Key findings in the investigation into the cause of an anticipated $1.9 million shortfall in the Board of Education's budget were revealed Monday during a meeting in Town Hall.

An intentional draw down of the budget's health insurance reserves and a sharp increase in underlying medical claims during 2012-13 -- as well as an additional increase projected in claims for 2013-14 -- are the "key drivers of the shortfall," according to information supplied by Board of Education member Brett Aronow, the chairwoman of the board's Health Insurance Fund Review Committee.

The reduction in reserves -- $1.6 million in 2013 and $1.4 million in 2013 -- was done because the school board "wanted to limit the tax" impact on those fiscal years, Aronow said.

Board of Education member Paul Block said that the school board, Board of Finance and members of the Representative Town Meeting knew they would be "working on a very thin margin of error" in drawing down the reserves, which left virtually no funds to fall back on if unanticipated costs arose -- as is now the case.

"Everyone looked at the same numbers and decided to reduce it," said Block, who wasn't a school board member at the time those budget decisions were made.

"We all felt it was an acceptable risk," said Aronow. She added that officials knew cutting the reserve funds was a calculated risk, but didn't know it would put them "in a bad situation."

"We know what happened and why and how to fix it," she added.

Aronow said the shortfall includes $1.3 million in "spillover claims," those that were incurred but not yet reported.

Block said that there were "warning signs in January of last year" that there might be a problem when the BOE's insurance consultant, Segal Consulting, "said employee contributions were dropping." Besides that, he said, "there was an increase in claims -- an anomaly."

There were 16 claims in 2013 that exceeded $100,000 and six were in excess of $225,000. The year before, there were six claims exceeding $100,000 and only one over $225,000, the stop/loss amount, which resulted in the $1.3 million liability for larger claims, said Elio Longo, the school district's business manager.

In fact, 2013 was the first year, in seven years, that the actual health insurance costs exceeded the projected amount.

The committee has recommended a new reporting format for health insurance benefits, implementing internal checks and balances and more frequent reporting, in particular to track actuals to the budget on a monthly basis and establish quarterly school board reviews. It also recommends considering an annual audit of the school district's health reserve fund.

The ad hoc committee was formed to investigate the cause of the shortfall and to come up with recommendations to prevent the problem from occurring again.

An independent audit of the health insurance account is also being done by McGladrey and Pullen, the town's accounting firm.

On Wednesday, there will be a special meeting of the Board of Education at 7:30 p.m. in the cafeteria at Staples High School, which will include representatives from Segal Consulting.