Tax relief possible via self-insurance
State bill would allow the town to self-insure school employees
BY VINCENT TODARO
Staff Writer

EAST BRUNSWICK - A proposed state law has the potential of saving taxpayers millions of dollars, according to one township official.

Known as S46, the bill would allow the township and Board of Education to join forces and offer self-insurance to school employees. The township already has self-insurance for its own employees, and as Township Councilman David Stahl noted during a recent meeting, the bill would enable the school district to also use the township's self-insurance.

The self-insurance plan, Stahl said, has already saved taxpayers money by making township employees' health coverage much more affordable to the township.

The bill, recommended in November in a report of the state Joint Legislative Committee on Government Consolidation and Shared Services, has passed the state Senate and Assembly, and awaits the signature of Gov. Jon Corzine. Stahl said he is pleased to finally see an opportunity where the township's insurance could also be used to cover school employees' for health benefits and life insurance.

Stahl said Corzine is expected to sign the bill as part of a tax reform package.

The township saves thousands of dollars each year by being its own insurance carrier, though it does use a supplemental private carrier to cover catastrophic illnesses, Stahl said.

"East Brunswick is one of the few towns that self-insures," he said. "We provide residents and taxpayers a tremendous savings, plus very good health coverage for our employees."

The savings are reaped because the profit margin, the driving factor for private insurance carriers, is not a large part of the equation. Money is also saved in administrative costs related to insurance. Stahl said the township hires a third party to do some administrative work, but it has managed to keep those costs low.

Being a larger town produces the economy of scale that is important to being able to be a self-provider, and the school district has even more employees than the township.

East Brunswick school officials said it is premature to comment on the matter.

"The district is already involved in many cooperative efforts with the township and we are always willing to consider ways to save the taxpayers money," Superintendent of Schools Jo Ann Magistro said. "We are not familiar with the township's insurance plan, since we have not been permitted by law to participate in it. Therefore, we are not able to comment further on it at this time."

During his speech at the council's Jan. 8 reorganization meeting, Stahl complained that it has taken so long for the state to get to the point where such a merger would even be possible.

"In East Brunswick, we have been sharing services with many different governmental agencies for years," he said.

"You have heard me state in the past that the Board of Education and the township have been unable to explore the possibility of a joint health insurance initiative because of state laws," he said. "S46 would remove that obstacle, yet it remains unsigned."

The measure, he said, has the possibility of saving taxpayers in East Brunswick in excess of $8 million.

Stahl told the Sentinel that the annual increases in the township's insurance plan are lower than those seen in private plans.

However, even if the measure is signed by Corzine, there is no guarantee that the township and school district will be able to work out a plan.

"It would be up to the professionals," Stahl said. "On the surface, it has the potential for major cost savings. But it would take time to work this thing out. They need to first discuss if it's something that make sense for both bodies."