Health Care Costs for School Districts Continue to Rise Faster than Inflation and State Aid

ALBANY, NY (04/08/2019) (readMedia)-- Health care costs for school districts rose from $5.8 billion in 2013-14 to $7.1 billion in 2017-18, an increase of $1.3 billion or 22%, while Foundation Aid increased by 10.4%. Health care cost increases exceeded the rate of inflation each year during this five-year period and exceeded the rate of increase in total spending by schools in four out of the five years.

"We appreciate recent actions by the Legislature to include in the State Budget ASBO's recommendations for reducing costs for school districts by allowing piggybacking of transportation contracts and staggering Building Condition Surveys. However, more cost saving measures need to be enacted, particularly if Foundation Aid is not fully funded, to offset these rising health care costs," stated Michael J. Borges, ASBO Executive Director.

The report also looks at regional increases in health care spending as well as projected increases for the 2019-20 school year. Health care costs increased the most over a five-year period in the Finger Lakes region (31.8%), the Hudson Valley (29.7%), and on Long Island (27.7%).

Projected health insurance costs for the 2019-20 school year are expected to rise the most in the Mohawk Valley (6.7%), and the Capital District and Central New York (6.2%) based on survey responses.

"These increases will be unsustainable in the long-term, particularly for high-need or fiscally stressed school districts, and the state needs to do more to assist school districts with reigning in these spiraling costs," continued Mr. Borges. "The state should take steps to facilitate the participation of school districts, particularly small high-need districts, in health insurance consortiums that work together to help contain costs. In addition, the state should allow school districts to participate in a statewide prescription drug plan, which would allow the bulk purchasing of medicine that will help reduce costs," commented Mr. Borges.