Ray Brewer
Exterior of the Clark County School District main office in Las Vegas, Nevada Thursday, August 31, 2023.
Wednesday, Sept. 6, 2023 | 2 a.m.
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The Clark County School District’s top finance official says the long-troubled teachers’ health insurance trust is in position to repay a $35 million district loan as it continues its fiscal turnaround.
Although THT Health’s last annual audit report, issued in December 2022, said there was “substantial doubt about the trust’s ability to continue,” CCSD Chief Financial Officer Jason Goudie said monthly financials since then make him cautiously optimistic.
“Their financial position has changed dramatically,” he told the Sun.
CCSD has a significant vested interest in the trust, formerly known as the Teachers Health Trust, since extending a $35 million taxpayer bailout in October 2021.
The self-funded insurance plan covers more than 30,000 active Clark County School District teachers and their dependents, plus some retirees.
CCSD uses the term “prepayment” when referring to the interest-free $35 million, and THT treats it as a loan. The note is due in full in June 2024. Should the trust have a major default on the loan, CCSD would cease its monthly payments to the trust until the default were remedied. Three major defaults would mean the teachers’ insurance would transition from THT to CCSD’s universal health plan.
Goudie said that although the monthly updates, which are a required term of the loan, were unaudited and separate from the trust’s annual independent audits, prior unaudited monthly updates have generally reflected accurately in the year-end audits.
“The financials that we see on a monthly basis have shown that they are fairly close to being in line with all of the projections that we had been provided prior to the agreement. They are showing positive income. They’re continuing to show lower claims costs,” he said. “More importantly, administrative costs, which are the things they can control, they have made significant improvements on. It has changed for the better, which is good for all of us.”
THT Health CEO Tom Zumtobel, who took over the helm in mid-2021 just before the trust accepted the $35 million loan, told the CCSD School Board in February that he was confident in the trust’s ability to repay the loan.
On Tuesday, he said he was even more sure of it.
Administrative cuts — including whittling down the THT employee roster from as many as 45 to about 18 to 20 people, while eliminating some high salaries, and streamlining redundant third-party vendors and consultants — have helped the trust realize savings, he said.
“We don’t actually know how many babies we’re going to have to pay to be delivered. Administrative costs are in our control,” Zumtobel said. “I’m extremely proud of my team.”
The most recent audit, completed in December 2022 for the fiscal year ending June 30, 2022, said that as of Dec. 29, 2022, there was “a substantial doubt about the Trust’s ability to continue.”
Auditors noted the trust had suffered substantial losses for the past three fiscal years, had $18.3 million in net assets available for plan benefits as of June 2022 and payable and incurred claims of $42.5 million. It further noted that “the liquidity and resources needed to continue to fund obligations of the Trust are significantly limited.”
There was the $35 million note, and there was also pending litigation. A plaintiff in a federal suit alleged that she was sent to collections after THT failed to pay her providers.
Another, a class-action suit filed in Clark County District Court, alleges teachers were denied coverage for certain health treatments, overcharged for copays and exceeded out-of-pocket maximums.
The latter case, filed in 2018, is scheduled to go to trial in January 2024, according to court records. The federal case appears to have been settled in May for an undisclosed amount.
Goudie said the last audit results, though, “are still partially left over from the challenges that the prior management had.”
Zumtobel said consistency and rebuilding trust with teachers will make THT the best health plan in town, “which we were 15 years ago. That’s the goal. It’s a lot of work, but we’re on the road.”
The trust was created 40 years ago by the Clark County Education Association teachers union.
THT’s next annual audit, covering fiscal year 2023, is due to CCSD by Dec. 31.
