Roberta Hotinski

Update on TE School District Finances and Tredyffrin Township declares State of Emergency for Pope’s visit

 

Tuesday night marked TE School District’s first Finance Committee meeting of the new school year.  Although I was unable to attend the meeting, my friend Ray Clarke did attend the meeting and shared the following notes from the meeting.  Thanks Ray!

The TESD Finance Committee opened the 2015/16 season with a relaxed session on Tuesday night.  The meeting was attended by candidates Berger, Colligan, Kling, Hotinski and Kantorczyk.  A few highlights from my perspective:

Budget Process

– Finance committee approval of the Preliminary Budget is due in just three months.  After some discussion about teeing up review of opportunities in the district’s self insurance of its health plan and potentially of some special education risks, Doug Carlson requested that the Administration present the Committee with full district budget scenarios that start with expenses managed to revenues with no tax increase.  Hopefully we’ll get more than the standard operating procedure showing a $6 million deficit.

– By the way, somehow in an environment of last 12 months US inflation of 0.2%, the Act 1 index is 2.4%.  Half of the index is the increase in the Federal school employment cost index, showing how contract awards get baked into future taxes.

Current Financials

– August YTD expenses/encumbrances are up across the board, total up 12% versus last year, driven by special ed instruction up 32% (over $3 million) YTD.  I don’t recall the explanation for this but I didn’t hear any immediate concern that the overall 5% budgeted expense increase would be exceeded.  One number that does stand out for the full year budget is the $770,799 (11%) increase in the Administration budget.

– For those of use that liked to do a quick scan of the month’s check register from high to low, the task has been made harder by a switch to reporting the check register by pay period in alphabetical order.  This seems arbitrary; when asked why, no reason was provided.

– The actual results for last year are still months away, awaiting the external audit.  The Business Office is working through the encumbrances and deciding what should be released; an interesting exercise, no doubt.

Department of Unintended Consequences

– Restricting part-time employees to 27.5 hours has caused a significant shortfall in the number of teachers/aides available to support the after-school homework clubs, and this is becoming a real problem with the clubs usually starting up in October.  Part of the program is funded by FLITE, which is not able to contract with employees of our out-sourcing company, CCRES.  The District is looking to advertise specifically to hire homework club leader and assistant positions at $28 and $17/hour, which FLITE would apparently be able to continue to fund.

Other

– Kris Graham brought up the need to fully air condition all of the elementary and middle school buildings in the light of the current heat wave.  She did not offer a cost estimate for this.

Residents also learned on Tuesday that the Tredyffrin  supervisors voted to declare the township a state of emergency for the upcoming Pope’s visit, citing expected traffic and congestion. According to Police Supt. Giamio, there will be over 16,000 train riders during the pope’s visit and that the highest number are expected to use the Paoli station!  Yikes!  As an aside, I am glad about my decision to move the annual historic house tour up a week to Saturday, Sept. 19 (www.tredyffrinhistory.org) to accommodate the Pope’s visit.

We should plan around the Pope’s visit as if the weather people were predicting a blizzard — get to the grocery store and don’t forget your medication before the storm hits (or rather, the Pope lands).

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TE School Board Candidates for Tredyffrin, Region 1 respond

TE School Board Candidates for Tredyffrin, Region 1:
Neal Colligan
Roberta Hotinski
Todd Kantorczyk
Neill Kling

The TE School Board candidates were asked to answer the following question in 500 words or less.

Although there are many important issues facing the TE School District, what one issue will you focus on should you be elected?  As a school board director, what in your background, experience or education prepares you to help with this specific issue.

The four candidate responses follow below in alphabetical order according to last name.  If your question and/or comment is for a specific candidate, please refer to that individual by name so as not to confuse. Voters will select two of these candidates in November for the school board.

