to do that um so i i'm just wondering what happens to us i mean if we're looking at what was it uh there are four years between 12 and 16 where our returns were ridiculous in the stock market but we were still piling money into that plan and it's evened out a little bit now but if if the market were to go down um do we do we uh have a significant financial exposure there or we could be looking

177at another 100 or dollars a year just to show up the pension and if we couldn't afford that what happens do we have bankruptcy or something i mean i don't know it's a huge liability you know i don't wanna i'm not an expert in this area but i will you know respond to a couple of things i know that um you know first of all the actuaries do account for fluctuations in the markets it's not just the stock market to point to made earlier it's you know whatever markets that the pension plan is invested in and they do take a long-term look actually at what the risk is with ups and downs of the markets that's the very reason that they've recommended that you take the return return assumptions you know down from you know

178where we were at eight and a quarter and now we're down to seven percent um so i at one point actually our pension plan was over a hundred percent funded right and then as the market started to drop and as the return assumptions changed then you know you were no longer at 100 but i want to say that when i looked at this last year you know i believe we were around 85 funded you know to the actuarial requirement and you don't have to make up the difference in one year you know the actuaries you know have recommended a schedule and and they provided various options you know to the town council to fund and get our actuarial actuarial value of the overall plan back where it needs to be so i'm just you know

179i just wanted to be careful about the 60 i'm pretty sure we're well above that at this point and part of that is you know not just because the markets have bounced back but it's because we've been significantly increasing the contributions each year not only on the board side but on the town side as well we're kind of locked step on that we get our pro rate of you know allocation based on the employees that we have in the pension plan so i'll get some more information from jim along those lines and maybe i'll snuggle up to the uh kafir uh because i think i don't think i had access to uh the current kafir yeah you know i don't think the new one is out yet oh it's not okay i don't think so

180well whatever it is uh we'll look at it again i guess you could snuggle up to last year's cafe if you'd like all right well i'll look at that because maybe it was two years ago the one i was looking at so um are there any other questions uh or comments on this section okay seeing none uh is uh vin uh looked like your presentation had concluded with uh i'm out okay all right let me just uh uh check that it's tapping out okay tonight just for tonight evan just just for fun uh was there any uh audience comment uh jeff did you have anything uh come over the email or anything like that no okay yeah is that usually what i mean in past years we have our normal commenters uh perhaps they'll they'll

181save their comments for next week or perhaps visit them for for next week i don't know um okay yeah they're waiting to review the conference as well before they could comment that might be next week to give a little try to wrap their arms around it yeah um that being said i i i am a little concerned that we don't have a lot of public feedback yet uh especially after last week's message and um i i again i i don't i certainly do not want to create any more work for anybody but there was a time when we would without the florida i think we used to do those short segments on the cable channel to put some out stuff out there i don't know if it's worked in some short youtube clips maybe from

182cps just highlight the major points of the budget because i i concerned that by time folks tune in tune in uh it'll be a surprise for them in february or march when the town council takes it up that you know there's so much going on with code that i think people's attention spans are diverted for right for reason so i don't know here tonight but i'll just think about what we can do to kind of uh put the word out there about this particular budget well you know i was concerned about that too tony and have already met with darcy chs pto tomorrow night is done i have others scheduled so you know certainly as part of that process i'm going through our budget and school modernization and then we'll uh you know certainly i

183can i can definitely add a video to put out to the masses as well yeah just just thinking out loud but but thank you for all your work on this thanks man all right business partnership too um seeing no other comment i again uh i'll extend uh uh the board's thanks to mr maciana for this excellent presentation or part one of the presentation thank you for answering all our questions this evening if there are no other comments or questions i would like to entertain a motion to adjourn all right um is there any discussion on the motion being good all in favor