Paterson School Board Health Insurance Change Saves $ 17 Million

PATERSON – The city’s school board is changing the medical insurance it provides to its 4,000 employees – a move the district says will save $ 17 million next year, but the teachers’ union described as risky.

The district has decided to drop the state health benefits program and is in the process of creating its own self-insurance plan. The school board decided to make the change after obtaining a report from a Red Bank-based consulting firm, Liberty Benefit Advisors, which the board then hired as a $ 100,000-per-year health benefits broker. .

The district is spending $ 86.9 million this year on the state program for employee health benefits, according to a report from Liberty. That cost would reach $ 97.2 million in 2018-19 if the district remained on the state’s program, according to the report.

By creating its own insurance plan, the district will spend $ 80.1 million on employee health coverage next year, according to the Liberty report.

School board members said they couldn’t pass up the opportunity to make such substantial savings, especially given the district’s chronic financial difficulties. As part of the 2018-19 budget, the district decided to borrow $ 12 million to avoid imposing layoffs for a fourth consecutive year.

“With the tax realities that we face, this is something that we certainly had to pursue,” said Manny Martinez, member of the board of directors.

Paterson Teachers Union President John McEntee Jr. did not respond to multiple messages seeking his comment on the story. Earlier this spring, the union, the Paterson Education Association, sent its members a letter saying the district’s self-insurance plan could end up costing taxpayers more money than staying on the program. State.

“We have consulted many experts, and all agree that self-insurance for a district the size and experience of Paterson is a risky decision,” the union opinion reads. to its members.

Eventually, according to the union’s letter, the district may have to revert to the state program as the self-insurance plan will become “cost prohibitive.”

The district is allowed to change health insurance programs as long as it offers a comparable level of medical coverage, according to the union’s letter. District employees have expressed no opposition to the change in insurance at the last two school board meetings.

The longest-serving school board member Jonathan Hodges was the only one to vote against the change in health coverage.

“I was not convinced of the merits of the change,” Hodges said. “If the worst-case scenario happens, we’ll be stuck behind the eight ball. “

Nakima Redmon, vice president of the school board, said district employees would pay less money through payroll deductions for their health care. The exact amount of savings will vary depending on each employee’s circumstances and coverage. But in many cases, district employees will save more than $ 1,000 a year, according to consultants’ reports.

The period of enrollment for the new medical insurance began on May 4 and is expected to end on May 24, officials said. District retirees will continue to receive medical benefits through the public plan, under a resolution passed by the school board on Wednesday night.

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