TE School Board Candidate Neal Colligan
Tredyffrin, East – Region 1

In Pennsylvania, the State is mandated to provide education to our children.  Local municipalities are permitted some autonomy in operating educational franchises.  This autonomy is centered on fiscal management and meeting established minimum standards…districts that fail come under State control.  We achieve educational excellence in T/E for reasons schools succeed anywhere…engaged parents who value education, experienced professionals in the education function and a socio-economic demographic that promotes physical and mental health.  T/E will continue to excel educationally because you (and I) will accept nothing less.

In selecting SB members, we should understand the power we give them. The Position we’re discussing regards the management of the local educational operation; largely relegated to business/organizational decisions and setting a local tax rate.  Educational excellence is the over-riding mission but THIS JOB is very specific.  The inalienable right of the SB Member is to levy taxes…that affects every household and business in our community…THIS JOB is to assure the money is spent wisely.   To “keep our schools great” or “make education better”, one should seek a position in the Education Department…curriculum is State mandated.  To change the State’s funding of PSERs, the election venue would be State Representative.  No person in this race is running for teacher, coach, administrator or good parent…those jobs feature direct contact with students.

I’ve been a Tredyffrin citizen for 20 years, attending School Board meetings for 5 years.  From the “EIT Study” until today, I continue to educate myself on the operation of our District. I became an activist, speaking out was necessary.  I’ve written in The Suburban many times regarding T/ESD finances, worked with a group of para’s/aides (at their request) to prevent their outsourcing, compelled the Board to release documents in the PA Open Records Office case Colligan vs T/E School District and continue to speak out on District issues that impact the community.  I’ve worked with some great people…R’s and D’s and I’s.  You can read about the positions I’ve advocated by searching this site.  I am who I am and will continue to be…that’s my BIG promise.

The job is straight-forward. Deliver excellent education while operating efficiently….that’s what you deserve.  Basics:  be honest with the community in financial matters, welcome community input, adhere to established rules regarding transparency, focus on long-term viability of the system and be a good community citizen.  Follow that path and the T/ESB won’t be constantly locking-horns with the public….TEMS fence…$5 MM garage…deficit budget/maximum tax increase/annual surplus cycle…outsourcing paras/aides…secret meetings that s/b public…shouting down community members…ALL can be in the past.

The attitude of “we know better”…”the community doesn’t need to know”…”they’re OUR schools” needs to change…THAT’s the #1 issue.  I’m (uniquely???) qualified for THIS position…my accounting degree and MBA provide the education necessary for the task, years of educating myself prepare me for the position and I’m not too full-of-myself. My record is easy to access…watch the last/any video of a SB meeting, search here if inclined.  Know the candidates: prepared?…share your values?…have leadership qualities?  Change is coming…  Thanks for listening.

TE School Board Candidate Roberta Hotinski
Tredyffrin, East – Region 1

As a geoscientist with a Ph.D. from Penn State who has spent the last 12 years working at Princeton University, I have spent most of my career in environments of educational excellence.    After working in research, I moved into science management and communication, gaining extensive experience in project coordination and outreach to the public, including teacher professional development.   I am currently the project manager for a $3.5 million/year ocean research initiative at Princeton (http://soccom.princeton.edu), which has given me additional experience in budgeting and consensus building among stakeholders.

As a scientist and parent with children in T/E, the single most important issue for me is preserving the quality of education that has made our district and our community so successful.   If elected, I will work to guarantee that:

1. Spending is focused on students.
Recently the Board has committed to significant expenditures for capital projects that were not adequately justified to the community, including issuing $24 million in bonds for future projects and approving a $4.5 million facilities building. Funding decent and safe school buildings is important to the education program, but I would push to provide details on design and costs long before the meeting where a final vote is held.  In addition, with over $30 million in our reserve fund I believe the Board should set a formal target for an adequate fund balance and develop strategies to limit the fund’s growth, such as committing surpluses to the following year’s operating expenses or increasing contributions to capital projects.

