Benefit Costs Squeeze Schools, Driving Cuts, Tax Hikes And Difficult Tradeoffs

School districts across Camden County are confronting a budget problem that is both familiar and difficult to control: employee health benefits are taking a larger share of the money available for classrooms, staffing and student programs.

In The Retrospect area, health care costs have climbed by hundreds of thousands, and in some districts, millions of dollars in recent years.

The increases are arriving alongside other pressures, including state aid changes, enrollment shifts and limits on how much districts can raise through local taxes.

The result is visible in school budget decisions: closed schools, eliminated positions, reduced instructional and extracurricular spending, delayed purchases and higher tax levies.

Collingswood Eyes Operating Referendum

Collingswood School District health care spending rose from $4.74 million in 2020-21 to $7.33 million in 2025-26. The district's response has included closing Garfield Elementary School, reducing staff and programs, raising extracurricular fees and planning for a November operational referendum.

District leaders are seeking $4.56 million in additional tax revenue for operating costs that would be built into all future budget years.

At Oaklyn Public School, which utilizes administrative staff from Collingswood, health care spending increased from $605,000 in 2020-21 to more than $1 million in

2025-26. Its current $12.7 million budget eliminated one full-time position and reduced spending on student assemblies and recognition programs, while delaying technology, furniture, and equipment purchases.

"The continued escalation of employee healthcare costs is becoming one of the most significant financial concerns facing New Jersey school districts," said Collingswood Business Administrator Beth Ann Coleman. "These doubledigit spikes are occurring simultaneously with contractual salary growth, rising special education costs, transportation inflation and flat state aid," Coleman said.

"Healthcare inflation isn't an isolated expense," Coleman added. "Every dollar forced into health premiums is a dollar taken directly off the table for teachers, student services, academic programs, facilities and extracurriculars."

The districts' budgets show that health benefits are not the sole cause of the cuts or tax increases. But they are increasingly one of the largest recurring obligations that boards must account for before deciding what remains for instruction and services.

A Growing Claim on All School Budgets

The cost trend extends across the county's smaller and larger districts.

The Barrington school district's health care spending rose from $1.73 million in 2020-21 to $2.33 million in 2025-26. The district used $35,000 from its emergency reserve to offset insurance costs in its $19.3 million budget, helping it avoid staffing and academic program reductions. Its school tax levy increased 5.95%.

Audubon's health care expenditures rose from $3.21 million in 2020-21 to $4.14 million in 2025-26.

The district anticipates $6.93 million in health care costs for 2026-27. Its spending plan eliminated one first-grade and one second-grade classroom, reduced an academic support teacher, converted two instrumental music positions to part-time jobs, and paused new curriculum initiatives.

The district also reduced supply and staff allotments, Chromebook purchases, summer work, and stipend positions.

Haddon Township's health care costs increased from $4.93 million in 2020-21 to $6.29 million in 2025-26.

The district initially projected a $1.3 million budget gap tied partly to a 25% health insurance increase. Later projections reduced that gap by about $300,000, but the district still did not replace a high school math teacher or the district registrar, reduced an elementary teaching position, cut daily substitute coverage, and eliminated three one-to-one aide positions.

Haddonfield's health care expenditures rose from $5.01 million in 2020-21 to $7.52 million in 2025-26. The district approved a $51.7 million operating budget that included a $1.3 million health care adjustment and used $326,000 in banked cap, unused taxing authority from prior years, to maintain staffing and student programs.

In Haddon Heights, medical costs alone, not including vision and dental, rose from $3.90 million in 2020-21 to $5.15 million in 2025-26.

Officials said health care costs added roughly $1.2 million to budget pressure as the district approved a 6.93% school tax levy increase and eliminated three full-time and seven parttime jobs.

Haddon Heights Superintendent Carla Bittner and Business Administrator Donna Phillips said the district is facing the same challenge.

"At this point, our focus is on managing these increases responsibly while protecting the educational experience we provide to our students.

We continually evaluate expenditures and look for efficiencies before considering reductions to programs or staffing. However, if health care costs continue to increase at a rate that significantly outpaces the growth of available revenue, school districts will eventually be forced to make increasingly difficult choices," Bittner and Phillips said in a joint statement.

The district said it evaluates expenditures and seeks efficiencies before considering reductions to programs or staffing. But continued increases, officials said, could eventually affect capital projects, instructional resources, technology, staffing and programs.

Woodlynne reported employee benefit spending rising from $$993,385 in 2020-21 to $1.69 million in 2025-26.

Budget Building a Long Process

A school budget is built months before a district knows its final benefit costs.

Collingswood anticipated $8.95 million in health care costs for 2025-26 but spent $7.33 million. Oaklyn anticipated $1.09 million, Barrington projected $2.53 million, and Haddon Township's revised estimate reduced its anticipated shortfall.

Such revisions can make the difference between preserving a position and cutting it.

They can also complicate public debate, as boards make preliminary staffing decisions based on estimates that may shift before the final budget is adopted.

