Committee warned of growing health-insurance claims and risk-fund shortfall

City staff told the Finance Committee on Jan. 15 that rising prescription and health-care claims have driven the risk-management fund toward a shortfall. "So but $804,445 over what we budgeted for insurance just in the first 6 months since July," an attendee said during the meeting, summarizing staff data on claim costs.

Kim Kaufman, the budget manager, and other staff explained the city is self-insured with stop-loss coverage to limit catastrophic exposures. Staff said they start with stop-loss billing when certain claim thresholds are reached, which should recoup some costs, but timing can be long because medical billing often arrives 60–120 days after care. The FY25 reserve for the risk fund closed much lower than expected—about $577,000 rather than the $1.7 million originally projected—and current-year claim activity has already produced the cited deficit.

Committee members pressed for specificity on stop-loss trigger amounts and asked whether employer or employee premium changes will be considered. Staff indicated the stop-loss arrangement protects against large single events but that a combination of employer and employee adjustments will likely be needed to address sustained increases rather than a single administrative change.

Staff committed to return with clearer stop-loss threshold documentation, options for employer/employee premium adjustments and the timeline for billing stop-loss carriers so council can evaluate whether the fund requires a midyear subsidy or other policy changes before FY27.