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HR projects health per‑employee costs rising; reserve fund below target, labor talks ongoing
Summary
Human Resources presented FY26 staff benefit rate increases, a rising per‑employee per‑month health cost and an under‑target Health Care Contingency Reserve Fund (HCCRF); collective bargaining and labor management committee work were cited as part of the plan to manage claims.
Michelle Michelle, human resources director, told the finance committee the borough’s staff benefit rates and health costs are rising for FY26 and outlined how the Health Care Contingency Reserve Fund (HCCRF) is being used to smooth costs.
The numbers: HR presented a proposed per‑employee per‑month (PEPM) budget of $2,653 for FY26, up from $2,434 in FY25. General government staff benefit rates would increase from 63% to 64.1% and the transit enterprise rate from 67.6% to 68.8%. The solid‑waste enterprise fund benefit rate is projected to fall to 72.8% after a drop in workers’ compensation and liability claims.
HCCRF status: Michelle said the HCCRF target is roughly $3,700,000 (about one‑third of the health plan cost) and that the fund’s balance is about $57,000 below target. The fund absorbed an offset of roughly $1.3 million in FY24 to cover claims that exceeded the budgeted amount. Michelle noted the borough both withdraws from and replenishes the HCCRF as part of its process and that employee deductions and employer matches continue to add to the balance.
Labor and mitigation: Committee members pressed HR on steps to mitigate large claims. HR said the borough’s Labor Management Committee on Employee Benefits (LMCEB) meets frequently and that off‑cycle bargaining with three bargaining units is underway; a number of cost‑saving options are at discussion, but no final agreements were reported. Michelle reiterated that because the borough is self‑insured, outlays track claims experience and the negotiation outcomes will affect FY26 costs.
Context and committee questions: Assembly members asked for last year’s employee contribution figure (Michelle provided an FY25 estimate of about $1.6 million) and about how negotiated cost‑sharing options informed the different COLA percentages for bargaining units. Michelle said those tradeoffs were analyzed during negotiations; the packet includes negotiated COLAs (3.2% for some units, 2.7% for others) tied to different health contribution terms.
Ending: HR’s presentation framed FY26 increases as driven by claims history, contract negotiations and current market conditions, and recommended continuing monitoring through the LMCEB and collective bargaining.
