001Good afternoon. My name is Kathleen Brown, chair of the Virginia Beach School Board, and I call this administrative, informal, and workshop session to order. Madame clerk, would you please announce the role? Thank you, Madam Chair, president in the school board chamber or chair Brown, Mr. Bowensteel, Mr. Kalen, Mr. Cummings, Miss Dwire, Miss Felton, Dr. Green, Miss Milnik, and Miss Rogers. Thank you. Um we, um Vice Chair WS is on the way. Um we are now on to schoolboard administrative matters and reports. Um a couple things I just want to put on the board's radar and make sure um I don't believe that we have a time yet still for the five-year forecast. Is that correct, Dr. Robertson? Okay. Um so that is um November 18th. So, I just want the boards to be aware that
002the five-year forecast will be on the 18th of November. Uh time is still to be determined. Historically, I think it's been at 1. Um also, uh we will have a special meeting just for discipline on the 18th at 4 p.m. Um so, I just want to make sure everybody's aware of that. And then there's one other thing. Um Mr. Co Pepper is currently our VSBA rep. He due to personal reasons is not sure if he's going to be able to attend um until the day before the VSBA. And Miss Melnik is our um substitute. Um and you're not attending, correct? So um if we could um get somebody that is going to be able to be at the VSBA to um cast the vote consistent with what the board votes, um I would like a
003volunteer for that today. Miss Rogers. I can do that. Yeah. Clerk. Um, Chair, uh, Chair Brown, in reference to the BSBA, uh, and since it's going to be Miss Rogers, all you need to do is go up to the, uh, welcome desk, um, at the meeting, tell them who you are, and they'll sign you in. So, we are covered that as long as we have a member from our school board there, they'll be able to vote. Okay, perfect. Thank you. And did you have anything to report since your name was in line? Yes. I would like to take the opportunity to acknowledge the following recognitions and celebrations within our community for the month of November. We will be recognizing the following. Diabetes Awareness Month, which raises awareness about diabetes prevention and management. Uh National Native
004American Heritage Month, which honors traditions, cultures, and histories of Native American and Alaska Alaskan Native peoples. And during this month, educational programs, storytelling, and cultural festivals are held to celebrate their contributions and educate the public about their history and ongoing challenges. On November 1st, the community celebrated dees lotos, which is a holiday that is intended to reunite the living and the dead. On November 8th, the community celebrated Dwali, which is the festival of lights, and it symbolizes the victory of light over darkness. Tomorrow on November 11th, the community will recognize Veterans Day, which honors all American veterans who have served in the armed forces. On November 13th, the community will celebrate World Kindness Day, which is a global celebration to promote the importance of being kind to one another. On November 20th, the community will
005celebrate Universal Children's Day, which promotes the international friendship awareness among children and the welfare of children worldwide. And finally, on November 27th, the community will celebrate Thanksgiving Day, which is observed as a day to give thanks. The celebration is marked with friends and family gathering for a large meal and expressing gratitude for the autumn harvest and blessings of the past year. Thank you, Dr. Green. Thank you. Um, by now each of our schoolboard members should have received an invitation to our legislative breakfast which will be held on December the 4th at 8:30 a.m. at Bayside High School. Great. Thank you. We will now move on to the Mercer update. We welcome Linda Matkins, director, Office of Consolidated Benefits. and Crystal. Uh, good evening, Chair Brown, schoolboard members, Dr. Robertson. Joining me this evening virtually is
006David Kio, principal with Mercer, and in person is Linda Matkins, director of consolidated benefits. Um, tonight, Mercer will provide a financial update reflecting claims data from July through September of 2025 and the updated health fund balance as of the end of September. The presentation will also cover medical and pharmacy cost drivers and include an update on the results of open enrollment. In addition, you will also see two projection scenarios. The first incorporates the $5.8 million from reversion as approved by the school board. The second builds on that scenario and includes the additional $5 million of employer contribution option we presented back on October 14th. We want to continue to emphasize that neither of these scenarios impacts employee contribution rates for the 2026 plan year. These actions are designed to strengthen the financial stability of our