2. Our district is providing a competitive 21st century education.
I am concerned about the impacts of high stakes testing and would propose an internal review of how much time (and thus money) is being devoted to preparing for PSSA’s and Keystone Exams, plus the costs of remediation.   I would also propose actively soliciting input from parents, teachers, and administrators on how current curricula and services are working for our students.  As a particular area of interest, I would advocate strengthening partnerships with local universities and businesses to enhance STEM initiatives, including internships and after-school or summer programs.

3) Community members are active partners in improving our district.
I am committed to transparency and accountability, improved communication with the public, and mining community talent to help improve our schools.  Specifically, I advocate
–  Increasing two-way interaction at Board meetings, providing a mechanism for the public to ask questions between meetings, and publishing answers to public questions online
–  Utilizing the expertise of our community members by creating citizen task forces or committees on complex issues

Residents of T/E deserve to feel confident that their tax dollars are being used wisely to provide a first-class education for every child in T/E.  I believe my background and professional experience have prepared me well to safeguard the interests of both students and taxpayers, and I hope voters will agree.   I am happy to answer questions and can be reached at hotinski@hotmail.com or (484) 320-7470.

TE School Board Candidate Todd Kantorczyk
Tredyffrin, East – Region 1

My name is Todd Kantorczyk, and I’m a candidate for Region 1 T/E School Board Director.  Serving on the board of a successful public school district like T/E requires directors to devote attention to a wide array of issues, many of which arise or shift significantly over the course of a school year.  Accordingly, choosing a single issue above all others would not be an accurate reflection of how I intend to approach my responsibilities as a school board director if elected.  With that said, I do believe a critical issue that will require much of my focus is ensuring that our district continues to provide a high quality education in an environment that demands consistent and transparent application of sound fiscal principles.

By all objective measures, we have excellent public schools.  Our schools provide a wide array of benefits, all of which maintain our home values and help define us as an outstanding community where people want to move and live.

But it will be a challenge to maintain this excellence looking at the financial pressures facing the district.  For example, the district will face almost $44 million in pension obligations over the next five years plus increases in unfunded mandates such as high stakes testing.  At the same time, the primary sources of revenue for the district are taxes from residents and businesses, and recently the current board has asked the community to shoulder additional tax burdens.  Accordingly, it is critical to ensure that: (1) funds are being managed in a fiscally responsible manner that adequately supports our excellent educational programs; and (2) requests for additional tax revenues are scrutinized and minimized.

My background and experience demonstrate that I am up for this task.  For example:

  • As the father of three current students in our district, I have a good sense of the issues schools face “on the ground” and the resources necessary for the district to deliver a high quality education;
  • As an environmental attorney, I find innovative solutions to complex issues, including land use and development matters, through input and buy-in from wide groups of stakeholders;
  • As a partner at a law firm, I understand the financial principles employed by Fortune 100 companies and small businesses; and
  • As the child of a former school board president, I appreciate the important role that committed local leaders can play in making sure that public schools deliver for our children and the entire community.

Finally, I feel strongly that our neighbors can provide valuable input on this and many other issues.  To that end, I would like to explore ways to increase public engagement and board transparency, including revising the procedure for interaction at monthly board and committee meetings.  Moreover, I hope to advocate for more local control of our schools so that our community, rather than Harrisburg or Washington, can decide how to focus our educational resources.

For additional questions, please contact me at toddfortesd@gmail.com or 484.832.8888.  Thank you.

TE School Board Candidate Neill Kling
Tredyffrin, East – Region 1

I welcome the opportunity to speak to what I believe is the most pressing issue facing the T/E School Board:  how to transition from the strong leadership of Dr. Waters and work with incoming Superintendent Gusick to keep our school district the best that it can be without overspending taxpayer money.  This will require cooperation and foresight, and it should be undertaken by those with the humility to listen, the energy to think about where the district needs to be several years from now, and the courage to take steps now to make that possible future a reality.

