HCPSS Eliminates Health Fund Deficit Two Years Ahead of Schedule

July 12, 2021

This press release is being sent jointly by the Howard County Public School System and County Executive’s Office

Ellicott City, Maryland — Howard County Public School System Superintendent Dr. Michael J. Martirano, joined by Board of Education Chair Dr. Chao Wu, County Executive Calvin Ball, County Council Chair Liz Walsh, and system and county leaders, today announced the school system’s health fund deficit will be eliminated this year (fiscal year 2022) – two years ahead of schedule.

The deficit, which began in 2015 and was first discussed publicly in May 2017 by then newly hired Superintendent Dr. Michael J. Martirano, grew to $39.2 million before a combination of several efforts were implemented to halt the continuing deficit growth. The first step was to begin to fully fund actuarially projected health insurance costs and then begin to pay down the deficit. In 2019, a plan was jointly developed by the Superintendent and County Executive to eliminate the deficit by fiscal year 2024. Using savings within the school system’s operating budget, a one-time infusion of funds from the Howard County Government, and a lower-than-expected claims experience in fiscal years 2021 and 2022, the health deficit will be eliminated in this current fiscal year (July 1, 2021-June 30, 2022) with an estimated $5 million positive balance if claims are consistent with actuarial projections. 

“This deficit has significantly constrained our operating budget for several years and limited our ability to adequately fund several priorities,” said Superintendent Martirano. “Eliminating the deficit became an immediate top priority for me and Board of Education members. Today truly is a 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. It is our responsibility and the responsibility of all future leaders in our county to ensure that our employee health care costs are fully funded.”

“The School System’s Health Fund Deficit represented a significant fiscal challenge that our Administration and County Council had to confront upon taking office. In just 3 years, we have accomplished something truly remarkable: we have taken a near $40 million deficit and turned it into a projected surplus of over $5 million,” said Howard County Executive Calvin Ball. “Our Administration, School System and Board of Education faced a daunting challenge, met it head on, and resolved the issue working together. I am proud of the work we’ve done to eliminate the Health Fund Deficit and am thankful to have good partners like Dr. Martirano, the members of the Board of Education, and our Howard County Council to make today possible.”

“This was not a problem created by this Board or this Superintendent, but it was ours to fix,” said Board Chair Wu. “Since 2017, this Board of Education has prioritized fully funding the actuarially projected health insurance costs, preventing the deficit from growing. 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.”
 
“The County Council has shared consistently with the Superintendent’s and Board of Education’s goal to eliminate this health fund deficit as quickly as we possibly could,” said Liz Walsh, County Council Chair. “So much so that we voted unanimously in support of an amendment to dedicate an additional $2.5 million to this exclusive purpose. 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.”

The Superintendent detailed several collaborative efforts to eliminate the health fund deficit:

• The efforts of the Board of Education’s steadfast commitment to fully funding the actuarially projected health insurance costs to stop the deficit from growing
• The County Executive and County Council’s collaboration by dedicating significant contributions to deficit reduction
• The strategic budgetary measures that were put in place to generate year-end savings in the HCPSS General Fund to help pay down the deficit
• Unanticipated health cost savings in the Health Fund producing operating gains

“Today truly is a momentous day as we celebrate that our commitment and collaboration has finally addressed this deficit and our budgetary focus will not be on getting out of a multi-million dollar debt but on how the budget can support the very important programs and services that our students and staff need. This includes implementing the Blueprint for Maryland legislation and welcoming back all of our students back to school next month to normalized instruction,” added Martirano.