By AMANDA HOFFMANN
The schools may get some relief from an unexpected source, the New York State Health Insurance Program (NYSHIP), which was established in 1957 to provide health benefits for state employees, their dependents and retirees.
NYSHIP, which also provides benefits for many local governments and school districts, negotiates with insurance carriers to set premiums that provide benefits for more than 1 million people enrolled in the program. Insurance carriers estimate how many claims there will be in a year and how much they will cost. They take those figures to NYSHIP, which negotiates with them to determine the cost of premiums.
Over the past six years, NYSHIP has accumulated nearly $500 million in premiums paid by the state and local government entities, including school districts. "The surplus was built up from $40 million in 2002 to $540 million at the end of 2008," said Nassau County Comptroller Howard S. Weitzman, who has advocated that the state, local governments and school districts recoup the money paid to NYSHIP.
Weitzman said he hopes NYSHIP will offer a cash rebate, reduce health premiums statewide or do both. "The whole benefit may not be available for a refund," he said. "The health insurance plan may need to retain part of those moneys to provide stabilization and prevent drastic increases in the future."
David Ernst, director of the Public Information Office of the state's Department of Civil Service, which oversees NYSHIP, explained that, by law, the surplus must be used to reduce premiums. "There is no question the money goes at some point or another to reducing premiums - it's not like it's being diverted anywhere else," Ernst said. "The issue is how much should be applied to this year, as opposed to holding it to reduce premiums thereafter."
NYSHIP is currently negotiating with insurance carriers for calendar year 2009, Ernst said.
He said he could not comment on whether cash could be part of a refund. "I'm not in a position to be able to comment on the discussions in that kind of detail," Ernst said.
He was also unable to say how far along NYSHIP was in making a determination about what to do with the surplus. "It's under discussion," Ernst said. "I wouldn't attempt to characterize it further."
Beyond the proposed midyear budget cuts, further reductions in next year's school budgets could also be offset by reduced insurance premiums, especially for school districts hit hardest by the cuts.
The Oceanside School District, which funds about 17 percent of its $122 million budget - nearly $30 million this year - through state aid, stands to lose about 7 percent of that aid midyear, about $1.4 million. "Right now we are concerned about Governor Paterson taking money away from us because of the state's financial crisis," said Oceanside Superintendent Dr. Herb Brown. "Obviously, if those moneys are taken away from us, whatever we can recover from the health funds would be beneficial."
Brown said it was too early to talk about where the district would trim the budget by $1.4 million if the cut becomes a reality when lawmakers met this week.
The Island Park school district faces smaller midyear cuts, because less than 3 percent of its $30.7 million budget - just over $194,000 - derives from state aid.
"We're a little better off than some other areas because we don't get that much money from the state," said Island Park Superintendent Dr. Edward Price.
"I think everyone is just concerned about the cuts and how one deals with that in terms of program revenue," Price added. "We have to have balanced budgets; we can't do deficit spending. We're always looking, especially in this climate, to keep costs down for the taxpayers and keep our programs."
Other area districts are also facing possible budget crunches, with Long Beach looking at a $1.9 million midyear cut and West Hempstead School District facing one of $644,000. And districts are bracing for more budget cuts next year, according to Price. "I think we're all fairly certain there will be cuts in school aid for 2009-10," he said. "It's inevitable. About 20 percent of the state's spending came from the Wall Street sector, and it's just not there anymore."
Refunds from NYSHIP or reduced rates for health insurance could make the blow a little less painful, Price concluded. "If indeed the insurance plan has this excess and is able to keep costs on a more stable level and at the same time give us back something, that would be really nifty," he said.
A refund or rate reduction from NYSHIP is not likely to result in any sharp rate hikes in the future, Weitzman explained. "This will not cause a decrease in benefits, and we don't expect it will cause an increase in cost as a result of this action," he said. "Health care costs do go up every year, but we don't believe the fact that we are looking for the return of these funds would cause it to go up [more than normal]."
While lawmakers are busy trying to decide how to cut the state budget, Nassau County officials, including Weitzman and County Executive Thomas Suozzi, are working with NYSHIP to come to a resolution regarding its surplus.
"It's being worked on right now," Weitzman said. "We are hopeful there will be a resolution sooner than later. I can't tell you when later is, but sooner is this month."
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