The question is, will the Board sit back and let administrators decide most everything, merely providing a rubber stamp for their plans on the theory that educators know best what they need?  Or will the board members be proactive, strategic and constructively critical partners, offering their own unique insights and always listening keenly to the parents and the taxpayers with the understanding that we all have to live with the consequences whether we use the schools or not?  To my mind, the answer must be “no” to the former and “yes” to the latter.  There are a great many things that educators are uniquely equipped to handle – e.g. the curriculum and the quality of the hired teachers – but there are many other areas in which the citizens and their representatives must have significant input – e.g. salaries and benefits, administrator to teacher ratio, how much we should provide for facilities and safety, and how all of that that impacts the taxpayers and the quality of life in the surrounding community.  It appears that the District has managed the education side quite well, but there is always room for improvement on the other issues, along with earning the confidence of the citizens that their voices are being heard throughout.

What qualifies me to join the team of school directors in what promises to be a new era is the insight that comes from working cooperatively to manage a business enterprise.  I am a graduate of Lafayette College and the Law School of the University of Pennsylvania.  My day job is as a commercial litigator in Philadelphia with the law firm Harkins Cunningham LLP where I have spent 23 years representing companies large and small in lawsuits involving state and federal law.  But I don’t just practice law, I also help manage my firm.  I know what it means to meet a payroll, to lease real estate, to manage mostly wonderful and occasionally not-so-wonderful employees, and to do so in an environment that requires the consensus of a small group of very dedicated, intelligent people who are not afraid to speak their minds.  I also understand neighborhood concerns about the aesthetic health of our community, having served on the Tredyffrin Zoning Hearing Board since 2007.  I hope to continue my service by helping to set the future course for a school district that I have called home for over twenty years and to which I have and will entrust the secondary education of two of my children.  I will be honored to have your vote to enable me to do so.

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Voters to select 5 T/E School Board Directors in November – All 10 Candidates provide responses

Your vote mattersIn November, voters in the TE School District will go to the polls to select five school board directors. People bring different backgrounds and qualifications to the job of school board director and as voters; we need to make the right choices on Election Day.

To assist voters in the decision-making process, it is important for the public to know the candidates. In early July, the following question was emailed to the ten T/E School Board candidates:

Although there are many important issues facing the TE School District, what one issue will you focus on should you be elected?  As a school board director, what in your background, experience or education prepares you to help with this specific issue.

I asked that the candidate’s response “not to be a political campaign plug or a laundry list of school district issues”. Their personal response was to “(1) focus on ‘one’ issue that is important to you and (2) to explain how your background/experience qualifies you to tackle this issue. All TE School Board candidates were invited to send a response not to exceed 500 words by August 1.

After reading the responses from the candidates, you be the judge whether or not the candidates successfully answered the question. Since many of the candidates spoke of transparency and communication with the public, it will be interesting to see if they respond to questions or comments.  I would ask you to remember, that these candidates are our neighbors — they are one of us – and I ask that all comments/questions be respectful and not personal attacks.

In the Tredyffrin, District 1 school board race, Dr. George Anderson withdrew from the race; therefore, his statement will not be included. On July 30, Neill Kling announced his candidacy to replace Anderson in a Tredyffrin, Region 1 candidate. With the receipt of Kling’s response today, I can now say that all ten candidates have provided a response for Community Matters.

The school board candidate responses will appear on Community Matters in alphabetical order (by last name) according to the region race. The schedule is as follows:  Tredyffrin, Region 1 on Wednesday, August 5, Tredyffrin, Region 2 on Friday, August 7 and Easttown, Region 3 on Monday, August 10.  Below is the list of candidates by region:

Candidates for Tredyffrin, Region 1:
Neal Colligan
Roberta Hotinski
Todd Kantorczyk
Neill Kling

Note: There are 2 seats available in Tredyffrin, Region 1. The two candidates receiving the highest number of votes in November win. Colligan and Kling endorsed by Tredyffrin Township Republican Committee; Hotinski and Kantorczyk endorsed by Tredyffrin Township Democrats.

