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TUSD staff present benefits-renewal options as medical costs surge; employees face higher premiums under recommended plan
Summary
Staff told the Tucson Unified School District board a 12.3% plan-cost increase (about $5.8 million) is projected for 2026–27; the Employee Benefits Trust recommended keeping the current three-plan structure and not subsidizing next year, which would add roughly $1.8 million in employee premium costs and could raise some employees’ premiums by about 30%. No board action was taken; the item was presented as a study.
Tucson Unified School District officials on Feb. 10 told the governing board that rising medical and pharmaceutical costs have produced a projected 12.3% increase in benefits costs for 2026–27 — roughly $5.8 million above current-year expenses — and laid out the Employee Benefits Trust (EBT) recommendation for the coming year.
John (Mister) Fernandez and benefits staff summarized options considered by the EBT and described why the trust recommended keeping the district’s current three-plan structure (one PPO and two high-deductible plans) rather than forcing employees to switch plan types. Fernandez said the district had previously used federal ESSER funds and EBT reserves to subsidize premiums, but those sources are no longer available; the trust projects year-end reserves close to the six-month minimum required by the trust charter.
Fernandez gave a numerical summary: the total projected increase is roughly $5.8 million, of which the district would fund about $4.0 million to maintain the PPO option and other plan features; employees would assume about $1.8 million in additional premium costs. He said that, under the recommended approach, some employees could see premium changes that amount to an approximate 30% increase compared with this year’s contributions. He also said the district currently contributes $60 per pay period — about $1,200 a year — to Health Savings Accounts (HSAs) for HDHP participants and that no change to HSA contributions was recommended at this study stage.
Board members asked for clarity on plan-design trade-offs, the effect of removing the PPO or converting all participants to HDHPs, the impact on bargaining-unit coverage obligations (board staff noted the district is contractually required to cover 85% of employee-only PPO premium increases), and the timeline. Administration said the EBT expects staff guidance in coming weeks because open enrollment is scheduled for April and the board may need to consider action in March.
The presentation was informational; the board did not take action on Feb. 10. Staff said they will return to the board with recommendations and implementation options, including cost scenarios and communication plans for employees.
