Budget Update

1. Budget Update January 15, 2014

2. Budget Calendar

3. General Fund ten Year analysis

4. Enrollment History Source: Matanuska-Susitna Borough School District Comprehensive Annual Financial Reports

5. Straight Line Growth Rate Total Salaries & Benefits Per Pupil*(FY2002-03 Base Year) *Employee Benefits does not include the on-behalf contributions for TRS & PERS, which began in 2008 Source: Alaska Department of Labor & Workforce Development and Matanuska-Susitna Borough School District Comprehensive Annual Financial Reports

6. Straight Line Growth Rate ComparisonCertificated Salaries Per Pupil(FY2002-03 Base Year) Source: Alaska Department of Labor & Workforce Development and Matanuska-Susitna Borough School District Comprehensive Annual Financial Reports

7. Straight Line Growth Rate ComparisonNon-Certificated Salaries Per Pupil(FY2002-03 Base Year) Source: Alaska Department of Labor & Workforce Development and Matanuska-Susitna Borough School District Comprehensive Annual Financial Reports

8. Straight Line Growth Rate ComparisonEmployee Benefits Per Pupil*(FY2002-03 Base Year) *Employee Benefits does not include the on-behalf contributions for TRS & PERS, which began in 2008 Source: Alaska Department of Labor & Workforce Development and Matanuska-Susitna Borough School District Comprehensive Annual Financial Reports

9. Health Insurance • The total Health Premium has risen steadily since 2003 with an overall increase of almost 160% • Through bargaining however, the District has set a priority to attempt to maintain these increases and our costs have increased about 133% Source: Matanuska-Susitna Borough School District Department of Human Resources

10. Financing the Future Longterm forecast

11. Revenue Assumptions • Borough Revenue continues to INCREASE at 3% • Federal Revenue Maintains with ZERO INCREASE or DECREASE • State Energy Relief Funding continues at $100 per Adjusted ADM • Student Safety and Security Grant ends after FY14 • ZERO INCREASE or DECREASE in the State Foundation Formula • Intensive Count maintains at 321 students • Other Local Receipts maintains with ZERO INCREASE or DECREASE

12. Expense Assumptions • Certificated Salaries are maintained with an average annual step INCREASE of 1.8% • Non-Certificated Salaries are maintained with an average annual step INCREASE of 3.2% • Health and Life insurance INCREASE at an annual rate of 8% with the INCREASE split 50/50 between employee's and the District (Overall INCREASE to District costs equal 4%) • All other deduction factors are maintained with any INCREASE due to INCREASE in Salary factors • Utilities INCREASE at an annual rate of 10% • Insurance Bonds & Premiums INCREASE at an annual rate of 1.5% • Indirect rate is maintained at 5.58% annually and amounts are based on Grant projections included in the FY14 Budget Book • All other Non-Personnel accounts are maintained with ZERO INCREASE or DECREASE

13. Long Term Forecast

14. Three Year Projection

15. Structural Deficit Structural Deficit

16. State Managed Group Health Insurance Program for Alaska Public School Employees Hay Group Study

17. Purpose • Conduct and provide an analysis of the current health benefit plans for each of the 53 school districts in Alaska. • Establish an actuarial value of the various benefit plans offered • Estimate the projected premiums and costs of consolidating public school employees in Alaska under a state-managed plan

18. Hay Groups Study • Surveyed all 53 school districts – 100% participation • NEA Alaska Health Plan • Aetna, Premera, TPAs • Dept. of Administration • Dept. of Education and Early Development • Unions – Teamsters, Local 71

19. Health Insurance in Alaska’s School Districts • Enrollment by district size • There are approximately 19,000 employees total, 17% opt out of coverage

20. Health Insurance in Alaska’s School Districts • Costs by district size

21. Health Insurance in Alaska’s School Districts • Plan offerings currently available in Alaska’s school districts

22. Health Insurance in Alaska’s School Districts • 21 district’s have 0% employee cost share • 32 district’s have some cost share the average being 13% • Public sector national average is 15%

23. Health Plan Cost Drivers • Three key drivers of a plan’s costs • The extent to which plan pays for the costs of care. • The utilization of those benefits by plan members. • The non-benefit costs that are required to administer the plan.

24. Plan Costs Broken Down • The argument for self insurance/pooling

25. Saving through Pooling Cost savings for a consolidated pool can be broken down to four main areas • Provider Networks • Overhead • Plan Design • Cost Sharing

26. Consolidation Outcomes

27. Options • Optimize Program Performance • Leverage AlaskaCare Plans • Centrally Managed School District Program with Standard Health Plan Options and Cost Sharing • Centrally Manage School District Program with Standard Health Plan Options Only • Bring all School District Plans under State management

28. 1. Optimize Program Performance • Savings achieved through provider networks and overhead $17.1M - $28.8M

29. 2. Leverage AlaskaCare • Consolidate all health care coverage under the existing AlaskaCare plans increase of $8.7M – savings of $34.9M

30. 3. District Pool with Standard Plan and Cost Share • Provides an independent pool for school districts with three standard plan options and a standard cost share savings of $22.6M – $33.7M

31. 4. District Pool with Standard Plan • Provides an independent pool for school districts with three standard plan options $9.4M – $64.9M

32. Recommendations • State pursue pooling as described in option 3 • Significant savings through optimization of plan performance, plan design consolidation and standardized cost sharing. • To achieve maximum benefit and savings the transition would need to be mandatory