Candidates for Tredyffrin, Region 2:
Michele Burger
Kris Graham*
Ed Sweeney
Alan Yockey
  *Incumbent

Note: There are 2 seats available in Tredyffrin, Region 2. The two candidates receiving the highest number of votes in November win. Burger and Yockey endorsed by Tredyffrin Township Democrats; Graham and Sweeney endorsed by Tredyffrin Township Republican Committee.

Easttown, Region 3:
Kate Murphy
Francis Reardon

Note: There is 1 seat available in Easttown, Region 1.  The candidate receiving the highest number of votes in November wins. Murphy endorsed by Easttown Township Republican Committee and Reardon endorsed by Easttown Township Democrats.

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Republican T/E School Board candidate George Anderson has withdrawn from the race

Republican school board candidate Dr. George Anderson has withdrawn from the T/E School Board race, providing the following statement:

Dear Pattye,

I have just been informed of a travel schedule which will not allow me to campaign for much of the election season, therefore it is with regret I must announce my withdrawal from the TE School Board race. TE deserves a school board which operates for the citizens in an open and transparent manner. I am hopeful that goal can be achieved.

Sincerely;

George E. Anderson III, PhD

Neill Kling, Chair of the Tredyffrin Township Republican Committee, stated in an email that the “TTRC does expect to replace George on the ballot for Region 1 and we are working through that process.”

There are two seats available for the T/E School Board, Tredyffrin-Region 1 in the upcoming election.  With the withdrawal of George Anderson, currently three candidates remain on the ballot – Roberta Hotinski (D), Todd Kantorczyk (D) and Neal Colligan (R).  According to Chester County Voter Services, August 10 is the last day for candidates to withdraw from the election. August 20 is the last date to file substituted nomination certificates to fill vacancies caused by the withdrawal of candidates nominated at the primary election or by nomination papers.

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Primary Election 2015 Results for Tredyffrin Board of Supervisors and School Board Races: Amidst Low Turnout, Results Indicate Interest in Change

Your vote mattersPrimary Election 2015 was yesterday and Chester County Voter Services has now calculated the results. Tredyffrin Township has 9,003 registered Republicans and 8,146 registered Democrats. For Primary Day, it was nearly a dead heat of Republicans and Democrats showing up to vote. Approximately 17.8% of the registered Democrats voted (1,447 voters) and 17.7% of the registered Republicans voted (1,596 voters) yesterday. If you want your vote to matter, you have to vote!

I received some early inaccurate results however the following information is verified from the County website. In reviewing the cumulative results, the total vote count for the Board of Supervisor races are as follows:

Tredyffrin Township Supervisor: At-Large 
Sean Moir(R) 1,378
Trip Lukens(R) 1,316
Elva Bankins(D) 1,264
Lou Horvath(D) 1,253

Two at-large seats are available on the Board of Supervisors and no incumbents are in the race. Republicans Mike Heaberg and Kristen Mayock are current at-large supervisors and are not seeking re-election. Both having previously run unsuccessfully for the Board of Supervisors, Moir and Lukens received the highest number of votes in yesterday’s Primary Election. Political newcomers, Democrats Bankins and Horvath followed closely behind Moir and Lukens in total votes.

Tredyffrin Township Supervisor:  District 3: West 
Yolanda Van de Krol(D) 444
Heather Greenberg (R) 416

Currently serving Western District supervisor John DiBuonaventuro is not seeking reelection. Both newcomers to the municipal supervisor races, Van de Krol received the highest number of votes in the Primary Election.

Tredyffrin Township Supervisor:  District 1: East 
Paul Olson(R) 466
Tory Snyder(D) 464

The District 1 supervisor race has a re-match between Tredyffrin Township Planning Commissioner chair Tory Snyder(D) and Paul Olson(R), the longest-serving supervisor in the history of the township. If you recall, in 2011, this particular supervisor race was extremely close with only 13 votes separating them in the General Election. For Primary Election 2015, Olson received only two more votes than Snyder. It doesn’t get much closer, it’s going to be interesting to see what happens over the next 6 months.