007health fund and positions us for sound planning and decision making as we prepare for 2027. Looking ahead, we will return in February with an updated report reflecting claims data from October through December of 2025 and a related updated fund balance. As we have emphasized before, maintaining a two-month reserve remains critical to ensuring the long-term sustainability of our health fund. Our ongoing goal is to rebuild that reserve while continuing to mitigate increases for both the employer and the employees. At this time, I'll turn the presentation over to David to walk you through the detailed informations and then we will open it up for questions. Thanks very much, Crystal. And Linda, I appreciate you advancing the slides here. So, as Crystal said, this is our financial update using data through September. And we've got a got a
008brief agenda here, but we'll go through the experience, talk a little bit about the cost drivers, and then we'll get into the exhibits to illustrate the projections for uh 2025, 2026, and 2027. And we'll focus uh primarily on the 2026 plan year. And then we've got assumptions and methodologies uh in the appendix, but we we won't go there uh unless directed to do so. So um next slide, please. And uh one more. All right. So, as mentioned, the the data that we shared uh in our in our previous meeting went through June. We're always using a rolling 24 months when we do our analysis and we update projections, but we'll focus here on um on the data through September. And so I'll call your attention if I may to the upper left uh corner there
009where it illustrates the loss ratio and it's 102.9%. So the the definition there is over on the right side. The loss ratio is total plan cost divided by the budgeted premium. And so a higher number is unfavorable. A lower number is is is favorable. uh and and the budget rates are set. So they would have been set using June data uh last year uh for the current 2025 plan year. And we use those budget rates and update the aggregate budget by multiplying the the budget rates by the actual enrollment by tier. So you'll see that in those um horizontal bar graphs in the center top of the page here. And so the the bar graph in the middle gross plan cost versus gross budget u unfortunately the the data the experience for the most recent
010three months uh was was was not good. It exceeded budget. Uh and so that's why we wanted to start up with this with this exhibit here just to to call that out. Um you'll see uh the 12.2 million in June that was incorporated in the last projection. The three months that have been updated are the 10.8 million, 11.8, and 11.4. All three of those exceeded the budget. So, uh, unfortunately, it's an unfavorable development, and we'll use all of this to show how that uh how how it impacts uh the financial position and the and the projection. uh the line graph at the bottom is the current year and the prior year uh overlaid on top of each other. So you can see there the uh the the dark line is the most recent uh period
011uh going through September. So you can see uh essentially four of the of the last uh five months were were at or above uh the same figures in the prior year. So with that we'll we'll move forward and talk a little bit more about the trend uh on the next slide please. So this data is a illustration of uh experience back to 2021 and the line graphs uh show the incurred claims. So that is specifically based on the date the claims were incurred. So they were incurred in these uh in these years and we're tracking them on a per employee per month basis. Pepm is per employee per month and we compare that uh to identify uh the trend. So in this incurred claims data you'll see there uh in the chart to the right
012there's a column for medical RX is prescription drug and then total and you'll see the the uh the claims trend there on the bottom row 25 2025 year to date versus 2024 year to date. So period over period through September the medical trend is 8.6 14.6 for prescription and 10.4 four in total and so that is continuing to run higher than projected. You'll uh you'll recall that when we when we spoke last time the trend that we're using is 9% on an annual basis. So that 10.4 uh is uh as suggested by the prior exhibit u is running uh running higher than than expected. Uh next slide please. So we want to update you on just some of the the cost drivers within the medical claims here. And uh and now uh directionally everything is
013similar. This is utilization data that we receive from Centa. And so there's one slight uh difference in the uh basis for the data and that is that these are based on paid claims. So, it's the date on which a claim was processed or or paid um versus being tied back to the date on which the services were rendered. But the the directionally the uh they're very similar. And this allows us to look at the most uh real time uh processed uh data for you all. And so you'll see the circle the red circles there highlight some of the categories that had the significant growth uh uh cancer nervous system claims digestive gen genital urinary and pregnancy uh those categories all increased in excess of 20% when we compare period uh 2024 to to the September
