The Howard County School System announced Wednesday it will report a $37 million health care fund deficit for the close of the 2017-2018 fiscal year, $13.5 million less than what had been projected.
The deficit, rooted in an imbalance of the school system’s employee health and dental fund that has been depleted since 2011 as money was used to pay for other uses, was projected to balloon to more than $50 million by the summer.
“This is huge, [the] first time in many years that [the school system] will not contribute further to the deficit,” Superintendent Michael Martirano said on Wednesday.
But, he said, the school system still has “miles to go before we are at zero.”
In January, Martirano undertook the tasks of “stopping the bleeding” of the deficit, establishing a budget proposal to begin paying the health care fund in full and addressing the remaining debts.
Under its self-insured system, Howard County Schools pays for 85 percent of each employees’ health care claims, including employees’ and retirees’ health insurance, life insurance and voluntary benefits; employees cover the other 15 percent.
For seven years, the school system was pulling funds from its health care budget to pay for major expenses, including a countywide pre-kindergarten program and salary increases, the Howard County Times previously reported.
“We should never have a deficit in a school system budget, we are not expected to have a deficit in a school system budget,” Martirano said.
The $13.5 million reduction in the deficit is the net result of a strategy combining efficient management, cost savings initiatives and close collaboration with medical vendors to provide better health care without additional costs, the school system said in a press release on Wednesday.
Significant cuts to the 2019 fiscal year school system budget and additional funding from County Executive Allan Kittleman and County Council were also needed to be able to pay out the health care budget in the current fiscal year.
The school board reduced the operating expenses for fiscal year 2019 by $19 million, which included cutting the school system’s television station, eliminating the foreign language program between pre-kindergarten and sixth grade and a reorganization of central office, according to Martirano.
Kittleman recommended an $11 million, one-time payment to start reducing the health fund’s red ink. The County Council approved the payment for the fiscal year 2019 operating budget in May.
By fully funding the health care budget of $138.4 million, the structural imbalance of the fund will be eliminated and the deficit will be capped, according to the school system.
As Martirano develops the school system’s budget for fiscal year 2020, he will include strategies that will continue to address decreasing the deficit.
In order for the school system to be able to offer new programs and initiatives for students, the deficit needs to be handled, Martirano said.
It’s in “everyone’s interest that we get this under control,” Martirano said. “It’s [the deficit] holding us back from what needs to be done for [the] kids.”