Howard County announces elimination of the public school system's health fund deficit

Jul. 13—Howard County officials on Monday afternoon announced the public school system's health fund deficit will be eliminated this fiscal year.

Howard County Public School System Superintendent Michael Martirano, County Executive Calvin Ball, Board of Education Chair Chao Wu and County Council Chair Liz Walsh made the announcement at a joint news conference at the Howard County Department of Education.

"[Today] is a truly momentous day as we can celebrate that our commitment and collaboration has finally addressed this deficit and that the Howard County Public School System will not be hampered by this looming deficit year after year," Martirano said Monday.

Martirano said the elimination of the deficit was able to come together by using savings within the school's operating budget, receiving a one-time allocation from the county government for fiscal 2022 and seeing lower-than-expected health claims during the coronavirus pandemic.

With the elimination of the deficit in this fiscal year — July 1, 2021, to June 30, 2022 — Martirano said the school system will be able to focus on learning recovery to support students as they return to in-person instruction in the fall, some of them for the first time since March 2020 when school buildings were shuttered at the beginning of the pandemic.

The deficit, which has beset the school system for the past several years, stemmed from an imbalance in the school system's employee health and dental fund, which had been depleted since 2011 as the money was used to pay for other uses, including salary increases and a countywide prekindergarten program.

The fund slid from $21.6 million in 2011 to $1.6 million in 2015, before hitting a deficit of $16.5 million in 2016, according to school system data. It grew to a nearly $40 million deficit in early 2020 before a combination of several efforts were implemented to halt the continuing growth and make strides toward funding the district's projected health care costs, according to the school system.

Howard schools pay for 85% of each employee's health care claims, while the employees cover the remaining 15%.

In 2019, a plan was implemented by Martirano to eliminate the deficit by fiscal 2024. Through the combination of efforts by the school system and Howard County leaders, the deficit will be eliminated two years earlier than anticipated, according to a school system news release.

Ball on Monday said when the coronavirus pandemic hit last year, it was clear the county needed to take aggressive and smart fiscal action.

"Today with our partners at the school system, our partners at the Board of Education [and] our partners at the County Council, we can announce that end and that our hard work and shared efforts have paid off," Ball said. "Working collaboratively with the best interests of our county in mind, we have accomplished something truly remarkable."

In May 2020, the County Council voted unanimously to appropriate $7.2 million from the school system's unassigned fund balance to go toward the deficit, and in April of this year, Ball announced a one-time county contribution of $10 million to further pay down the deficit.

After the adoption of the county's fiscal 2022 budgets in May, the deficit was projected to be $6.2 million.

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Wu said the deficit was one of the reasons he decided to run for the school board three years ago.

He said the elimination of the deficit is a milestone for the school system.

"Since 2017, the Board of Education has prioritized fully funding the ... projected health insurance costs, preventing the deficit from growing," Wu said. "We will continue to prioritize the health benefits that our employees receive and engage in sound financial practices to ensure we never find ourselves in this position again."

Walsh said the board and the County Council worked with the shared goal of eliminating the deficit as quickly as possible.

"We can now all turn our attention to fully funding the present needs and future needs of our county school system and the children in our care at this very moment and for generations to come," Walsh said.