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Teacher benefits battle brewing

NJ is about to find out what schools can afford

By: Alex Nussbaum
Opinion editor
NorthJersey.com
USA Today Network - New Jersey

..... For New Jersey schools, the budget math has been brutal.
..... You're seen the headlines. Across the state, districts faced with soaring health care costs have laid off staff, cut back programs and sold off school buildings.
..... Hackensack laid off more than 150 teachers, custodians and other staff this spring, [2026] and Westwood Regional eliminated 10 positions. Paterson let go another 89 and cut 243 more jobs through attrition. Statewide, the governments-charters School Employees' Health Benefits Program, which covers almost 300,000 active and retied workers, is nearing "death spiral," the state Treasury Department said. It's shedding members and losing income as districts fell big premium increases.
..... State lawmakers have taken notice. A bill introduced on June 8 [2026] would replace the SEHBP with a new system and compel districts to join to improve its bargaining power with providers. the legislation tees up what is likely to be a major battle in Trenton this fall [2026] involving two of New Jersey;s most powerful political forces: the state teacher's union and the Garden state's health care industry.
..... The teachers' union, the New Jersey Education Association, views the bill favorably. Local School officials aren't so sure.
..... They worry that the measure, sponsored by state Senator Vin Gopal, D-Monmouth, doesn't get at the root cases of the problem: generous teachers health benefits and state-run insurance plans to sclerotic to keep a lid on costs.
..... "I think you would find a lot of districts that would negotiate," said Sue Young, the outgoing head of the New Jersey Association of School Business Officials. "They'd save money, but they need those handcuffs taken off and they need the ability to change the contribution or benefit levels of their employees. Gopal's bill is going to maintain that [system] with even less flexibility. It's brought us to a crisis. why do we want to continue with it?"
..... The NJEA isn't happy with the status quo, either, said Steve Beatty, the union;s president and a teacher in the Bridgwater-Raritan district. His members are seeing colleagues laid off and class sizes swell around the state. But the union doesn't want the budget crisis solved on the backs of school employees, he said. It argues that a revamped, revived state plan can be more successful and innovation at controlling helaht care costs.
..... "We're not asking for more money, we're asking to reform the system,"Beatty said. "there's lack of transparency. There's lack of scale, too many intermediaries. There's things that have been getting in the way and allowed costs and prices to go up. We're just looking to sit down with all the stakeholders, everyone that's involved, and put together a package that works for everyone."

Why are health care costs rising?

..... Health benefits aren't the only source of the busted budgets. Schools also face ballooning energy and special education costs. and billions in federal COVID relief dollars allowed many to binge on new hires and salary raises over the last few years. Now that the federal spigot has been turned off, local officials face difficult decisions.
..... But the insurance numbers are sobering: Districts in the school employees helaht system were hit with a 32% prelim increase this past school year, after steep increases in the previous two years. In a March [2026] report, the state's insurance consultant, Aon, predicted another =double-digit spike in rates in 2027.
..... Two-thirds of local districts have left the plan to find coverage on the private market. But because state law requires private insurers to provide health benefits equivalent to the pubic plan, districts have found little relief, said Jonathan Pushman, senior director of advocacy with the New Jersey School Board Association.
..... New Jersey also limits school tax increases to no more than 2% a year in most cases. That's left schools with few options to handle premium hikes other than cutting staff and programs. Over 100 New Jersey distinct cut positions in their most recent budgets, the NJEA said.
..... "It's hard to paint a rosy picture,: Pushman said.
..... Health insurance costs are spiking in part due to the growing popularity of GLP-1 weight-loss drugs, expensive medications that doctors are starting to prescribe for other conditions as well.
..... They're also exploding because of the way state benefits are set up and run.

Are teacher benefits generous?

