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Maximizing Resources: The Power of Pooled Purchasing for Public Agencies and Schools

Budgets, staffing, and risk management are always on the minds of organizational leaders. Public agencies have been facing prolonged budget and staff shortages, along with increased risk, making it challenging for them to manage their employee benefits and insurance. Insurance and employee benefits directly influence these areas, highlighting the need for solutions that ease financial, personnel, and risk management resources strain.

School districts, in particular, struggle with these budget challenges while fulfilling their crucial roles in communities. One strategy that can help is the use of pooled purchasing arrangements for managing employee benefits and insurance. These arrangements involve similar agencies collaborating to collectively buy property, casualty insurance, health and welfare coverage, and related services. This group purchase power often results in lower costs and better coverage options than what individual entities might obtain alone.

Pooled property, liability, and casualty insurance programs are available through statewide or regional joint powers authorities (JPAs). These offer a variety of coverage limits, self-insured retentions, and ancillary services, allowing each member organization to tailor their choices to their budget, risk tolerance, and internal capabilities. Loss control services, including hazard identification and mitigation, safety, and mandatory training, can reduce losses and offer premium savings over time.

Employee benefits JPAs and joint labor-management benefit trusts provide schools and local agencies with avenues to alleviate financial and administrative pressures. The collective purchasing power of multiple agencies helps in securing more favorable rates. Enhancements like wellness programs, gym memberships, telemedicine, and discounts on hearing and eyewear are additional benefits of pooled purchasing. Some programs also offer automated eligibility and enrollment processes, significantly reducing the administrative load on benefits staff.

While the advantages of pooled purchasing are numerous, each agency must assess if it's the right fit. For example, when considering health coverage, ensuring the JPA's health plan provider networks are suitable for your employees' locations is essential. Addressing specialized risks specific to your organization is critical in property, liability, and casualty. These factors can vary based on geography, demographics, facility types, and, in the case of schools, unique educational and vocational training programs.

Pooled purchasing isn't suitable for every school district or public agency. Organizations requiring highly customized insurance programs may not find enough flexibility in a pooled arrangement. Additionally, being part of a pool means sharing the risk across all members. How the pool is managed, and members being permitted to join are important factors to consider when evaluating a pooled solution. Understanding the underwriting requirements and reserving policies is essential before joining a pooled arrangement.

Even if pooled purchasing doesn't initially seem right for an organization, it's wise to revisit this decision periodically. Many JPAs are innovating to meet their member agencies' ever-evolving insurance needs and helping them with loss prevention and employee health promotion.