Voorheesville School Board tables vote on approval of 2019-20 budget

VOORHEESVILLE — Faced with cutting five posts and slashing programs to save half-a-million dollars, the Voorheesville School Board delayed the inevitable by a week and day when it voted on Monday to wait until April 16 to approve a budget for the 2019-20 school year.

The voters will have their say on May 21.

Full-time positions that could be cut include: a kindergarten teacher, the school resource officer, a one-to-one aid for a student, and two teaching assistants. In addition, it’s been proposed to cut two part-time teaching positions and to reduce the hours — and salary — of two other teachers.

The decision to wait until April 16, on whether or not to approve the proposed $25.4 million budget for next year, comes as the school board grapples with a $622,000 budget deficit fueled mainly by sharp increases in prescription-drug costs.

The district had budgeted $1,o74,800 for prescription-drug coverage this year; so far, it has exceeded that amount by $588,000. Specifically, the budget deficit is due to specialty maintenance drugs that have no generic equivalent.

Currently, the district is paying for the prescription-drug benefits of 160 active employees and 95 retirees. Add in family members, and Voorheesville is providing drug benefits to 680 people of which 14 use a specialty maintenance drug.

At a budget forum last month, Francis Rielly, Voorheesville’s assistant superintendent for finance and operations, said of the specialty drugs, “A lot of these drugs cost nearly $10,000 per month.”

At the April 8 forum, Rielly struck a serious tone about the problems the district is facing.

“This is an organizational health issue; this isn’t union versus union or district versus employee. This is a situation where the health of the school district financially is at stake,” he said. “If we don’t address this situation, what’s going to be proposed … tonight is only going to be exponentially worse next year.”

As an example of the larger problem the district may face in the future if it doesn’t tackle costs now, Rielly pointed to the issues that the Mohonasen Central School District is facing with its $2 million budget gap. “You only need to look at Mohonasen’s lack of addressing the situation properly to see what happens,” Rielly said.

Mohonasen is looking at cutting about 20 full-time positions; however, eight of the jobs will be cut through attrition, from retirement or resignations that go unfilled.

At Voorheesville, five full-time positions may be cut while another five would be affected. If the district were to accept all of the proposed reductions, it would save $477,100.

The current deficit is based on a calculation that assumes a 2% levy increase; if the district were to set the property-tax levy increase at 2.96%, the maximum allowed by state law under the cap, it would yield an additional $169,000.

And, the school board has the ability to raise the levy limit above 2.96 percent; that would require the public to pass the budget with a supermajority vote, or 60% of the votes cast.

At the April 8 budget forum, the board wouldn’t entertain the idea of a levy limit that exceeds 2.96%.

Voorheesville has a self-funded prescription-drug plan, meaning that its plan is not tied to the district’s health-insurance plan; it’s a separate premium.

The cost of Voorheesville’s prescription-drug plan is based on past experience, and, historically, the district has had low rates. And that low rate has meant that Voorheesville employee premiums have been lower than those of employees in other school districts.

Over the past three years, Hunt said during the April 8 budget forum, the increases in cost that the district saw in its prescription-drug plan were: 10%, 0%, and 0%.

Now, as costs have increased by well over 30 percent, the district has had to tap a prescription-drug reserve to pay the difference when drugs costs go over the monthly premium that is paid by employees. Voorheesville, over a number of years, had accrued a reserve of $681,000.

By the end of the fiscal year — June 30 — the district expects the reserve to have less than $100,000.

During the budget forum, Rielly said that employees in other school districts have monthly premiums that are closer to $200 as opposed to the $125 per month Voorheesville employees pay, which is because Voorheesville has, historically, had lower rates than neighboring school districts. This same problem is a prime factor for why Mohonasen has a $2 million budget deficit.

“Two-hundred dollars seems to be the magic number that stabilizes,” Rielly said.

Any premium increase would have to be negotiated.

Hunt told The Enterprise on Wednesday that, if prescription drug costs had increased by just 5% and the school board agreed to a levy increase higher than just 2%, the district would not have had to make any cuts.

Rielly said that when he looked into moving Voorheesville into a plan where “pharmaceuticals are tied to the health insurance,” he was told the district was too big of an organization to do that. He added that, when an insurer calculates drug costs, those costs are “experience rated — and now is not the best time in the world to be experience rated.”

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 the long term, the district has to look for other health-care plans.

In the short term, Rielly recommend that there be $500,000 in the district’s prescription-drug reserve to start next year, money that will have to be moved from other district reserves.

Rielly recommended that the $477,100 in proposed cuts for next year stay as they are because “the district needs as much wiggle room as possible, so that we’re not laying off staff mid-year.”

“That’s how razor-thin this budget is going to be,” he said.

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