Statement of Howard County Executive Calvin Ball on HCPSS Health Fund Deficit

Howard County Executive Calvin Ball has issued the following statement on HCPSS’s Health Fund deficit:

“The County was just informed of the HCPSS audit concern, which appears to be primarily driven by an unanticipated claims spike that exceeded actuarial projections by $10.2 million and a policy decision by HCPSS to provide $3.3 million unbudgeted employee benefit credits, per the superintendent’s memo. We feel it is appropriate for HCPSS to review its practices that resulted in the deficit in the Health and Dental Fund and develop a workable plan to address the deficit.

HCPSS makes its own spending decisions and determines its own spending priorities as a separate government entity. The HCPSS General Fund budget in FY20 ($901.3 million) experienced the largest increase over a decade. During the last 10 years, total direct funding to HCPSS (state, local and other) has averaged an annual growth of 3.2%, more than double its enrollment growth of 1.5% per year on average.

Recently, the County also requested the Maryland State Department of Education to conduct an audit of the HCPSS Health and Dental Fund to assess the financial implications of carrying a historical deficit in this fund, and to provide a comparative analysis to peer jurisdictions based on program design, benefits, cost details and cost sharing agreements to identify opportunities for savings and cost mitigation.”

To clarify concerns that the deficit will potentially impact the County’s bond rating, the bond rating agencies understand the working relationship between the County and HCPSS and will consider many other factors that are more influential in determining the County’s credit rating.”

###

Here is the memo from the HCPSS Superintendent noted in the release above (provided by HoCoBOE member Chao Wu): Health Fund Deficit Grew Larger. One of the things that stood out to me in the memo was the statement (under Audit Challenges): “As we know know, we have not received any funds from the County over the last three budget years to reduce the deficit”.

It was just 13 months ago that this was reported: HCPSS to Report $37 Million Health Fund Deficit – not $50 Million and things seemed to be moving in a positive direction…I guess everyone was wrong. Also noted back in September of 2018 was the following statement “A major priority for the Board of Education was to fully fund the Health Fund. This required additional funding supported by County Executive Allan Kittleman and the Howard County Council, as well as significant cuts to the HCPSS budget”.

So has the HCPSS received funds to assist in paying down the fund deficit over the past 3 years or not? I am now a bit confused on that topic based on the statements made recently and 13 months ago.

No matter what the answer to that question is…we should all be very concerned about finances in our school system. Things seem bad right now on a number of fronts. We cut positions in the last budget cycle, we possibly will defer major capital projects because of lack of funding and now this news about the Health Fund.

This all seems to be pointing towards the possibility of more new taxes on residents of this county (to follow the fire tax increases last year…and the recently filed plastic bag tax). Will we also get a hefty property tax increase next year to cover the “shortfalls” of the school system? I do not know…but if not, then what is the plan to stabilize the finances of our school system?

Stay tuned…I am sure the finances of our school system will be a topic worth continuing to follow in the near future.

Scott E