Expense to Employees a Factor

Employee contributions have increased in some districts, but not at the pace of the overall cost increases reported in local budgets.

That does not mean employees are paying less for health coverage. Contributions depend on state law, collective bargaining agreements, and workers' plan selections. But the figures show that districts are often absorbing a growing portion of premium increases.

In Haddonfield, employee contributions increased from $1.25 million in 2020-21 to $1.6 million in 2025-26. During the same period, the district's health care expenditures increased by about $2.51 million.

Oaklyn's employee contributions rose from $103,000 to $126,087 from 2020-21 to 2025-26, while district health care spending grew by more than $400,000.

In Haddon Heights, employee medical contributions went from about $658,750 in 2020-21 to $677,640 in 2025-26, while medical expenditures rose by roughly $1.24 million.

Rising costs leave school boards with limited options: use reserves, reduce spending elsewhere, seek additional tax revenue, or ask employees to bear more of the costs when contracts and state requirements allow it.

Higher Prices, Not More Care

The Camden County increases reflect a broader national trend in employersponsored health coverage.

The Health Care Cost Institute, an independent nonprofit that analyzes commercial, Medicare and Medicaid claims data, found that annual health spending for people younger than 65 with employer-sponsored insurance reached $6,711 per person in 2022. That was nearly 19% higher than in 2018.

Over the same fiveyear period, the institute found average health care prices increased 14%, while utilization, the amount of care patients used, rose 4%. The data point to prices, rather than a large increase in the use of medical care, as the principal driver of spending growth.

Hospital and outpatient care accounted for much of the increase, while prescription drug costs also grew.

"One of the big things is the rise in health care costs isn't new, and it's been continuing over time, but when prices and costs increase year over year, it gets to a tipping point, and in the last few years employers have really felt that," John Hargraves, managing director of data strategy and analytics at the Health Care Cost Institute, told The Retrospect.

Haddon Heights officials have cited growing use of GLP-1 medications, prescribed for diabetes and weight loss, as one contributor to insurance costs. Hargraves said new drugs may add to spending but are only one part of the larger pricing problem.

"New drugs might create new areas of spending rather than replacing or shifting costs," Hargraves said.

"Hospital spending and prices have been a pretty steady contributor to cost growth and thus premium growth, and that has been happening for a very long time."

Hargraves also noted that insurers generally must spend at least 80% of premium revenue on medical care and health services under federal medical-lossratio requirements. Rising premiums paid by employers and employees therefore largely follow increases in the underlying cost of treatment, rather than administrative expenses alone.

The trend extends beyond school districts, according to the National Association of Insurance Commissioners' U.S. In the Health Insurance Industry Analysis Report, insurers' capital surplus increased from $155 billion in the second quarter of 2019 to $213 billion in the same period in 2023, an increase of nearly 37%.

Can Anything Be Done?

In a not-yet-peer-reviewed study conducted by medRxiv and circulated by Yale School of Public Health, researchers found that adopting a national public insurance program like Medicare for All could reduce U.S. health care spending by an estimated $1.04 trillion annually, or nearly 20%, even after accounting for increased care among uninsured and underinsured Americans.

"Medicare for All strips out those sources of waste while providing everyone with healthcare, saving over a trillion dollars and 114,000 lives every year," said Alison Galvani, the director of the Yale Center for Infectious Disease Modeling and Analysis, in an article reviewing the study, Another Increase on the Horizon

The next budget cycle could bring a more acute test for districts enrolled in New Jersey's School Employees' Health Benefits Program.

In July, the state actuary recommended a 34.4% increase in 2027 premiums for active employees in the program. If adopted, that increase would place new pressure on districts that have already used reserves, staffing cuts and tax increases to balance their budgets.

For districts, the potential increase comes as they are already confronting health care costs that have risen substantially over the past several budget cycles.

A School Funding Question

The health care pressure is unfolding alongside a broader examination of how New Jersey funds its public schools.

The state has begun a stakeholder-driven review of New Jersey's school funding formula, led by the Department of Education and the Hunt Institute. A steering committee led by Education Commissioner Lily Laux is scheduled to meet this fall, with the group expected to examine research, data, and national best practices while identifying potential shortand long-term improvements.

"Education spending is the single largest investment our state makes year to year, and we have a responsibility to ensure we are getting the best return on every dollar spent," Gov. Mikie Sherrill said in an Aug. 5 statement announcing the review.

Any statewide funding changes, however, would come after local boards begin confronting the next round of health benefit costs.

What Comes Next?

For Camden County districts, the budget choices are immediate. A higher premium can mean a larger tax levy, a draw on a finite reserve fund, fewer adults in school buildings, delayed curriculum and technology work, or a referendum asking residents for more support.

Health benefits are not a one-time expense that can be deferred. They return each year, competing with every other part of a school budget, and leaving communities to decide how much of the escalating cost should be carried by employees, taxpayers, and students.

Next week, The Retrospect will publish an article with a look at how local leaders are responding to the ongoing health benefits cost difficulties.

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