$39M Health Fund Deficit Erased 2 Years Early By Howard Schools

ELLICOTT CITY, MD — Howard County leaders said Monday that the school system's health fund deficit will be eliminated this year (fiscal year 2022), which is two years ahead of schedule.

Howard County Public School's $39 million health fund deficit will be eliminated in this fiscal year, which is two years ahead of schedule, officials said Monday in a news release.

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 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 money from the Howard County government, and lower-than-expected claims in fiscal years 2021 and 2022, the health deficit will be eliminated in this current fiscal year (July 1, 2021-June 30, 2022).

The fund will have an estimated $5 million positive balance if claims are consistent with projections.

"This deficit has significantly constrained our operating budget for several years and limited our ability to adequately fund several priorities," said Superintendent Martirano in a news release. "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 three 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 in a statement. "Our administration, school system and board of education faced a daunting challenge, met it head on, and resolved the issue working together."

"This was not a problem created by this board or this superintendent, but it was ours to fix," said Board Chair Dr. Chao Wu. "... 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 dedicated an additional $2.5 million to help pay off the deficit.