In front of an audience packed with teachers, Mehlville Board of Education members voted last week to form an advisory group on health insurance, designed to offset the influence of the district’s existing employee-led Insurance Committee.

The 18-member committee, which is comprised of teachers, district employees, retirees and one board member but no community members, has for years recommended options, then approved by the board, that put the district’s self-insurance fund in financial peril, board President Mark Stoner said at the board’s Nov. 21 meeting.

To remedy that gap in knowledge about issues surrounding the district and its self-insurance fund, members voted 4-2 to add the advisory group, which will consist of two board members, two district employees and three members of the public with insurance expertise. Board members Larry Felton and Ron Fedorchak opposed the move. Board member Kathleen Eardley was ill and unable to attend the meeting.

“We have a group made up entirely of a self-interested group, a group that inherently has a conflict of interest,” Stoner said. “Even the last time that I brought up (an insurance proposal), it wasn’t well-received by the board, and honestly it probably wasn’t very fair to say that I should have brought it up six months earlier or something of that nature — simply because of the fact that it was a week and a half before that I find out we’re $2.5 million in the red (in the insurance fund).”

The new group can help the board provide a good benefits package while fixing the costs of the program and providing options for the board to review, Stoner noted.

He appointed Vice President Lori Trakas and board member Elaine Powers as the board’s representation on the advisory group.

Chief Financial Officer Marshall Crutcher, who took over from longtime CFO Noel Knobloch in July, pledged that he will show the board the status and monthly trend of the district’s insurance fund at least quarterly to prevent any future surprises about the state of the fund.

“Mark, I think your comment about not getting advance notice has a lot of merit to that. Well, I’m walking in the door, and that can change,” Crutcher said. “There is no excuse for you guys not knowing where that self-insurance fund is throughout the whole year. You should not get a September surprise like that.”

The district can keep employee premiums low by self-insuring. However, Mehlville’s insurance plan has not been revised over the years to stabilize the fund balance, resulting in next year’s much higher premium and plan costs to restore the fund, Crutcher noted.

After the self-insurance fund peaked at $6 million due to low claims five years ago, the district has paid out millions more in claims than it replenished in premiums, until the fund dwindled from $3.3 million at the beginning of last year to $2.3 million by December, barely the minimum balance the district needs on hand in the fund to pay out two months of average claims.

After a rash of claims this year left the fund further depleted below that $2.2 million minimum balance, the board approved an Insurance Committee-recommended plan that increases the share employees will pay next year for their monthly insurance premiums to 60 percent, or $1.2 million more for next year. The district will pay 40 percent of employees’ premiums, or $800,000 more, next year.

The district’s insurance advisers, J.W. Terrell, have predicted that the district’s insurance costs will increase by 13 percent, or $1.5 million, next year.

The potential for risk and volatility in self-insuring worries Fedorchak, who also noted the changing insurance landscape due to the Affordable Care Act. Although he did not want to form an advisory group, he liked the idea of learning from experts in insurance so the board can make better decisions.

“I will agree with Mark, one of the things when I first joined the board, I was surprised that we were self-insured,” he said. “The potential impact, if we had a rash of sicknesses or a rash of pregnancies — that could jeopardize our ability to educate kids … There’s a change in the law, and we as a district are self-insured and there’s a severe risk of financial crisis that could be caused by this.”

Calling a second committee “extraordinarily premature,” Felton said the existing committee does what it is designed to do and does not make binding decisions. Instead of a new committee, he suggested that insurance experts be added to the Finance Committee.

The board cannot disband the current Insurance Committee, since it is an administrative committee formed by district officials decades ago to give employees a voice in the district’s health insurance decisions. The committee met twice this year, once in the spring and once this fall, prior to the board’s vote on insurance.

Superintendent Eric Knost said he does not believe the 17 employees on the committee are excessive, since they represent more than 1,300 employees.

The ultimate decision on insurance is the board’s, he noted.

“We based our vote for the most recent insurance choice on the options that were presented by the committee, so don’t say the committee has no power. And those were the only options that were offered to us,” board Secretary Rich Franz said. “I find it curious that everybody sitting at this table was elected by the taxpayers of this district, but a number of you have dug in your feet at the very suggestion that there would be any taxpayers on this committee.

“Are you so afraid of those people sitting out there, that you’re not willing to allow the taxpayers to have representation?” he added, as he gestured to the audience of mostly teachers.