In the mad dash to find a solution to the health insurance crisis before school budgets face more dire cuts next year, the state’s largest teachers’ union has pushed forward a plan to solve the high-stakes gamble.
But even with the powerful New Jersey Education Association behind it, the proposal faces its own headwinds, leaving questions if a compromise is possible any time soon.
So far the only proposed legislation to address the crisis, the Public School Employees’ Health Benefits Trust Act has already amassed bipartisan support and sponsorship from key legislative leaders. Sen. Vin Gopal (D–Monmouth), who chairs his chamber’s education committee, and Sen. Joseph F. Vitale (D–Middlesex) sponsored the bill, S4438.
The bill aims to address the crisis left by New Jersey’s current system that has left hundreds of districts facing sky-high insurance premium costs set to rise another 34% in January, with little relief in sight.
Among the key features of the proposed trust, which was first discussed by a state Senate panel last week, are to make permanent a cost-saving measure for teachers, establish a new governing board with less state oversight, and mandate all districts opt into one insurance pool for better negotiating leverage.
Teachers’ healthcare plan contributions are currently calculated based on a percentage of their salary instead of a percentage of the cost of the plan they select, a stipulation that under current state law would expire on Dec. 31, 2027. This measure has brought much relief to teachers’ take-home pay and shifted the cost of these plans onto school district budgets instead.
This proposal would be “for the greater good for all students,” said NJEA Vice President Petal Robertson before a Senate committee. “Because it would be absurdly unfair of us to have to tell a student that you are going to lose your aid, your music teacher, your art teacher, just because of the health benefits in your district skyrocketing.”
A Senate committee that oversees state government heard last week from supporters who were largely union members and school employees, and critics who mostly represented their employers.
Educators and union representatives praised the bill’s aim to bring down steep insurance costs by mandating all 600 public school districts opt into the new plan under the proposed trust, which supporters say would create a larger insurance pool to better negotiate plan costs.
But several critics, including superintendents and school board representatives, cautioned the proposal is deeply flawed and lacks assurances to bring down costs or create any savings for districts or taxpayers.
Gov. Mikie Sherrill has made the state health benefits crisis among her key priorities in her agenda to make the state more affordable. She launched a working group, which held its first meeting on Friday, to examine steps to create a more sustainable public health insurance program.
“Together, we’re committed to meaningful reform to address the program’s structural challenges, preserve access to quality affordable benefits for public employees, and ensure that we are deploying state resources efficiently,” Sherrill said on X after the kickoff meeting on Friday.
Mandating the enrollment of all New Jersey districts isn’t enough by itself to ensure lower costs, said Elisabeth Ginsburg, executive director of the Garden State Coalition of Schools, a nonpartisan advocacy group representing 100 suburban school districts across the state.
The proposed trust, Ginsburg added, will be a continuation of the current plan “cloaked in a shiny new outfit that is secured by only one giant safety pin: the compulsory district participation.”
Where both sides agreed was that a lack of structural change to the current School Employee Health Benefits Program will ultimately put the burden on students, as staff layoffs and program cuts could likely get worse without any significant changes.
Shift the cost of healthcare back to teachers?
January will mark the second consecutive year of 30-plus percent hikes to public school employee healthcare premiums. They are increases that school district leaders say are unsustainable, especially on bare bones budgets that have already gone through recent years of staff layoffs, programming cuts, and less state aid due to imposed temporary guardrails.
School budgets, largely funded by taxpayer dollars, have covered the bulk of those steep insurance costs since 2020, after a law referred to as Chapter 44 stipulated that school employees’ contributions are based on a percentage of their salary instead of the premium costs.
In terms of numbers, the total cost of the public health benefits program reached $4.6 billion in 2024, of which districts covered $3.9 billion and employees paid $750 million, according to an analysis of public data by the state’s Association of School Business Officials.
At an individual level, the district covers most of the plan’s cost, saving the teachers’ paychecks from what would otherwise be much larger deductions.
Yet that stipulation has an expiration date of Dec. 31, 2027, and without an extension, teachers could face much higher contribution rates that would be in part determined by their individual district’s contract negotiations.
While school leaders and boards of education want that rule to sunset to bring relief to district budgets, teachers counter that it’s one of the key benefits to recruit and retain staff at a time when salaries are being outpaced by inflation.
Prior to 2020, the state School Employee Health Benefits Program operated under Chapter 78 of the state’s education statutes, which put less of a burden on district budgets and required those costs to come out of teachers’ salaries.
“Those were unbelievably difficult years. I took on a second job. I took on a third job. And that was all to cover the cost of healthcare,” said Dan Epstein, an elementary school special education teacher in Franklin Township and president of the Somerset County Education Association, speaking before the legislators last week.
As the proposed bill could face amendments, teachers like Epstein urged lawmakers to stay away from returning to the days when they had to pay for insurance premiums based on the cost of the plan they chose instead of only a percentage of their salary.
But critics of the bill say it’s essential to put that option back on the table.
“The situation is unsustainable and is at a tipping point,” said Jonathan Pushman, senior director of advocacy at the New Jersey School Boards Association. “The cost of care just continues to crowd out other important educational priorities to the detriment of students.”
New trust proposes less state oversight
The proposed bill would establish a 10-member board to oversee the trust. Five members would be union appointees, another four would represent school boards, administrators and principals, and one would be a governor-appointed member.
In contrast, the current program has a nine-member commission where there is more state oversight that includes the state Treasurer and the Commissioner of the Department of Banking and Insurance, in addition to other governor-appointed members and four representing unions.
Critics say the 10-member proposal would yield voting deadlocks, as the current system with eight active members did in recent weeks as one member seat remains vacant.
Additionally, critics want to see amendments to the proposal that includes making changes to the plan designs and reforming pharmaceutical coverage. The current program offerings cover 98% of medical costs, whereas private plans in the state on average cover around 89% of those costs, they said.
Reining in pharmaceutical coverage is also key, Pushman said. The weight-loss GLP-1 medications, according to a recent state Treasury report, represented a significant financial challenge due to their high cost and rapidly expanding use among those on the program.
Both supporters and opponents of the bill said they would be willing to negotiate on amendments and find compromises. Many who spoke out at last week’s Senate hearing agreed there needs to also be a shorter-term remedy to the issue.
Stakeholders involved in Sherrill’s working group said they aim to find resolutions that could be included in the governor’s 2028 budget proposal. But some experts say more time may be needed for this crisis.
“It’s unreasonable to think that we’re going to have a remedy for healthcare by late February,” said Tony Trongone, a retired superintendent and executive director of Great Schools of New Jersey.
Trongone, who’s participating in the state’s school funding formula stakeholder working group that’s examining ways to reform state aid, says a short-term remedy could be a temporary calculation into the formula for additional aid to school districts seeing exorbitant spikes in healthcare costs.
The governor’s working group for state health benefits reform will continue to meet regularly in the coming weeks.
Source: www.njspotlightnews.org
