Wednesday, December 10, 2014

Benefits Committee Funding Update

The Benefits Committee met today, Wednesday, December 10, 2014, at 8:00 a.m. to receive information from Associated Financial Group (AFG) regarding wellness plans and our dental and medical funding analysis. Dr. Kahl gave an overview of what has been accomplished through strategic planning and what to expect from today’s meeting.

Associated Financial Group (“AFG”) began working with the SDJ in September, 2014 as the District’s benefits consultants. Al Jaeger and David Kracht, both Senior Vice-Presidents and Senior Benefit Consultants with AFG, immediately began the benefits strategic planning process. This process included 4 phases: pre-planning, discovery, learning, and setting the course.

Al Jaeger and David attended two Meet and Confer sessions with the Board of Education and representatives from a large number of employee groups. The first Meet and Confer session focused on the discovery phase and resulted in an articulated vision and a SWOT (strength, weakness, opportunities and threats) analysis of our current benefits. The second Meet and Confer session focused on the learning phase where AFG presented an overview of the fundamentals of benefits, loss ratios, and peer group benchmarks. They also presented data on our health plan utilization, trending data, and an analysis of ACA (Affordable Care Act) compliance and impact, including how and when the District will be affected by the Cadillac excise tax.

Al and David facilitated a discussion with the Benefits Committee in November and led a discussion in order to set priorities for benefits over the next three to five years. Two of those priorities included wellness initiatives and plan design review which includes an analysis of dental and medical funding.

During today’s Benefits Committee meeting Al Jaeger of AFG presented a summary of the Health Risk Assessment and Wellness planning document. The purpose of a wellness program is to establish a progressive wellness model that is integrated into the long term planning and objectives of the district’s benefit program. The overarching objective is to establish a wellness program that positively impacts the benefits to be sustainable, accommodating and valuable to staff members. Next steps include packaging this into the final plan design for fiscal 2015-2016 or earlier. This should be determined no later than March 2015.

David Kracht, AFG, presented the dental and medical funding analysis. The SDJ dental funding analysis shows that we spent 89 cents on every dollar received as premiums for the 13-14 plan year. This can be a good predictor of what will happen in the future. The year to date (3 months) percentage of total costs to funding for this plan year (9/1/14 - 8/31/15) is currently at an estimated 69%. The SDJ is doing well, financially, with this plan design.

The analysis of the medical funding report revealed the year to date percentage of total costs to premium funding at an estimated 120% for the 9/1/13-8/31/14 plan year. We used money from our reserve to cover the $2.1 million dollars funding shortfall of fiscal 2014-2015. The projections for future costs for health care are grim.  The claims funding for fiscal 2015-2016 is projected to be $17.8M which is an increase of $5.5 million or 42.47% from fiscal 2014-2015. These projections are early and there are some projection variables. However, we can expect a plus or minus 5% variance to these projections

Administration will continue to work with AFG to look at healthcare options with a three-pronged approach, which includes the following: driving down costs for the remainder of the 2014-2015 school year without raising premium share; changing the plan redesign for the 2015-2016 school year, which may include increases in premium share; and long range planning that may include an onsite clinic model. The superintendent will bring a recommendation to the Board no later than January 2015 for the 2014-2015 school year and no later than March 2015 for the 2015-2016 school year. We will share the information received today during a Meet and Confer session on Thursday, February 5, 2015, from 5:30 pm - 7:30 pm.

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