Employee health insurance benefits consume nearly one-third of operating budgets in 92% of school districts, forcing leaders to delay hiring, tap reserves and cut spending elsewhere.
Rising healthcare costs are quickly becoming a significant contributor to districts’ structural deficits, according to a new joint survey from The School Superintendents Association and The Association of School Business Officials International.
Over the past two years, 30% of districts saw premium increases exceeding 20%. Here’s what superintendents say are contributing to rising healthcare costs:
- Prescription drug costs (60%)
- More claims for expensive treatments (56%)
- Increased use of specialty drugs, including GLP-1 medications such as weight-loss treatments (56%)
- Higher utilization of medical services (52%)
- Rising provider fees (44%)
In response, leaders’ first response is to tap into their “rainy day” funds to cover healthcare premium increases, the data suggests. In one Massachusetts school district, leaders are drawing from funds typically used for deferred maintenance and recurring capital expenses.
“Diverting funds to account for rising healthcare costs is slowing down maintenance and replacement cycles, placing districts in a difficult position where they have to choose between buildings, equipment and safety,” according to the leader quoted in the report.
One New Jersey district leader said his school system is “getting crushed in the short-term” by delaying facilities projects for aging buildings to cover healthcare costs.
Below is a chart representing other ways superintendents are absorbing rising healthcare costs:
The data reflect current media reports that suggest healthcare costs are fueling tensions between district leadership and employees.
Last month, the New Jersey School Boards Association drafted a sample resolution encouraging local school boards to approach state leaders about rising healthcare costs and how they’re impacting district budgets. The organization argued that healthcare premiums affect staffing, educational programs and local taxpayers.
As of last week, Florida’s Orange County Public Schools is stalled in contract negotiations with its teacher union, which is pushing for higher wages, benefits and transparency, according to WKMG. However, leadership says healthcare costs limit the district’s financial flexibility.
The district is self-insured and pays more than $10,000 per employee for healthcare coverage, according to the news outlet.
“Even with $240 million in district contributions, continuing on this path would require an additional $145 million next school year just to keep up,” Superintendent Maria Vazquez told the news outlet.
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