Sooke school district officials are “not worried” about covering the cost of the new payroll tax, which will rule out medical service plan premiums by 2020.
The “employer health tax” takes effect Jan. 1, 2019 and applies to businesses with annual payrolls of more than $500,000, some of which now pay MSP premiums on behalf of their employees. The tax rate is 1.95 per cent for businesses with payroll above $1.5 million, with reduced rates for payrolls between $500,000 and $1.5 million.
The Sooke school district has approximately an $80 million annual payroll, which means they will be expected to pay a tax rate of 1.95 per cent.
But since the payroll doesn’t take effect until Jan. 2019, they will only have to pay half of the 1.95 per cent next school year, which will equal out to about $700,000 on top of the $670,000 they will pay for MSPs.
“Only about $200,000 of that money will be unfunded costs that we’ll have to go looking for, but I don’t think the district will have a hard time coming up with it,” said school district chair Ravi Parmar.
Harold Cull, secretary treasurer for SD 62, said the money won’t have to come out of classrooms and will likely be generated from the large amount of students who are expected to be joining the district in the fall.
“We are funded on a per-person basis, and in our district the number of students continues to go up and up, so that means our grant revenue will continue to go up as well,” said Cull.
“In the grand scheme of things, $200,000 is not a huge amount. We will be able to manage it into our budget, largely because of the increased enrolment.”
Parmar agreed, saying staff is confident that they will be able to find the money.
“The board is in support of removing the MSP and will find the $200,000 this year, but we expect for following years that the government will fund the cost of the payroll tax,” said Parmar.
In 2020, when the school district has to pay the full 1.95 per cent, SD 62 is expecting to have pay approximately $1.4 million for the payroll tax, and the MSP will be eliminated.
“By then the new funding formula will be in place, so we can’t really speculate on what will happen but we hope that the formula will cover costs like this,” said Parmar.