School employees in Millburn, Livingston and roughly 200 other New Jersey districts face a proposed 34% health insurance premium increase that a state commission cannot agree to approve or reject.
The School Employees' Health Benefits Commission voted 4-4 on the rate hike at its Sept. 4 meeting, New Jersey Hills reported. The deadlock means school workers may not know their 2027 premium costs when open enrollment begins Oct. 1.
The commission is supposed to have nine members. One seat has been vacant since at least 2024, according to the New Jersey Monitor. Four union-appointed trustees voted against the increase. Four governor-appointed trustees voted for it. The panel deadlocked on five separate votes at the meeting, including one that would have opened the floor to public comments.
About a dozen members of the New Jersey Education Association showed up to the Sept. 4 meeting. The commission is not required to take public input.
State actuaries said premiums need to rise by 34.4% on average to fund claims, rebuild a month of surplus and repay $90 million in loans the plan expects to owe the state next year, the New Jersey Monitor reported.
"These rates are going to bankrupt the districts," said Michael Salerno, a teachers union associate director and commission trustee, at the Sept. 4 meeting. He called the potential impact on New Jersey education "a catastrophe."
Sergio Arvizu, a commission trustee representing state Treasurer Aaron Binder, said the panel has a legal obligation to act. He acknowledged that exact plan costs may not be ready when open enrollment starts.
Livingston already feeling the squeeze
Livingston Public School district's 2026-2027 budget cited an "unprecedented 33% increase" in medical, dental and prescription premiums as the primary driver of its financial difficulty, according to district budget documents. Livingston used a state-authorized Health Care Adjustment Waiver of $5,611,079 and cut 40 staff positions to cover the gap.
A second consecutive year of increases near that level would compound the pressure on Livingston's budget.
Why the increase is so steep
The School Employees' Health Benefits Program (SEHBP) currently covers 98% of average medical costs. Governor appointees say state law restricts changes to the plan's benefit design until Jan. 1, 2028, under a 2020 law known as Chapter 44. That law also shifted more of the premium burden to taxpayers and away from employees.
The NJEA said in a July 15 statement that proposed rates could run as high as 39% for some plans. The union is pushing lawmakers to advance the Public School Employees' Health Benefits Trust Act (S4438/A5285).
Gov. Mikie Sherrill reached a separate agreement with 17 state employee unions to waive an increase for their own health plan, the State Health Benefits Program.
That deal does not cover school employees.
Daniel Holub, a union research director and commission trustee, called on the governor and Legislature to provide financial relief to school districts at the Sept. 4 meeting.
The commission meets next on Monday, Sept. 28. Open enrollment begins three days later.
