School District Health Costs Exceed Rate of Inflation and State Aid Increase

ALBANY, NY (04/25/2013)(readMedia)-- The New York State Association of School Business Officials (NYSASBO) recently conducted a survey of school districts from around the state on health care costs, which after pension contributions are the next largest employee benefit expense.

From school years 2011-2012 to 2012-2013, health insurance premiums for school districts rose statewide by an average of 7.44%. Survey respondents also indicated that on average they are planning for a 7.2% increase in the 2013-2014 school year.

These health insurance premium increases exceed both the rate of inflation (1.7% in 2012) and the increase in state school aid (4.7% in 2013).

"Many school districts currently band together to purchase health insurance to reduce costs and administrative overhead, but much more needs to be done to reign in rising health care expenses," stated Michael J. Borges, NYSASBO Executive Director.

The amount of employee health insurance contribution varies across districts from a low of 0% to a high of 25%. On average, employees pay 12% of individual coverage insurance premiums and 13% of family coverage insurance premiums.

The average monthly health insurance premium cost per participant is $660 for individual coverage, and $1,716 for family coverage. School districts expect these premium rates to rise to $708 and $1840 respectively for the 2013-2014 school year if rising premium trends continue.

"State policymakers need to work with school districts to develop a framework that maximizes the cost benefits of consortium purchasing of health insurance and reduces unnecessary utilization of health care providers," continued Mr. Borges.

School districts spend approximately $4 billion annually on health care or about 10% of total school spending statewide.

School districts within the Capital and Western regions saw the largest increase in health insurance premiums last year at 9.29% and 10.58% respectively. School districts within the North Country regions saw the smallest increase, with premiums rising 4.92%.

Long Island is budgeting for the largest increase in health insurance premiums, allocating for a 10.42% increase in next year's budgets on average. Southern Tier school districts are only planning for a 5.17% increase to health insurance premiums for next year; North Country school districts are slightly above this budgeting for 5.26% increases.

Southern Tier school districts pay the lowest individual monthly insurance premiums, with individual premiums averaging $508.00. Long Island school districts on the other hand pay the most for individual coverage at $747.95 a month. Western school districts pay the lowest family coverage premiums at $1221.50 monthly. The Capital Region school districts have the highest family coverage premiums, costing $1,731.22 a month; though their individual coverage premiums average only $618.11, roughly 10% lower than the state average.