"We're getting closer to balancing the budget," Director of Schools Jubal Yennie said Wednesday night after the Board of Education reached a consensus on a net $1.6 million in expenditure decreases during a work session.
Six of seven BOE members present informally agreed to just less than $1 million in spending cuts proposed by central office staff — including elimination of 13 teaching positions through attrition — since a May 5 work session.
Board members also agreed to another $640,000 in cuts made up of $300,000 in savings from slashing another six teaching positions and a possible $340,000 or more in savings from encouraging employees to choose a limited preferred provider organization (PPO) health insurance plan through Tennessee.
A sample scenario would save $357,177 the first half year, starting in January, and $714,345.98 in 2014-15 if enough employees holding more than 1,100 health insurance plans switched to limited during open enrollment in October.
To bridge the originally projected $3.2 million shortfall between revenues and expenditures, school system officials also plan to budget another $1.6 million from the fund balance, which would leave the system with the Tennessee-recommended 3 percent of the overall general purpose budget in the fund balance. Of $1.8 million budgeted that way this fiscal year, Yennie said all but about $100,000 is to be returned.
"I think we can get it (needed savings) with the insurance limited PPO by selling the insurance limited PPO," Yennie said of a health plan that has lower monthly costs for employees and the system but higher out-of-pocket expenses for employees. "I think the only way we can sell it is with a gap or something similar."
Vice Chairman Jack Bales, member Jerry Greene and other board members said they supported the plan.
However, to protect employees, the county would fund 100 percent of a gap insurance or similar insurance that would cover the out-of-pocket expenses not covered by the limited plan.
The limited PPO was offered first by the state last year but with little fanfare or explanation.
As an example, Yennie said an individual employee who would pay about $27 a month for the partnership plan would pay $17 a month for the limited plan, with the county paying the premium for a gap or similar policy, which Yennie said also could be a self-insured program with the county or a health care reimbursement account.
He said he is working with current county school system insurance broker Mark III Employee Benefits and, if that doesn't work, likely will look to an insurance broker called Five Point Insurance and others to answer a request for proposal for gap coverage or a similar option.
In a recent collaborative conferencing meeting, Yennie said teachers were worried the system would "penalize" those who wanted to stay with the preferred plan. Among other things, it includes mandatory health coaching for those with health issues but has lower pharmacy and provider visit copays, as well as lower maximum out-of-pocket expenses than the limited plan.
Those with certain pharmacy needs and chronic conditions, including diabetes, might be better off with the preferred plan, officials have said.
The system now pays 95 percent of the cost for individual health policies and 70 percent for an employee plus spouse, employee plus child and family policies.
However, board members Robyn Ivester, Todd Broughton, Randall Jones and Chairman Dan Wells suggested the system look into offering lower percentages of the cost to new hires after a specified date.
Jones suggested starting out with the same percentages of cost coverage for preferred, regardless of hire date, but going down so much each year until a pre-determined base was reached. However, Ivester said that would be "taking the decision out of employees' hands."