October 24, 2019

Media Contacts: Scott L. Peterson, Director of Communications, Office of Public Information, 202-277-9412

ELLICOTT CITY, MD – Howard County Executive Calvin Ball has issued the following statement on HCPSS’s Health Fund deficit:

“The County was just informed of the HCPSS audit concern, which appears to be primarily driven by an unanticipated claims spike that exceeded actuarial projections by $10.2 million and a policy decision by HCPSS to provide $3.3 million unbudgeted employee benefit credits, per the superintendent’s memo. We feel it is appropriate for HCPSS to review its practices that resulted in the deficit in the Health and Dental Fund and develop a workable plan to address the deficit.

HCPSS makes its own spending decisions and determines its own spending priorities as a separate government entity. The HCPSS General Fund budget in FY20 ($901.3 million) experienced the largest increase over a decade. During the last 10 years, total direct funding to HCPSS (state, local and other) has averaged an annual growth of 3.2%, more than double its enrollment growth of 1.5% per year on average. 

Recently, the County also requested the Maryland State Department of Education to conduct an audit of the HCPSS Health and Dental Fund to assess the financial implications of carrying a historical deficit in this fund, and to provide a comparative analysis to peer jurisdictions based on program design, benefits, cost details and cost sharing agreements to identify opportunities for savings and cost mitigation.”

To clarify concerns that the deficit will potentially impact the County’s bond rating, the bond rating agencies understand the working relationship between the County and HCPSS and will consider many other factors that are more influential in determining the County’s credit rating.”

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* Net of $11.1 million in one-time non-recurring costs per certification of State Department of Education.

 

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