California community colleges will be confronting a $180 million reduction in their state funding in the 2009 fiscal year, and therefore, it will be critical for institutions to get the most out of their available resources along with the best value for their expenditures. Insurance, risk management and employee benefits are areas of significant expense, and by applying strategic approaches to these areas, community colleges can make a difference, immediately and in future years. In this article we present five high-impact strategies that can save community colleges on their budgets.

Consider Early Retirement Incentives.

The objective of early retirement programs is to encourage employees age 55 and older to retire earlier than anticipated by providing attractive, but cost-effective incentives. Employers benefit by revitalizing their staffs and avoiding possible layoffs when payroll expense reductions are necessary. Some early retirement program designs may also result in reducing GASB 45 (postretirement health care) liabilities. The savings from an early retirement program is realized in the salary differential between the retiree and a replacement employee. Flexible funding mechanisms can be incorporated into the design to account for the college’s cash flow requirements.

Self Funding of Health Plans

With the changing environment in the health care delivery system, many larger institutions may be able to save on their health plans through self-funding. Because of the differences in regulation, self-funded plans can take advantage of customized benefit designs, more aggressive case management and disease management programs that are not always available in the insured market. Such approaches allow for long term cost control because they may foster changes in the utilization of benefits and improvements in the overall health of the population. Self-funding also gives the sponsor greater control over the selection of a provider network and the levels of network discounts applied to plan expenses. If medical plan self-funding is beyond the risk tolerance of an institution, self-funding of dental and vision programs can still provide some savings with a greater predictability of claims.

Explore Insured Health Plan Rate Incentives

Community colleges that do not have the option of self funding medical benefits can also find new and innovative programs for reducing and controlling their rate increases. Some health plans now offer rate caps and multi-year rate guarantees based on performance. Implementation of wellness programs, disease management and utilization goals may be rewarded by certain insurance carriers in the form of renewal increases below the market norms.

Rent a Safety Professional.

The budget crunch still leaves community colleges on the hook for compliance inspections and other loss control obligations to meet California Occupational Safety and Health Administration (Cal-OSHA) and Environmental Protection Agency (EPA) requirements. Institutions that are not able to staff for these needs internally may be able to purchase just the professional services that they need through a Rent A Safety Professional (RASP) program. This is a cost-effective solution when full-time staffing cannot be justified, because it helps prevent assessment of penalties and can contribute to overall reduction in claims.

Implement Web-Based Training for Safety and Compliance.

In an ideal world, face-to-face training is preferable, but there are significant direct and indirect costs associated with it. Travel expense, employee time away from the work place, and possible overtime pay make “live” training less practical and more expensive than can be managed. With the technology available today, web-based safety and compliance training is a viable alternative for accomplishing these education requirements while saving significant time and money. Educational institutions are now able to train employees in specific, tailored programs such as sexual harassment, new-hire orientations, and safe work practices in an e-learning environment. Employees have the flexibility to access the training programs from their office, home, the library or human resources department kiosk.

Summary

Change and adaptation will be critical for community colleges during this period of fiscal restraint. At the same time, vital programs, compliance requirements, and an attractive employee benefits offering need to continue. These approaches can maximize efficiency, reduce current expense, control longer-term increases and streamline delivery. By implementing some or all of the five strategic approaches listed, community colleges can obtain budget savings while preserving the programs and services they have committed, or are required, to provide.

---

About the Author

Tim Keenan leads Keenan & Associates’ Community Colleges practice, which provides risk management, loss control, workers’ compensation, employee benefits and retirement program services to more than 50 California community college districts. For more information about these budget savings strategies, please email Tim Keenan at tkeenan2@keenan.com