0142025 data. Next slide please. So this is the uh same type of information but for specifically the pharmacy claims that were processed in the period over period. And so you'll see there at the at the top uh we've got total pharmacy cost uh on a per member basis. So we're drilling it down to the to the purest uh per capita basis. So it's when we say member, we mean any individual that's covered on the plan, whether they be a retiree, a dependent of a retiree or an employee or that retiree or employee themselves. Um, and so you'll see that 14.1% increase on a per member basis. And we split that into uh specialty and non-spety. And and really we we call out the specialty medications. They are the highest cost medications. And you'll see uh
015that in the in the chart below. Um they are they are expensive uh on a per prescription basis. Uh and they contribute significantly significantly to the to the cost. So uh just a couple of highlights there. Heimera is the top specialty drug and uh it's contributing um about $2.1 million in in pharmacy claims. And then the uh top two non-speety drugs are u are ompic and mangaro uh that are uh contributing a combined $3 million to the plan. So uh some of you all may have heard the term GLP1s and those medications are in fact in that in that class of medications and uh the the school's plan covers GLP1s for when they are prescribed for the diagnosis of diabetes and that's what this specifically uh is being used to treat uh GLP-1s for the
016diagnosis of uh weight loss or or specifically obesity. uh they are not they are not currently covered under the plan. So anything you see here in that category is is related to the treatment of diabetes. Next slide please. So we talk a lot about the high-cost claims and and that is is what has been driving the primary driver of the cost acceleration in the in the school's plan. So, uh, we've got the historical high-cost claimments here, and this is activity for individuals that have over $100,000, uh, in the in the year in the plan year. Um, and so this is, uh, for the 2025, uh, you'll see that the high-cost claimments, the sum of the high-cost claimments in the chart down at the bottom, um, increased about 2.2% 2% from from 26.9 million to 27.5
017million. Um so that is uh a significant driver and and generally speaking um however the high cost claimment trend goes is uh is is how the the plan will will generally trend uh and and we're cons continuing to see elevated high-cost claimments there. Um the number of high-cost claimants over $100,000 um increased about 9.6 6% from 125 to 137. Um, so that's uh that's the the bad news. The good news is is the intensity of the claims uh actually declined about 8%. And when I say intensity, I'm referring to the average cost of those high-cost claimments. Uh it dropped about 8% from 217,000 down to to 199,000 uh per per person. So there's um like like anything you might be tracking, there's a there's the volume times the cost. Uh so the volume increase is
018is really the primary driver rather than an increase in the in the intensity of these high cost claimments. Um you'll see over there to the right there's a a note of.3% of members enrolled in the plan which is about 40 individuals or is 40 individuals uh accounted for uh almost 16% of the of the total plan spend. Uh and that is uh a bit eye-catching perhaps but it is entirely normal in employer sponsored plans. Next slide please. Um so that that wraps up the the utilization and the the cost elements and we'll talk about the projection uh in just a moment. It of course will take into consideration all of the claims experience that we just described there. Uh this exhibit is intended to capture the enrollment that that resulted from the recent uh open
019enrollment elections that all plan participants went through. So the first column is um is the enrollment proportion in each of the tiers of coverage that was assumed prior uh during in the midst of the the rate setting process. So, we set the rates for 2026, the budget rates, and we assumed the enrollment distribution uh that you see there, and then we want to compare that to what actually happened as a result of the elections that were captured in the recently concluded open enrollment. And so, you'll see there the variance. Um there was there was a little bit of a uh little bit of sh of a shift away from peers where there are dependents covered. uh a little bit of shift towards uh employee um employee or retiree only coverage as you'll see that 1.7%
