East Irondequoit Could Save More Than $2M Through Health Care Buyout Program
The East Irondequoit Central School District could save as much as $2.15 million over a 10-year period by offering annual payments to eligible retirees to forego health plan coverage, according to an audit released today by New York State Comptroller Thomas P. DiNapoli.
“In tough financial times, school districts and local governments need to look at every option for saving money,” DiNapoli said. “East Irondequoit could save big by offering health insurance buyouts to retirees. The district is taking my recommendation seriously, and every school district across the state should determine if they can do the same. The possible savings are too great to ignore.”
DiNapoli’s auditors conservatively estimated the district could save about $750,000 over a 10-year period, assuming health care costs remained unchanged and the same percentage of employees retired as had during the previous 10 years.
However, using the district’s estimated annual increase of 12.5 percent in health care costs, the buyout would produce an additional $1 million savings over the same time frame. Allowing current retirees to also participate in the plan could save the district an additionally $400,000. As of May 18, 2010, there are 70 retirees under the age of 65 for whom the district pays insurance premiums.
The district’s 2009-10 budgeted expenditures totaled $65.8 million. Health insurance premiums for the district’s retirees for the 2009-10 fiscal year were estimated at $2.2 million.
The district currently offers a health insurance buyout plan to its active employees. In exchange for opting-out of medical coverage provided by the district, those employees receive an annual payment. Approximately 13 percent of the employees currently exercise this option, saving the school about $750,000 in the fiscal year ended June 30, 2010.
District officials agreed with the audit’s recommendations and said they would consider offering the buyout program.
A copy of the complete audit can be found here.