Overview:
Madison Local Schools was selected for a performance audit based on its projected financial condition. The Ohio Auditor of State found Madison spends more than average on employee health insurance and urged the district to negotiate a more affordable plan iwth its two unions.
MADISON TOWNSHIP — A new report from the state auditor’s office is urging Madison Local Schools to get its health insurance costs under control.
Ohio Auditor of State Keith Faber’s office released a performance audit of the district’s finances last week. The audit includes a series of recommendations that, if implemented, could save the district upwards of $1.4 million annually, per projections from Faber’s office.
But most of those savings would only be realized if the district can negotiate a less generous health insurance plan for its teachers and staff.
The terms of Madison’s employee health insurance plans are dictated by collective bargaining agreements with its two employee unions. Each have agreements in place with the district through July 31, 2027.
Faber’s office found Madison Local Schools’ current plans are more costly than those of average school districts in the region. The audit recommends aligning the district’s employer insurance costs with the regional average for school district employees.
Supt. Rob Peterson said the findings were not a surprise.
“We know the big challenge that we need to tackle is our health insurance plan, and that was clearly identified as not being in line with the peer districts identified in the audit,” he said.
Peterson said deductibles, out of pocket maximums and the percentage of premiums the district pays are all factors that will need to be considered when the current contract is up.
“We have great employees, and I have the utmost respect for the job they do with our students, but we will have to take a close look at our health insurance plan in negotiations,” he said.
Joshua Boliantz, president of the Madison Local Education Association, said a high value insurance plan has long been a priority for Madison staff.
“Long before my time as president of MLEA, the association has often accepted lower percentage—or even no—pay raises in order to preserve our insurance rates and coverage,” Boliantz said.
He said the MLEA understands the continued rise in healthcare costs and the importance of finding responsible savings, which is why union leaders have worked with the district treasurer to look at savings strategies like joining a consortium and implementing hanges around procedures and prescriptions.
“Wellness benefit” means Madison pays a higher premium share than most school districts
Madison Local Schools offers health insurance through a self-funded plan, but outsources its claims and billing to a third-party administrator.
Faber’s office compared Madison’s primary health insurance plans with those offered by 116 other school districts in the region and found that Madison offers a more “generous” plan than most for its employees.
Madison Local Schools offers both PPO and high deductible plans; however, all but three enrolled employees use the PPO plan, according to the audit and district officials.
The district covers a greater percent of total premium costs for PPO holders than the regional average, which is between 83 to 84.6 percent.
Madison picked up 85 percent of premium costs for PPO plans in 2025, plus an additional five percent if employees submit proof of an annual preventative wellness check up.
The district premium share for PPO plan holders dropped to 84.5 percent this year and will drop to 84 percent in 2027, per the most recent negotiated agreements.
But employees will still be eligible for the wellness benefit, which could shift the district’s actual premium shares to 89.5 and 89 percent over the next two years.
Madison employees enjoy “significantly lower” deductibles than the average school, report finds
The performance audit also found Madison offers “significantly lower” deductibles and out-of-pocket maximums than the average district.
The audit did not list those averages; however, a fact finder’s report from last year cited a state average of $2,837 for single in-network and $5,653 for family in-network plans.
Madison’s in-network out-of-pocket maximums are currently $1,000 for single plan holders and $2,000 for family plans.
Deductibles are currently $350 (single plan) and $700 (family plan) for in-network care on the Madison PPO plan.
PPO plan holders with a wellness incentive pay either $152.57 or $187.33 monthly for a single plan and $379.39 or $476.05 monthly for a family plan, depending on which union they are in.
Madison Local Schools offers health insurance through a self-funded plan, but outsources its claims and billing to a third-party administrator.
Treasurer Bradd Stevens said the district has sought quotes from other insurance providers, but has had limited success in finding a more cost effective plan.
The district changed third party administrators this year, entering into a $11.7 million agreement with Jefferson Health Plan. Despite offering a lower rate than the district’s previous provider, the contract with Jefferson Health Plan was still more than Stevens had budgeted for.
“As we have stated repeatedly, increasing health insurance costs are bankrupting the district,” Peterson said. “We’ve joined a health care consortium to reduce our costs, but we must continue to look at every aspect and potential cost-saving measure of our health care plan.”
