Not a repeat: Prescription drug costs blow an even bigger hole in VCSD budget

VOORHEESVILLE — In just a few weeks, the budget deficit for the Voorheesville Central School District’s proposed $25.4 million budget for next year has increased another $80,000, leaving the school board looking for ways to fill a $622,000 gap.

As in March, the deficit increase is due to a spike in prescription-drug costs, specifically, the increased cost of specialty maintenance drugs that have no generic equivalent. The 35-percent increase in prescription-drug costs means an additional $480,000 has been added to the budget deficit.

“A lot of these drugs cost nearly $10,000 per month,” said Francis Rielly, Voorheesville’s assistant superintendent for finance and operations. “So, it’s driving up the cost.”

Drugs like Humira, an immunosuppressant used to treat arthritis, plaque psoriasis, Crohn’s disease, and ulcerative colitis; Enbrel, which treats autoimmune diseases like rheumatoid arthritis and psoriatic arthritis; and Xeljanz, which is used to treat rheumatoid arthritis, psoriatic arthritis, and ulcerative colitis, were a few examples cited by Rielly at the March 27 budget forum as specialty maintenance drugs.

Humira is not only the best-selling prescription drug in the United States but around the world as well. AbbVie, the maker of Humira, has doubled the drug’s price from $19,000 annually in 2012 to about $38,000 today.

With New York State passing its budget this week, it doesn’t appear that Voorheesville will be receiving any additional school aid from the state, leaving the district to balance its 2019-20 budget with cuts to jobs and programs while also increasing property taxes.

The current $622,000 deficit is based on a calculation that assumes a 2-percent levy increase; if the district were to set the property-tax levy increase at 2.96 percent, the maximum allowed by state law, it would yield an additional $169,000, leaving Voorheesville with a $452,600 budget deficit.

The school board has the ability to raise the levy limit above 2.96 percent; that would require the board by a supermajority vote — 60 percent or, in the case of the Voorheesville School Board, five of seven members — to raise the levy, which would ultimately have to be approved by the public in passing the budget.

When asked about exceeding the 2.96-percent property-tax increase to help balance the budget, board President Doreen Saia told The Enterprise on Wednesday: “It is always a consideration.”

However, having to already ask for the maximum allowable tax increase is in itself an acknowledgement of the significant contribution that the community has to make, Saia said.

She added, “And the governor doesn’t help us by continuing to call it a 2-percent property-tax cap, when it is not.”

Last year’s budget included a 2.5-percent increase in the property-tax levy, when the maximum allowable increase was 2.78 percent. The levy for each school district is set by a state formula that takes a number of factors into account.

For a list of proposed cuts, see table.

If the school board were to agree to all of the recommended cuts, the district would be within about $10,000 of a balanced budget.

A budget workshop will be held on April 8, at 6 p.m.; the regular school-board meeting will follow.

The good times lasted for a long time

Voorheesville has a self-funded prescription-drug plan, meaning that plan is not tied to the district’s health-insurance plan; it’s a separate premium set by the district’s pharmacy benefit manager, ExpressScripts.

Since about the 1980s, the pharmacy benefit manager is a middleman that negotiates with drug manufacturers on behalf health plans of all kinds: government, private, and employer-based.

At first, because of competition, pharmacy benefit managers reduced drug prices. But the consolidation of the industry — three companies now control 85 percent of the market — some have argued, has led to increased prices.

The cost of Voorheesville’s prescription-drug plan, Rielly said, is based on past experience, and, historically, the district has had low rates. Over that time, Voorheesville has been able to accrue a reserve of $681,000, so when drugs costs go over the monthly premium, the reserve is used to pay the difference.

To date, Rielly said, the district has spent about $300,000 of the $681,000 reserve. And, with three more payments due this school year, in addition to the regular monthly premium the district pays, Rielly expects to burn through another $120,000 in reserves paying for specialty maintenance drugs.

Rielly also said that the last invoice the district received had costs that were increased by 40- to 45-percent. “We don’t know if that’s going to stay the current trend, or if that was just one month,” he said. “So, we need another bill to see if the trend is going to continue.”

Driving down costs

The school district is providing prescription-drug benefits to about 680 people — current and former employees as well as their family members. Of the 680 people receiving benefits, 14 use specialty maintenance drug. The district currently covers about 80 percent of the health-care costs of its employees.

Since the 2001-02 school year, the district’s health-insurance costs have more than quadrupled, from about $1.2 million in 2001-02 to almost $5 million in next year’s proposed budget. In those two decades, the number of employees in the district has remained about the same, according to Superintendent Brian Hunt.

During the 2003-04 school year — the earliest data available — Voorheesville had an enrollment of about 1,270 students; the most recent available data puts the district’s enrollment at about 1,166.

At the March 27 budget forum, Rielly offered a few ideas to lower costs, while some residents offered up Rielly’s job to close the budget gap.

Step therapy was one option Rielly proposed. With step therapy, a drug recipient would start with a generic drug, and, if that didn’t work, the recipient would then move up to a brand-name drug.

While it won’t do much to lower the costs brought on by the 14 specialty maintenance drug users, step therapy may help the district cut costs by substituting generic drugs that work as well as brand-name drugs for other recipients.

