Published Friday, March 14, 2003
Herald Staff Writer
Jamestown Area School Board members don't seem worried about the additional money they must pay to the Western Pennsylvania Schools Health Care Consortium but presidents of at least two other Mercer County school boards are offended by comments that everyone should have been aware of the precarious financial position.
Jamestown Superintendent David Shaffer told board members Thursday that the district has $130,000 in a reserve fund to cover a bad health-care year.
The district owes the consortium -- which provides health-care coverage to member schools' employees -- $162,000 by June 30. Shaffer said the additional $32,000 will come from somewhere in the current budget.
Shaffer said consortium members were aware as early as August that the insurance trends haven't been good, although no one learned until Feb. 27 that the deficit was as large as it is.
"We're fully aware of the need for a contingency in the event that we have a bad year," Shaffer said. He urged the board to look into the future and rebuild the reserve. "If you don't keep a fund in reserve, then it becomes a crisis. I don't want to minimize this," he said.
Other school boards are in the process of developing plans to pay their share of the approximately $4 million the consortium is in debt.
"I take great offense to saying that we've known for a long time," Hermitage Board President Duane Piccirilli said in reference to a comment Friday in The Herald by Dr. David K. Monsour, co-chairman of the consortium. He said no one should have been surprised to learn the 12 member districts owe additional large sums of money this year.
"We were told they (the consortium) needed an advance payment to assist with cash flow. Then I go to a meeting (Feb. 27) and the audit said it was a 13th payment," Piccirilli said.
An audit conducted by Black, Bashor and Porsch of Sharon, dated Dec. 6 -- almost three months before school directors said they were informed of the 13th payment -- said the districts funded an extra payment in November.
"Nobody knew the extent of the problems. What's that telling us?" Piccirilli asked.
Sharon School Board President Melvin Bandzak said he understands the reasons given for the deficit but also took "great exception" to Monsour's comments that everyone should have known about the financial problems.
Bandzak cited several examples of times when he and others raised questions about the consortium's financial condition and were only told that there were temporary cash-flow problems.
The Herald was shown a Feb. 19 e-mail from Monsour to school administrators in the member districts in which Monsour says though there were some financial problems things were looking better for the future. The e-mail gave no indication that the districts were going to have to pay hundreds of thousands of dollars.
Sharon owes the consortium $680,000 and Hermitage owes $623,000. The other member districts in Mercer County are West Middlesex, Farrell, Commodore Perry and Reynolds.
A portion of each member school district's monthly premium to the consortium is put into a stabilization fund to be used in case of a bad year but that money was already spend this year.
Monsour said increased claims, the consortium becoming self-funded and changing third party administrators caused the deficit. A third-party administrator processes the claims and bills the consortium for the care. UPMC Health System is the consortium's administrator.
Shaffer told his board members that being self-funded means you "pay as you go." He said you have to be prepared for a bad year, and industry trends show there will be a bad year about every five years.
You can e-mail Herald Staff Writer Kristen Garrett at:
kgarrett@sharonherald.com