Watch How one Orange County community college district found $8M of its own money Money News

Rancho Santiago Community College District found itself this summer season able virtually too just right to be true, after officers won $8 million in dividends from a third-party insurance coverage dealer that has organized protection for the district since 1997.

Two exams — one for $7,167,249 and some other amounting to $878,105 — have been lower on June 24 through Cerritos-based dealer the Alliance of Schools for Cooperative Insurance (ASCIP). And whilst it gave the impression of a present, the switch of budget used to be infrequently that.

The collective $8,045,354 represents public faculty money that had accrued over years, all the way through the Orange County community college district’s participation in a self-funded risk-sharing pool that supplied worker healthcare, staff’ reimbursement and assets and legal responsibility protection.

The smaller take a look at got here from rebates, or dividends, collected thru Rancho Santiago’s staff’ comp program. But the bigger take a look at mirrored a complete remittance of budget lengthy held in a threat control deposit fund.

The rub? Most Rancho Santiago stakeholders, together with the Board of Trustees, which used to be approved to spend the budget at any time, had no clue one of these repository of belongings existed till most effective just lately.

The ever-growing steadiness used to be by no means reported at the district’s price range, and a normal accounting used to be by no means supplied to the Board of Trustees through the district directors who oversaw, and made withdrawals from, the account.

It wasn’t till a bunch of present and previous staff, following up at the standing of a $1-million “rebate” promised through an ASCIP reputable looking to persuade the district to proceed its worker healthcare protection together with his group closing fall, that the reality in regards to the fund, and its enormity, started to come back to mild.

This is the tale of how a public faculty district — one that had persisted post-recession layoffs and wage freezes whilst banked dividends multiplied off the books — got here to be told thru a lot of public information requests and collaboration with the Daily Pilot the main points of a protracted and murky dating with ASCIP that has been anything else however clear.

In brief, it’s about how a district found $8 million of its own money.

The nice rebate debate

For years, individuals of Rancho Santiago CCD’s Joint Benefits Committee — a bunch of worker representatives and district officers that makes suggestions about worker well being receive advantages protection — had heard in regards to the ASCIP rebates.

Whenever collective premiums, paid into the pool through rankings of California faculty districts for more than a few paperwork of protection, exceeded the overall claims, or losses, paid out over a definite length, the leftover budget have been to be had to be returned through the nonprofit joint powers authority to member districts in step with each and every district’s calculated proportion of the chance pool.

Under this system, districts can switch dividends to their person common budget, observe them to systems, apparatus and coaching designed to reduce their threat of legal responsibility or use them to attract down the price of long term premiums. They too can cache them in a threat control deposit fund.

But Rancho Santiago Trustee Phil Yarbrough, who additionally heads the Board Fiscal/Audit Review Committee, stated he used to be now not made mindful through district directors that the rebates have been being held in an account maintained through ASCIP.

“This $7 million with ASCIP was never disclosed. I never saw it,” stated Yarbrough, who robotically evaluations quarterly stories at the district’s accounts. “Why isn’t a cash account with ASCIP disclosed anywhere?”

Last fall, a rebate used to be proffered to Rancho Santiago when the district used to be deciding whether or not to stay its $30-million worker medical health insurance contract with ASCIP, at a 7% proposed top rate hike, or transfer to competitor Aetna, which might have stored the district from $670,000 to $3 million every year, relying on worker participation.

Dan Sanger, who then served as ASCIP’s government director of well being advantages, knowledgeable officers the company can be returning some $1 million in healthcare rebates to the district.

During an Oct. 23, 2023, Rancho Santiago board assembly coated through the Daily Pilot, Sanger defined that after inflation and post-COVID call for for healthcare have been riding up prices, ASCIP charged upper premiums to offer protection to individuals.

“The question is, did we overcharge you? Well, yeah, because if we undercharged you we’d have to assess you in the middle of the year. So we always add a little bit of margin, just for safety,” he informed trustees.

“But we do have a significant equity balance that we have built for just this purpose,” he persevered, “so we can keep rates stable — that’s one of the advertised benefits of ASCIP — and so we can launch value adds that we believe will get a positive return on investment.”

Board individuals in attendance at that assembly determined to stick within the pool with ASCIP for one extra yr and revisit the topic this yr. They are scheduled to take a vote at the medical health insurance contract all the way through their common assembly Monday.

