NJASBO Response to S2273
Sunday, March 22, 2020
NJASBO Concerns & Request for Clarifications
New Jersey school business administrators are acutely aware of the financial challenges facing school districts given their need to create and administer balanced budgets in the face of rising costs, capped levies and in 190+ cases declining state aid. They are also acutely aware of the details involved in the implementation of specific laws and mandates which is why the association is requesting consideration of the following elements of S2273.
1) A major concern is that it appears a district who is in the SEHBP and has already negotiated plan options in the CBA which provide less generous benefits and lower costs than the D10 and D15 plans would be required to offer existing employees the more expensive D10 & 15 plans. We would suggest a waiver of the requirement for those districts that can demonstrate a more cost effective plan.
2) As of July 1, 2027 employees enrolled in the NJ Educators Health Plan will have the ability to select ANY plan provided by the program. Additionally, the percentage of salary structure will be the presumed starting point for negotiations. Once the contribution structure is changed to a percentage of salary the district will shoulder the burden of premium increases. Also for the plan year that commences July 1, 2027 the level of benefits in the NJ Educators Health Plan, the Garden State Health Plan, the D10 and D15 plan may be modified by the SEHBP design committee. These unilateral decisions may have significant non-controllable financial consequences to districts.
3) The definition of ‘commencement of employment’ is not clear. Is this intended to be commencement of employment within the state pension plans or with an individual employer? If it is the latter, there is a significant concern that this will curtail movement of staff and administrators between districts and curtail the growth and development of our educational leaders similar to the effect of the salary cap on superintendents and their resulting exodus.
4) The level of benefits and the schedule of contributions for the NJ Educators Health Plan and the Garden State Health Plan remain unchanged until June 30, 2027. Should actuarial plan and enrollment assumptions prove not to materialize the resulting balancing factor would be increased premiums which would be disproportionately borne by the school districts.
5) An overarching concern is the timing of the implementation. The implementation would encompass communications, education, re-enrollments, re-programming of payroll software to calculate contributions, development of plans and actuarial rate determinations by insurers all of which will be complicated and delayed by the current Covid-19 crisis and school closures. As an example, individual rates would need to be developed for each district in a HIF.
6) Section 6b requires an inordinate amount of tracking of data which is constantly fluid. To base a tax levy adjustment on data which may be the result of personnel changes, plan selections, etc. is onerous and unreliable.
7) Guidance tools appear to be only available to participants in the SEHBP. The short implementation timeframe would provide little time to educate and advise participants in other plans thereby perhaps reducing a change in selection behaviors.
8) Tying savings to tax levy adjustments will further hamper districts whose costs (including salary settlements) cannot be covered by 2% tax levy increases as 2% is rarely if ever a 2% total budget increase. Districts often use these savings to cover salaries, technology implementation, safety, security and unfunded state mandates. This will continue to drive cost reductions in educational areas. Additionally, swings in year to year adjustments will have resulting swings in tax rates.
9) It is unclear as to which elements will apply if a district as a whole moves into or out of the SEHBP. For example, will districts be allowed to exit the SEHBP if they can obtain better rates on their own?
10) Will it be possible for private insurers for fully insured plans to mimic the NJ Educators Health plan in areas such as mandatory generics?
Thank you for taking the time to consider these questions and suggestions. We remain available at any time to discuss them.