But the board has also been feeling out its options in terms of employee benefits with its new insurance agent of record, Joseph Fields of the Durham-based CBC and Kane Partners, Inc.

CBC Kane, which also represents the borough side, replaced the board’s previous broker, USI Consulting, as a condition of the borough’s approximately $1 million bailout.

At a BOE Finance Subcommittee meeting last Thursday, Fields laid out his preliminary analysis of the board’s health insurance problem—and what can be done about it.

Though the borough, as BOE Chairwoman Kathleen Donovan noted, has pushed for the board to return to a fully-insured health plan, as opposed to the self-insured program instated two years ago, Fields said a switch isn’t yet financially feasible.

He said despite some perceptions about a self-funded insurance program—specifically, that its possible savings come with risks of overages—it really isn’t a gamble to utilize one, provided two conditions are met.

First of all, he said, the board needs to accumulate a reserve to cover any claims over budget in a given year. But he said that’s not an easy task for any board of education to face.

“Self-insured is not a problem of efficiency,” he said. “No board of education worth its salt, given a choice to fund a reserve or lay off a teacher, would choose to fund its reserve. … It requires a degree of discipline most boards of education don’t have.”

Fields has worked with many municipal clients and says it’s a storyline he’s seen played out many times: A school board saves in a good year, but rather than supplement a reserve fund, it instead prevents a layoff or finances a much-needed capital improvement project—then pays dearly down the line when claims run over budget.

In addition to nesting a reserve fund, Fields said, the board needs to make better estimations of insurance costs when preparing yearly budgets. He said the fatal mistake of the board’s previous broker was making projections based on previous years’ claims without accounting for inflation, or as he called it, “the trending factor.”

He qualified the point by noting that he’d been examining data “forensically” and that more detailed analyses are forthcoming.

Provided the board utilizes better estimation techniques and manages to save about $400,000 per year using its current self-funded system—and tucks it away in reserve—Fields said it would be in a better position to make the expensive switch back to fully-insured health benefits or to reevaluate that switch in about three years.

“These are reasonable ways to make sure these items are done so they’re consistent with how they’re done in the rest of the industry,” he said. “Slow and steady is a good thing.”

The board met privately Wednesday prior to a budget workshop to examine insurance options in more detail.

The board is banking on that plan to help make up a projected $2 million budget shortfall for the fiscal year that ends in June.

The board’s proposal, which it posted on its Web site last Wednesday, calls for all employees to switch from either a traditional health insurance plan or a health savings account, which the employee owns, to a health reimbursement account, owned by the school system.

According to the board, among the benefits to employees is that the school system proposes to pay the entire deductible—$2,500 for singles and $5,000 for family plans—through the reimbursement account. The major benefit to the school system is that funds only need to be paid when a claim is incurred, and unused funds can be rolled over from year to year.

A major reason for the board’s projected deficit is high health insurance costs. The board has a self-funded plan, which means it pays for all medical costs incurred, and has set aside $8.3 million, with no reserve account, to pay claims this year.

The board already has spent about $5 million on health claims with seven months to go in the fiscal year. Officials project the insurance account will be underfunded by $700,000 to $1.5 million by the end of June.

The reimbursement account approach, which would be provided by Anthem Lumenos, is the board’s answer to that problem.

According to board documents, which were written by the board’s insurance broker, employees would use account dollars to pay for medical care, and Anthem Blue Cross and Blue Shield would reimburse the school system after reimbursement account funds are spent.

The board says employees would be eligible for immunizations and wellness visits for children, routine exams for adults, adult immunizations, adult screenings, including mammograms; prostate exams, diabetes testing and colorectal cancer screenings.

Mayor Bob Mezzo, who is also a member of the school board, said he believes the board has a difficult task of trying to sell the plan to employees.

“I’m not at all trying to diminish the merits of the proposal, but this conversation should have happened months ago when the climate for having this discussion would have been much better,” he said. “The dialogue has to be strong right now so we can move forward.”

The board wants an answer by Dec. 14 from the three school unions.

The school board says it will likely have to resort to massive layoffs and program cuts if the school unions do not accept the insurance plan and other concessions. The 400-member Naugatuck Teachers’ League has butted heads with Superintendent Dr. John Tindall-Gibson and the school board for several months because of the budget shortfall.

Educators and many others in the community say Tindall-Gibson and the board have done nothing to solve the problem three months into the school year. Teachers overwhelmingly approved a vote of no confidence in Tindall-Gibson last month, and the Board of Mayor and Burgesses did the same last Tuesday.

Board of Education Secretary David Heller, chairman of the board’s communications committee, said the insurance proposal is a win-win for the board and employees.

Mayor Bob Mezzo and Wayne McAllister, borough controller and acting school business manager, say expert advice leads them to believe the proposed Health Reimbursement Account system, which the school board is pushing with hopes of saving $892,489 this year, is a bad idea.

They said the borough’s health insurance broker, Joseph A. Fields, a partner in CBC Kane Partners, told them the new plan would not save any money this year—it would actually cost Naugatuck more in the long run.

That’s because the school board has proposed to fund the entire deductible, $2,500 for singles and $5,000 for family plans. According to Mezzo, Fields said that will not lower the rate at which employees file health insurance claims.

“The consultant said there are two ways to save money,” Mezzo said. “One is to require more [deductible] costs from employees, and the other is to provide an incentive for the employees to cut back on health insurance claims. This does neither.”

Mezzo said Fields is an expert with an impressive resume. Fields has taught insurance and finance classes at the University of Georgia, Penn State and the University of Connecticut for more than 20 years and has acted as an expert witness in more than 200 insurance cases in 20 states, including two that were heard by the U.S. Supreme Court.

The school board, which received its new healthcare proposal from its insurance broker, USI Connecticut, believes the health insurance plan will save money because the funds only need to be paid when a claim is incurred, and unused funds can be rolled over from year to year. The board believes the proposal is a win-win for employee groups, which must agree to the new plan, and the school board.

Board Chairwoman Kathleen Donovan said she believes the board’s insurance plan is solid and noted it was drafted by experts. She said she has yet to see any documentation from McAllister that indicates the proposal will not save money.

“If someone provides us with some information, we will certainly look at it,” she said.

Even though the board plans to fund the entire deductible, Donovan said she does not believe the way people use their insurance will be much different from their normal utilization patterns.

“All of this information on savings was cross-referenced with Anthem [Blue Cross and Blue Shield insurance] to make sure there would be savings,” she said.

The board has proposed the health insurance piece as the major cost-saver in its $1.6 million plan to bridge the budget gap. The plan also calls for concessions from unions, and the board has given school unions until Dec. 14 to make a decision.

The largest school union, the Naugatuck Teachers’ League, says it will not vote on the insurance proposal until it reviews the plan with its own experts.

“It took the board six months to come up with this plan; they can give us more than two weeks,” said Charley Marenghi, vice president and spokesman of the NTL.

The NTL also wants the board to vote on the teachers’ proposal for $552,000 in concessions before the union will vote on the board’s proposal.