020variance. So it increased the employee/retireon uh category increased about 1.7%. Uh and so you can see the figures there. We also look at it uh by plan. So the school's plan includes two offerings, a point of service plan and a consumerdirected health plan uh which is an HSA qualified plan. And the enrollment has been uh relatively stable over the last several years, but we we are seeing a a slight modest uh growth in the CDHP enrollment. You'll see there uh the the the 0.9% increase. So folks shifted from the point of service plan which uh does uh have higher contribution requirements for employees and they elected to make that transition to the CDHP plan. Uh and and these figures are as noted in the footnote there. They are combined for employees and retirees but but
021the uh the changes were were uh were very uh very comparable for each. So with that that describes the uh the open enrollment activity and if we can move to the next slide please we'll talk about what all this means in terms of the plan year projection. So uh in this exhibit we we break down the various components of the projection and again we'll focus on that middle column the 2026 plan year that's upcoming here and uh what we do is we look at all that experience that we talked about and we use a rolling 24 months of experience with 2/3 waiting on the most recent 12 months one/3 waiting on the prior 12 months and that's what we updated using data through September. So we incorporated in three months that uh were were above
022budget. So they were not good. The the experience um did did not improve. In fact, it um it it it was unfavorable. And so that's what we're capturing in this projection here. So the uh we also took into consideration the movement by tier and by plan. All of this is reflecting what is now known to be the elected enrollment for the 2026 plan year. And the gross cost is 132.6 million. the employer contributions actually declined uh a little bit uh because of that shift that I mentioned of folks from uh moving away from dependent heavy tiers and also that uh that modest movement from the point of service plan which is a little bit higher cost uh to the CDHP plan. Uh so that employer contribution was 105.7 when we used data through June which
023was what was used to set the rates. So that's the amount the schools would have budgeted 105.7 the results of the of the enrollment when we multiply that times the budget the employer budget amount it actually has fallen a little bit to to the 103.6. Uh employee contributions are just that a function of the rates the contribution rates that were previously established multiplied by the new enrollment. Um and you'll see that the the the math uh flows down there to the 121.1 million. And so that difference that difference is uh has to fall from fall to the health fund. Uh and that draw down is the 11.5. So right now there are three sources of funding. The employer contribution, the employee contribution and a draw down of the available funds from the health fund. And
024those are the splits for that 132.6 million of projected gross costs for the 2026 plan year. So the health fund balance as of five uh as of September 2025 is 5.6 6 million and that is uh lower than was projected by virtue of the fact that those claims came in higher in that last quarter those last uh July, August and September that we talked about because they were above budget that resulted in a draw down of the health fund uh at a higher rate than was projected. Um and so you can see that uh that draw down. Uh so the projected health fund balance at 1231 2026 is now estimated to be 5.9 million uh negative. So you'll recall that the previous uh projection using data through June before we got this most recent 3
025months of unfavorable claims experience that was a positive 1 million. It was projected to be a positive 1 million at year end. This updated data now for 2026 u is yielding a projection that's negative 5.9 million and the projected uh two months uh reserve again is 212ths of the projection and so that's 22.1 million. So the the the shortfall relative to the desired health fund balance is that negative $28 million. So unfortunately the financial picture has um has has not improved and in fact gotten gotten worse and and um I'll boil that down to to say the health fund balance um swung by uh the the the $6 million to um to negative 5.9 million. So the options that we were asked to prepare as Crystal mentioned uh on the next slide please is the
026impact of uh infusing $5.8 million into the plan. And so the mechanics of of that of how that $5.8 $28 million actually gets into the plan is is at your discretion. For purposes of this exhibit, we have added it to the row of employer contributions. So, you'll see it went uh it went from 103.6 million up to 109.4 million and it's off by a tenth due to rounding. Uh but we added 5.8 million to that. So, uh, Crystal mentioned that investment, that infusion into the plan does not affect the contributions required of employees or retirees. It simply improves the financial position of the plan. So, the math flows through the employee retiree contributions are are unchanged. Uh, and the and the result is a favorable impact to the projected health fund balance at year end.
