School board pays down insurance debt
June 12, 2002
The Havre school board Tuesday agreed to use more than $58,000 of surplus money to pay off part of a debt accrued by its health insurance provider.
Havre Public Schools, according to district director of operations Ric Floren, is responsible to pay $184,000 of the debt of the Helena-based Montana Unified School Trust.
"The only way the debt can be reduced is if the users pay the debt down," Floren said.
MUST's debt, which Floren said is about $6 million, occurred because it owes that much more than it collected in premiums.
"They actually went into the hole because they didn't collect enough money," he said.
Of the remaining $126,000 Havre Public Schools is responsible for, an additional $34,000 will be paid with money from an insurance adjustment fund the district maintains. The fund is a savings account holding money left over from the district's previous insurance provider, Blue Cross/Blue Shield.
The other half of the debt, $92,000, will be covered by an 8 percent insurance premium hike for employees for each of the next three years, Floren said.
The board voted 4-1 in favor of using the $58,000 in taxpayer money to pay down the debt. Member Joe Marino abstained from voting, because, he said, he's on the board of directors of a competing medical insurance company.
Board member Dave Milam cast the lone nay vote.
"This sounds like kind of a sloppily run outfit," Milam said. "Besides, if we have $58,000, I'd like to see it go into the classrooms."
Floren suggested to the board that this was the best time and way to reduce the debt.
During the last four years, he said, many teachers and other staff members have left Havre Public Schools.
"By paying down half the debt, the district is saying it's paying for those who have left," Floren said. "This is the last year that any money will be available to do this."
It's also the second year in a row in which the quality of coverage has gone down, Floren said.
"A year ago, (MUST) elected to go from the normal policy' to the reduced normal policy,'" he said.
The upcoming school year will be the district's fifth with MUST as its provider. Between the first and second years, Floren said, rates stayed the same. This year, he said, the premiums jumped 36 percent, including an 8 percent increase to begin paying off the debt.
With the $58,000 paid off in one lump sum,the school district employees' increase will be only 28 percent.
"When I was informed that we would have a frozen two-year rate, I knew it would come back to bite us," Floren said. "Once we give them this money up front, it will reduce the amount of our increase."