“And there’s quantity limits,” Rielly said. Some people receive a 90-day supply of a drug and never come close to using the entire prescription, Rielly said he was told. By limiting quantity, it could eliminate waste, which could lower costs.

He also said that there was talk of moving people who are eligible for Medicare off Voorheesville’s Capital District Physician’s Health Plan insurance and into a Medicare Advantage Prescription Drug plan that offers prescription drug coverage.

Another option is to look for a different health-insurance consortium to join, but that wouldn’t help solve the immediate crisis.

Public prescribes administrative cuts

After Rielly had finished, the public began to weigh in on the cuts.

Rachel Gilker said that none of the cuts seemed to affect the administration.

“I know I’m not alone in asking if there are redundancies or ways that jobs can be combined,” Gilker said. “Because all these cuts directly impact the students.”

Superintendent Hunt responded that Voorheesville had already cut a number of administrative positions. Referring to cuts that are being proposed in the Mohonasen Central School District to close a $2 million budget gap, Hunt said Mohonasen is proposing cutting positions that Voorheesville had long ago cut, like assistant principal.

The generous benefits that teachers receive were also questioned.

Many private-sector workers, it was said, do not receive the health or retirement benefits that public-school teachers receive and the question was asked if there were savings to be had there.

“That’s a long story,” Hunt said of the agreements the district has with three bargaining units. “But I can give you a shorthand [answer].”

The district’s agreement with the United Employees of Voorheesville, which represents non-instructional employees, Hunt said, had just been renewed. And the district is still negotiating a contract with the Voorheesville Teachers’ Association, he added.

Hunt said that district covers about 80 percent of employee health-care costs, which one resident said was “awfully generous.”

Kathy Fiero, the teachers’ union president, responded to the benefits question: “Public school benefits have always been kind of the key to the job, because the salaries are lower [than those in the private sector].”

Recently, the Rockefeller Institute of Government compared the salaries of teachers in all 50 states and found that teachers in New York State make more per year than anywhere else, about $80,000 annually on average.

Asked about New York State’s teachers salaries, Fiero wrote to The Enterprise in an email: “When you take an average of NYS as a whole for almost anything, the downstate area/NYC/Long Island carries more weight than upstate (because the cost of living is higher). The average teacher in upstate NY is not making $80,000. In most upstate contracts that salary range would only be attained toward the end of a 30-year career.”

She further wrote: “If you look at the increased responsibility over the last decade with everything from allergies to state testing, I don’t think salaries are out of line. If you delve further into this issue you will find economic data that shows teacher salaries have stagnated…”

Based on The Enterprise’s compiling of teachers’ names from Voorheesville’s staff directory — teachers only; no teaching aids or assistants, administrators, or names that fell under the “School Staff” header — and cross-referencing those names with the most recent data from See Through New York, the average salary of a teacher in Voorheesville, based on The Enterprise’s analysis, is about $65,000 per year.

Later, Hunt was asked if there were specific subject administrator positions that could be cut; subject administrators are teachers that typically teach fewer classes. Those positions, too, had been cut already; Voorheesville has department chairs who are mostly teachers with some administrative responsibilities.

When it came to specific administrative jobs being cut, Hunt was asked if the district needed an assistant superintendent for finance and operations or a director of curriculum.

The director of curriculum, Hunt said, serves several functions, including district data coordinator, which Voorheesville is required to have. The current director, Karen Conroy, according to See Through New York, has an annual salary of about $96,000. However, the district is not required to have a director of curriculum, Hunt said.

“It is common in a school our size to have a Superintendent with strong financial skills and a treasurer, not an Ass’t Superintendent for Business,” Kathy Fiero, president of the Voorheesville teachers’ union said in an email to The Enterprise. “Also you can have a School Business Official which is a lower paying job than an Ass’t Superintendent.”

Rielly, the current assistant superintendent for finance and operations, according to See Through New York, earns $102,000 per year.

Each of the 24 component school districts of the Capital Region Boards of Cooperative Educational Services has some kind of designated business person.

In the Berne-Knox-Westerlo Central School District, with about 760 students (Voorheesville has about 1,166), the designated business person is called the school business executive and has an annual salary of about $72,000 per year, according to See Through New York.

The Guilderland Central School District, with about 4,836 students, has a business administrator, with an annual salary of about $88,000; and an assistant superintendent for business, who earns about $160,000 per year, according to See Through New York.

An analysis of Voorheesville’s spending on administration as compared to other similar component districts of Capital Region BOCES — Cobleskill-Richmondville; Cohoes; Ravena-Coeymans-Selkirk; Schalmont; Schoharie; and Watervliet — by Forecast5 Analytics, a company that makes forecasting software and analytic technology for the public sector, found that Voorheesville spends 5.89 percent of its budget on administrative costs, which is less than just two other districts — Cobleskill-Richmondville and Watervliet .

The analysis was provided to The Enterprise by Hunt.

When compared to the 11 other school districts in Albany County, Voorheesville’s administrative spending is less than all but three districts — Watervliet; the city of Albany; and South Colonie

And, when compared to 13 other area school districts with similar enrollment, Voorheesville is eighth out of 14 in administrative spending.

 

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