WAYNE, NJ – Vice President of the Wayne Board of Education, Suzanne Pudup read aloud a proclamation during Thursday night’s BOE meeting. This was an official request to Gov. Murphy and the NJ Legislature, requesting financial “relief from the increased health care costs experienced by school districts due to the implementation of Chapter 44.”
Without this relief, the BOE is likely to be raising taxes. TAPinto reported on Chapter 44 in an earlier article about the BOE’s proposed tax increase.
RELATED STORY: Wayne School Budget’s Tax increase Explained
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In a nutshell, Chapter 44 reduces public school employee’s health insurance premium contributions, which is great for the employees, but for districts like Wayne, this will increase the cost of healthcare premiums for a couple of reasons.
As stated in the proclamation: “Many school districts had previously negotiated health benefit agreements with lower net costs compared to the plan design and cost-sharing requirements under “Chapter 44,” and/or have staff that previously declined coverage but now are choosing to enroll in the NJEHP due to its low employee cost-sharing provisions.”
Chapter 44 was implemented on January 1, 2021, right in the middle of the 2020-2021 school year, so these increased costs were not accounted for in the current year’s budget.
Wayne Schools’ Business Administrator Bill Moffitt estimated a near $350,000 loss on this year’s budget and an estimated loss in revenue because of Chapter 44 in next year’s budget as close to $740,000.
Because of this, and the implementation of full-day kindergarten in the fall, the proposed BOE budget for the 2021-2022 school year will increase taxes by 2.68% should it be approved during the next meeting on May 6.
Perhaps some relief will come from the state because of this proclamation, but it’s not something the Wayne BOE is counting on, or counting on coming anytime soon.
“It may be symbolic,” said Wayne BOE President Cathy Kazan of the proclamation. “However, if enough boards come together and share their concerns about a particular issue, of course it will receive attention and possibly be resolved.”
When asked if the relief would come before the Wayne BOE budget is set to be passed on May 6, Kazan replied with a hearty “no,” yet she still feels it’s worth the effort.
“Anytime you lend your voice to something like this, it’s better than doing nothing,” she said. “I definitely know that other Boards have done something similar.”
The estimated health care premium costs given by Moffitt during the March 4, 2021 budget presentation was approximately $4 million which is a 12% increase from the previous year.
BOE Trustee Michael Bubba questioned Moffitt’s estimate during this week’s meeting.
“Have we received any actual numbers on what our health insurance is going to be as far as the increase this year?” he asked. “Because we keep hearing that it’s going to be huge, but we really don’t know the answer.”
Bubba and fellow Trustee Eileen Albanese were the only two ‘no’ votes on the introduction of this preliminary budget in late March. They both stated that they were against a tax increase, especially one that involved an increase over the cap of 2%.
Referring to the expected tax increase, Bubba said, “I would like to know if it’s even necessary because at this point in time, and the numbers that we’re seeing, I don’t see how we need it.”
Moffitt told the board that the information on the actual cost of the premiums the district would be paying was requested, and under review. “I anticipate it in the early part of May,” he added.
Bubba then asked to confirm that the BOE would be ratifying the budget during the May 6 meeting. Moffitt confirmed this, and one might’ve seen the frustration on Bubba’s face.
The full proclamation which is on its way to Murphy’s office is below.
RESOLVED, that the Board of Education, upon the recommendation of the Superintendent, approve the Resolution Urging Relief from Increased Costs to School Districts Resulting from the Implementation of “Chapter 44,” the 2020 School Employee Health Benefits Reform Law.
WHEREAS, P.L.2020, c.44 (“Chapter 44”) requires the School Employees’ Health Benefits Program (SEHBP) to offer plans, beginning on January 1, 2021, for medical and prescription benefits coverage including the New Jersey Educators Health Plan (NJEHP); as adopted and implemented by the School Employees’ Health Benefits Commission; and
WHEREAS, Chapter 44 established reduced premium contributions for any employee who selects, or is placed into, the NJEHP as his or her health care coverage option; and
WHEREAS, The SEHBP applies to the following employers who elect to participate in the SEHBP: local school district, regional school district, county vocational school district, county special services school district, jointure commission, educational services commission, state-operated school district, charter school; and
WHEREAS, The provisions of Chapter 44 also apply to these same employers even if they do not elect to participate in the SEHBP; and
WHEREAS, Many school districts had previously negotiated health benefit agreements with lower net costs compared to the plan design and cost-sharing requirements under “Chapter 44,” and/or have staff that previously declined coverage but now are choosing to enroll in the NJEHP due to its low employee cost-sharing provisions; and
WHEREAS, A significant number of school districts will experience a net increase in their health care costs because the NJEHP premiums are higher than the premiums for the collectively bargained plans previously offered by the district, which is further exacerbated by reduced employee contributions under Chapter 44; and
WHEREAS, Other school districts will experience a net increase in their overall health care costs even if the NJEHP premiums are lower than that of the previous plan offerings because the reduction in employee contributions will offset any overall premium savings, resulting in increased net costs to the district; and
WHEREAS, The low employee contribution requirements under NJEHP encourage employees who had previously waived or declined coverage to enroll thereby increasing the districts’ health benefit costs for the balance of fiscal year 2021, continuing into fiscal year 2022 and likely beyond; and
WHEREAS, These costs may exceed districts’ ability to address within their budgets owing to the limitations of the 2% property tax levy cap; and
WHEREAS, Chapter 44 was a well-intentioned proposal that aimed to generate hundreds of millions of dollars in savings for school districts, school employees and taxpayers; and
WHEREAS, While some school districts may indeed be realizing savings due to the provisions of Chapter 44, many are experiencing the opposite effect and witnessing an increase in their health care costs, which may result in cuts to critical programs, services and staff in order to balance their budgets; and
WHEREAS, Since Chapter 44 essentially froze the level of health benefits and employee contributions for the seven-year period following the law’s effective date, districts are unable to control cost increases through the traditional collective bargaining process; and
WHEREAS, It is incumbent upon the Legislature and Governor to address and correct the unintended financial consequences districts are experiencing due to Chapter 44 and ensure that all districts share in the anticipated savings.
NOW, THEREFORE, BE IT RESOLVED that the Wayne Board of Education requests that the State Legislature and Governor provide relief from the increased health care costs experienced by school districts due to the implementation of Chapter 44; and be it further
RESOLVED, that relief from Chapter 44 should include direct, short-term assistance from the state to ensure that all school districts are held financially harmless in both the current and subsequent fiscal years; and be it further
RESOLVED, that the Legislature and Governor should expeditiously begin to explore long-term structural reforms that reverse the unintended consequences of Chapter 44 and generate lasting savings for school districts, employees and taxpayers; and be it further
RESOLVED, that any proposals to amend or revise Chapter 44 include input from all affected stakeholders before moving forward, including feedback from representatives of local boards of education, school business administrators, superintendents, building-level supervisors and school employees; and be it further
RESOLVED, that this resolution be delivered to Governor Phil Murphy, State Senate President Stephen M. Sweeney, Assembly Speaker Craig Coughlin; and the 40th Legislative District’s representatives, Senator Kristin M. Corrado, Assemblyman Christopher P. DePhillips, and Assemblyman Kevin J. Rooney in the state Senate and General Assembly; and be it further
RESOLVED, that copies of this resolution be sent to the New Jersey Association of School Business Officials and the New Jersey School Boards Association.