Morgantown City Council voted Jan. 7 to designate funds from the fiscal stabilization fund to the city's Life & Health Fund to restore cash reserves for the self-funded employee health insurance plan and to begin repaying interim borrowing from the general fund.

John Ferguson, the city's finance director, summarized the problem: the city operates a self-funded health plan and has experienced a sustained period of high claims over roughly six months that depleted the plan's cash reserves. "We have depleted the city's cash reserves. We've actually borrowed approximately 1.4 or 1.45 million dollars from the general fund temporarily, to get us past this," Ferguson said. He explained that the city relies on a stop-loss policy that reimburses claims above an individual threshold but that reimbursement lags and some individuals may be carved out from stop-loss coverage.

Ferguson gave staff's estimate of funding needs to restore three months of incurred-but-not-reported (IBNR) reserves and to repay the interim borrowing. He said staff estimated approximately $1,800,000 would be needed to meet a three-month reserve target (IBNR) and also discussed additional amounts for repayment, but the resolution language read at the meeting did not include a single, explicit transfer amount.

To address the shortfall, Ferguson outlined a three-part strategy staff recommended and the council approved:

- Recalculate employer contribution rates and move to a "cost plus" structure so the employer share covers ongoing claims and begins repaying the temporary borrowing; staff noted employer contribution rates had not changed in over two years.

- Establish a monthly oversight committee comprising council and board representatives (including partners such as the Ballpark and Morgantown Parking Authority) and the city's benefits consultant to review plan performance and implement cost-control measures.

- If stabilization and repayment progress is insufficient within six months (target date discussed: June 30, 2025), begin exploring commercial insurance alternatives.

Ferguson said staff's intention is to repay the temporary general-fund borrowing within 12 months if possible and to present periodic reports to council. "We are intending to have it repaid in full within 1 year," he said, while acknowledging uncertainty if high-spend trends continue.

Council approved the resolution by roll-call vote; the motion recorded "yes" from all six members present.

Ending

Staff will bring back a detailed proposal for revised employer contribution rates and the oversight committee's membership and schedule. Council asked for monthly progress updates; staff said they prefer to reassess in six months and advise on commercial-insurance alternatives only if repayment progress is insufficient.