City officials told the Methuen City Council on July 7 that the city faces a projected $4.4 million shortfall in its self-insured health trust for fiscal year 2025 and that the mayor’s administration planned transfers and appropriation to prevent that liability from shifting into next year’s tax levy.

“ We are currently projecting a $4,400,000 shortfall in the city's self insured health insurance trust fund for fiscal year 25,” Mayor Beauregard said during his report. He told councilors that the projection “includes both actual claims paid and incurred but not reported liabilities,” and that state law requires the shortfall to be fully funded.

The mayor proposed a two-part plan: a $1.5 million transfer from available FY25 surplus and a $2.9 million transfer from the general stabilization fund. The administration also outlined drivers of the shortfall: “a record number of high cost claimants,” several catastrophic illnesses and cancer-related claims, and an unusual number of GLP‑1 drug claims (the mayor cited 1,724 GLP‑1 drug claims totaling $884,837.49 across 220 claimants). He noted that Blue Cross Blue Shield plans to remove GLP‑1 coverage in FY27, which should reduce future pharmaceutical spending.

Chief Administrative and Financial Officer (CAFO) briefed the council on the mechanics and timing of transfers. The council approved several related resolutions and transfers later in the meeting, including: a transfer of $88,100 within police accounts (TR25-35), a transfer of $756,840 between general-fund personal-services and other-expense accounts (TR25-36), a transfer from enterprise funds (TR25-38), and an appropriation of $2,935,850 from the general stabilization fund to the health-insurance trust (TR25-37). Several of those votes required and received emergency-passage (EPA) votes because the amounts related to fiscal-year 25 closing requirements.

The administration said it is pursuing operational responses including a retrospective claims audit, hiring a benefits consultant to review plan design and administrator performance, establishing a health-plan working group, and evaluating alternatives such as joining a regional group or the Massachusetts Group Insurance Commission. Mayor Beauregard said quarterly updates will be provided going forward.

Councilors asked for additional fiscal detail and timing assurances. The CAFO said the general fund and enterprise fund were “in the black” at fiscal-year close but that the final numbers were still being finalized and that stop‑loss reimbursements could arrive in the coming months. Councilors also asked for ongoing quarterly reports as the administration executes audits and consultant reviews.