At the beginning of 2021, the law now commonly referred to as Chapter 44 officially went into effect. This law, which was passed by the Legislature last June and promptly signed by Gov. Murphy, made significant changes to the health benefit plans that school districts must offer to their employees, while simultaneously altering how much those employees contribute to the cost of their insurance coverage.
The proposal was developed with the goal of providing boards of education, school employees, and taxpayers with much-needed financial relief from the high cost of health insurance benefits. As health care is a significant driver of district budgets that can crowd out spending on other educational priorities, the NJSBA has long advocated for such relief and welcomed the Legislature’s commitment to providing it.
As the bill that eventually became Chapter 44 worked its way through the legislative process, the NJSBA expressed its support for the intent of the proposal. However, the Association also voiced concerns that the measure might not necessarily achieve its stated purpose across all of our member districts.
One of the most significant concerns was that the enabling legislation did not guarantee that every school district in the state would share in the projected savings and be protected from experiencing any potential increase in their health care costs. While certain provisions ensured employees would be at least held harmless, the bill did not include similar safeguards for school districts. As boards of education began to implement the law in the fall of 2020, several began to fear that a spike, rather than a reduction, in the employer’s share of health care spending was a very real possibility.
While the jury is still out regarding the overall statewide impact of Chapter 44, early anecdotal evidence from the field indicates that the law is not having its desired impact in several individual school districts. In some districts, premiums under the new N.J. Educators Health Plan (NJEHP) required under Chapter 44 are actually higher than the premiums they were previously paying for their most common plan options.
Combining this scenario with the board now taking on a greater share of the costs, while employees experience a reduction in their contributions, further exacerbates the financial loss to those districts. In other districts, the NJEHP premiums are indeed lower than their prior coverage options. However, the cost to some of those districts can still rise if the reduction in overall premiums is insufficient to offset the reduced employee contributions.
In the months following the bill’s enactment and in the weeks since it went into effect, the NJSBA has heard directly from school board members and administrators expressing their concern over the negative impact this law will have on their respective budgets. To be sure, the NJSBA is taking these concerns very seriously and considers Chapter 44 a front-burner issue that will remain so for the foreseeable future.
As we continue to gain a deeper understanding of Chapter 44, the NJSBA will continue to advocate for relief from any of its adverse consequences. We know that the Legislature and governor did not intend to cause any harm to districts, but rather sought to help them achieve real and lasting savings. We believe they will be open and receptive to making adjustments moving forward to ensure their objective matches the actual experience in the field.
Even before the law went into effect at the beginning of this year, NJSBA staff engaged key legislative staff, as well as members of the Murphy Administration and the N.J. Department of Education, alerting them to the potential adverse consequences districts were anticipating. The issue was brought to the attention of legislative leadership – including Senate President Steve Sweeney and Assembly Speaker Craig Coughlin, prime sponsors of the law – during the legislative panel discussion at NJSBA Workshop 2020.
During that session, both leaders indicated their willingness to revisit the law once there has been ample opportunity to examine whether it is working as they intended. The Association has also been in active discussions with our partners throughout the educational community to gather information and different perspectives on the new law.
Additionally, the NJSBA is partnering with the N.J. Association of School Business Officials (NJASBO) to gather important financial data on health care spending post-Chapter 44. The robustness and comprehensiveness of any data collection effort will be key to determining whether the law is working as intended. But more importantly, it will help inform any policy adjustments, such as a legislative fix, that may be necessary to ensure no district suffers financial harm under Chapter 44. We strongly encourage all boards of education to complete the survey being compiled by NJASBO.
As we move further into 2021, the NJSBA will continue to collect information, gather feedback from our members, and engage in discussions with key stakeholders on Chapter 44. We urge all of our members to assist in our advocacy efforts by communicating with their representatives in the State Senate and General Assembly, informing them of their individual experiences, be it positive, negative or somewhere in between. The NJSBA will continue to keep our membership informed of any significant developments on this critically important matter.