Health care costs could soar by nearly $200 a month for more than 1,300 local community college employees. That’s because their health care plan is experiencing cash-flow problems.
The State Center Community College District participates in a self-funded insurance plan known as the EdCare Group. In essence, it means the three participating school districts fund the insurance themselves.
This year, a number of catastrophic claims to the insurance strained the system. The money shortfall means the three entities in EdCare will have to advance $4 million to the joint powers authority that governs the health care plan.
Fowler Unified and Kingsburg Elementary Charter School District are the other partners.
“The EdCare JPA’s Modern Care plan (one of several medical plan choices available for member employees) has been experiencing high medical costs. This is creating a significant cash flow (not enough premiums available to pay bills) problem for the EdCare JPA,” the SCCCD staff report said.
About 1,350 SCCCD employees receive health benefits through EdCare.
Board Approves $3 Million Advance
“I would have supported exploring other alternatives to determine if there were other opportunities to minimize such drastic cost increases to our employees.” — Trustee Annalisa Perea
State Center trustees approved its share, 75% of the total costs or about $3 million, at a board meeting Tuesday (July 2). The vote was 6-1, with Annalisa Perea opposed.
“It’s unfortunate. It’s something districts across the state are struggling with, health care costs. We bear the burden as a system to take mitigation measures on the health care crisis,” trustee Eric Payne said.
The JPA will pay back the money in three years, with no interest.
Board president Deborah Ikeda, in an email to her colleagues, said that in May medical costs exceeded premiums collected by $600,000. One individual has a pending $800,000 medical bill.
“Although the financial severity of large claimants this year could not have been anticipated, in the future to mitigate this issue, we will need to increase premiums enough to cover the shortfall in the JPA, as well as pay the district back for the money they are advancing,” Ikeda wrote.
Perea said the result will more than triple premiums.
“Before voting to advance the money to EdCare, I would have supported exploring other alternatives to determine if there were other opportunities to minimize such drastic cost increases to our employees,” Perea told GV Wire.
Premiums are expected to increase $130-$150 per month. On top of that, employees face another $45 monthly charge to cover the advance. The surcharge would last three years.
At that rate, members — assuming they remain with the plan — would be paying $60,750 a month to cover the advance. At 36 months, that equals $2.1 million, still short of the $3 million the district will contribute.
Keith Ford, the president of the State Center Federation of Teachers, says he’s not happy about the increase.
“I don’t know if there is much we can do about it at the moment,” Ford said. “The members of the plan are going to bear all of the expense in paying this loan back.”
Employees to Absorb Costs
“(The district could) take the high road and absorb some of that costs … they could go above and beyond it and act in good faith. They are choosing not to.” — SCFT president Keith Ford
Ikeda also noted that contracts with three unions representing SCCCD employees allow the district to pass on costs to the employees without additional negotiation.
“The unions understand what has been negotiated in their agreements, that any increase to the premiums during the term of the agreement above the district contribution would be paid by the employees,” Ikeda wrote.
Ford wished the district would “take the high road and absorb some of that costs … they could go above and beyond it and act in good faith. They are choosing not to.”
Specific health care rates will be decided at the next JPA meeting on July 16.
The district also offers other health plan options for employees.