Health trustâ??s assets decline

EDWARDSVILLE – Representatives of school district labor unions were literally put out in the cold when fault lines in the Northeast Pennsylvania School District Health Trust grew wider at the trust's monthly board meeting Monday.

When an attorney representing five districts considering leaving the trust asked for a meeting with trust attorneys, labor representatives called for their own caucus, then held it outdoors.

The move came after member districts learned premiums will likely go up an average of 8.1 percent, while the trust's net assets have dropped from about $14 million last year to about $3 million this year, thanks primarily to a court ruling in a lawsuit by two districts that already left the trust.

The trust is a consortium of area school districts, two career and technology centers and the Luzerne Intermediate Unit. The board is composed of representatives from labor and management of each member entity.

Last summer, nine of those members gave required one-year notice they are considering leaving the trust at the end of this fiscal year on June 30.

That move came after Lake-Lehman School District found comparable coverage at a savings of about $1 million. The district remained in the trust this year, but only for dental and vision coverage.

Five of the nine districts considering leaving this summer jointly retained attorneys John Audi and George Shovlin to assist in dealing with the trust. Audi then sent a letter seeking a meeting with the trust's attorneys and Executive Director Andrew Marko.

When that request came up Wednesday, several members called for an executive session. The trust rents an office that is essentially one large room accessed from outside, so those people not allowed to stay waited outdoors.

When the session ended, board member Boyd Weiss called for a caucus of members who represent labor, and the caucus also ended up outdoors, where both the temperature and the wind speed were in the teens.

After returning, they moved to require an attorney from the Pennsylvania State Education Association – the state teachers union – attend any meeting with Audi and Shovlin. The motion was approved.

Audi, who is solicitor of Lake-Lehman School Board, was present and said his goal is not to break up the trust, but to negotiate improvements on behalf of his five clients: The Luzerne Intermediate Unit and the districts of Northwest Area, Hanover Area, Greater Nanticoke Area and Wyoming Area.

He said the initial meeting was intended only to agree upon an agenda for further negotiations that would then include a representative from labor and from management.

Before the debate about Audi began, Robert Glus – from the trust's actuarial firm, Conrad Siegel – discussed preliminary increases in premiums for member districts in the 2013-14 school year.

Stressing the numbers could change as the budget is worked on, Glus said the average increase is 8.1 percent, with the lowest being 5.7 percent and the highest 9.8 percent, excluding Lake-Lehman. Glus said he couldn't give an accurate estimate for that district if it returns to full coverage through the trust, but added he would be surprised if the increase was less than 20 percent.

The board also heard a report on the annual audit by the accounting firm Bonita and Rainey.

Tom Rainey said the trust's net assets had dropped dramatically, primarily for two reasons: The trust had given all member districts one month premium-free, draining about $4 million, and a Luzerne County judge had ruled in favor of two districts that withdrew from the trust in 2007 and sued for what they argued was their share of a large surplus, which had hit a high of about $21 million at one point.

Pittston Area and Dallas School districts withdrew from the trust because of the high surplus, arguing it should be used to reduce premiums. They then sued to get what they contend is their share of the surplus.

A judge ruled in their favor and the trust appealed, but the judge ordered the money owed the districts – nearly $8 million after adding interest – be held in a separate account until the case is settled. Rainey said that, while the trust technically has about $10.9 million in hand, $7.9 million of that is restricted by the judge's order.