EPISD staff recommends $5 million infusion and 15% employee premium increase to stabilize self‑funded health plan
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Summary
District staff told trustees a combination of a $5 million district contribution and a 15% raise in employee contributions would be needed to sustain EPISD's self-funded health plan amid rising medical and pharmacy costs, and proposed contract and utilization strategies to reduce future pressure.
El Paso Independent School District staff recommended Thursday that the district add $5,000,000 to its health plan and raise employee contributions 15% to address rising medical and pharmacy claims and dwindling plan reserves.
The recommendation came in a budget workshop presentation on employee benefits. "After several meetings with staff over the past few months, the recommendation is to increase the district funding by $5,000,000 and increase employee contributions by 15%," said Liz Bebo of HUB Consulting, a presenter on the district's health plan.
The proposal is intended to shore up EPISD's self-funded plan, which staff said is running a structural shortfall because employee contributions and district funding have not kept pace with claims. "We do see that the health plan fund itself is experiencing a short fall created when contributions don't cover the health plan costs," Bebo said, adding that health fund reserves are "diminishing," which in turn puts pressure on the general fund.
Nut graf: The recommendation is advisory and was presented for the board's consideration during budget development, not adopted at the workshop. Staff said the district must balance protecting benefits with long-term fiscal sustainability; they showed several scenarios for how the suggested changes would affect the 2026 budget and forecasted health‑plan results under different assumptions.
Most important facts: Presenters told trustees EPISD's medical cost trend in 2024 was 11.5% and pharmacy was 19.5%, above national modeling cited by the consultants. Staff described key drivers as high‑cost claimants, specialty medications for cancer, increased use of GLP-1 class drugs for diabetes/weight loss, and COVID-era delayed care that materialized as claims.
Implementation details and alternatives: Staff proposed supplementing the funding change with contract negotiations with Cigna around administrative fee holidays and improved pharmacy rebates. "If we can make those improvements, then, the district would adopt extensions to the current contract," a staff presenter said, describing potential administrative fee holidays and an approximately $500,000 improvement in pharmacy rebates beginning July 1 under an extension.
Trustees asked detailed operational questions about plan design and employee impact. Chief Human Capital Management Officer Patty Cortez explained district contributions since 2019 amount to roughly $26,000,000 in operating funds infused into the health program, and clarified the district has intentionally not increased employee premiums for four years to shield paychecks during a difficult compensation environment. She said the district also contributes to health savings accounts (HSA) for employees on the consumer‑directed plan.
Staff presented alternative projections that show different results depending on timing and assumptions. On a calendar‑year projection staff said the recommended changes would produce a small surplus of $343,000 for 2026; on a fiscal‑year conversion that accounts for phased employer and employee changes staff showed a possible surplus of about $3.9 million.
Plan design specifics explained to trustees included per-member-per-month (PEPM) cost comparisons and deductibles: staff said CDHP (high‑deductible) plan cost per member per month was about $447 while the traditional PPO cost PEPM was $574; the CDHP deductible is $3,300 and the PPO deductible is $1,000 with a $5,000 out‑of‑pocket maximum. Staff also described a $1,000 HSA district contribution for employees on the CDHP option and said some members are ineligible for HSA deposits due to Medicare/TRICARE rules.
Questions and concerns raised: Trustees stressed mental‑health access under a high‑deductible plan, the equity of shifting costs to employees, and the need for more detailed utilization data on who is using mental‑health services in each plan. Board members also asked why EPISD's trends exceed national averages and asked staff to compare regional districts. "When we look at 2023 costs versus 2024, those are the things that are driving the trend increases on the EPISD," Bebo said.
Next steps and status: Staff presented the recommendation as part of the district's ongoing budget development work and sought trustee direction; the board did not vote on the recommendation in the workshop. Staff said final decisions will be taken as part of the formal 2025–26 budget process and may be adjusted based on final state funding and the negotiated Cigna contract terms.
Ending: Staff asked trustees to submit feedback by the district's stated deadline so the health plan proposals can be reflected in coming budget drafts; no formal action occurred at the workshop.
