Rising Health Insurance Costs Strain School Budget

Board focuses on employee benefits in budget discussion.

Westfield Public Schools is already bracing for a tough budget process for the 2010-2011 school year, with the school board focusing on the salary, benefits and related costs that eat up the majority of the district’s appropriations.

The school will face the same issue as many households, businesses and the country as a whole: how to account for rising costs, especially of health insurance, with a relatively fixed revenue allotment.

“This is a much bigger problem than just for the Westfield Board of Education or New Jersey,” said Schools Superintendent Margaret Dolan. “People are grappling with it throughout the country.”

Health insurance for the school district's 787 staff members takes up 15.5-percent of the entire budget of about $84.5 million, according to Robert Berman, the district’s business administrator. That’s up from 10.6-percent in the 2003 school year.

“Each year, it means less dollars that we’re able to put towards other items like staff and capital projects,” Berman said at Tuesday’s board meeting.

Furthermore, the district is only allowed to increase its budget four percent a year, while benefit costs can increase seven percent to 40-percent, Mark Lawrie, a benefits consultant at Willis, told the board. State law caps school district budget increases to four percent annually in an attempt to control rising property taxes statewide.

One way the district has avoided more severe cost increases is by switching insurance providers -- three times in the last five years -- which have kept premiums lower than average. The board doubts that will be cost-effective enough to do again.

Salary and benefits account for about 79-percent of the annual budget, with very little leeway except for when more experienced teachers retire and are replaced by younger staff, Berman said.

“We struggle with getting rid of staff to pay for benefit costs,” Dolan said.

Berman said he’s likely to hold off until February or March to seek bids from insurance carriers.

The board will review the remaining segments of this year’s budget -- which together account for 21-percent of spending -- at the next few meetings.


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