027uh that gets it to will round it to zero, but it it's coming in at a negative $100,000. So rather than the the the negative 5.9 million projected balance, it is projected to be negative by $100,000. Next slide, please. So the alternative the second alternative is the an additional $5 million added to the 5.8 million investment and this exhibit uh flows through just as the other one did. So all of that investment is reflected in the row of employer contributions. Uh so that employer contribution increases to 114.4 million. Uh just as before, there's no impact to the employee and retiree contributions. So they're static at 17 and a half. Uh and the math blows through that additional um 5 million on top of 5.8. So 10.8 million uh results in a projected health fund balance
028that is uh back in the positive at $4.9 million. So, uh, that concludes the exhibits that we've got prepared here today. Uh, I am happy to answer any questions, Miss Melnik. So, it's hard to just gloss over slide seven, the pharmacy trend drivers without just a little discussion about that because clearly that's a driver right in in the in the increase. I'm assuming correct. So, um, looking at the bottom of that slide, um, with the diabetes drugs, Ompic down to Skyrizzy, um, it says prescriptions and it says claimments. So, tell me exactly what prescriptions mean. Are we do we have 709 people that are taking the drug or do we have 3,431? That's right. The the the claimants are the number of individual members that are on that particular medication and the prescriptions are the
029number of total fills. So if you were to divide the prescriptions by the claimants 4.8 8 the number of scripts number of prescriptions per person. Okay. Yeah, that's like 4.8 a piece. And so that's a large I mean that's so I guess just how many people do we have on our plan first of all. How many employees? Um it is uh about 14,000 employees I believe. Yes. And there's approximately 23 to 24,000 individuals. Okay. combined consolid. Oh, sorry. Yes, combined. Okay. So, just in this slide alone. So, we're self-insured. So, I'm sure that this is do they look at this as a risk? Is that what contributes to some of this? So, if you have 709 employees that are taking drugs for diabetes, is there like a risk formula that they use that drives some
030of this? Yes. So, we're looking at all of this experience and our actuary. So, so so, so you um accurately accurately emphasize the fact that you all are self-funded and so Cantara does not bear risk in this. So, they are your health plan administrator, but they don't bear risk in it. The risk is is yours as a self-funded employer with some protection built in at that specific stop-loss level. Um, but we look at all of the data. Our actuaries here at Mercer do the projections and take into consideration the trends within your population and within your experience. So specifically the utilization of prescriptions that you referenced there, the high-cost claimants, the medical conditions uh and and then we also consider trends within the market, the healthcare market and use all of that data to project
031forward. Okay. So we you know we just generally think power in numbers, right? That we're are everything is going to be lower because there are so many of us. But there are also other drivers that large numbers also increase your your risk there. You know there are more people to get sick. Um so that's all part of it. I it you know again this this is really hard to this is this is a really hard thing for all of us. So um I think that was my only question. If I have one I'll come back. Thank you. Y Dr. Green. Thank you. And and Miss Mackinson, thank you for all the great data that triggered more questions in my mind related to slide number nine and you probably will have to get back which is
032okay. I was curious um as David talked about the different subgroups um as and now that we have the rate increase um I would be interested in seeing employee numbers for those who were previously enrolled in the POS plan and because of the cost they now had to take a well I don't want to say a lesser plan but it is a different plan. Um, and and only those who we already had employed last year that had coverage with us. I would be interested in seeing raw data on how many of them now are on the um cheaper plan, the CDH. Uh, yeah, we can look at that um information. What he is show what David is showing is just people, you know, the numbers of people. So it doesn't get to your point of
033who actually made a change. So we can get that information, right? And and I don't need new employees who elect, right? I just want to compare last year um to this year because it's unfortunate because of cost people had to make those tough decisions. We'll get that information. Thank you, Miss Rogers. I'm going to circle back again to um slide seven and kind of piggyback off of Miss Melnik, but other question um with regard to our major increase in our prescriptions. So, are we looking and I'm I'm not going to ask you, David. I think I'm asking Linda, are we looking for solutions for these costs um with perhaps other avenues of delivering medications that would not be through um you know would be through a less expensive provider. Um whether that is like mail
034in I I will just be upfront. I am one of those people with diabetes and it is much cheaper for me to get my medicine and I'm not on the school plan through a male in prescription service than it is for me to get it at the pharmacy. So again, if we're having these experiencing these high high costs, how can we then lower our costs without telling our our our employees that you can't get this medicine or you can't get that medicine? Our plan already has um a lot of um risk mitigation in there. We have a closed formulary which is any new drug to the market um is is not available until you know tried and failed through like a step therapy. Um and we also have a required generic. It's not mandatory because
