Press Release: Smith County Schools statement regarding audit finding

March 21, 2019

The following press release was submitted to Smith County Insider by Director of Schools Barry Smith:

Barry Smith, Director of Schools in Smith County

Smith County Schools received an audit finding in the 2017-2018 school year because a penalty of $37,180 was assessed by the Internal Revenue Service for noncompliance related to the Affordable Care Act (“Obamacare”). This current audit finding relates to the Affordable Care Act for 2015. This amount was assessed as the employer shared responsibility to offset the costs of any employees that obtained health insurance through the Marketplace. Money was budgeted for the potential expense on August 5, 2014, in a Special Called Board Meeting.

Formal discussions with the Board on the Affordable Care Act began upon its passage. Businesses of more than 50 employees were subject to penalty unless they offered affordable coverage to all full-time employees.

In 2014 the cost of providing insurance for 150 full time non-certified employees was $622,908.00 yearly, versus paying the assessment from the IRS in the amount of $37,180. Significant study was conducted and all budgetary items were considered. The Board could not feasibly expand coverage without asking for a tax increase and amended its budget to cover potential costs of the assessment. In the 2018-2019 school year budget with 165 non-certified employees, the cost would be $902,880.00 for the year. In comparison, the expenditure in 2018-2019 to the IRS was $35,100 for the 2016 assessment related to the Affordable Care Act.

Other school systems in Middle Tennessee are being affected by the Affordable Care Act as well, and have been forced to undertake similar analysis of the most feasible budget option. This recurring expense is included in the line item of the regular instruction medical insurance budget each year.

Other options include cutting full-time non-certified employee hours back to less than 30 hours per week to avoid triggering the Affordable Care Act. Smith County Schools have chosen not to punish employees by cutting hours or pay but instead budgeting to offset the cost for employees utilizing the Marketplace.

Any questions may be directed to the Smith County Board of Education Central Office.

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Director Smith’s statement is in response to an article recently published by The Tennessee Star reporting that the Smith County School System was required to pay $35,000 due to noncompliance with the Affordable Care Act.

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