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At its July 24 meeting, the School Board adopted a resolution that included direction to the Superintendent and staff to retain an independent audit service to investigate overpayments by the District to employee union–agreed healthcare insurance premiums. The report by forensic auditors at the September 25 meeting of the Board found that for multiple years the District has paid increasingly large amounts over and above the employer’s share of health insurance costs.
The review confirmed that, in recent years, the District exceeded its contractual cap on employer health benefit contributions, resulting in overpayments on behalf of employees. The largest variances occurred in the 2024–25 and 2025–26 plan years. The current administration estimates the combined impact of $1.3 million.
Like many employers, the District’s labor contracts provide that employees pay for health care premiums above employer contribution caps in the collective bargaining agreement. While the audit did not identify fraud or intentional misconduct, it did find that internal control weaknesses, mismatched fiscal and plan year calendars, and a lack of systematic reconciliation contributed to the overpayments. These breakdowns meant that the excess costs were not readily visible to District leadership, staff, or the Board.
The auditors advised the Board that a combination of factors—including budget execution, staffing, internal controls, contract design and complexity, and the misalignment of plan and fiscal year calendars—contributed to a pattern of overpayments over multiple years. In response, the Superintendent is implementing immediate process changes and initiating a comprehensive review of health benefits management and internal fiscal controls, which was supported by the auditors.
To address these serious issues, the District will work as partners with the collective bargaining unit employee associations to renegotiate contract agreements that restore sound financial accountability standards to provide adequate, reliable, predictable health care insurance to our valued and respected District employees represented by their chosen collective bargaining representatives. Moving forward, we will implement measures to prevent any future overpayments and ensure that all contributions are transparent, contractually compliant, and aligned with legal and ethical standards.
While the audit did not include legal findings, public funds must be spent in accordance with contractual terms, Board authorization, and applicable law. Strengthening systems and internal controls will help ensure future compliance and transparency.
The Board has not yet taken further action or made any specific policy determinations based on the audit report presented on September 25. The resolution adopted by the Board on July 24 also authorized further forensic auditing related to this health care premium issue, as well as any other significant internal control concerns, budget execution, or financial management challenges that arise for the District.
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