Hohman School officials present 2024–25 fourth-quarter budget revisions, cite higher health-claims costs

Julie Holman, executive director of finance and operations for the School District of Hohman, presented fourth-quarter budget revisions for the 2024–25 fiscal year to the school board on July 28, saying the district adjusted revenues and expenditures after the fiscal year closed June 30.

Holman told the board the general fund revised revenue budget is $56,464,000, an increase of $243,000 from the March projection “primarily due to more projected interest earnings on fund balance reserves.” She said the revised general fund expenditure budget is $60,206,000, an increase of about 1.45% since March, driven mainly by health-insurance experience.

Why it matters: the district moved to partial self-insurance for health coverage and must record an actuarial estimate for “incurred but not received” claims at fiscal year end. Holman said the initial IBNR (incurred but not received) estimate recorded in the issue paper was $579,000, and that the district expected to adjust that estimate downward during audit discussions.

Holman cautioned the estimate is imperfect: “It doesn’t mean that that is the actual. In addition, we have to record anything we know but wasn’t paid by June 30,” she said, explaining the audit entry. She added the district has been “running worse than any of Janice self insured districts right now,” and called the early experience “challenging” while noting staff and the insurance center are reviewing claims data for future premium-setting and cost containment.

Holman also reported changes in other funds. The special-education fund rose about $167,000 since March, largely because of tuition invoices and out-of-district placements agreed to after the district’s October certification; the result is an interfund transfer from the general fund of about $7,460,000, roughly 12.4% of general fund expenditures and about $606,000 (8.8%) higher than the prior year. She said the debt-service fund showed a $432,000 revenue increase tied mainly to a bond bid premium received when the district sold construction bonds this spring; ending debt-service fund balance was estimated at $5,370,000. Capital-projects funds (funds 42 and 46 combined) reflected remaining construction funding and an estimated available balance of roughly $791,000 for long-term capital improvements.

Board members pressed for clarification on how the insurance entries will appear in the audit and in future budgets; a board member asked whether the IBNR estimate and related premium adjustments would be “corrected in budget” before the audit. Holman replied the audit entries will be adjusted to actuals for the audit and that any overage would become restricted fund balance to smooth future premium-setting. She said the district’s goal is “to set premiums slightly above anticipated claims, and to establish some revert reserves in the future.”

Actions and next steps: Holman said the fourth-quarter revisions will be presented for formal approval on the board’s consent agenda at the district’s August meeting. The district’s 2024–25 audit field work had begun the week of the meeting.

Context and limits: Holman repeatedly described the IBNR number as an estimate and said discussions with the insurance center likely will reduce the audit adjustment. The board did not vote on the fourth-quarter revisions at the July 28 meeting; the presentation was informational and scheduled for approval on a future consent agenda.