Bill Text: NJ S4860 | 2026-2027 | Regular Session | Introduced
Bill Title: "School District Health Procurement Efficiency Act."
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced) 2026-10-22 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S4860 Detail]
Download: New_Jersey-2026-S4860-Introduced.html
Sponsored by:
Senator GORDON M. JOHNSON
District 37 (Bergen)
SYNOPSIS
"School District Health Procurement Efficiency Act."
CURRENT VERSION OF TEXT
As introduced.
An Act concerning school district health insurance procurement, establishing the "School District Health Procurement Efficiency Act," and supplementing Title 18A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "School District Health Procurement Efficiency Act."
2. The Legislature finds and declares that:
a. New Jersey public school districts are caught in a severe, compounding budget deficit, constrained by a strict 2 percent property tax levy cap while facing unsustainable increases in employee health benefits.
b. The School Employees' Health Benefits Program recently experienced a devastating 31.9 percent premium increase for active school employees, driven largely by soaring prescription costs and high medical utilization.
c. While transitioning to private commercial joint-purchasing pools could lower costs, local school districts are currently blocked from joining forces due to conflicting local union contracts, a lack of local underwriting resources, and multi-layered regulatory bottlenecks.
d. "Staggered entry" financial penalties currently exist because local school districts have staggered contract expiration dates, prompting commercial carriers to penalize piecemeal enrollment with higher premium rates.
e. Therefore, it is necessary to establish a State revenue neutral legislative framework for an executive county superintendent-led health insurance procurement system to maximize purchasing power and protect local property taxpayers without eroding collectively bargained benefits.
3. a. The office of the executive county superintendent of schools of each county in this State shall be authorized to issue a county-wide request for proposals to major commercial insurance carriers to establish a county-wide school master plan for the purpose of providing health insurance benefits to employees, and their dependents, of school districts within their respective counties.
b. Commercial carriers underwriting a master plan shall be required to provide uniform, stable bulk pricing to any district that opts in via a local board resolution and shall not charge any penalty, or otherwise increase premiums, based upon differing contract expiration dates of such districts.
4. Any administrative overhead of a county-wide school master plan shall be funded by a "zero-cost administrative fee," not to exceed 0.5 percent of the total premium, and shall be included in the commercial premium rate paid by participating school districts.
5. a. The office of the executive county superintendent of schools of each county seeking to establish a master plan shall establish a cap which shall not be exceeded by the underlying premium cost of the master plan. The cap shall be a set percentage of the School Employees' Health Benefits Program baseline rate as of the time such a cap is established.
b. If commercial carriers cannot achieve this cap through corporate scale, the office of the executive county superintendent of schools of each respective county shall have an autonomous escape clause to automatically implement the county pool into a partially self-insured model. The model shall be backed by private aggregate stop-loss insurance, which shall be funded entirely out of the local districts' premium savings.
6. a. No master plan shall alter or reduce employee benefits.
b. Commercial plans offered through a master plan shall be equal to or provide greater benefits than the New Jersey Educators Health Plan and the Garden State Health Plan benchmarks established pursuant to subsections a. and d. of section 1 of P.L.2020, c.44 (C.52:14-17.46.13).
c. Participation in an executive county superintendent-led private commercial pool shall not alter the employee contribution structure set forth in section 2 of P.L.2020, c.44 (C.52:14-17.46.14) and the contribution calculation set forth in section 4 of P.L.2020, c.44 (C.52:14-17.46.16).
7. a. If a master plan meets the benchmark equivalence established under P.L.2020, c.44 (C.52:14-17.46.13 et al.), a local school board's decision to enroll in the county pool to achieve administrative savings shall be designated as a protected management prerogative.
b. All other non-medical, collectively bargained, local provisions, including but not limited to optical and dental riders, wellness incentives, and local grievance procedures, shall remain under the absolute control of the local bargaining unit and the local board of education.
8. a. The Department of Banking and Insurance shall review and approve or deny multi-district health fund applications within 60 days of receipt of such applications.
b. Local Efficiency Achievement Program grants, administered by the Department of Community Affairs, shall cover any upfront actuarial, legal, and underwriting feasibility costs for groups of three or more school districts seeking to form a private commercial insurance pool pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
9. This act shall take effect immediately.
STATEMENT
This bill establishes the "School District Health Procurement Efficiency Act."
New Jersey public school districts are caught in a severe, compounding budget deficit, constrained by a strict 2 percent property tax levy cap while facing unsustainable increases in employee health benefits. The School Employees' Health Benefits Program recently experienced a devastating 31.9 percent premium increase for active school employees, driven largely by soaring prescription costs and high medical utilization. While transitioning to private commercial joint-purchasing pools could lower costs, local school districts are currently blocked from joining forces due to conflicting local union contracts, a lack of local underwriting resources, and multi-layered regulatory bottlenecks.
"Staggered entry" financial penalties currently exist because local school districts have staggered contract expiration dates, prompting commercial carriers to penalize piecemeal enrollment with higher premium rates. Therefore, it is necessary to establish a State revenue neutral legislative framework for an executive county superintendent-led health insurance procurement system to maximize purchasing power and protect local property taxpayers without eroding collectively bargained benefits.
Under the bill, the office of the executive county superintendent of schools of each county in this State will be authorized to issue a county-wide request for proposals to major commercial insurance carriers to establish a county-wide school master plan for the purpose of providing health insurance benefits to employees of school districts, and their dependents, within their respective counties. Commercial carriers underwriting a master plan will be required to provide uniform, stable bulk pricing to any district that opts in via a local board resolution and may not charge any penalty, or otherwise increase premiums, based upon any differing contract expiration dates of such districts.
Under the bill, any administrative overhead of a county-wide school master plan will be funded by a "zero-cost administrative fee," not to exceed 0.5 percent of the total premium, and will be included in the commercial premium rate paid by participating school districts.
The bill requires the office of the executive county superintendent of schools of each county seeking to establish a master plan to establish a cap which will not be exceeded by the underlying premium cost of the master plan. The cap will be a set percentage of the current year's School Employees' Health Benefits Program baseline rate as of the time such a cap is established. If commercial carriers cannot achieve this cap through corporate scale, the office of the executive county superintendent of schools of each respective county will have an autonomous escape clause to automatically implement the county pool into a partially self-insured model. The model must be backed by private aggregate stop-loss insurance, which will be funded entirely out of the local districts' premium savings.
Under the bill, no master plan will alter or reduce employee benefits. Commercial plans offered through a master plan must be equal to or provide greater benefits than the New Jersey Educators Health Plan and the Garden State Health Plan benchmarks. Participation in an executive county superintendent-led private commercial pool will not alter the employee contribution structure and the contribution calculation set forth under existing law.
Under the bill, if a master plan meets the benchmark equivalence established under the New Jersey Educators Health Plan and the Garden State Health Plan benchmarks, a local school board's decision to enroll in the county pool to achieve administrative savings will be designated as a protected management prerogative. All other non-medical, collectively bargained local provisions, including but not limited to optical and dental riders, wellness incentives, and local grievance procedures, will remain under the absolute control of the local bargaining unit and the local board of education.
The bill requires the Department of Banking and Insurance to review, and approve or deny, multi-district health fund applications within 60 days of receipt of such applications. Local Efficiency Achievement Program grants, administered by the Department of Community Affairs, will cover any upfront actuarial, legal, and underwriting feasibility costs for groups of three or more school districts seeking to form a private commercial insurance pool pursuant to this bill.
