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CFO: Mercedes ISD health insurance fund faces shortfall; plan to seek cost savings without cutting core benefits
Summary
The district’s health insurance fund is projecting a shortfall for the 2024–25 year; the CFO said staff will present cost‑saving measures to the insurance committee and possibly the full board.
Mercedes ISD financial staff told trustees March 18 that the district’s health insurance fund is projecting a year‑end shortfall and will likely require a transfer from the general fund if current claim trends continue.
Miss Garza, the district chief financial officer, presented the health insurance fund figures and said the September‑through‑February run rate extrapolated through August produces an estimated $1.8 million shortfall in the insurance fund and a projected year‑end fund balance of about $967,241. “So we would we would have to go to the general fund and pull $967,000 out of the general fund to pay medical bills,” she said.
Why it matters: the health insurance fund pays employees’ medical and pharmacy claims. A shortfall in that fund can require the district to transfer general fund dollars to cover claims, reducing money otherwise available for operations.
Details and next steps
Garza provided month‑by‑month claims history and cautioned that claims are volatile; she identified January 2025 as an unusually high month for claims. To address the shortfall, Garza said she met with the district’s health insurance consultant and the insurance committee and plans to present cost‑saving options to the board that aim to reduce the fund deficit without removing core medical benefits for most employees.
Garza said revenue to the insurance fund comes from employee and employer premium contributions and that current payroll‑driven premium receipts were estimated to yield roughly $5.2 million in local revenue; estimated expenditures extrapolated to about $14.0 million. The board discussion noted that some months’ claims spikes make year‑end outcomes difficult to predict and that future workshops will include updated claims and revenue information.
Ending: Garza told the board she will return with recommended cost‑containment measures and noted the insurance committee had begun that work; trustees asked staff to present clear options that preserve employee coverage where possible.
