School officials to make pitch to financiers to cover deficit tonight
Published 6:08 am, Wednesday, March 5, 2014
At the same time, school board members will be updating the finance board on why they are requesting a special appropriation of $1,088,709 to cover a deficit in the 2013-14 health-care fund, a request approved by the BOE at a previous meeting.
Of that amount, $355,000 is a projected net cash shortfall and $733,700, which represents a 5 percent risk corridor, or safety net.
"We are waiting for an external verification of that number from McGladrey," said Elaine Whitney, board chairwoman. That's the auditing company doing an external review of the health insurance account.
Whitney said board members are presenting both items Wednesday because they are interrelated. A vote on the operating budget is expected March 20.
A vote on the supplemental funding could come at the same time, depending on whether the figures have been verified.
Whitney said they have a "very good read on the numbers," although because "this is a very highly variable fund, there are fluctuations."
This was mentioned Tuesday by Elio Longo, the school system's business administrator, who said there is a chance the amount of the special appropriation request could change due to "negative variances" related to the medical insurance costs concerning retirees under the age of 65 or "positive variances" in the overall fund.
Whitney plans a slide presentation outlining not only the budget figures, but ways the board plans to strengthen it's internal controls and oversight to prevent any further problems.
According to a draft proposal she presented Tuesday night, one way is to redesign the reporting format that will include detailed tracking of all components of revenues and expenses. Internal checks and balances will now require a review by a second administrator of the health insurance fund. There will also be greater transparency and more frequent reporting. As Longo put it, accounting won't be just in summary form, but more detailed.
This would include monthly variance analyses; quarterly BOE reviews and regular reports to other town bodies. The board also needs to establish a plan for outstanding liabilities related to incurred but not reported claims, an amount currently projected at $1,307,400.
The Health Insurance Fund Review Committee, an ad hoc committee, recommended that the board request that the Board of Finance work in collaboration with the school board to address this "accounting liability."
That will also be addressed during Whitney's formal presentation.
The public portion of the Board of Finance meeting tonight gets underway at 8 p.m. in Town Hall.