For many people, the Board of Supervisor races have taken a backseat to the TE School Board races.

Five of the nine seats on the school board are available. Four Board members, Karen Cruickshank (D), Pete Motel(R), Jim Bruce(R) and Liz Mercogliano(R) are not seeking reelection. The fifth available school board seat is held currently by Board President Kris Graham(R) who is seeking reelection.

The unresolved school fencing issues, the very expensive $4 million + maintenance building and the outsourcing of the aides and paraeducators are just three school district issues that recently have had some of us questioning the decisions of the current school board. The Primary Election results indicate an interest from the community in ‘change’, particularly the numbers in Tredyffrin, Region 2.

TE School Board: Tredyffrin West, Region 2
Michele Burger(D) 1138
Ed Sweeney(R) 922
Kris Graham(R) 764
Alan Yockey(D) 691*
(*Not cross-filed)

In the only school board race with an incumbent, Democrat Michele Burger has a commanding lead, with more than 200 votes separating her and Republican Ed Sweeney, with incumbent Kris Graham(R) in third place. With only two seats available in Region 2, if the General Election were held today it would mean that incumbent Kris Graham would no longer be sitting on the school board.

TE School Board: Tredyffrin East, Region 1
Roberta Hotinski(D) 604
Todd Kantorczyk (D) 572
Neal Colligan(R) 495
George Anderson(R) 398*
(*Not cross-filed)

Two positions on the school board are available in Region 1. All political newcomers, the Democratic candidates Roberta Hotinski and Todd Kantorczyk received the two highest vote totals in the Primary Election.

In addition to the Region 1 and Region 2 seats in Tredyffrin Township, Region 3 in Easttown Township has one seat available. Currently serving school board director Dr. Pete Motel(R) is not seeking reelection.

The Primary Election results for Easttown, Region 3 have Republican Kate Murphy receiving 610 votes and Democratic Fran Reardon receiving 268 votes. Reardon did not cross-file. Although both Murphy and Reardon themselves are newcomers to the school board races, Murphy is the daughter of a well-known local political family, Steve and Carol Aichele. Steve Aichele served as the Chief of Staff for former PA Governor Tom Corbett. Carol Aichele served as Secretary of the Commonwealth under Corbett and previously served as a Chester County Commissioner and TE School Board member.

The results of the Region 2 School Board race should be a message not just to incumbent Kris Graham but to the entire school board. More and more people are ‘tuning in’ as to what is going on and do not necessarily support some of this Board’s decisions.  Whether it is the increasing taxes, school fencing, outsourcing of District employees, an over-priced maintenance building, lack of transparency,  etc. – these votes reflect a desire for change.  The Board needs to accept that this is no longer a ‘few discontents’ but that more and more residents are paying attention and are troubled by some of their decisions.

It will be interesting to see if the Primary Election proves to be an indicator for what we will see in November.  It is six months until the General Election and much can happen between now and then, particularly with the addition of the Independent voters.  Pennsylvania does not allow Independent voters a voice in the Primary Election but come November, our votes will count!  I am sure that the local political analysts will have more to say on the Primary Election results and I welcome the discussion.

In closing, I have to include this photo from Primary Day. I ran into the Democrat and Republican chairs (Kathleen Keohane and Neill Kling) at Our Lady of the Assumption, one of the voting locations yesterday and they generously posed for this photo. Although I’m delighted to include it here on Community Matters, I challenged each of them to include it on the respective websites!

Kathleen Keohane and Neill Kling

Kathleen Keohane, Tredyffrin Democratic Party Chair with Neill Kling, Chair of Tredyffrin Township Republican Committee on Primary Election Day, Our Lady of the Assumption.

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IRS & Dept of Treasury provide further explanation on Affordable Care Act one-year implementation delay — Is this sufficient information to satisfy TE School District?

