Future health care premium increases will likely trigger educational excess spending threshold penalty.
As many of us are painfully and often personally aware, the cost of health care premium increases has been in the double digits during the past several years and there is no end in sight. What many Vermonters might not realize is the impact these increases have on our school budgets. As a result of the most recent increases, almost $4.9M of the $39.5M FY21 Addison Central School District school budget can be attributed to health care costs.
If health care premiums increase another 12% or more during the next educational budget cycle, school boards will once again be forced to figure out how to prevent their budgets from exceeding the educational spending threshold and saddling residents with a penalty on top of those uncontrollable health care benefit costs. And sadly, the current trend of double-digit premium increases could become even worse as a result of the COVID-19 crisis.
To put this into perspective, the FY21 ACSD school budget approved by the voters was $39.5M, of which approximately $4.2M was related to employee health care benefits. This is on top of the $700,000 budgeted for HSR/HSA benefits to offset the high insurance deductibles for a total of $4.9M representing 12.3% of the total budget. For the next budget cycle if the health care premiums increase another 12%, this alone will increase the overall budget by another 1.3% or $500,000. With the current COVID-19 crisis, there is a real risk we will be saddled with 16%, 18% or even higher increases. This will have a profound impact on our school budget and even more so if these increases cause the budget to exceed the Excess Spending Threshold.
I believe the Senate and House Education Committees must draft and pass legislation this session to place a temporary hold on applying the Excess Spending Threshold penalty until the Legislature can also pass legislation that controls the cost of health care, health care premiums, and related HSR and HSA expenditures.
According to Act 68, the taxpayers within the district are penalized with an additional tax if the school district spends in excess of the per equalized pupil amount allowed under the state’s calculated excess spending rate. That rate is set every year. However, as I’ll explain, this penalty is levied without taking into account the ongoing, annual exponential increases for health care.
The impact high health care costs are having on school budgets is not just a problem in my school district here in Addison County. It is happening across the entire state. It is a problem that needs to be addressed by our Legislature before we get into another educational budget cycle that includes unsustainable, double-digit, health care premium cost increases.
We must, therefore, all urge our Vermont legislators to immediately place a temporary hold on applying the Excess Spending Threshold penalty during this legislative session and then take real steps towards solving the high cost of health care for all Vermonters by passing legislation that puts us on a path towards implementing publicly funded, universal health care. I believe that implementing Universal Primary Care (UPC) would be a reasonable cost effective first step towards this goal. According to 2015 Vermont Legislation (Act 54), UPC is defined as a publicly financed program that would provide primary care services to all Vermonters, regardless of their ability to afford insurance coverage, ensuring all Vermonters have access to primary care.
Without a doubt, our premiums under the current profit-driven health care system will continue to increase substantially, thereby negatively impacting school district budgets across the state and increasingly penalizing residents to meet the basic health care needs of their dedicated school employees. We cannot let the uncontrolled increases in health care benefits jeopardize the quality of education for our children, or the quality of health care for school staff and their families.
As a state, we can no longer kick the can down the road nor can we assume our Vermont health care cost issues will be solved at the national level. If we don’t act now, it will not only impact the health of Vermonters, but also the quality of our K-12 education.
Barbara Wilson lives in Shoreham.