Reducing Budget Costs in

the Turbulent Waters of PPAC

When Outsourcing

Should you Outsource? A core set of issues and questions must be explored

when deciding to outsource.

Your decision factors are grouped into 6 main categories:

1. HUMAN RESOURCES

2. FINANCIAL

3. SERVICE QUALITY

4. LEGAL AND ETHICAL CONSIDERATIONS

5. MISSION AND CULTURE

6. MANAGEMENT CONTROL AND EFFICIENCY

General Overview of PPAC From a Vendor Standpoint

• If a new hire is a variable hours employee or seasonal employee, the employee is not required to be offered health coverage unless the employee actually works, on average, at least 30 hours per week during a “measurement period” of between 3 and 12 months.

• Employees should receive credit for all hours they are paid or entitled to be paid for the performance of duties plus each hour for which an employee is paid or entitled to be paid on account of a period of time during which no duties are performed (such as due to vacation, illness, layoff, etc.).

• For hourly employees, employers must credit based on actual hours of service.

• Academic year employees of educational organizations cannot be treated as seasonal employees.

Understanding the Clock & Calendar

• Measurement Period (Eligibility)

Period of time between 3 to 12 months (7-1-2013 to 6-30-2014)

• Administration Period (Enrollment) Period of time between 30 to 90 days (7-1-2014 to 8-31-2014)

• Stability Period (Employee is on Benefits) Period of time generally 12 months

Communications

SEE POWERPOINT ATTACHMENT

What have you heard from your Vendor’s

Next steps• Prepare to issue notice of exchange availability.• Calculate projected PCORI fee and projected temporary reinsurance

program fee for budgeting purposes.• Review employee work schedules and identify variable hours and seasonal

employees, and employees who work close to 30 hours. • Determine if you will use safe harbor measurement period and stability

period and if so, begin to implement now.• Determine if your lowest cost medical plan option is affordable and if not,

consider adding a lower cost option.• Consider steps to minimize liability such as converting employees to

outsourced, independent contractors or leased employees.• Reduce employee hours?

Areas that can be streamlined, automated, or handled externally without

impacting your core competencies.

• Benefits: Would you be best served by finding a broker to handle your benefit needs?

• Recruiting: Maybe finding a contract recruiter would give you the breather you need to catch up on some of the critical HR tasks on your plate.

• Staffing Non-Instructional Positions: Would you be able to provide more focus on instruction, by having an experienced partner work with you to take over all aspects of staffing for non-instructional areas?

What to Outsource?

Examples

Benefits and Limitations of Outsourcing

BENEFITS: Management can structure the contract so that a vendor bears the cost of bringing in new equipment and technology.

Outsourcing permits districts to take advantage of economies of scale achieved by vendors.

Outsourcing can enable schools to gain better control over a function.

Benefits and Limitations of Outsourcing

BENEFITS: Outsourcing introduces an element of competition.

Outsourcing allows you to strengthen your own capabilities and focus on what you do best!

Limitations of Outsourcing LIMITATIONS: Your district may not have the means to craft the contract with the vendor.

Outsourcing may place new demands on management.

Outside vendor may not understand the culture and mission of your district or education.

Questions you should ask BEFORE jumping in the BOAT!

VENDOR

PARTNER Team based

Shared goals

Knowledgeable within the market

One sided

Contract Driven Commitment Driven

Open lines of communication

Turnkey

Current happy customers

Transparent

vs

Lack of Flexibility

Lack of understanding with the market

Profit motive only

Questions before you Jump! Can the partner actually do the service? OR what service(s) do they specifically provide?

Can the proposed partner give you examples of their infrastructure?

How much does the proposed partner charge for the service?

What security measures does the proposed partner have in place?

Does the proposed partner have happy customers and references?

Is the proposed partner committed to your success?

The FOCUS is on EDUCATION

Contacts

• N. Henry BledsoePresident/CEO

• Kim Woodson

• Fredericka Hayes