Cerf, Newark teachers union spar over no-bid contract for politically connected firm

By Dan Ivers | NJ Advance Media for NJ.com
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on January 18, 2016

 Newark Superintendent of Schools Chris Cerf, shown here in a file photo.

 

NEWARK — The city's school district is facing criticism for unilaterally approving a no-bid health contract for a politically connected health insurance firm, though officials contend its dire financial position left it with little choice.

Last week, Superintendent Christopher Cerf signed off on the deal that on Feb. 1 will transfer prescription drug benefits for all school system employees to Benecard, a Lawrenceville-based company owned by former U.S. Senate and gubernatorial nominee Doug Forrester.

The switch, which officials say is expected to save the state-controlled district $1.1 million annually, came after an analysis of three providers performed by its insurance broker, Conner Strong & Buckelew. The firm is run by George Norcross, the South Jersey Democratic power broker and ally to Gov. Chris Christie, and has also served as broker for Benecard.

The move met with a strong reaction from the Newark Teachers Union, who accused Cerf of violating both its contract and pledges made when he arrived in Newark in July in order to curry favor with Trenton power players.

"He went on national television, local media, promising transparency and honesty," said union president John Abeigon. "If awarding a no-bid contract to a politically supported entity is part of that, well, at least he's transparent in that."

The district fired back, saying that in addition to the considerable annual savings, the switch away from the NTU's longtime provider, the self-funded General Prescription Plan would not require the district to pay all claims, and shift some risk to Benecard. It also denied that there were any political motivations behind the switch.

"Newark Public Schools has only one objective — to select a prescription benefits program that provides benefits equivalent to our current provider at a lower cost," Cerf and other administrators said in a Jan. 12 letter to the state Department of Education.

The dispute between the district and its teacher and administrators' unions dates back to May, when school officials attempting to close an imposing budget deficit approached the Supplemental Fringe Benefits Fund - an unusual joint trust that has provided dental, vision and prescription benefits to the city's teachers since the early 1970s — with a proposal to change its carrier to Benecard.

According to school officials, Abeigon, one of eight trustees from both the union and NPS, balked at the proposal and insisted that any switch be preceded by a public bid for his union only — a tactic Cerf and other officials contend eventually forced its hand.

"Due to Mr. Abeigon's opposition, the SFBF deadlocked, thus preserving the status quo indefinitely and denying the District's ability to realize a much-needed cost savings at a time of great financial exigency," they said in their recent letter to the state.

The district has also raised concerns about the General Prescription Plan's business practices, saying its financial controls are "weak, at best, and suspect, at worst" and has refused to hand over itemized summaries for its roughly $1 million in monthly service fees.

School officials also purport to pay $30,000 per month in administrative fees to the SFBF, while Benecard will be managed entirely in-house.

Abeigon, however, disputed that there was any malfeasance on the GPP's part, saying medical privacy laws kept them from handing over itemized records from anyone outside the SFBF. He also denied that he played any role in pushing officials into their unilaterla action.

"They don't need anyone's permission to put out a bid for the entire district. They can do that anytime they feel like it," he said.

The union has filed a complaint with the state's Public Employment Relations Commission alleging the district has violated a portion of its contract banning no-bid deals for medical benefits.

GPP is the current provider for three of Newark's larger school-based unions, including teachers, food service employees and trade workers such as custodians and security guards. Other employees, including administrators, are covered by Horizon Blue Cross Blue Shield of New Jersey.

In addition to forgoing the open bidding process, Cerf also approved the contract without seeking approval from the city's School Advisory Board. Though the board holds no actual power over the district's financial affairs, most service agreements are presented to it for apro all.

Marques Aquil-Lewis, the board's vice chairman, said he and other members planned to push the district to present it for a vote at a business meeting scheduled for Tuesday.

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