P.O. Box 909 ● Trenton, NJ 08605-0909 ● Phone: 609.695.7600 ● Fax: 609.695.0413 ● Web: www.njsba.org/PI
NEWS RELEASE
CONTACT: Frank Belluscio (fbelluscio@njsba.org) FOR IMMEDIATE RELEASE
Mike Yaple (myaple@njsba.org)
Save Tax Dollars by Allowing School Boards to Negotiate Health Coverage – NJSBA
NJSBA Testimony on Health Benefits Reform
TRENTON, Oct. 12, 2006—If school boards in the state’s health plan could negotiate with unions over the cost of benefits, millions of tax dollars could be saved every year, a representative of the New Jersey School Boards Association today told a legislative panel exploring property tax reform.
The ability to bargain over aspects of health benefits, however, is not available to school boards that provide their employees coverage through the New Jersey State Health Benefits Program (SHBP), explained NJSBA lobbyist Barbara M. Horl in testimony to the Joint Committee on Public Employee Benefits Reform.
Almost 40 percent of New Jersey’s school districts use the state plan. State regulations preclude these districts from negotiating levels of deductibles and co-payments, employee contributions to premium, placement of new employees in less-costly managed-care systems, and other aspects of coverage.
However, such strategies are common among school districts that use private insurance carriers. The best cost-saving solution would be to give SHBP-member districts the ability to negotiate provisions to control health benefit costs, Horl told legislators.
“Things have changed over the years,” Horl said. “In 1991, 457 school districts were part of the SHBP, representing 76 percent of all New Jersey school districts. Because of huge increases in premiums since the mid-1990s and the plan’s rigid structure, 218 school districts have left the SHBP and gone with private health insurers.
“Districts have saved millions of dollars by making this move,” she said, giving the example of the Clifton school district, which saved $1.5 million the year it left the plan.
Unfair Restrictions The largest chunk of taxpayer-funding for schools, approximately 75 percent, is spent on salaries and employee benefits. Health coverage represents the most rapidly escalating employment cost.
Horl pointed out that current SHBP regulations treat school districts differently than the state government, which can negotiate cost-containment options with its employees. These same options, however, are not available to school districts.
“It’s a matter of fairness, and it’s a matter of saving tax dollars,” Horl said in her testimony.
Increase Competition Some school districts are forced by the market to remain in the SHBP because private carriers will not accept them, or the costs would be prohibitive. Granting SHBP-member school districts the ability to negotiate aspects of health coverage would make the state plan more competitive with private carriers, attracting school districts back into the state program, according to the NJSBA.
To increase participation in the state health plan, some legislators have considered measures that would simply require that all school districts enroll in the SHBP. However, NJSBA has cautioned against such a move, saying it would completely remove any competition in the healthcare insurance industry for school districts and counteract efforts to save taxpayers’ money.
********
The New Jersey School Boards Association, a federation of district boards of education, advocates the interests of school districts, trains local school board members, and provides resources for the advancement of public education.