Medical premiums and pensions push Cheltenham toward hard budget choices, staff warns
Summary
District staff told trustees that a projected 17% increase in medical premiums—driven by high claims—and a pension rate uptick could add roughly $7 million and $570,000 respectively to next year’s costs, prompting staff to flag staffing and programming as areas for budget reductions to remain within the Act 1 index.
Cheltenham School District staff told the finance committee on Dec. 2 that employee benefit cost drivers will be a central challenge in next year's budget.
The presentation said medical premiums are facing an estimated 17% increase after a period of unusually high claims; staff said "this 17% increase ... is approximately a $7,000,000 increase to the district for medical insurance" if the first look holds. Staff also presented an initial staffing‑cost baseline: maintaining current staffing levels would create about $1.2 million in additional salary expense.
Pension rates were reported as uncertain but potentially higher: staff said the pension rate scheduled for a mid‑December update was currently projected to rise from about 34% to roughly 37.3%, which staff estimated would add approximately $570,000 to the district's costs. The presenter summarized the budget implication plainly: these drivers together, coupled with base index constraints (Act 1 index this year is 3.5%), will require a "hard look at staffing and programming to fit within" the available revenue.
Board members asked about timelines for contract negotiations. Staff said the district will form a negotiation committee for support staff and administrative contracts that expire at year‑end and that teacher contract talks will occur next year (teachers' contract expires in 2027). Transportation contracts were noted to include a 4% contract increase, and staff said there is an option for early renewal in some cases.
What's next: staff said updated pension rates and final health‑insurance quotes are expected in mid‑December; they will return to the board with refined numbers and options for addressing the projected gaps.
