No Relief

NJ school districts struggle as health care, other costs spike

By: Mary Ann Koruth
NorthJersey.com
USA Today Network - New Jersey

..... As budget pressures hit North Jersey's public schools, teachers and other staff are losing their jobs - a clear sign of the painful choices districts must make as inflation, spiking health insurance costs and other expenses test their financial sustainability.
..... The pain is everywhere, in Urban and suburban districts alike.
..... In Paterson, 89 layoffs and the elimination of another 243 district jobs through attrition.
.... In Hackensack, 108 teachers and instructional staff layoffs - with another 49 custodial and administrative jobs cut. In Westwood Regional, 10 staff cuts. In Ridgewood, six jobs cut.
..... And in Montclair, a $19.6 million shortfall that took the question of raising taxes to voters.
..... Montclair's budget woes are due in part to over-spending and over-hiring. a trend that experts warned about given a lack of strong oversight as the federal government rushed millions in pandering the COVID-19 health emergency.
..... But for most districts, a 30% spike in the cost of helaht benefits this year [2026] - combined with increasing costs for special education student services and electricity - are breaking district budgets, a chorus of school leaders say.
.... Another pinch comes form districts competing to hire teachers during a shortage that's ongoing nationwide, pushing them to pay starting salaries at higher rate - despite the coming layoffs.
..... "while much of the current discussion has focused on the revenue side of the budget - particularly the state aid formula - even a significant increase in state aid will not, by itself, resolve these challengers," Susan young, head of New Jersey Association of School Business Officials, told NorthJersey.com .
..... "The core of the problem lies on the expense side of district budgets, where costs for health benefits, special education, and student transportation have grown dramatically and largely beyond local control," young said.
..... Districts aren't only cutting teaching send staff positions. Years of budget cuts have ended precious programs in vulnerable communities, like the sunsetting of marching band and musical instrument programming at Paterson's Eastside High School.
..... In Ridgewood, families will now pay for courtesy busing, which use to be free and available to students who did not qualify for bus services because of their proximity to their neighborhood school.
..... Westwood Regional is postponing large purchases such as new Chrome-books for students, reducing peritoneal costs by 10%, and reducing some professional development.
..... Spiking health insurance costs for district employees is one of the biggest impacts on school budgets across North Jersey.
..... In Clifton, a 30% spike in health insurance premiums for the coming 2026-2027 school year amounts to $13 million in costs. "this giant spike hit everybody," whether districts are privately insured or insured by state health plans, said Janina Kusielewicz, assistant superintendent of Clifton Public Schools. "This was a perfect storm."
..... With tax leviers for schools capped at 2%, inflation at a 4% average for the last few years, and federal dollars for COVID relief expiring a year ago, districts have no relief from rising costs, Kusielewicz said . the semi-urban district with 10,000 students, a majority of them low-income, is also underfunded from the state by around $42 million, she said.
..... Cuts in the Ridgewood Public School district for the coming school year were prompted by increase in health benefit costs that went up by almost 15%, or $2.9 million. Westwood Regional saw helaht benefits costs increase by $3.5 million for 2026-2027 from the current school year.
..... Rising health care costs were "the biggest driver" for Westwood Regional, a suburban, high-income district serving Westwood Borough and Washington Township in Bergen County.
..... "I'm hearing from colleagues, that one, it's just the state of health care is," said Patrick McQueeney, superintendent of Westwood Regional.
..... "and then it's also - though each district is different - we're seeing employees access the health care more and more, which obviously drives up costs," McQueeney said. The school funding formula, which lawmakers and state Education Commissioner Lily Laux have said they will update, is only one factor, McQueeney said.
..... Public school are obligated by contract to offer employees strong health and pension benefits, McQueeney said. Private companies can say their insurance plans are too expensive, and say "Sorry, we don't offer vision anymore," he said. "Public schools don't have that ability to change our plans, because they are negotiated into teacher contracts."

Special education costs

..... Special education costs have been with no solutions or systematic fixes in sight, say superintendents, as more children are diagnosed with learning disabilities. ADHD, and emotional dysfunctional, especially after the pandemic.
..... the "increased complexity of student need in special education" is driving up costs, said Kusielewicz. "We're facing increases in the number of cases and their complexity."
..... Many special education students with IEPs, or Individualized Education Plans, attend out-of-district programs that charge high tuitions paid by the sending district. Those schools are passing on their own rising health care costs by raising tuitions, McQueeney said.
..... "We're seeing an increase in that and the whole special education out-of-district placement cost is extremely high," he said. "However, if that's what we have to pay for our students, we're going to pay, so that just means we aren't making reductions in that area."
..... Other districts, like Northern Highlands Regional High School in Allendale, have found solutions by offering in-house programming shared between local districts for their special education students.
..... "what we've done for special education is we have relationships with other regional high schools. such as Pascack Valley, Ramapo-Indian Hills, and Ramsey," said Scot Beckerman, superintendent of Northern Highlands Regional District.
..... The district makes significant savings by sending its special education students to partnering public schools in the region program that avoids having to pay private school tuitions from public school budgets.
..... The schools offer specific programming for area students depending on their disability. Beckerman also saves money on transportation, because of shorter routes and district-owned busing, he said. "we've solved that puzzle."

Soaring utility costs

..... Districts are also juggling rising electricity costs, because schools are using more air conditioning as summer get hotter, and unexpected weather events grow more frequent.
..... It's a cost factor that has yet to hit as hard as health insurance and special education, but it is an added pressure point for district budgets. "More and more school districts are having air conditionings or just even keeping the lights on, and we're seeing the utility rates increase," McQueeney said. "that's one that we haven't realized, I don't think, to the full extent yet."
..... "That's one that's coming, and it is going to impact our buildings, to be able to keep them operating and the lights on and the environment clean and ready for students and staff," he said.

Should the state step in to help with health care costs?

..... Some district leaders suggest that to help with health insurance costs, the state needs to step up and help.
..... "When you have multi-million dollar gaps from budget year to budget year the only way to do it is with staff reductions," McQueeney said.
..... "Because of the high costs of salaries and benefits you're able to make up those differences."
..... McQueeney suggested that state subsidies to cover health benefits for public school employees was the only other option, to entice teachers to stay in the field while giving them robust benefits.
..... "While districts and communities need to have some purchase or help to pay for them, we are not regular operating businesses," he said.
..... "We don't have the ability to manage costs in the way a business would."
..... Inc erased subsidies for special education costs should go hand in hand with health benefits assistance, said Kurielewikz.
..... One problem is that while school districts are required to offer health benefit plans with rich benefits, employee contributions are calculated as a percentage of salary rather than as a percentage of premium cost, putting more burden on taxpayers and districts, said Young.
..... "As premiums continue to rise, this structure shifts a vast majority of health benefit costs to local taxpayers through the property tax levy," calling for a "serious and sustained conversation about financial pressures facing schools," Young said.

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