The Math Doesn’t Lie: 56 School Districts Face Inevitable Cost Increases as BOCES Grapples with Completely Unfunded Retiree Healthcare Debt
Nassau BOCES has a $946.7 million problem with no solution in sight. This staggering liability for retiree healthcare benefits sits completely unfunded on their balance sheet, growing by $110 million last year alone. And there’s only one way this story ends: Nassau County’s 56 school districts will pay ever-increasing bills to keep the system afloat.
The Stark Financial Reality
The numbers from Nassau BOCES’ 2024 audited financials paint an undeniable picture:
- Total OPEB Liability: $946,656,308 (up from $836.5 million in 2023)
- Money Set Aside to Fund It: $0
- Annual Growth: $110,144,983 (13.2% increase in one year)
- Current Annual Payment to Retirees: $26,811,635
- Interest Accruing on Unfunded Liability: ~$39 million annually at 4.09%
Unlike pension obligations that require annual funding, Nassau BOCES has operated its retiree healthcare on a “pay-as-you-go” basis for decades. They’ve made promises worth nearly a billion dollars with no money saved to keep them.
The Jericho Example: Why Your BOCES Bill Exploded
Want to understand why districts are seeing explosive BOCES cost growth? Look at Jericho:
- 2017-18 BOCES Bill: $3.6 million
- 2025-26 BOCES Bill: $5.2 million
- Increase: 44% in 8 years (~5% annually)
The Hidden Driver: While Jericho’s overall budget grew at 1.7% annually, their BOCES costs grew at 5% – nearly triple the rate. Why? Because Nassau BOCES must generate cash to pay $26.8 million annually to current retirees while the unfunded liability compounds at $110 million per year. That money comes from one place: district bills.
Jericho’s mandatory Administrative Charge alone – which they pay regardless of services used – has grown to $560,000 annually. This charge includes a share of BOCES’ retiree healthcare costs, spread across all 56 districts based on enrollment.
Why District Costs Must Rise: The Inescapable Math
Nassau BOCES has only three sources of revenue to address this crisis, and they all lead back to school districts:
- Administrative charges – mandatory fees all 56 districts pay based on enrollment (like Jericho’s $560,000)
- Service fees – charged for specific programs districts purchase
- Capital and debt charges – shared by all member districts via RWADA formula
With 1,627 current retirees already receiving benefits and 2,551 active employees earning future benefits, the trajectory is locked in. The liability grows by roughly $65 million annually just from interest and new benefit accruals, before considering healthcare inflation.
The Compound Growth Disaster
The financials reveal the devastating power of compound growth working against taxpayers:
- Service Cost (new benefits earned): $31.7 million
- Interest on Existing Liability: $33.7 million
- Changes in Assumptions: $71.6 million
- Actual Benefits Paid: -$26.8 million
- Net Annual Increase: $110.1 million
This means Nassau BOCES needs to generate an extra $110 million annually just to prevent the unfunded liability from growing larger – before paying a single dollar to reduce it.
The Double-Payment Scam
As the Jericho analysis reveals, districts are already paying twice for many services – maintaining their own staff while paying BOCES for parallel functions. But here’s the kicker: embedded in those BOCES charges are the costs of an unfunded retiree healthcare system that districts have no control over.
When Jericho pays BOCES for:
- HR services (while maintaining their own HR department)
- Technology support (while employing their own IT staff)
- Curriculum development (while paying their own curriculum directors)
- Administrative overhead (the mandatory $560,000)
They’re not just paying for duplicate services – they’re funding BOCES’ retiree healthcare crisis.
No Escape Routes Available
Nassau BOCES’ own financial statements eliminate potential solutions:
Can’t Cut Benefits: Note 11 explicitly states retirees have “contractual rights that likely can’t be changed.”
Can’t Issue Bonds: Already carrying $25.5 million in existing debt, adding nearly $1 billion more would require impossibly high debt service payments.