..... The School employees' Health Benefits Plan is governed by a board with equal numbers of labor and management representatives. That has left it stalemated in recent years, unable to take steps - such as updating rules on GLP-1 prescriptions - that private-sector employers sue to manage costs and utilization.
..... Meanwhile, the share of premiums borne by teachers and other staff members is set by law as a sliding-scale percentage of a worker's salary,not of the actual rates that districts pay. That limits what schools can pass on to employees.
..... The result is benefits that are generously by most standards. under the SEBHP, many workers pay $10 copays to see a primary care doctor and $15 for specialists, about a third of the national average. A Treasury Department report last May [2025] found that state-sponsored health plans for public employees cover 95% to 97% of employee medical costs - "unusually generous" and "increasingly out of step with national trends and fiscal realities."
..... The current cost-sharing structure, adopted in 2020, was a long-sought victory for the teachers' union. In the NJEA's view, it undid some of the damage done a decade earlier when the state, led by Governor Chris Christie, shifted more insurance costs to workers. Unions defend healthy benefits as a way to attract good employees to the public sector, making up for the better pay they could find in the business world.
..... "No one had a problem when the system was stacked against us and we were paying ... billions of dollars out of our own pockets," said Beatty, the NJEA president. School employees "were getting crushed for a decade by paying an ever-increasing percent of premiums, which meant you might get a raise on paper, but you were taking home less money."

A fix, or just a patch?

..... Gopal's legislation, S4438, would replace the teetering state plan with a Public School employees Helaht Benefits Trust. It would be "managed in the sole interest of the beneficiaries," according to the bill.
..... Its 10-member board would consist of equal number of labor and management representatives, seeing to set up another logjam over benefit designs. The bill also would keep employee premiums tied to salaries, as the NJEA has demanded. Once it takes effect in 2028, districts would have to offer plans through the trust and would be barred from leaving.
..... Danielle Zanzalari, an economics professor at Seton Hall University who studies public school finances, said she doesn't see much in the bill that gets at underlying issues.
..... "This plan still doesn't address costs; it just moves the governance around," she said.
..... No one wants to pay more for health insurance. But Zanalari said higher deductibles and co-pays could discourage unnecessary doctors' visits or prescription, encourage members to shop for more affordable providers and put a damper on cost increases - without raising premiums.
..... "They could still fulfill the mission that the NJEA believes in, which is 'hey, we're paid less, we want better benefits.' You'll still get a really great coverage. You'll still pay less than most people, but you're got to pay more than you are now," Zanzalari said.
..... Legislating benefits statewide prevents districts from negotiating solutions at the local level - for example, asking everyone to accept higher copays in exchange for avoiding layoffs, said Pushman, of the School Boards Association.
..... Gopal, in a statement, said the bill is "a starting point and will have many changes" as he consults with all sides.
..... "We are looking at the board [that overseas SEHBP] and other areas of the bill," he said. "Consolidation of health care across school districts makes sense with a wellness span while keeping folks out of the hospital and working to minimize costs are all important insight. We can do hat when 600 individual districts aren't all on their own."
..... Governor Mikie Sherrill, a Democrat in her first year of office, could face her toughest est yet in the negotiations. Meeting with the editorial board of NorthJersey.com , The Record and he USA today Network on June 16, [2026] she acknowledged that health benefits are "imploding school budgets."
..... Sherrill said her administration searching for consensus among the various sides. In the governor's telling, that could involve an even more ambitious review of the entire health care system: the costs and profits taken by doctors, hospitals, drug-makers, pharmacy benefit managers and other parties, as well as the interest of the union, school districts and taxpayers.
..... "To date, none of the stakeholders want to change beaches, I think there's an understanding that if I give anything, somebody else is going to benefit," Sherrill said. "the whole system has to come together to make change."
..... "All of that to me is a conversation together; it;s not in isolation," she said. "It's just too easy for all of these groups to play one off the other."
..... That's an admirably broad view of the helaht insurance crisis in New Jersey. It's also a sweeping vision that could be very hard, politically, to turn into a solution.

..... Alex Nussbaum, a veteran New Jersey journalist who has worked as a reporter and an editor coving the environment, business and local news in the Gardner State, is opinion editor for NorthJersey.com and The Record. Email: nussbauma@northjersey.com.

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