The Senate Finance Committee dissected the Department of Education’s proposed 2022 fiscal year budget during Thursday’s hearing, exposing “inflated” fringe benefit costs that represent 30 percent of the department’s entire year’s budget.
The recommended cost for the department’s fringe benefits was over $55 million, 10 percent higher than the last fiscal year, Education Commissioner Racquel Berry-Benjamin said. Within this cost, things like the employer’s contribution to retirement, health and dental insurance, workers compensation premiums, and unemployment insurance contributions are projected and cumulated to arrive at the recommendation.
But nearly immediately senators realized something about the calculations was incorrect.
Sen. Marvin Blyden was the first to say, “The fringe benefits seem to be kind of high,” and the committee needs to “scrub the numbers.” He said the relationship between fringe benefit costs and personnel costs are related, and most agencies within the territory estimate fringe benefit costs to be 40 percent of what the agency’s total personnel cost is.
Education’s Fiscal and Administrative Services Deputy Commissioner Ava Penn said, “We have historically used 50 percent of the calculated fringe benefits, and this year we are up,” to 52 percent.
“The process in all the other departments is 40 plus percent, not 50,” Blyden said. “You are the first agency I have seen at 52 percent, so something is wrong. It cannot be accurate. Everyone else is at, I believe, 42 percent, not 52. Every agency so far for this year’s budget process, no one has been at 52 percent.”
Penn told the committee the calculations are based on formulas that come from the Office of Management and Budget and should reflect 52 percent of personnel costs.
“What concerns me is the personnel services increased by $4,874,805. That’s the increase to the personnel, but your fringe increased by $5,029,012,” Sen. Kurt Vialet said. “So, your fringe actually increased more than the personnel. You say that your fringe is 50 percent of your personnel, then your fringe should have been $2.4 million. The increase should have been $2.4 million, instead of $5 million.” He said the increase was closer to 110 percent.
But Penn assured senators the calculations were correct.
Sen. Donna Frett-Gregory said even if the calculation were correct, a flat percentage for every employee would never produce accurate projections because individuals have different health care needs and plans.
“What’s supposed to happen is the HR office and your office should work together to establish single and family,” Frett-Gregory said. “Everyone is not at 52 percent, and that is the issue. We can not do a straight 52 percent on every single employee. Some sort of analysis needs to be done so we can get a better picture. I know you can’t get the full picture for all the vacant positions, but at a minimum, the filled positions you should have a better perspective on. So, this in fact is inflated, it is.”
The governor recommended a 12 percent increase to the appropriation for the department’s budget over last year’s, nearly $185 million, to be allocated from the General Fund. Of this amount, 30 percent will be earmarked for fringe benefit costs, unless the Legislature adjusts the department’s budget.
Separately, the committee also received testimony on the Career and Technical Education Board’s proposed fiscal year budget of nearly $650,000 and the Virgin Islands Board of Education’s proposed budget of nearly $2 million.
Sens. Marvin Blyden, Samuel Carrion, Dwayne DeGraff, Kurt Vialet, Donna Frett-Gregory, Javan James Sr., and Janelle Sarauw were present for the hearing. Additional non-committee members also attended the hearing.