But one thing didn’t sit down proper with one union president, whose questions on a unmarried rebate from a statewide insurance coverage threat pool began a tidal wave of passion and inquiry that will result in a public call for for the whole lot of Rancho Santiago’s rebates to be returned to the district’s coffers and its price range.

The Alliance of Schools for Cooperative Insurance Programs CFO Jeff Grubbs, proper, speaks all the way through an Aug. 31, 2023, assembly of the JPA’s Executive Committee.

(James Carbone)

The inscrutable threat control fund

In May of this yr, when the district’s Joint Benefits Committee used to be yet again engaged in talks about whether or not to stay its worker well being protection thru ASCIP’s risk-sharing pool, Morrie Barembaum — then president of the Faculty Assn. Rancho Santiago Community College District (FARSCCD) — used to be reminded of the rebate Sanger had discussed on the October assembly.

What had came about to these promised budget?

As a member of the advantages committee, Barembaum had requested in regards to the rebate within the months following Sanger’s declaration that it have been despatched however used to be informed two times it had now not been won.

So, he emailed Iris Ingram, the district’s vice chancellor of Business Services, on May 29 and copied a handful of directors and school affiliation individuals, asking yet again in regards to the standing of the rebate.

Through a sequence of emails with Ingram and different district directors which have been reviewed through the Pilot, Barembaum stated he discovered $1.04 million have been deposited through ASCIP right into a threat control deposit fund for which, in step with Ingram, the district receives quarterly statements.

As a lead negotiator for the school union, Barenbaum, a Santiago Canyon College astronomy professor, had change into acquainted with combing thru price range paperwork to achieve a transparent image of the district’s budget forward of bargaining.

Yet he had by no means heard in regards to the threat control fund held through ASCIP.

“They didn’t give us the $1-million rebate,” he stated in an interview with the Pilot in overdue July. “They set it aside in a fund for the benefit of Rancho, but it didn’t actually go to Rancho. It just accumulated in a fund.”

Barry Resnick, a former college union president for Rancho Santiago Community College District from 2012 to 2016.

(Courtesy of Barry Resnick)

Curious to be told whether or not different district stakeholders knew about it, Barembaum reached out to Barry Resnick, a neighborhood resident and previous college union president from 2012 to 2016 with a name for being a watchdog on a host of community and college district problems.

Resnick, it seems, used to be already taking a look into some other insurance-related topic involving the district and its ASCIP rebates and had simply noticed point out of a “Risk Management Deposit Fund” in a Public Records Act reaction from the chancellor’s workplace about one week earlier than Barembaum contacted him about it.

Wanting to drill all the way down to the reality, Resnick persevered to ship public information requests to the district and, on June 4, won a file revealing the $7,129,246 steadiness.

“I was shocked. I didn’t believe it,” Resnick recalled of the invention. “This rebate thing I had heard for a half a dozen years, and it never made any sense to me. Pretty much from the beginning of [the time our district began] working with ASCIP, the rebates were mentioned and they were emphasized during the times we went out to bid. But Morrie was really the one to push them on where the rebates were.”

The ‘annual cry of poverty’

Learning of the life of the $7.1 million angers Resnick who, for years, attempted to discount for pay raises and coaching for college however used to be forestalled through district negotiators.

“There were years I sat at the table and listened to them tell us they had no money,” he recalled of annual contract bargaining periods with then-Vice Chancellor of Human Resources John Didion, who served as lead negotiator for the district.

“It was the district’s annual cry of poverty: ‘We don’t have any money, maybe we can give you an off salary schedule raise, maybe we’ll give a raise in the spring, but we don’t have any money for staff development.’ And they had anywhere from $1.1 million to $1.8 million sitting in that account [at the time].”

Former RSCCD Vice Chancellor John Didion, proper heart, listens all the way through an Aug. 31, 2023, assembly of ASCIP’s Executive Committee in Cerritos.

(James Carbone)

Resnick took the tips he’d discovered to trustee Yarbrough — a 28-year veteran board member who owns two actual property funding and control corporations and is a self-described price range wonk.

For all his tenure and credentials, the chance control fund held through ASCIP used to be as a lot of a thriller to him because it have been to Resnick and Barembaum.

So, all the way through a June 10 board assembly, the trustee demanded the money be returned to the district and accounted for in public, shifting ahead.

“There’s $7.1 million, it’s not a small amount of money,” Yarbrough stated. “It needs to be given back to us, in my opinion as a trustee, to where it’s subject to our audits and safely put into the bank accounts we have established at the county treasurer’s office.

