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Cheltenham SD prepares preliminary budget; PSERS rate holds and medical/prescription cost trend eases
Summary
Committee members reviewed budget drivers for the preliminary budget, including a PSERS contribution rate that did not increase, expected employer pension costs, and moderating medical/prescription premium pressure tied to contract negotiations and claims experience.
Cheltenham School District finance staff reviewed key budget considerations for the preliminary budget at the Jan. 7 finance meeting, including pension contribution rates and employee medical and prescription cost trends.
Staff reported there was no change to the Public School Employees’ Retirement System (PSERS) employer contribution rate announced Dec. 15; the district will continue to budget at 34% of salary rather than the previously projected 34.73%.
On health benefits, staff said prescription-cost growth has moderated after recent contract negotiations and plan design changes. "The industry average is still 8%. It's not the 1% we are anticipated to get next year," staff said, adding that the district’s negotiated changes and its claims experience are combining to produce a lower increase than in prior years. Staff also described the district’s total medical and prescription spend as roughly $10 million, with prescriptions making up about $2 million of that total.
Why it matters: PSERS contribution rates and benefit cost trends are among the largest drivers of future budget gaps. Staff said the preliminary budget will incorporate these numbers as it is prepared for board review.
Other items cited
- Membership services budget for the intermediate unit (IU): staff said the IU membership services piece for joint county services is about $55,000 for the district and reflects a 4% increase (roughly $2,000) that will be on February's agenda for approval.
- Act 1/budget timeline: staff reiterated the Act 1 schedule and noted the preliminary budget will be presented next month and used in the district’s budget process.
Next steps
Staff will present the preliminary budget at the next meeting and continue to provide updates on PSERS and benefit projections as additional actuarial or claims data become available.
