TRENTON—The Hunterdon Central Regional High School District spent $13 million annually on insurance coverage without seeking competitive proposals, and the Borough of Keansburg failed to recoup $95,000 in improper sick and vacation payouts. These are among the wasteful practices detailed by the Office of the State Comptroller (OSC) in two reports released today.
OSC’s audit of the Hunterdon Regional School District finds that the district hired an insurance broker and purchased insurance coverage without seeking other proposals in fiscal years 2022 and 2023. The broker, who was compensated $253,000 in fiscal year 2022 alone, recommended renewing medical and prescription coverage for two consecutive years without seeking other quotes. OSC’s analysis found that the School Employees’ Health Benefits Program (SEHBP) could cost up to $2.3 million less annually. While changing providers requires negotiations with employee unions, knowing a potential benchmark—and what competitors can provide—can aid these negotiations and ensure that the district obtains optimal coverage at the best price.
In Keansburg's case, OSC finds that the borough failed to fully implement 11 of 13 recommendations made by OSC in 2021 to address excessive employee benefits and lax internal financial controls.
“Our audits frequently uncover wasteful practices in health insurance procurement and unused vacation and sick leave payouts. But the waste should not be normalized, rationalized, or tolerated,” said Acting State Comptroller Kevin Walsh. “Taxpayers expect public officials to fulfill their obligation to protect public funds.”
OSC found that Hunterdon violated Public School Contracts Law by hiring a broker without seeking other quotes for brokerage services and failing to have a written contract with the broker. This fundamental failure to obtain competition and transparency brings a greater risk of waste and abuse, according to the report.
Hunterdon’s broker fees increased from $50.49 per employee per month in fiscal year 2021 to $54.07 per employee per month in fiscal year 2023. OSC has recommended in prior reports—and continues to recommend—that school districts and local governments pay brokers a flat fee so they can be assured brokers do not have conflicts of interest when recommending providers offering the best deal for employees and public entities. The SEBHP does not pay commissions.