Special thanks Roberta Hotinski for sending the link to the latest announcement from the IRS and the Treasury Department of the ‘Employer Shared Responsibility Provisions’ for 2014 which was released on Tuesday!

Federal government Notice 2013-45 was provided as a follow-up to the July 2 alert from the Treasury Department announcing a one-year delay in the effective dates of certain Affordable Care Act provisions including the annual information reporting requirements and the employer shared responsibiity provisions — these provisionso of the ACA will now be fully effective for 2015 rather than 2014.

The IRS followed up its decision to delay these key provisions by publishing Notice 2013-45 below which outlines the additional time for input from employers in an effort to provide time for employers to adapt to the health coverage and the reporting process. Notice 2013-45 provides the background and guidelines for the one-year transition period, including the the employer shared responsibility provisions.

Is there sufficient information contained in this update to satisty the questions of the TE School Board and District solicitor?  Upon review of Notice 2013-45, will the District reinstate the hours of the aides, paraeducators and paraprofessionals?

Transition Relief for 2014 Under §§ 6055 (§ 6055 Information Reporting), 6056 (§ 6056 Information Reporting) and 4980H (Employer Shared Responsibility Provisions)
NOT-129718-13

Notice 2013-45

I. PURPOSE AND OVERVIEW

This notice provides transition relief for 2014 from (1) the information reporting requirements applicable to insurers, self-insuring employers, and certain other providers of minimum essential coverage under § 6055 of the Internal Revenue Code (Code) (§ 6055 Information Reporting), (2) the information reporting requirements applicable to applicable large employers under § 6056 (§ 6056 Information Reporting), and (3) the employer shared responsibility provisions under § 4980H (Employer Shared Responsibility Provisions). This transition relief will provide additional time for input from employers and other reporting entities in an effort to simplify information reporting consistent with effective implementation of the law. This transition relief also is intended to provide employers, insurers, and other providers of minimum essential coverage time to adapt their health coverage and reporting systems. Both the information reporting and the Employer Shared Responsibility Provisions will be fully effective for 2015. In preparation for that, once the information reporting rules have been issued, employers and other reporting entities are encouraged to voluntarily comply with the information reporting provisions for 2014. This transition relief through 2014 for the information reporting and Employer Shared Responsibility Provisions has no effect on the effective date or application of other Affordable Care Act provisions.

II. BACKGROUND

Sections 6055, 6056, and 4980H were added to the Code by §§ 1502, 1514, and 1513, respectively, of the Patient Protection and Affordable Care Act (ACA), enacted March 23, 2010, Pub. L. No. 111-148.1 Section 6055 requires annual information reporting by health insurance issuers, self-insuring employers, government agencies, and other providers of health coverage. Section 6056 requires annual information reporting by applicable large employers relating to the health insurance that the ————————————— 1 Section 4980H was amended by § 1003 of the Health Care and Education Reconciliation Act of 2010 (HCERA) (enacted March 30, 2010, Pub. L. No. 111-152) and was further amended by § 1858(b)(4) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (enacted April 15, 2011, Pub. L. No. 112-10). Section 6056 was amended by §§ 10106(g) and 10108(j) of the ACA and was further amended by § 1858(b)(5) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011. In this notice, the term Affordable Care Act refers to the ACA and HCERA, collectively. ————————————– employer offers (or does not offer) to its full-time employees. Section 4980H(a) imposes an assessable payment on an applicable large employer that fails to offer minimum essential coverage to its full-time employees (and their dependents) under an eligible employer-sponsored plan if at least one full-time employee enrolls in a qualified health plan for which a premium tax credit is allowed or paid. Section 4980H(b) imposes an assessable payment on an applicable large employer that offers minimum essential coverage to its full-time employees (and their dependents) under an eligible employer-sponsored plan but has one or more full-time employees who enroll in a qualified health plan for which a premium tax credit is allowed or paid (for example, if the coverage offered either does not provide minimum value or is not affordable to that full-time employee).

