Board of Ed claims town overcharged for health insurance

EAST HAVEN — A letter sent to Mayor Joseph Maturo Jr. and the town administration alleges the town overcharged the

Board of Education by millions of dollars for health insurance over the past four fiscal years.

“Since at least 2014-2015, it appears that the town has systematically overcharged the Board of Education for the cost of health insurance... the charges assessed on the Board of Education by the Town exceeded the cost of claims for the covered employees by over $2,000,000 in 2015-2016, almost $2,500,000 in

2016-2017, and over $1,000,000 in both 2014-2015 and

2017-2018,” Board of Education

Chairwoman Michele DeLucia writes in the letter.

Given that the

Board of Education’s payments have allegedly exceeded the cost of claims over the past several years, DeLucia said the school board demands answers from the town.

“This is a serious matter. If the board’s calculations are correct, there is a risk that the town has been in violation of the charter by using a different methodology for setting rates for Board of Education employees, on the one hand, and town employees on the other,” the letter states. “There is also a risk that the town is in violation of state statute, specifically the minimum budget requirement, if its charges to the Board of Education for health insurance had the effect of inflating costs and thereby effectively underfunding education.”

“There were a few board members … who were aware of this happening for a while, but they felt the timing wasn’t right to bring it public. Myself, since I took over,

“There were a few board members … who were aware of this happening for a while, but they felt the timing wasn’t right to bring it public.”

Michele DeLucia,

Board of Education Chairwoman

I want full disclosure and full transparency with the public, with everyone,” DeLucia said. “I (didn’t) want to just go off and say this happened without seeing solid proof.”

Upon becoming chairwoman, DeLucia said she kept wondering why nothing was done and had two separate individuals look into the matter.

“It’s pretty astonishing. Honestly, I don’t know how those who knew about it did not do something sooner,” she said. “It took a person, an interim, to come for only a month and realize it.”

Maturo, whose office received the letter July 5, said the issue is being discussed with Town Attorney Joseph Zullo and Finance Director Paul Rizza.

While Maturo said he isn’t sure if the town plans on responding to the letter, he does “believe they have the wrong information.” He said he’s waiting until both Zullo and Rizza give him their interpretation of what they find out before he makes any further comments, though.

Zullo said he has contacted the town’s health care provider and requested data over the past several

years, as the letter sent did not include that information. Upon receiving the data, Zullo said they will see what the school board’s claims and budgeted numbers were as well as take a look at the amount in the health insurance reserve fund.

Zullo said just because there is an overcharge, doesn’t mean there was any wrongdoing.

“There are years where the town’s medical claims are less than what we budgeted. It goes into the surplus fund for a bad year. Everyone’s got this conception that an overcharge is a bad thing. An overcharge is intentional… because God forbid, that big (claim) comes down the road,” he said.

This, Zullo said, is where the surplus in the health insurance reserve fund comes into play.

“At the end of the day, it’s a reserve. It’s intended to be a rainy day fund. It’s intended to be a surplus in it. It’s supposed to cover years where claims are very, very bad, so it’s not unusual for towns to have $3, $4, $5 million of claims of those size in those accounts,” Zullo said.

Rizza noted this isn’t the first time something like this has happened. He said a similar issue was raised two or three years ago when a board member made a passing comment during

a meeting.

Along with looking into the comment, which he said proved to be unfounded, he also had representatives from the town’s health insurance come in and give a presentation.

“In order to try to assist the board members I brought in two (representatives) from Anthem (Blue Cross) … twice within a matter of a year to go through how does the system work…and answer questions,” he said.

Rizza said he couldn’t comment further until he talks with Zullo and draft a report to the mayor , who will then be included in the discussion and then a response letter will be sent.

“I’m hoping the town is going to say, ‘Oh my God, we’re so sorry. We didn’t realize,’ and in some way work with us to maybe put … the money back into our school system in a way that will positively impact our students,” DeLucia said. “I would like to sit down and see what went wrong, fix it going forward and see what we can to do to make it right for these students. They deserve to get what is owed to them, what is owed to the Board of Education.”