District refutes looting allegations - Gate House

District refutes looting allegations - Gate House

An allegation that a former school board action "looted" $1 million from the teacher's insurance fund came up during a discussion of Camdenton's salary schedule.

During the public comment portion of a Camdenton Board of Education meeting on Wednesday, teachers spoke on behalf of veteran teachers who felt their wages aren't competitive.

One of those teachers, Camdenton football coach Jeff Shore, told school board members that he felt it was a “situation where the teachers feel like a million dollars was taken out of that account and then in turn their insurance goes up. At best it creates a distrust among the teachers and the board."

Shore is the husband of Stacy Shore, who has used the Lake Watch Dog display name in the past. The anonymous Lake Watchdog website is where the allegation of the "looting" of $1 million from the teachers’ insurance fund surfaced.

Shore said that although teachers questioned the move by the board in 2007, they did not get a response. To this day, he claimed, there has been no response.

In a strongly worded and detailed explanation provided at the request of the Lake Sun, four members who were serving on the school board in 2007 addressed the allegations.

According to the members, there was indeed a transfer of $1 million from the insurance fund to the general operating fund. However, they said there was nothing illegal or covert about the move and that the transfer did not negatively affect the teachers’ insurance fund. They went on to say that the money transferred was not earmarked for any one particular project or payment.

John Blair, former president along with Wayne Compton, who served as treasurer at the time, Susan Leslie and Danny Drover said the funds were moved only after the district checked with the state to make certain no rules were being violated.

The Teacher’s Insurance Plan

The Camdenton health insurance plan has been a self-funded plan since July  2000.  This means the school district is responsible to pay for all participant health insurance claims incurred and allowed by the plan document. 

At the same time, the school district also must pay for re-insurance to protect itself for large claims above a certain amount, and for efficient payment of claims by a “third party administrator”, a.k.a. TPA, to insure compliance with HIPPA and other privacy matters.

The board annually calculates a monthly contribution amount per participant for different levels of participation in an amount projected to cover actuarial estimated claims, health network fees and TPA fees. That amount does not include any overhead, broker commission, or built in profit that is included in the premiums charged by an outside insurance company indemnity plan.

According to Blair, the monthly contribution for health insurance is considered a board paid fringe benefit, and the school district paid 100% of the certified employees’ individual premium.  This employee contribution amount is not taxable to the employee under IRC Code section 125.  However, the contributions paid yearly qualify for credit toward retirement benefits in addition to other paid employee wages.  This benefit increases a retiree’s monthly retirement benefit. 

He said it is much like social security withholdings, the employee pays ½ and the employer pays ½ .  The school district is obligated by state statutes to remit its portion of the retirement contribution on this health benefit which ranged from 10.5 % in 2001 to 14.5% in 2013 for certified staff (teachers and administrators)  and 5% to 6.86% for classified staff (cooks, janitors, secretaries, and para-professionals).

The computed monthly contribution did not include any amount to cover the district’s portion of the retirement contribution or the additional administrative time necessary for the district’s employees to deal with additional administrative costs attributable to a self-funded plan when compared to an indemnity plan, he said.

All district retirement contributions for both certified and classified employees were paid from the General Fund through June 30, 2005.  Thereafter, all district classified retirement contributions continued to be paid from the general fund while the certified matching contributions were paid from the teachers fund. 

Blair said transfers from the general fund to the teachers fund were made in several years to cover any shortfall in the teachers fund.

To facilitate the bookkeeping process, monthly contributions were deposited in a separate bank account.  Claims were also paid from this same bank account.  This bank account is not a separate fund like debt service or capital projects, but rather part of the operating funds, Blair said.

 If the contributions by the district were not adequate to cover the claims, then the district would be obligated to make up the difference regardless of how much had been budgeted and paid into this account. In fact claims, could have been paid from the main district bank account without any monthly transfers to a separate account. 

Moving the funds

Sometime in early 2007 the balance in the separate claims account was approaching  $3,500,000.   Discussion occurred among the administrative team and board members concerning this excessive balance.  The TPA advised the board that adequate reserves were three months of claims.  The $3,500,00 represented about 18 months of claims. 

Blair said it became apparent that just the district’s portion of retirement contributions alone that had been paid from the general fund on the past years’ contributions substantially exceeded $1,000,000.   A decision was made to transfer this amount back to the general fund from this separate bank account. 

The legality of this transfer was cleared by the superintendent with the Missouri Department of Elementary and Secondary Education and the district’s outside auditors, he said.

According to the information provided by the former school board members, the money was then moved to the general fund. At the same time, money was moved to capital projects. This occurs every year. The money was transferred into the general account at the end of the 2006-07 fiscal year and it was then included in the next year’s budget.

The money, from the district funded insurance account, was not earmarked for any one particular project or payment.