III. TRANSITION RELIEF

Q-1. When will the rules be published regarding § 6055 Information Reporting and § 6056 Information Reporting? How will these provisions apply for 2014?

A-1. The Affordable Care Act requires information reporting under § 6055 by insurers, self-insuring employers, government agencies, and certain other parties that provide health coverage and requires information reporting under § 6056 by applicable large employers with respect to the health coverage offered to their full-time employees. Proposed rules for the information reporting provisions are expected to be published this summer. The proposed rules will reflect the fact that transition relief will be provided for information reporting under §§ 6055 and 6056 for 2014. This transition relief will provide additional time for dialogue with stakeholders in an effort to simplify the reporting requirements consistent with effective implementation of the law. It will also provide employers, insurers, and other reporting entities additional time to develop their systems for assembling and reporting the needed data. Employers, insurers, and other reporting entities are encouraged to voluntarily comply with these information reporting provisions for 2014 (once the information reporting rules have been issued) in preparation for the full application of the provisions for 2015. However, information reporting under §§ 6055 and 6056 will be optional for 2014; accordingly, no penalties will be applied for failure to comply with these information reporting provisions for 2014.

Q-2. What does the 2014 transition relief for § 6056 Information Reporting mean for application of the Employer Shared Responsibility Provisions for 2014?

A-2. Under the Employer Shared Responsibility Provisions, an applicable large employer generally must offer affordable, minimum value health coverage to its full-time employees or a shared responsibility payment may apply if one or more of its full-time employees receive a premium tax credit under § 36B. The § 6056 Information Reporting is integral to the administration of the Employer Shared Responsibility Provisions. In particular, because an employer typically will not know whether a full-time employee received a premium tax credit, the employer will not have all of the information needed to determine whether it owes a payment under § 4980H. Accordingly, the employer is not required to calculate a payment with respect to § 4980H or file returns submitting such a payment. Instead, after receiving the information returns filed by applicable large employers under § 6056 and the information about employees claiming the premium tax credit for any given calendar year, the Internal Revenue Service (IRS) will determine whether any of the employer’s full-time employees received the premium tax credit and, if so, whether an assessable payment under § 4980H may be due. If the IRS concludes that an employer may owe such an assessable payment, it will contact the employer, and the employer will have an opportunity to respond to the information the IRS provides before a payment is assessed.

For this reason, the transition relief from § 6056 Information Reporting for 2014 is expected to make it impractical to determine which employers owe shared responsibility payments for 2014 under the Employer Shared Responsibility Provisions. Accordingly, no employer shared responsibility payments will be assessed for 2014. However, in preparation for the application of the Employer Shared Responsibility Provisions beginning in 2015, employers and other affected entities are encouraged to voluntarily comply for 2014 with the information reporting provisions (once the information reporting rules have been issued) and to maintain or expand health coverage in 2014. Real-world testing of reporting systems and plan designs through voluntary compliance for 2014 will contribute to a smoother transition to full implementation for 2015.

Q-3. Does this affect employees’ access to the premium tax credit?

A-3. No. Individuals will continue to be eligible for the premium tax credit by enrolling in a qualified health plan through the Affordable Insurance Exchanges (also called Health Insurance Marketplaces) if their household income is within a specified range and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value.

Q-4. What does this mean for other provisions in the Affordable Care Act?

A-4. This transition relief through 2014 for § 6055 Information Reporting, § 6056 Information Reporting, and the Employer Shared Responsibility Provisions has no effect on the effective date or application of other Affordable Care Act provisions, such as the premium tax credit under § 36B and the individual shared responsibility provisions under § 5000A.

IV. DRAFTING INFORMATION

The principal author of this notice is Kathryn Johnson of the Office of Associate Chief Counsel (Tax Exempt & Government Entities). For further information regarding this notice contact Kathryn Johnson at (202) 927-9639 (not a toll-free call).

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