The rising costs of healthcare are creating big challenges for public colleges and universities in Alabama. Members of the Alabama Commission on Higher Education are worried that these expenses may take away from funds needed for education.
During a recent meeting, officials discussed the Public Education Employees’ Health Insurance Plan (PEEHIP). This plan covers employees in the Alabama Community College System and three state universities. Due to financial shortfalls, more money has been diverted to cover mandatory retirement and health benefits, leaving less for other essential programs. Jim Hood, the commission’s deputy director, mentioned, “If PEEHIP wasn’t an issue this year, we likely would have allocated more funds to other priorities.” This highlights how interconnected financial issues are in education budgets.
To address these challenges, board members have asked the Governor’s Office for a $148 million budget increase for the next fiscal year. Both the educators’ health insurance plan and the State Employees Insurance Board are grappling with rising costs as healthcare expenses soar nationwide. In fact, the educators’ insurance plan is seeking an additional $380 million to prevent premium hikes. Meanwhile, the insurance board has already pulled from reserves to manage some of its costs, as detailed in recent reports.
Governor Kay Ivey is set to present her budget proposal to the Alabama Legislature next month, which will ultimately decide the fate of funding for these programs. The educators’ health insurance plan covers K-12 teachers and staff, impacting a wide array of educational institutions, including Alabama A&M University and Jacksonville State University.
Jim Hood observed that universities are already feeling the pressure. He noted that some institutions are requesting larger budget increases than their peers due to PEEHIP costs. For example, Jacksonville State University is looking for a nearly 9% budget boost, while Alabama A&M and Athens State are seeking almost 7% increases. These adjustments may seem localized, but they have broader ramifications for all educational entities supported by the Education Trust Fund in Alabama.
The concern about rising healthcare costs reflects a national trend. According to a recent report from the Kaiser Family Foundation, premiums for employer-sponsored health insurance increased by nearly 4% in the last year, affecting budgets in various sectors. This situation is pressing not just in Alabama but across the country, as public educators and institutions are forced to adapt to these financial realities.
Ultimately, how Alabama responds to these rising costs may set the stage for funding decisions that could impact education for years to come. The discussion around PEEHIP is not just about health insurance—it’s about the future of education funding in a challenging economic landscape.
For more details on this topic, you can check out [Alabama Reflector](https://alabamareflector.com).
