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HISD reports multi‑year health‑insurance losses; administration links proposed raises to offset employee impacts
Summary
At the May 20 budget workshop, Houston ISD staff said employee health insurance has run multi‑year deficits (FY23–FY26), driven by high‑cost claims and pharmacy costs, and signaled employees may face contribution increases while the district proposes salary raises to help offset impacts.
Monica Drafski, chief of staff for Houston ISD, told the board the district’s self‑funded health plan has posted multi‑year losses and faces structural pressures: specialty pharmacy expenses, several very high‑cost medical claims, weaker pharmacy rebate performance, and higher out‑of‑network reimbursements under the No Surprises Act.
Drafski summarized recent fund results, saying the health fund experienced a negative change in position of approximately $6.8 million in fiscal year 2023, nearly $20 million in fiscal year 2024, more than $10 million in fiscal year 2025, and a FY26 forecast of roughly a $25 million deficit. "Operating expenses have consistently exceeded our operating revenues," she said, and the administration warned that the fund’s projected ending balance for FY26 is forecast to become negative.
Administration officials told the board they are planning cost‑containment and design changes and that employee contributions are likely to rise; they said any plan changes would be communicated during the October–November open enrollment period and would not take effect until January 2027. At the same time, the administration proposed compensation investments intended to blunt the effect of higher premiums, including a 4% general pay increase and raising the minimum hourly wage to $17.
Board members asked whether the proposed raises would be sufficient to cover potential premiums and noted employees will make individual coverage choices during open enrollment. Administration staff said they will analyze plan popularity, vendor responses, and the open‑enrollment results before finalizing changes and will attempt to limit the employee impact while restoring fund sustainability.
Why it matters: The health‑insurance fund deficit is a recurring budget pressure that can affect overall district finances and employee take‑home pay. The administration’s twin proposals—raise employee pay while redesigning benefits—aim to keep health coverage viable but would shift some costs to employees if revenues and rebates do not improve.
