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Paradise Valley Unified School DistrictNovember 1, 2012
Discussion Points
Background/Overview
Review of Financial Statements
Executive Summary of VSIT/VSWCP Annual Report (handout)
Services Data (handout)
2
Background/OverviewHow are Insurance Services and Products Acquired?
Two Methods for Acquiring Insurance
Individual school district procurement
Join insurance pool and have pool acquire on your behalf
3
Background/Overview Overview of Individual School District Procurement
Issue Request For Proposal (“RFP”) for consultant services
Hire an Employee Benefits Consultant
Put out RFP for providers
Review proposals and evaluate
Committee review
Best and Final negotiations
Award contract
3+ months to do
Perform above at least every 5 years or when a change of vendors is needed
During 5 year award negotiate renewals with only current vendors
4
Background/OverviewOverview of Pool (Valley Schools) Procurement Process
Solicit proposals from providers
Receive and evaluate proposals
Award contract
Perform the above at least each year
3+ weeks to do (more of less if necessary)
5
Background/OverviewPool Advantages
Lower administrative costs for acquisition
Reduce administrative work on appeals, claims, documents, legal, vendor management, committee work, etc.
Vendor other than current vendor can be negotiated with during annual rate renewals (continuous Best and Final)
More negotiating power due to aggregation of members
Eliminates formal bid protests and unintended bid rejections
Able to enter into longer term relationship
Investment Advantages
6
Background/OverviewHow is Valley Schools different from other Pools/Trusts in Arizona?
Surplus Reserves can be used to offset contribution increases, wellness program costs, or any other employee benefit or insurance related expense
Autonomy of plan design for all Employee Benefits (i.e. health, dental, life, etc.)
Portion of rate for fixed expenses broken out from medical/pharmacy claims expense
More transparency of management/administration operations
7
Background/OverviewValley Schools Formation and Governance
The Valley Schools Insurance Trust (“VSIT”), Valley Schools Workers’ Compensation Pool (“VSWCP”) and Valley Schools Employee Benefits Trust (“VSEBT”) are public entity pools created by an Intergovernmental Agreement pursuant to A.R.S. §11-952.01
The Valley Schools Management Group (“VSMG”) was formed by an Intergovernmental Agreement pursuant to A.R.S. §11-952
Annual audit by Certified Public Accountant
Monthly/Quarterly financial statements prepared by independent Certified Public Accounting firm
Oversight and regular periodic examinations by the Arizona Department of Insurance
Governing/Management structure
Assets
Twenty-three public entity pools in Arizona
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Background/OverviewValley Schools Operations
VSMG fixed management fee is charged to VSIT, VSWCP and VSEBT
Management fee allocated to VSIT/VSWCP/VSEBT members
VSIT closed to new members; VSWCP and VSEBT open to new members
VSEBT is the largest of the eight employee benefits public entity pools in Arizona
VSEBT average annual growth:
25% in ADM 57% in members 22% in covered lives
VSEBT serves about 25% of all public school district employees
VSEBT had 100% retention this year
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Background/Overview
How does a school district assure itself on an ongoing basis it is getting the best deal?
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Background/OverviewVSEBT Contribution (Premium) Breakdown
11
Fixed Expenses Medical Claims Administration (TPA) Network Usage Prescription Drug Administration Stop Loss Coverage EAP/Managed Care COBRA Services
Background/OverviewWhat are fixed expenses?
12
Compare like programs to accurately
evaluate fixed expenses
Self-Insured School Districts UnitedHealthcare
Background/OverviewHow do you compare fixed expenses?
13
District 1 & 2 Average (PEPM) $ 54.32
PVUSD Rate (PEPM) $ 46.42
PEPM Difference $ 7.90
PVUSD Employee Count X 2,811
Total savings on Fixed Expenses $ 266,483
Interest earnings $ 380,134
TOTAL $ 646,617
The above rate include claims administration, network usage, stop loss coverage, EAP/managed care, COBRA administrationThe above PEPM rates have not been adjusted for differences in stop loss levels or all contractual termsThe above do not include dental, vision and life insurance savingsThe above information was obtained through Public Records Requests
Background/OverviewFY 2011/12 VSEBT Fixed Expense Comparison/Annual Savings
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Review of Financial Statements
Valley Schools Insurance TrustValley Schools Workers’ Compensation PoolValley Schools Employee Benefits TrustValley Schools Management Group
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VSIT Financial Statements
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VSWCP Financial Statements
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VSEBT Financial Statements
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VSMG Financial Statements
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