“This just has to go back into where the taxpayer money is supposed to go,” he persevered. “I just don’t think it should be held at an insurance company.”

The day after the board assembly, in the hunt for to be told how lengthy the district’s threat control account have been accruing budget, Resnick despatched out some other information request, requesting all statements from ASCIP, from Jan. 1, 2020, thru May 31, 2024, memorializing the rebates deposited into that account in addition to expenditures discussed through Ingram all the way through the board assembly.

Rancho Santiago CCD Vice Chancellor of Business Services Iris Ingram listens as trustees at a June 10, 2024, board assembly ask for a go back of $7.1 million being held through ASCIP to the district.

(Screenshot through Sara Cardine)

By means of a July 9 reaction from the chancellor’s workplace, reviewed through the Pilot, Resnick won a unmarried file — dated June 12 of this yr — appearing rebate deposits, collected passion and withdrawals made out of the account between July 1, 2009, and June 12, 2024. No beginning steadiness used to be indexed, and no working totals have been supplied.

Nearly 3 weeks later, on July 29, the district returned data on more than a few purchases made with money from the chance control fund. That file contained an inventory of sundry line pieces from 2012 to 2020 — together with protection fencing, soccer helmets and Title IX coaching and movies — totaling greater than $3.6 million.

Some withdrawals integrated a notice indicating the date the Board of Trustees had authorized the expense, bundled amongst dozens of acquire orders, whilst others had no notice of board approval.

But the board dockets related to each and every referenced approval date, tested through the Pilot, both fail to checklist such bills fully or point out the purchases as being paid out of Fund 11, the district’s unrestricted common fund.

Fritz J. Heirich, leader government officer for Alliance of Schools of Cooperative Insurance Programs at an Aug. 31, 2023, assembly of the JPA’s Executive Committee.

(James Carbone)

Yarbrough maintains the board most effective approves acquire orders paid out of two common fund accounts and one for specific one-time greenbacks earmarked for explicit issues.

“There’s no way the board would approve expenditures that came from a fund held outside the district or the treasurer’s office — no way in hell,” he stated in a follow-up dialog Wednesday.

A request for an interview with ASCIP leader government Fritz Heirich, made thru lawyer Robert J. Feldhake, used to be declined in an Aug. 22 electronic mail from the lawyer.

“Media interviews [are] not really a function which ASCIP is intended to serve or should undertake, generally or at the expense of time for its members,” Feldhake wrote within the electronic mail. “Interviews with print media are outside the purpose and function of ASCIP, the availability of staff, and not where priorities presently exist.”

Rancho Santiago Chancellor Marvin Martinez in a similar way declined to talk for this tale about when and the way he used to be made mindful of the district’s $7.1-million threat control fund steadiness.

Ingram, the district’s Business Services vice chancellor, first of all agreed to respond to questions in a Zoom interview on Tuesday however canceled 90 mins prior because of sickness, in step with an electronic mail from the district’s spokesman, and requested to reschedule for the next week, after e-newsletter of this tale.

Searching for solutions

The questions on ASCIP — a joint powers authority that has treated a lot of Rancho Santiago Community College District’s insurance coverage insurance policies since 1997, in spite of now not being authorised through California Assn. of Joint Powers Authorities — come as district leaders are poised, yet again, to believe renewing the district’s $30-million worker healthcare contract with ASCIP.

It’s been just about a yr for the reason that choice used to be successfully tabled. And now the lately configured Joint Benefits Committee — Barembaum’s time period as the school affiliation president and his time at the committee ended July 31 — has really helpful, in an 8-2 vote, sticking with the Cerritos-based ASCIP. But the astronomy professor has considerations in regards to the district protecting its trade with the company.

“Had each of us not pulled a little thread in this tapestry, we wouldn’t know about any of this,” he stated.

Chancellor Martinez has permitted the Joint Benefits Committee’s advice to resume its coverage with ASCIP for some other 3 years, regardless that it’s going to be as much as trustees to come to a decision. Yarbrough says regardless of the vote, he nonetheless has questions and needs some solutions.

He sought a evaluate of the chance control deposit fund beneath the board’s audit committee however used to be informed through Martinez the panel most effective had purview over Rancho Santiago’s audited budget, now not the ones held outdoor the district.

“Someone is going to answer to me how this account was set up, how it was ever allowed to exist and where did the money go,” Yarbrough stated. “I’m going to get to the bottom of this, and I’m not going to rest until I get my answers. And they’re going to want to give them to me because they have nothing to hide.”