Developing a budget for a New Jersey school district involves an unavoidable guessing game if district employees are enrolled in the state’s health insurance plan.
The state’s health insurance rates run from Jan. 1 through Dec. 31, while school budgets run from July 1 to June 30 – meaning a budget must be developed without knowing what the rate will be for half the year ahead.
The Brick Township district, which has participated in the state plan since a previous board of education switched from self-insurance in 2010, is now considering a number of options as a rate hike in the state plan is beyond what officials were expecting.
“We budgeted a 6 percent increase,” said Board of Education member Larry Reid, who heads the board’s finance committee.
But unexpectedly, the state will increase rates by about 12 percent this year, representing a $500,000 budget hole.
“We are looking at alternatives and we hope to have a recommendation for the Board of Education for our next meeting,” said Reid.
Such alternatives could mean switching back to self-insurance, like many other large school districts such as Toms River Regional, Reid said. District officials and the finance committee are currently analyzing their options to eliminate an impact on the budget before a proposal is formally presented to the board. Regardless of whether the state plan is retained or a private insurer is selected, the levels of coverage owed to employees is governed by a collective bargaining agreement as well as state laws.
According to a report from Aon Hewitt, a consulting firm hired by the state government to analyze its health insurance plans, the cost of the School Employees Health Benefits Plan in 2015 is projected to rise to $2.83 billion – $1.76 billion for active employees and $1.07 billion for retirees – including both employee and taxpayer contributions, necessitating an overall increase in the cost of the amount districts must pay.
