Educators Benefit Board Expects $700,000 Surplus

The latest figures are based on expenditures through August of this year and represent a 50-day working capital balance

November 15, 2010 -- While state agencies slash expenses and struggle to achieve mandatory budget cuts, the Oregon Educators Benefit Board is projecting a budget surplus of more than half a million dollars

The surplus is based on expenditures through August of this year, 14 months into the biennium.

“OEBB’s on target to end the 2009-2011 biennium at or below budget,” Financial Coordinator Ali Hassoum told the Business and Operations Workgroup Nov. 10. He projects an ending cash balance of $708,032, which is approximately a 50-day working capital balance.

“This is slightly ahead of our 45-day target,” said Hassoum, who reminded the workgroup that the new biennium budget beginning next July “will start at zero again.”

Actual expenditures through August totaled $4.7 million of the original $10.5 million budget, he said. Summarizing an open enrollment cost comparison for 2009 and 2010, toll-free telephone expenses decreased by 55 percent (from $5,800 in 2009 to $2,600 in 2010) due to a 60 percent decrease in the number of minutes (154,000 minutes in 2009 and 96,500 minutes in 2010).

Travel costs, on the other hand, rose by more than half, up 55 percent (from $8,484 in 2009 to $11,353 in 2010), largely due to employees attending more insurance committee meetings. “My opinion is that’s money well-spent,” said Chair Michael Cannarella. “It’s the cost of doing business.”

Printing costs also rose, up 28 percent (from $47,000 in 2009 to $60,000 in 2010) because of additional communication sent to members and potential members.

Hassoun reminded the group that OEBB’s debt service payments of nearly $1 million per biennium will sunset next biennium, with payments of $438,181 in 2011, $497,140 in 2012 and $499,416 in 2013.

“Unfortunately, there’s no way to pre-pay that (the debt service),” due to penalties, Hassoum said. Ending the debt service means the board can consider lowering its administrative fee during budget deliberations next spring.

The workgroup also considered a request from Mount Hood Community College to extend health benefits to employees working less than half-time. Negotiations between the college and the part-time employees bargaining unit resulted in the college’s request for health insurance eligibility through OEBB for 129 eligible employees on a self-pay basis.
While the college asked for coverage from four medical plans (three from ODS, one from Kaiser Permanente), four dental plans (two from ODS, one from Kaiser and one from Willamette Dental), and four ODS vision plans, “a more limited set of plan offerings and the use of tiered premiums” was recommended by OEBB staff and Towers Watson consultants -- three medical plans (one from Kaiser, two from ODS), three dental plans (one each from Kaiser, ODS and Willamette Dental), and two vision plans (one each from Kaiser and ODS).

“While we don’t believe that adding this particular group of 129 people to the OEBB pool will have a significant financial impact on the insurance pool, this decision potentially sets precedence for other future requests the Board may receive,” according to OEBB staff.

Deputy Administrator Denise Hall agreed, noting that the overall impact of such a small group would be minimal. The full board will review the workgroup’s recommendation for approval, cautioning the need to look carefully at the future impact when more of the state’s 17 community colleges make similar requests. “We probably should have that conversation at the board level,” Cannarella said.

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