Weymouth budget shortfall blamed on rising healthcare costs

Mayor blames healthcare costs

Weymouth Mayor Sue Kay has asked all town departments to submit new budgets with drastic cuts in the wake of an explosion in healthcare costs that has thrown the town's budget process into chaos.

Town officials say it is too soon to know how many of the town's 1,300 workers could lose their jobs because of the fiscal crisis, but School Department employees are already feeling the impact.

The School Committee voted recently to eliminate 83 positions - 47 by layoffs, the others through retirements and unfilled positions - to cover the expected costs of a new contract for teachers and absorb the newest round of budget cuts.

"The simple fact is that the town is bleeding," said School Committee chairman Sean Guilfoyle .

When the budget process began, town departments were asked to submit level-funded spending requests. Kay's original budget asked for $128.5 million, a 1.65 percent increase over last year, but in the face of the town's worsening financial picture, she came back and twice asked for 1 percent cuts.

Then came the revelation of a projected $3.4 million deficit in the town's health insurance account by the end of the fiscal year June 30. Kay then asked all department heads to submit new budgets - slashed by 3.4 percent - by last Friday.

Chief financial officer James Wilson informed town officials late last month of the healthcare shortfall after an audit done by Harvard Pilgrim Health Care, which administers the town's self-insured program.

Much of the deficit, Wilson said, is due to a jump in the number of so-called catastrophic claims - those that result in costs of at least $87,500 - from eight in the last fiscal year to 18 this year. "We won't actually know the size of the deficit until late July, early August, after all the claims have trickled in," he said.

The town pays 70 percent of healthcare costs; employees pay 30 percent.

The impact of the higher costs affects this fiscal year as well as next. The town budgeted $10 million as its share for this fiscal year and is projected to spend about $13.4 million, a gap of $3.4 million. In addition, Wilson said, the town had budgeted $11.2 million for its share of the health insurance account for the fiscal year that begins July 1, but that figure has since been revised to $14.2 million.

Guilfoyle said the schools submitted a level-funded budget, and then were asked twice to trim that by an additional 1 percent, or about $1.1 million. He said the schools are also hit with increased costs in many other areas.

"In essence, we're already gambling with this budget," Guilfoyle said, noting that the proposed budget trims $300,000 in utility costs at a time when fuel prices are skyrocketing.

Of the 83 reductions recently voted by the School Committee, 42 positions will be professional staff, or teachers; 34 will be support staff, such as paraprofessionals; and seven will be administrators.

According to their contract, administrators and teachers to be laid off had to be notified by May 31, paraprofessionals by June 13.

Weymouth employs 491 teachers to instruct almost 7,000 students, according to the state Department of Education website.

School officials are also in mediation with the Weymouth Teachers Association over a new contract, after the current contract was extended at the beginning of the school year.

Kathy Lavery, president of the teachers association, said although the teachers who are being laid off have not been publicly identified, she expects them to include not only nontenured teachers, but also several teachers with many years of service.

She called the insurance deficit "a sinkhole." Teachers have seen their share of health insurance premiums rise about 35 percent since last year, she said.

The town could also carry the health insurance deficit into next fiscal year's budget or work to join the state's Group Insurance Commission. The latter is an idea that has been discussed in Weymouth, but no formal steps have been taken to explore it.

According to the Group Insurance Commission website, a decision to join the state plan is subject to negotiations with a local committee of union and retiree representatives.

The town would have to notify the commission of its intention to join by Oct. 1 of this year to be eligible to enroll for the fiscal year that begins on July 1, 2009, so any savings wouldn't be seen until fiscal year 2010 at the earliest.

Kay could not be reached for comment.

Rich Fahey can be reached at faheywrite@yahoo.com.