Utilizing market research regarding commodities and world events, the district strategically locks in or migrates to variable pricing measures based upon specific circumstances. Each year, the district bids out for fuel pricing both for buildings and buses. As you aware, fuel prices increased significantly in June due to the unrest in Iraq. The district and the 2014-15 budget is not impacted by these price changes at this point in time as fuel bid prices were locked-in late in May.
A comparison of the locked-in fuel prices to June 19, 2014 market closing prices provides a “snapshot” analysis indicating that the School District of Cheltenham Township has achieved collective cost avoidance exceeding $16,152 by locking prices in prior to the current escalation.
In discussion of the district’s budget, health and retirement benefits are a considerable expenditure. A previous C3 has addressed the retirement expenditures. This C3 will review a measure with the district’s healthcare provider to ensure accountable care. Accountable care is a payment model from the insurer to the provider that is driven by performance measures, which include medical cost management and readmissions. By establishing medical cost targets, the insurer incentivizes the medical and pharmacy costs. In the first year of the program, 50% of providers managed costs below targets. Additionally, readmission rates improved an average of 16%. These measures translate into cost savings on the district’s base line healthcare costs compared to competing healthcare plans on average of 20-22.5%.
In addition to changes in plan design, Cheltenham is an active participant with its healthcare provider, Independence Blue Cross, in managing to reduce medical cost trends (not just those associated with chronic conditions) an average of 1-2% annually. The impact to the medical cost trend is attributable to decreases in utilization each year. The reductions offset trend increases and increased utilization of benefits in new cases. Additionally, there was a reduction to trend costs for the school district which participates in a benefit consortium where, when case-by-case costs are benchmarked to national costs over a period of time, a total of $210,403 in savings was realized
One of the key ways that bids for supplies and proposals for services yield reduced costs from year to year is through increased diversity and competition in the purchasing process. Cheltenham continues to increase its diversity and competition twofold in both county-wide purchases such as paper and supplies and locally in annual supply bids aligned to budget allocations.
For 2014-15, consortium bid results for paper purchases, which are in fact the largest line item bid, yielded a reduction of $1.18/carton resulting in county-wide savings of over $45,000 and marks the third consecutive year of achieved price decreases for an accumulated savings of over $127,000 since 2011. At the district level, the district recently implemented a vendor registration program to alert any vendors of opportunities and increase diversity and competition in bids received. If you were not aware of the school district’s e-mail list serve for bids, go to http://www.cheltenham.org/emailsignup.cfm to sign up.
The potential $130 million in pension savings for school districts as a result of “tapering” the pension collars provides schools desperately needed relief from rapidly rising employer contribution rates. Unfortunately this proposal kicks the can further down the pension reform road, effectively underfunding an already underfunded pension system, adding to the already massive debt.
Governor Corbett has increased the special education line item after six years of flat-funding. The $20 million proposed increase—the first increase in six years—will not cover the rapidly increasing costs in one of the most heavily mandated services schools provide. The new money would be distributed through a weighted funding formula that is based on three categories of support for students with disabilities.
With a fourth year of flat-funding for PlanCon, the state program that reimburses eligible school districts for a portion of their school construction costs, the $1.2 billion backlog in the program that has delayed reimbursement for districts across for years will only continue to grow. As you know, Cheltenham is impacted by this line item not being increased on recent building projects to include Glenside, Cheltenham, and Wyncote Elementary Schools.
A data analysis of funding to Cheltenham since 2010-11 concludes the district will in 2014-15 receive an additional $10 per student over funding in 2010-11. Cheltenham school board members and officials continue to advocate for a funding stream which will provide sustainable revenue while addressing the adverse economic impact to schools in future years.
To compare Cheltenham and other district’s revenue history please go to: www.psea.org/schoolcuts
In January, the School District of Cheltenham Township specifically participated in a concerted and coordinated state-wide advocacy effort to obtain the district’s current state reimbursement for construction completed at Glenside and Cheltenham Elementary Schools. Due to no increased expenditures in this budget line item at the state Department of Education, our funding cannot be released until the funding to other districts ends and the availability is based upon a non-transparent order of submittal to the Department of Education. The advocacy included press events and additional legislator and department follow-up.
Click here for information on the ongoing PlanCon issues. You will note the impact to Cheltenham is a loss of $7.9 million in state reimbursement owed through 2030, which equates to $108,000 annually, and a current balance due to Cheltenham through 2014 of $432,000.
During the summer of 2014, an outside firm will perform a comprehensive inventory of district assets. This process will confirm district records for assets as well as update those assets disposed of during construction and renovation periods. Additionally, there will be a migration to electronic management of assets. This will not only improve record keeping but also improve the allocation of resources based upon need. Especially in the age of mobile technology in classrooms and the increased use of all resources, the inventory update will not only provide a timely update of asset locations but reduce costs with paperless electronic recordkeeping in future years. Furthermore, as the district adds to its assets, a regular update can be made in-house to continue tracking and avoid this process as an annual expense.
The district regularly performs a review of processes and procedures at various intervals. This year, the bidding and purchasing functions were reviewed. Internally and externally changes were made to reduce costs, expand participation and to improve efficiencies. Many of these efficiencies will be implemented as bids are prepared for the 2014-15 school year. Total cost savings are projected to be $51,235.
Additionally, of importance to all constituents, a list serve has been developed for any interested party to sign up and receive notification of bid opportunities. This will continue to expand participation and awareness of the proposals and bids sought to meet the needs of the School District of Cheltenham Township. To sign up for notifications, please visit http://goo.gl/xWDs9I