On July 15, the School Employees Health Benefits Commission received its annual rate renewal presentation from AON, the actuary for the state’s health benefits plans, which issued its premium adjustment recommendations for the 2027 plan year. The recommendations included a nearly 35% increase in premiums for active employees.

Upon hearing this news, New Jersey School Boards Association Executive Director/CEO Dr. Timothy Purnell issued the following statement:

“News from the SEHBC meeting is just the latest blow to New Jersey school districts who have been struggling to cope with the escalating cost of health care. If approved, the nearly 35% will come on the heels of years of exorbitant increases.

As budgeting is a zero-sum game, these rising costs continue to crowd out other critical spending priorities, including the ability to retain, recruit, and adequately compensate hard-working employees. In the end, it's the students who will suffer most. Class sizes will rise, support services will diminish, courtesy busing will be eliminated, sports and other extracurricular activities will be cut, and facility and IT improvements will be deferred. The list goes on.

Employees have been largely insulated from these increases due to the 2020 health care reform law, commonly known as Chapter 44, that transitioned employees to a system of paying a percentage of salary towards their health insurance. Unfortunately, that law failed to deliver on its promise of meaningful savings and a "win-win-win" for employees, school districts, and taxpayers. To be sure, NJSBA was the lone voice sounding the alarm about that ill-constructed law, which has resulted in school districts and taxpayers having to absorb the vast majority of these premium increases.

As pointed out by AON, the plans boards of education have been forced to offer their employees are far richer than most New Jerseyans receive. The cost of these benefits has become seemingly uncontrollable, and, under Chapter 44, boards of education are prohibited from even negotiating cost savings with their local unions. It is incumbent upon us to rethink and take a hard look at the structure of the way we provide health care to public employees. Driving down these unsustainable paths will take shared sacrifice by all interested stakeholders to fix this dire situation.

Also, in delivering its recommendation, AON noted that premium increases have been exacerbated by districts exiting SEHBP in favor of other options, such as self-insuring or joining a health insurance fund. To be clear, boards of education are fleeing SEHBP because it is their responsibility to make the most efficient use of taxpayer dollars and maximize investments in our students. They should not be blamed or punished for taking such action due to the SEHBP becoming less and less competitive and affordable. Absent real reform and guaranteed savings, any attempt to force them into a statewide plan will only place non-SEHBP districts in the same position as those districts in the State plan.

Once again, we call upon the Governor and Legislature to take bold action and provide both immediate and long-term relief to ALL New Jersey school districts, whether they participate in the State plan or not. NJSBA stands ready and willing to work with policymakers to deliver such relief. Our students and taxpayers deserve it.”

Sincerely,

Dr. Timothy J. Purnell
Executive Director/CEO
New Jersey School Boards Association