A 2020 law ties most school workers' contributions to their salaries, so districts absorb most of the increase, while the plans' design stays frozen until 2028.
New Jersey school districts, not most of the people they employ, will cover a 34.4 percent average increase in health premiums next year under rates a divided state commission approved Sept. 25 to keep the school employees' plan running.
Under Chapter 44, a 2020 law, workers in two of the plan's four options contribute a set slice of their salary, not of the premium, the state Division of Pensions and Benefits told employers.
The rest falls to the employers. Jonathan Pushman, advocacy director for the New Jersey School Boards Association, puts the split at 98 percent for schools and 2 percent for employees.
The division's October list of employers in the School Employees' Health Benefits Program counts 212 school districts, colleges and other education employers.
A 34.4 percent increase may still leave the plan's reserve short of its target. "Additional margin may be appropriate," Aon, the state's actuary, wrote in the rate analysis the School Employees' Health Benefits Commission approved.
Changes to the plans' benefits have to wait. Chapter 44 says the design of the plans "shall remain unchanged until December 31, 2027."
Gov. Mikie Sherrill's Oct. 1 release says her administration will coordinate the recommendations of her new health benefits reform working group with "parallel work" on the school plan. It names no leader, members or timeline for that work.
On Sept. 18, the division warned the schools and colleges in the plan that if the deadlock held, the plan "will not be an option for providing health benefits by employers to their employees starting January 1, 2027."
The commission approved the rates a week later. The state's chief operating officer, Kellie Doucette, described the increase as "necessary and overdue."
Most school workers pay by salary, so most of the increase falls on districts
The two salary-based options are the New Jersey Educators Health Plan, or NJEHP, and the Garden State Health Plan, or GSHP. Aon assumed in setting the rates that 81 percent of working members would be in the first next year and 3 percent in the second.
The New Jersey Principals and Supervisors Association spelled out the result for its members Oct. 2: "If you are enrolled in either the NJEHP or GSHP, you should see no change because your cost share, covered under Ch44, is a percentage of your salary."
The total premium for family coverage in the Educators Health Plan will be $5,669.46 a month in 2027, up from $4,283.76 this year, the division's rate sheets show.
The older NJ Direct 10 and NJ Direct 15 plans, and Aetna's matching Freedom plans, work differently. Members, all hired before July 1, 2020, pay a share of the premium under a 2011 law, the division told employers. That share runs from 3 percent to 35 percent, depending on salary and coverage.
The division posts 2027 worksheets for estimating contributions in each plan, but, as of Oct. 2, the principals' association said the state had not yet released its contribution calculators.
State law lets districts tax past the cap for health costs
School boards generally may raise their property tax levies no more than 2 percent a year. When health costs climb faster, a 2010 state law lets a board go past the cap to cover the difference.
The law ties the limit on that extra room to the average premium increase of the State Health Benefits Program, the separate plan for state and local government workers, as the division determines it.
The New Jersey Department of Education put that average at 31.9 percent for this school year and 14.0 percent for the year before, in budget guidelines that say the figure comes from the division.
The department has not published its budget guidelines for the 2027-28 school year. It did not respond to a request for comment.
Laura Archer, business administrator for the Pemberton Township School District in Burlington County, said at an April 30 budget hearing that "approximately 87 percent of the $6.8 million tax levy increase is needed to cover the $5.9 million increase in health benefits."
The New Jersey Council of County Colleges told the state Senate Higher Education Committee on Oct. 5 that the increase could cost colleges $40 million to $50 million, with no state money to offset it.
Treasury counts four yes votes, and the two sides read the rule differently
Labor and management appointees hold four voting seats each on the commission, according to the NJEA. The ninth seat, the chair's, has gone unfilled for years, according to a Treasury spokesperson.
The final count was 4-2, Danielle Currie, a Treasury communications official, confirmed.
Sarah Favinger, one of three commissioners nominated by the New Jersey Education Association, could not vote; union officials said her term had run out and she had not yet taken the oath for a new one. John Cunha, the AFL-CIO's representative on the commission, missed the vote.
Steven Baker, an NJEA spokesman, said the state sent Favinger her reappointment paperwork the night before. "She was present electronically and prepared to vote," he said.
The union's statement after the meeting tells it differently: "Today, our three commissioners again voted no because they could not support imposing these rates without first doing everything possible to reduce them." Treasury's 4-2 tally counts two no votes.
The NJEA did not respond to a request for comment.
Before the vote, the NJEA said commission action takes five yes votes. Afterward, the school boards association, which the NJEA counts on the management side, told its members the vote needed a majority of the members present.
State law calls for a majority of the members present, at a meeting where a majority of the full membership attends. A State Health Benefits Commission rule, which applies to the school panel until it adopts its own, says a motion needs "a majority of all votes of the entire Commission."
The commission has carried other motions, including a member appeal, with four yes votes in 2017 and 2023, its minutes show.
The division has posted no open-session minutes from the commission since its May 5, 2025, meeting. The New Jersey Department of the Treasury, the division's parent agency, did not respond to a request for comment.
The actuary says the increase may fall short, and benefit changes wait until 2028
The approved premiums run 15.9 percent above projected claims, Aon's analysis says. Of that margin, 4.2 percent repays the $70 million the division expects to have moved from the retirees' fund by year's end under a June state law allowing temporary transfers. The other 11.7 percent helps rebuild the reserve.
By the end of 2027, the reserve reaches one month of plan costs, against a target of two months. Aon's latest estimate puts the reserve at a deficit of $66 million at the end of 2025.
Daniel Holub, the NJEA appointee who served as the meeting's interim chair, opposed the increase. "It's irresponsible for us as a commission to move forward with these rates knowing it will lead to further crises in the future," he said.
Danielle Schimmel, the state treasurer's representative at the meeting, put the choice another way: "The rates are what they are, and we need rates to operate a plan to be able to have enrollment, to be able to have members."
Aon's analysis of the 2025 rates projected a $35.1 million gain for that year. Its analysis of the 2026 rates put 2025 at a $253.5 million loss. The latest analysis puts the 2025 loss at $161.7 million.
Employers keep leaving for cheaper private coverage, Aon wrote in March. Its September analysis shows working membership fell 17.6 percent from 2025 to 2026.
Treasury spokesman Darryl Isherwood said after the vote that "Chapter 44 froze the design of the plans but it did not freeze the costs of delivering health and prescription drug benefits."
The union commissioners have pressed for savings that need no benefit changes, such as in how the plan is run or how it buys services. State officials have signaled they are open to discussing some of those ideas with them, Schimmel said.
Starting in 2028, Chapter 44 lets the plans' design committee change benefits. Aon's August menu for that committee includes dropping the two older plans and raising deductibles.
Doucette leads Sherrill's working group, which meets first on Oct. 16. Its listed members include AFT New Jersey and the school boards association, which said Oct. 6 it would bring the school district perspective to the talks. The NJEA is not on the list, and the release says the administration may add members.
"For too long, New Jersey has responded one rate cycle at a time," Sherrill said in announcing the group. Her office did not respond to a request for comment.
School employees will have Oct. 26 to 31 to pick their 2027 coverage. The division told employers the commission's delay in approving the rates is the reason the window opens late and lasts a single week. The commission meets next on Nov. 23, according to the division's calendar.
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