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McAllen staff warn of $2.8M health-plan gap, propose premium increases and funding change
Summary
City staff told the McAllen City Commission a projected $2.8 million shortfall for fiscal 2026–27 and proposed funding to 120% of expected claims plus premium increases for active employees, awards of new medical and pharmacy contracts, and steps to start rebuilding reserves.
City staff presented a plan to address a projected $2.8 million deficit in the McAllen employee health fund for fiscal 2026–27 and recommended a set of changes intended to stabilize the plan and begin building reserves. Jolie Perez, the city’s employee benefits director, told the commission the current recommendation would create "about a 2.2 net net positive in order to start building some reserves within the fund." The package combines premium changes for active employees, funding to a higher actuarial liability, and contract awards for medical and pharmacy services.
Perez said the city currently carries a $1.9 million interdepartmental loan against the fund and proposed partial loan repayment of $475,000 per year for four years if recommendations are approved. She summarized the central trade-off: "Funding to the maximum claims liability…provides much more greater stability," but the step "does come at a significant increase to both the city and to the employee." The presentation estimated the recommended premium adjustments would generate roughly $4 million in additional revenue across active and retiree funds and projected roughly $2.2 million in expected savings from the recommended RFP awards.
