DFinance Committee Information Requested

Several pieces of information were requested at the last Finance Committee meeting.

One of the requests for information centered on how much health care cost savings the district had experienced by switching to the AETNA Preferred Provider Program (AETNA PPO). The attachment below entitled "Aetna Savings 2 1 2017 through 12 31 17" illustrates the amount of savings. KPBSD started with the AETNA PPO an February 1, 2017, so the saving over eleven months was $2,674,151. For comparison purposes, the savings for a year under our previous Multiplan PPO had been $1,486.593. Using those figures, it appears that KPBSD experienced an additional savings of approximately $1,187,558 over eleven months by switching to the AETNA PPO.

The other health care cost savings question centered on how much savings the district had experienced by adding a High Deductible Health Plan (HDHP) option for the employees. To answer this question, we will need to look at the required contribution differences between the Traditional Plan and the HDHP. The district currently pays $1,783.73 per month for Traditional coverage and $1,669.58 for HDHP coverage. This is a monthly difference of $114.15 which equals a yearly difference of $1,369.80. There are currently 107 employees selecting HDHP coverage, which would represent an annual contribution savings to the district of approximately $146,568.60. Employees currently pay $388.70 per month for Traditional coverage and $252.26 for HDHP coverage. This is a monthly difference of $114.15 which equals a yearly difference of $1,369.80. With 107 employees selecting HDHP coverage, those employees are saving $175,188.96 per in total.

In previous budget years, conversations were held about the differences in the amount of fund balance usage predicted in the budget at the start of a budget year, and then the actual final fund balance usage reflected in the Comprehensive Annual Financial Report at the end of the budget year. These differences occur largely as a result of unspent money authorized in the budget, but also from unexpected revenue variances. The budget authority to expend in the General Fund is only for a single fiscal year, therefore, legal authority to spend the funding "lapses" on June 30. Within governmental budgeting, this has led to the unspent funds being commonly referred to as Lapse Money.

In an effort to reduce the amount of Lapse within the FY17 General Fund Budget, we made a concerted effort to identify and reduce areas within the budget causing a lapse difference. Two of the major areas that were targeted were the reduction of unallocated staffing positions, and a reduction in salary and benefits to reflect the difference created when experienced staff retire and less experienced staff replace them.

In the attachment labeled "FY17 Budget Memo 6 30 2016", the predicted usage of Fund balance of $1,967,428 is highlighted in yellow. In the attachment labeled "FY17 Comprehensive Annual Financial Report Fund Balance Usage", the actual usage of $1,315,015 is highlighted in yellow. This is a difference from predicted to actual of $652,413. When you consider that the total General Fund expenditures and transfers for FY17 were $141,065,303, it means that the variance in Fund Balance usage equaled 0.46% of the total expenditures and transfers. If you consider that the Governor subsequently did not veto the $444,812 in Foundation Funding he originally announced, the variance was even less.

Preliminary information for the FY19 Budget Work Session is included in this board packet, and will be used for discussion at the Finance Committee Meeting as well.