TEACHER HEALTH PLAN FAILED TO DELIVER PROMISED SAVINGS, DISTRICTS SAY – InsuranceNewsNet

A lot New Jersey School districts say they didn’t see the cost savings promised by the state when they implemented New Jersey’s mandatory educator health plan in 2021.

The plan of chapter 44, promulgated by the governor. Phil Murphy in 2020 and backed by the state’s powerful teachers’ union, could end up costing some districts more than the old plan. Three districts have let the state know they want to exit the new health plan, with support from seven others.

In Ridgewoodschool officials said the state estimates the district will save approximately $4.7 million in health benefits under the new scheme. During the preparation of the 2022-23 budget, local officials learned that the actual savings would amount to $27,000.

If the savings had materialized, they would have potentially benefited other school programs and services, said Ridgewood chairman of the school board Hyunju Kwak.

The law requires that all health plan savings be used to reduce the property tax burden.

Ridgewood is not alone, as other districts have told similar stories of inaccurately estimated savings or additional costs, contrary to what the law intended.

What is Chapter 44?

The law is the result of an agreement between the former president of the Senate Stephen Sweeney and the New Jersey Education Association. It was touted as a plan that cuts costs by removing out-of-network reimbursements and offers teachers lower premiums.

The law passed unanimously with a 34-0 vote in the State Senate in June 2020. It replaced Chapter 78, a similar health benefits law passed under the then government. chris christiwhich has been criticized by the NJEA for driving teachers out of the profession due to its high cost.

Local school officials agree that the plan reduces teachers’ contributions to their health plan, but the costs are passed on to districts and therefore taxpayers. Some district officials called the law an unfunded state mandate that causes “significant difficulties” because it also adds layers to their negotiations with local employee unions.

State officials and the NJEA disagree with local districts’ assessment of the plan, saying providing teachers with affordable health benefits is not an “unfunded mandate.”

School districts are required to automatically enroll staff hired after July 1, 2020, in the New Jersey Educators Health Plan, unless they decline coverage. Staff hired before this date should be offered the plan which offers a contribution scale linked to a percentage of teachers’ salaries instead of a percentage of the total bonus.

After its implementation 15 months ago, 2022 is the first year that savings from the new plan will be reflected in local tax levies.

A New Jersey the actuary will analyze the plan and submit a report by summer 2023 indicating whether it has saved at least $300 million one year; otherwise, the law directs the state treasurer to design changes that will achieve those savings.

bear the cost

In complaints filed with the State Council of local mandates, school districts have provided documents arguing that they and, in turn, taxpayers bear the cost of the new law as health care costs continue to rise. They ask to be excused from offering the new health plan to staff if they do not see savings. The districts said the plan does not provide universal taxpayer relief, as it was designed to do.

In 2021, a number of school districts, the New Jersey School Boards Association and the Association of School Affairs Officials of New Jersey asked the state Council of local mandates to stop implementing Chapter 44. The council, which can strike down a law if it finds the state hasn’t provided resources to fund it, denied the groups’ request in December.

Lower Canton in Cape May County said the new health plan will cost his school district extra $44,000. City of Gloucester in Camden County said his school district is planning expenses $260,000 more than under the previous plan.

Franklin Township in County of Somerset did not offer the new plan to employees as planned, saying the cost would have increased by more than $1 millionthey could not assume it without the help of the State.

Chapter 44 “creates higher costs to individual school districts and should therefore be imposed on those districts,” the three districts and their supporters wrote at Council of local mandates.

Of 158 districts surveyed by the Association of School Affairs Officials of New Jersey, 85% said Chapter 44 would cost them more. There are nearly 600 school districts in the state.

Among the districts that said Chapter 44 would increase their costs are the Warren Hills School Districtwith an increase of $197,000 per year; Bogotáwith an increase of $19,600; Boontonwith an increase of $101,500; hackettstownwith an increase of $41,500; the Hunterdon County Educational Services Commissionwith an increase of $56,260; Morris Plainswith an increase of $2,100; and Warren County Technical Schools, with an increase of $9,300.

the Attorney General’s Office intervened with a motion to dismiss the districts’ complaints to the council, and attorneys for the leaders of both legislative houses, Sweeney and Assemblyman Craig Coughlin, filed briefs disagreeing with the school districts. The NJEA has also come out in support of the new law.

Providing teachers with affordable health benefits is not an “unfunded mandate,” the NJEA said in its written response to the Council of local mandates. The union invoked a clause in the state constitution to support its position. He said the state must provide children with a “thorough and effective” education and that keeping health spending low for teachers is essential to providing such education.

“There’s been a lot of numbers that have been thrown around over the last year and very little ability to track and substantiate claims that districts have made about the costs associated with this, or the lack of savings, because frankly, when we challenged them on that, and to kind of come to the table and show us that, they didn’t,” the NJEA spokesperson said. steven baker.

The schools argue that letting local districts negotiate contracts with teachers’ unions to offset the costs of the new plan is tantamount to not funding the law. Districts and unions don’t always agree, they said.

Districts have said their hands are tied because they are not allowed to collect money to offset their expenses from any source other than property taxes, according to documents provided to the Council of local mandates.

The new health plan

The new plan reduces the employee contribution percentage from a range of 3% to 35% to a range of 1.7% to 7.2%, leaving school districts to absorb that difference, according to legal documents submitted by the districts. .

The New Jersey School Boards Associationin his letter to the council, wrote that he warned lawmakers not to pass the law in 2020 without an opt-out for individual school districts.

The association said the law also exposed school boards to lawsuits for violating collective agreements if they don’t offer the new health plan to cut costs.

In Franklin Townshipthe teachers’ union filed a lawsuit seeking to force the board to offer the new plan to its teachers.

In response to district complaints, the Council of local mandates informed them that their request had been denied because the costs they were citing were speculative and that it was too early in 2021 to rule on the matter, as districts were still negotiating contracts with their teachers’ unions.

To like Ridgewood98 other districts have filed documents that recalculate Chapter 44 savings, state says Department of Education.

On March 10, after conducting a review of district savings documents, the department asked school districts to submit additional documents. On the same day, Murphy announced the state’s education budget.

“Some districts may be able to demonstrate that health care savings were unrelated to Chapter 44.” the Department of Education said in a statement.

“I don’t think it’s anyone’s fault. It was a new law,” said Susan Youngwho runs the Association of School Affairs Officials of New Jersey.

The state’s overstatement of the savings made through the law was understandable, and it was dealt with gently, Young said. “The law with respect to these tax levy adjustments has been drafted very broadly. I don’t think anyone, whether school districts or the Department of EducationI don’t think either side appreciated the level of detail involved in exploring the intent of the law.”

The savings districts have seen over the past two years in health insurance costs, however small, are due to Chapter 44, said NJEA’s Baker.

That’s not true, says Young. There are “many, many reasons why the net benefits to a school district may increase or decrease that have nothing to do with the implementation of the EHP plan.”

The law didn’t consider other ways the district was saving money for taxpayers, she said.

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Twitter: @MaryAnnKoruth