What did Ohio Auditor recommend?
Faber’s office found that to maintain the current PPO plans, Madison Local Schools would have to shift a greater portion of premium costs to its employees in order to bring its insurance costs in line with the regional average.
Such chances would be stark. A teacher with a family PPO plan and wellness incentive would need to pick up an additional 17.7 percent of the premium costs as compared to 2025.
That would more than double a teacher’s monthly premium payment, bringing it to around $944, based on the audit.
Adjusting the employer-employee premium share is the only insurance strategy that Faber’s office analyzed in-depth in its report. But the audit did offer additional strategies for reducing costs, like “adjusting plan designs (like deductibles and out of pocket maximums), implementing spousal restrictions or seeking out alternative insurance options.”
The auditor also recommended reducing a total of 2.5 full time positions, even after considering the recent staff cuts implemented for next school year.
According to Faber’s report, Madison Local Schools could reduce one K-8 art teacher from full to part time and eliminate two full-time K-8 physical education teachers and still maintain above average staffing compared to similar school districts. The cuts would save the district a projected $321,000 annually.
Boliantz said the union understands some staffing changes may be necessary to align staffing with declines in enrollment, but staff cuts are always a cause for concern.
“Our primary concern arises when reductions lead to excessive class sizes, the loss of student support services or the elimination of educational programs that provide students with a well-rounded and diversified education beyond the core subjects,” he said.
“These types of reductions can result in fewer opportunities, diminished quality, and ultimately fewer successes for our students.”
There were not any K-8 art or physical education teaching positions cut during a recent reduction in force.
Peterson said the number of K-8 art and physical education teachers will remain the same for next year. There will be one art teacher and two PE teachers at Madison Primary School, one art teacher and one PE teacher at Madison Intermediate School and two art and three physical education teachers at Madison Middle School.
Why was Madison audited?
Faber’s office routinely audits government-funded agencies — from school districts and universities to townships and transit authorities.
But Madison was selected for an additional audit based on its projected financial condition, according to the report.
Faber’s office acknowledged that Madison’s financial outlook has improved over the last year due to several cost reductions, including districtwide staff cuts and a building closure, which take effect in the fall.
But its most recent financial forecast (released in February) found the district could end the 2027-2028 school year with a negative cash balance without additional cost cuts or increased revenue.
The performance audit projects that its recommended cost saving measures would eliminate the district’s operating deficit through the 2027-2028 school year and ensure a positive fund balance for the district for at least the next four years.
“If the District is unable to implement some of the recommendations contained in this report, additional cuts may be necessary for the District to remain solvent,” the report states.
Peterson said the district will continue looking for ways to reduce expenditures, but also said that cutting costs won’t be enough to secure Madison’s financial future.
“Even with the reductions, the cost of educating students continues to increase annually at a higher rate,” he said. “We must find a way to increase our revenues as well so that we can get out of this cycle of cutting staff and programming every year.”
“With no increase in state funding on the horizon, that revenue increase is going to have to come from us as residents of the Madison district,” Peterson said.
The school district has a new income tax levy on the ballot in May. The five-year levy would be for earned income only. The school board voted last year to stop collecting a 7.5 mill property tax if the income tax levy passes.
The new income tax levy would generate an estimated $6.27 million each year, while the 7.5 mill property tax generates about $2.94 million a year.
Where did the data in the audit come from?
Most of the data used in the report came from the 2024-2025 school year, but auditors also incorporated more recent data supplied by the school district, such as information on staff cuts and a building closure that will take effect next year.
For comparisons, the audit examines how Madison Local Schools compares to surrounding school districts and similar districts across the state. The report uses “primary peer” districts (those with similar demographics) for operational comparisons such as staffing levels. It uses “local peers” (other districts in Richland County and Ashland City Schools) for labor market comparisons such as salary schedules.
A letter from Peterson included in the performance audit stated “the district has a degree of concern with some of the Performance Audit Team’s methodologies.”
Nevertheless, Peterson told Richland Source he appreciated the work of the Ohio Auditor of State’s Office.
“Their team worked closely and collaboratively with us to affirm that our district is in line with industry standards in most areas, but also helped to identify a few areas of significance in our district where we need to make changes,” he said.
