Pasco schools face multimillion-dollar shortfall in self-insured health plan, officials say

Tammy, a member of the district budget team, told the Pasco County School Board at a budget workshop that the district's self-insured health plan is experiencing a "very bad year" and that staff expect "about a $15,000,000 short fall." The district contributes about $8,801 per employee annually to the plan, and total annual expenditures for the plan are in excess of $100 million, Tammy said. The district's finance staff said pharmacy cost trends are the largest driver of increases this year, with employers seeing pharmaceutical trend rates in the 29—35% range; overall combined trend is nearer 9.5%. Superintendent Legg and budget staff said actuary and year-end accounting timing complicate exact close-out amounts because district fiscal-year reporting differs from calendar-year benefit experience. Board members and staff discussed a timeline of near-term actions: staff are meeting again this Thursday to review plan design changes and to further narrow projected savings; the district is considering issuing an RFP for a benefits consultant to recommend long- and short-term strategies; and any changes will likely intersect with employee bargaining/union negotiations. No formal board action was taken at the workshop. Tammy also said the district has been projecting reserves for proration and other budget volatility but noted the current health fund erosion may leave the fund below its required reserves unless cost reductions or other measures take effect. She told the board the district's original estimate for next-year exposure was closer to $123,000,000 before some design-change work. Board members emphasized urgency. One board member said the district should start a consultant search immediately to have recommendations in time for next open-enrollment; another said pharmacy costs in particular "keeps me up at night." Staff said implementation and procurement timelines (RFP, bid, implementation) could take several months and that some changes would not affect the calendar-year benefit cycle until the following plan year. Looking ahead, staff said they will present updated actuarial and year-end figures once closed; if the final numbers require it, they will return to the board with recommended budget amendments or other options. No motion or vote occurred in the workshop.