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Howard schools health fund deficit to be eliminated by 2022, Superintendent Michael Martirano says

The Howard County Public School System’s health fund deficit is set to be paid off in full by the end of fiscal 2022 through an elimination plan, according to a memo from the superintendent.

Howard schools Superintendent Michael Martirano sent the memo to the Board of Education on Wednesday, spelling out his blueprint to erase the $39.2 million deficit. The memo was also shared with the county’s budget office and auditor Wednesday.

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Martirano wrote in the memo he is looking “to begin discussions [with the county] so that an agreement can be reached” on the elimination plan.

“It is my recommendation that once agreement is reached on a plan, that the Board of Education and the County Government document this agreement,” he wrote.

The deficit is rooted in an imbalance in the school system’s employee health and dental fund, resulting from money being taken across seven years to pay for various expenses.

The health and dental fund began to shrink in 2011 and in 2016 began showing a deficit.

“We have stabilized the Health Fund and must now work to eliminate the accrued deficit,” Martirano wrote.

The school board is awaiting final approval from the County Council to use $15.2 million from the school system’s unassigned general fund, which has no set use, to pay down the deficit.

Martirano’s elimination plan looks to use the $15.2 million now to immediately bring the deficit down to $24 million. From there, he will use $2.5 million from the school system’s fiscal 2020 year-end savings and is requesting a one-time ask of $9 million from the county in fiscal 2021. For the remaining funds, Martirano’s plan looks to use school system year-end savings from fiscal years 2021 and 2022 at $5 million and $4 million, respectively, and ask for a final one-time request of $4 million from the county in fiscal 2022, according to the memo.

As outlined, the school system will pay for two-thirds of the remaining deficit, while the county will contribute one-third of the funds.

The school system did not pay down the deficit in fiscal 2019; instead, it grew slightly from $37 million to $39.2 million, according to the school system.

As a result of not reducing the deficit, the school system received an adverse opinion in a yearly report from CohnReznick, a public accounting firm headquartered in New York.

An adverse opinion in the report has the potential to affect the county’s AAA bond rating, according to CohnReznick.

The deficit plan will be discussed during Monday’s quarterly meeting between the County Council and school board.

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