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Board reviews health-insurance proposals, reserve shortfall and revenue-sharing options during budget work session
Summary
At the March 6 budget work session staff presented proposed FY26 health insurance changes including a third plan option (HealthKeepers HMO, $3,400 deductible) with an optional HSA and employer contributions. Staff said projected claims create a risk of negative reserves without transfers totalling about $4 million; a $1 million general-fund
At a March 6 budget work session, Roanoke County Schools Finance Director Susan Peterson briefed the board on the division's health insurance fund, proposed FY26 plan changes and the division's broader revenue outlook.
Peterson said current-year health insurance claims project a potential reserve shortfall by year-end and that staff plan to ask the county for a $1,000,000 transfer from the general fund; that transfer was delayed and will be presented to the Board of Supervisors on March 25 with second reading and transfer proposed April 8. Without additional transfers, staff said the insurance reserve could run negative in the fiscal year. Staff recommended a planned starting fund balance of about $4,000,000 for FY26 and presented short- and long-term strategies to contain costs, including adding a third plan option and negotiating plan design changes.
USI and division staff presented two premium/plan-option packages. Both maintain the existing KeyCare PPO $1,000 plan and the KeyCare PPO $2,000 plan; option A would add a HealthKeepers HMO with a $3,400 deductible and an HSA option (employer HSA contribution proposed at $1,200 for single coverage and $2,400 for non-single coverage). Option B provides similar plan designs but uses a HealthKeepers provider network for the middle tier and showed slightly lower premiums and paid-claims projections. Staff estimated migration assumptions of roughly 40% remaining on KeyCare $1,000, 35% on KeyCare $2,000 and 25% moving to the new HealthKeepers option for modeling purposes.
Peterson also walked through other budget drivers: realized payroll lapse to date of about $2,800,000 with an estimated additional lapse of $1,700,000 (total ~ $4,600,000), a proposed hold of a planned OPEB transfer until FY27, and a one-time refund receipt parked in minor capital. Staff discussed operational items including the phased wind-down of a school clinic (estimated three months of cost carryover) and software and flu-clinic costs. Several board members asked whether additional one-time revenue would reduce premium increases; Peterson said she would analyze how transfers or one-time injections could affect employee rates.
Board members discussed the feasibility of asking the county to allocate a share of actual (rather than budgeted) revenue from recent county surpluses. Peterson's analysis showed roughly $17 million in additional county revenue since 2020 that was not included in revenue-sharing calculations; one board member proposed seeking half of the division's calculated share of that amount as a compromise. No formal board votes occurred on the insurance plans or revenue requests; staff were asked to return with final recommended plan option and updated budget language for board action next week and to present the superintendent's budget on March 13 and for adoption March 20.
