So What About the $750,000 transfer?

So tell me about the transfer of $750,000 from the insurance fund in June 2012.

For the past decade our district, like every other district in Oregon, has ridden a roller coaster of funding fluctuations. Fiscal year 2011-12 was one of the more volatile. That was the year where all of our employees helped stabilize our finances by taking reductions in compensation. The impact of those reductions helped but it was challenging to manage the impact on various parts of the budget. Our finance office brought an unprecedented four budget amendments to the board in an effort to keep the budget reconciled with spending.

That year the board approved a budget, altered it before adopting it in late June, and then amended it four different times (8/29/2011, 11/7/2011, 2/27/2012, and 6/4/2012). In three of these four amendments changes were made to the Health Insurance Fund. It is the fourth change, a transfer out of $750,000 that has been the focus of some contention during the current bargaining process. This is due in part, in that after that transfer occurred, we became aware of the need to share information about such transfers to the District Insurance Committee. Most districts don’t have such a committee. We have one because we are a self-funded insurance district and part of the way we protect that status is by involving our various employee groups in the review of the financial records so that we can produce collaborative recommendations on whether to adjust benefits or employee costs as the insurance industry changes.

As soon as we became aware of the need to communicate with the District Insurance Committee regarding transfers, our finance team shared the information regarding the transfer and apologized for not discussing the transfer with the committee. Our CFO publicly acknowledged that we had not followed the protocol for involving the insurance committee at a subsequent board meeting. We thought the matter had been resolved.

During the current bargaining process, however, the transfer has been characterized in ways that imply the District intentionally transferred out funds for some ulterior purpose. That was not the intent. The facts actually support the opposite. Transfers in and out of this fund reflect responsive budget management and helped provide stability of services for our students during an instable fiscal season.

The irony in all of this is that during the 2011-12 fiscal year, the district actually transferred substantially more money into the fund than out. The amounts transferred in totaled about $1.215 million and were part of two earlier budget amendments that year.  The transfer out of $750,000 was intended to rebalance funding back to the general fund to provide the flexibility the district needed to fund additional services for students. The net change in the Insurance Fund was actually a $465,000 increase in the Insurance Fund over the fiscal year. Here are the specific amounts and dates of transfers:

·         On November 7, 2011, the district transferred $350,000 into the fund as part of the second budget amendment.

·         On February 27, 2012, the district transferred $865,000 into the fund as part of the third budget amendment.

·         On June 4, 2012, the district transferred $750,000 out of the fundas part of the fourth and final budget amendment.

One can view a record of all of these transfers by looking at the Budget Roadmap provided to the Board at the June, 4, 2012, regular Board meeting. This is accessible via our district website (www.medford.k12.or.us, click on School Board and Committees, click on Medford School Board, click on meeting agendas, select 2012 in the drop-down menu, scroll down and click on Monday, June 4, 2012 at 7:00 pm, click on Agenda Packet, scroll down to 14. Action Agenda e. and click on Adopted to Amended Budget Roadmap).

While all employees have an interest in the funding available for the District’s Health Insurance program, the fact remains that the District has kept its word regarding the funding of its contractual obligations for Insurance costs. We have been able to maintain excellent health insurance benefits for our employees even as 190 other Oregon school districts have defaulted to the state OEBB insurance pool.  This is specifically due to the careful fiscal management of the program by the District and the cooperation and support of our Medford employees.

All transfers have been authorized by the board after being presented and discussed in public board meetings. The information is provided to each of our employee associations, MEA and OSEA, and MEA has consistently had representatives attend board meetings. And the District Insurance Committee provides an additional level of review and scrutiny.