Can’t Use Existing Reserves: While BOCES maintains $105.9 million in restricted reserves, none are designated for OPEB. They’ve created reserves for items as small as $315,000 (unemployment insurance) but nothing for their largest liability.
Can’t Grow Out of It: With the liability increasing 13.2% annually and BOCES revenue growing only 9.2%, the gap widens each year.
The Annual Cost Spiral
The current payment structure reveals the inevitable squeeze on districts:
- 2024 Actual Retiree Healthcare Paid: $26.8 million
- Projected 2025 (with typical healthcare inflation): ~$28.7 million
- Amount Needed to Stop Liability Growth: ~$140 million annually
- Current Total BOCES Revenue: $567 million
To merely halt the growth – not reduce it – Nassau BOCES would need to nearly double the amount currently extracted from districts for retiree healthcare.
How BOCES Hides the True Cost
The audit shows Nassau BOCES engaging in financial shell games:
- Earned $19 million in investment income in 2024
- Transferred $17.8 million to Capital Fund
- Moved $3 million to Retirement Contribution Reserve
- Added $575,000 to CTE Equipment Reserve
But $0 to address the $947 million OPEB liability.
Instead, they spread the retiree healthcare costs across multiple budget lines, making it impossible for districts to see what they’re really paying for. When Jericho’s bill jumps 5% annually while their own budget grows at 1.7%, the difference isn’t “enhanced services” – it’s the compounding cost of unfunded promises.
The Political Shell Game
Nassau BOCES operates across 56 districts with a combined population exceeding 450,000 residents, allowing them to spread costs so widely that no single community bears the full impact. This diffusion of responsibility creates perfect conditions for fiscal irresponsibility:
- Individual districts see only their allocated share
- No direct voter approval required for benefit promises
- Costs buried in service charges and administrative fees
- Complex accounting obscures the true burden
- Districts can’t opt out of mandatory charges
What This Means for Property Owners
Based on the financial trajectory, Nassau County property owners face:
Immediate Impact: Districts like Jericho seeing 5% annual BOCES increases must either raise taxes or cut programs. With BOCES consuming an ever-larger share of budgets, educational services inevitably suffer.
5-Year Projection: If the liability continues growing at 13.2% annually, it will exceed $1.75 billion by 2029. Districts will see BOCES charges double within a decade.
Breaking Point: At current growth rates, OPEB costs will eventually consume 25-30% of BOCES’ entire budget, crowding out actual educational services.
The Uncomfortable Truth About “BOCES Aid”
The state’s BOCES aid formula becomes a trap. Districts get state aid only if they purchase through BOCES, creating a perverse incentive to keep feeding the beast. But that “aid” comes with hidden costs:
- Mandatory administrative charges (growing with the OPEB crisis)
- Inability to competitively bid services
- Duplicate staffing costs
- Zero transparency on true unit costs
The Bottom Line
Nassau BOCES’ unfunded OPEB liability isn’t a future problem – it’s THE reason your district’s BOCES costs are exploding right now. Jericho’s 44% increase over 8 years isn’t about better services or new programs. It’s about feeding an unsustainable retiree healthcare system that grows by $110 million annually with zero funding mechanism.
Every district in Nassau County faces the same reality: BOCES bills will continue growing at multiples of inflation because the alternative – defaulting on retiree healthcare – is politically unthinkable. The $946.7 million liability is a permanent tax on every property owner in Nassau County, extracted through ever-increasing BOCES charges that districts have no choice but to pass along.
School board members who approve BOCES budgets without demanding immediate action on OPEB funding are complicit in this generational theft. They’re signing blank checks drawn on their taxpayers’ accounts, funding a system where today’s students get less so yesterday’s employees can maintain benefits that most taxpayers will never see.
The question isn’t whether this system is sustainable – it mathematically isn’t. The question is which generation of taxpayers will finally say “enough” and demand fundamental reform before the entire structure collapses.
Sources: Nassau BOCES Audited Financial Statements, FY 2024; Jericho School District Budget Documents 2017-2025
