Unemployment Compensation.

In June 2003, the School Board approved a contract with DeGroot Management Services (DMS), Inc. to perform unemployment cost control services for the District, contingent upon the successful outcome of a six-month pilot program. This information item is presented to the Board to provide an update on the performance of this contract.

The School District is self-insured for Unemployment Compensation Insurance (UCI), a state-mandated program that requires employers to pay either insurance premiums or the actual cost of unemployment claims to the state. In an effort to mitigate the UCI costs, projected to reach $500,000 in 2003/2004 and to continue increasing thereafter, the School Board entered into a contract with DMS for cost control services, “subject to the successful outcome of the six-month ‘pilot’ period.” By the end of the pilot period, the District had saved more money than the cost of DMS--a successful outcome that allowed the contract to continue.

DMS’s ongoing services have included verification of the accuracy of unemployment benefit charges assessed against the District, representation of the District at unemployment hearings, training of District staff as needed, and production of periodic management reports. As a result of these services, the District has reduced its number of unemployment claims, even as the number of employees has increased, and saved thousands of dollars.

The annual unemployment compensation charges paid by the District have decreased substantially every year since the contract with DMS was approved:

Fiscal Year						Claims Paid				Reduced from 2003 / 2004
2003 / 2004						$419,888				--
2004 / 2005						$323,090				($96,798)
2005 / 2006						$280,854				($139,034)
2006 / 2007						$276,026				($143,862)
Total						$1,299,858				($379,694)

In addition, subsequent to analyzing recent DMS reports, the Human Resources Department identified several areas to target for process improvement and staff training. As a result, there has been an increase in the number of unemployment hearings that have been ruled in favor of the District.

All District Goals and Critical Success Factors.

The District’s net savings over the last four years, when compared against the 2003/2004 baseline, can be quantified at $276,694 ($379,694 total savings less $103,000 paid to DMS). However, since the costs prior to contracting with DMS were projected to be in excess of $500,000 per year, the savings are probably much greater.

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