Education, Health Care, Obamacare, Original Report, Uncategorized

Obamacare, PERA adds stress to JeffCo schools budget

If budget assumptions hold up, the Affordable Care Act (ACA, also known as ObamaCare) will cost the Jefferson County School District an additional $8 million over the course of three years. And most of those costs will continue year after year for the district.

According to publicly available documents dealing with the ongoing budgeting process for the upcoming school year, JeffCo will need an additional $3 million in 2015-16 to cover benefits mandated by the ACA. Those dollars will pay for health insurance coverage for employees who are now considered full-time under the 30-hour per week definition and less than full-time employees who actually average 30 hours or more per week.

icon_orig_reportKathleen Askelson, Chief Financial Officer for JeffCo, says the district already budgeted $1 million in to last year’s budget for technical and consulting resources to prepare for the ACA. Those expenses were not generally related to new benefits (i.e. to “increase” health coverage), but instead were expenses related to the administrative implementation of the health law. For example, the district purchased consulting help to make sure they were correctly administering benefits as prescribed by the ACA.

File photo - Todd Shepherd
File photo – Todd Shepherd

Finally, Askelson also says the district is forecasting another $4 million in additional health care expenses next year when they move to an “automatic enrollment” system required by the ACA. Under that system, all employees eligible for medical coverage will be enrolled into a designated plan and must proactively opt out of medical coverage if they do not require it. Automatic enrollment is expected to increase the number of covered employees, but those changes are not anticipated until the 2016-17 school year budget. 

Once all of the increases are added up, and if the one-time administrative setup costs are omitted, ObamaCare will have permanently increased JeffCo’s budget by $8 million for all budget years for the foreseeable future after 2017.

To put the $8 million annual increase into some context, the JeffCo board is currently considering the construction of a new school, which has been estimated to cost from $15 to 25 million. If the district were able to forego the costs of the ObamaCare requirements and save those monies instead, it would roughly afford the district a newly constructed school every two to three years. For another point of comparison, $7 million represents roughly one percent of the school district’s yearly budget.

Increases for similar line items may not be seen in other districts, however. For example, Askelson noted the Boulder Valley School District has already had a policy in place offering benefits to those employees who work 30 hours or more.

Other employee benefits will put new budgetary stress on JeffCo as well. In the upcoming fiscal year, the district’s pension benefits through the Public Employee Retirement Association (PERA) are scheduled to increase by about $3 million.

As for covering employees who work 30 hours per week, other employers have often opted to decrease workers’ hours. For example, last October, Complete Colorado broke the story that the University of Colorado was going to limit the number of workable weekly hours to 25 for those students directly employed by the university. CU cited the ACA as being at least partially responsible for the decision to limit student work hours if the student was employed by the university.

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