Bill Passed to Allow Carmel to Set Up School Reserve Fund

State Assemblywoman Sandy Galef and Senator Pete Harckham announced their bill to allow the Carmel School District to establish an insurance reserve fund was signed into law by Governor Cuomo on July 16.

The bill amends the state’s General Municipal Law to add Carmel to the list of districts that may establish insurance reserve funds and make expenditures from such reserve fund for any loss, claim, action, or judgement directly related to the district’s self-insured plan.  This will enable Carmel to make more cost-effective use of savings.

For example, the Carmel school district has self-insured their employees’ health benefit plans for more than a decade and has been able to save several millions of dollars by identifying the most cost-effective healthcare plans and pharmaceutical contracts.  These savings go directly back into the district, helping to maintain its workforce and supporting programs and services for students.

Insurance card
The bill to allow the Carmel School District to establish an insurance reserve fund was signed into law on July 16.

Insurance reserve funds, such as those now permitted in Carmel and a few other districts, aid administrators and school boards in planning their districts’ annual budgets and whether there are increases or decreases in health insurance expenditures.

“This new law will help the Carmel School District avoid a financial burden that could lead to large year-to-year variations in claims,” Galef said. “Helping the taxpayers of the Carmel School District is of the utmost importance, as well as stabilizing yearly school budgets. Senator Harckham and I were proud to sponsor this legislation.”

“This legislation will give the Carmel district flexibility in funding basic services and responding to unforeseen expenditures,” said Harckham. “I applaud efforts like this that help local taxpayers and am pleased to have been able to partner with the district in this regard.”

Mary-Margaret Zehr, Superintendent of the Carmel School District, expressed her gratitude to the state lawmakers for their efforts.

“The Carmel Central School District has self-insured their employees’ health benefit plans for over a decade. This reserve will allow the school district to make more cost-effective use of savings and then make expenditures from this reserve fund for any loss, claim, action or judgment directly related to the district’s self-insured plan,” she said.

In a memorandum of support, the New York State School Boards Association stated, “Over the course of 10 years, the district’s annual health insurance expenditures have varied greatly. The 2009-10 school year resulted in an expenditure increase of more than $3.3 million, while 2021-13 experienced a decrease in expenditures by more than $1.6 million.  Even with this relative volatility, the district has found that self-insuring continues to be the most cost-effective approach.  A health insurance reserve would improve the district’s ability to plan their annual budget despite dramatic year to year increases or decreases in health insurance expenditures.”

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