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Council warned of rising employee‑insurance claims; staff recommends $500,000 transfer to stabilize fund
Summary
Staff told the council that employee‑insurance claims spiked and recommended a $500,000 transfer from the general fund to the employee‑insurance fund to cover FY26 claims and blunt an expected FY27 premium increase of at least $200,000.
Finance staff told the council on April 13 that employee‑insurance claims have grown sharply and the town will recommend a mid‑year budget amendment transferring $500,000 from the general fund to the employee‑insurance fund to ensure solvency through the end of FY26.
"Our claims from April to June were about $857,000 or double what we thought they were going to be," Finance staff (Kelly) told the council. Staff reported the fund’s target had been ~$750,000 historically, and with the $500,000 amendment the employee‑insurance fund would be projected to finish the year with a positive balance. Without the transfer, staff said, the fund would be at risk.
Staff also forecast at least a $200,000 increase in premiums in FY27, noting claims have roughly doubled over the last four years. The presentation described the plan for a short-term internal rate adjustment (equivalent to an 18% internal rate change for the current fiscal year) and a proposed 5% internal rate increase in FY27 to rebuild fund balance.
Councilors asked for historical context and questioned whether the fund balance target should be higher than $750,000. Staff said they will present a comprehensive review of employee benefits and fund strategy over the next year.
No formal vote was taken at the meeting; the manager said staff will include the $500,000 amendment in the next budget amendment packet for council consideration.
