HoCo Pays $10M Toward HCPSS Health And Dental Fund Deficit

HOWARD COUNTY, MD — The county has made a one time $10 million contribution to help pay down the Howard County Public School System's health and dental fund deficit. The contribution will put the county ahead of the fiscal year 2024 target for eliminating the deficit and could potentially allow for the elimination of the deficit by the end of 2021.

“Shortly after taking office, we were confronted with health fund deficit exceeding $39 million and an adverse audit opinion. We have since worked collaboratively with the school system to address the health fund deficit, creating a multi-year plan to reduce and ultimately eliminate the deficit by 2024,” Howard County Executive Calvin Ball said in a news release. “Last spring, amid the fiscal uncertainty surrounding the pandemic, we were unsure we would still be able to meet our proposed timeline. Today, we are taking the next big step toward meeting this fiscal challenge head on, contributing an additional $10 million in my proposed fiscal year 2022 operating budget and putting us on track toward eliminating this deficit once and for all.”

Prior to fiscal year 2015, HCPSS maintained a healthy fund balance in the employee health and dental fund to account for year-to-year changes in the total amount of health claims. However, from fiscal year 2015 through fiscal year 2018, the employee health and dental fund was underfunded to meet operating budget priorities, contributing to an accumulated deficit of $39.2 million by the end of fiscal year 2019.

"The deficit has long undermined the school system’s financial footing and has limited our ability to fund instructional priorities and student supports," HCPSS Superintendent Dr. Michael J. Martirano said in a news release. "Since becoming superintendent nearly four years ago, eliminating the deficit and fully funding our health care obligations have been amongst my highest priorities and I am grateful for the partnership and support of the county executive. This $10 million county contribution will bring us far closer to ultimately eliminating this financial burden on a much faster timeline than we originally deliberated in our elimination plan."

As of June 30, 2019, the HCPSS health and dental fund held a deficit of $39.2 million. The Comprehensive Annual Financial Report for fiscal year ending June 30, 2019, contained a modified adverse opinion for the general fund and the health and dental fund. In February 2020, Ball and Martirano reached an agreement on a multi-year plan to resolve the health and dental fund deficit by the end of fiscal year 2024. The multi-year plan proposed to pay down the deficit incrementally using HCPSS unassigned fund balance, year-end savings from HCPSS, and one-time contributions from Howard County government.