035you can still get a brand but you pay the difference in the co you pay the difference in the co-pays and then the difference in the cost of the drug up to a certain limit. Um the plan also does have pre-authorizations. It does have what I mentioned the step therapy. So they try you at a lower cost drug and then if it you know you can't take that drug then they will ultimately approve. Um to your point about um there has been a change in diabetic re uh rebates. Yes. So for sure. So the way that would work is the um pharmacy benefit manager would provide rebates back to the plan and then a certain allocation of course comes to our plan that we get quarterly. Um but because of the change in the diabetic
036drugs, um people at when they're getting their prescriptions should start to see a lower cost to them and it's not coming in rebates back to the plan, which is good for the member. Yeah. Um but in terms of other um avenues of medications, we don't have another source at this time. Okay. And and is that something that's like possibly to be discussed? I mean, because you're consolidated, so like I know that it has to be with the city, but I'm just thinking that if prescriptions are increasing by such a high cost, then it would be reasonable to believe that this trend is going to continue as we move forward and that it's, you know, and we have to prepare for that. So in that preparation, I'm just wondering is that something that the city and
037cons as far as consolidated is thinking of either you know and I know that some people talk about oh other you know places have their own pharmacy for their employees and that sort of thing just a way to help us lower costs without hurting our employees. In terms of the other division that has an on-site pharmacy, we have explored that. Um, we did that in 2015 again in 2020 and we compared the the actual ingredient cost of the drugs of our top 100 by utilization and top 100 by cost. So, it wasn't every single drug. Um but it was a getting the top hundred of both of those categories accounted for over 58% of the total um scripts and there wasn't a say and so we compared um two different on-site Cerner and on-site RX
038which is one of the other division uses unless they've changed and we compared that to our drugs uh through our pharmacy benefit manager through Cinta and there were not savings that would have been achieved um by actual utilization of our members on the plan to operate an on-site pharmacy. And and in terms of other options, we can certainly explore that part of the RFP process um that we award reawwarded to Cintara includes um pharmacy. So if we were to carve that out, there may be some impact to admin fees, but it's something that we can explore. And and to your point, we did it in 2020, but the costs have exponentially grown since then. So it could be that in the last five years, I mean, we've se our costs are through the roof and
039they're just there isn't relief in sight. So, and this doesn't seem to be a once off year. We seem to be trending up. So maybe it might be worth exploring again. Yes, Mr. Ken. I'm going to try to stay as positive as I possibly can so that we all learn in a happy upbeat environment. My god. And with that as my intro, let me explain my reaction to tonight's presentation. I'm an old school guy who does things old school ways. And that means I get hard copies of everything that's presented when the agenda is put together. Came by this morning bright and early because I was out of town over the weekend and picked up my copy of today's agenda. Went through this section and followed the presentation that was presented tonight page by page
040and the story is building to a crescendo. We're going through slides one through nine and it's building up with data and all of those slides are available to me on the packet that I picked up. But when we get to the grand finale of the symphony and we get to pages 11, 12, and 13, I'm looking at lots of fine print, lots of small font, lots of numbers that are arranged in an allgether different format than was presented to me when I picked up the hard copy packet this morning. Since I want to stay positive and since this is a section of the schoolboard agenda meeting where we're all trying to learn and deepen our understanding of difficult subject matters. This is not a good way to run a railroad to show the finality of
041all of the detail that was collected and accumulated and then put it on a spreadsheet that looks like this and shows up and being presented by David as he's going through lots of data. I may be speaking for only myself and that may be true but this is no way for me to understand the complexity that accompanies this subject matter. I apologize. Um when we uploaded the presentation um it had been put in a format that provided summary pages. So it did not have the full projections with the 2025, 2026 and 2027. And it was thought that that summary would help explain, but we felt it was more confusing and we felt like we needed to return to the format in which we had shared with you for the you know the past two meetings
042because otherwise it it was confusing and it was almost like starting over. So I apologize that you didn't have the presentation that we presented this evening. Um, we thought that this format because the other one while it was a summary, it didn't allow you to do the math and it didn't allow you to see, okay, this is what the the um balance was as of September 30th, which then carries over to 2026. And so that was the reason for the change. Yeah, let me add that. Uh, so I certainly appreciate your frustration, Mr. Ken. Um, we had a meeting at four o'clock on Friday. And in that presentation at four o'clock on Friday, Miss Woodhouse, myself, Miss Matkins, Crystal P, the format that uh that you have in front of you, uh we felt was
043going to be disadvantaged to the school board because it was a different format. So, we requested, we pretty much demanded to Mercer that they put the presentation back into a format we're familiar with, which is what you saw on those last three slides. Well, this was by the time you talked to Mercer, it was like 4:45. So, clearly they did no work on Friday between 4:45 and 5:00. They came in and today and and gave the updated information and and I don't know what time you would have received it, uh, Miss Tony, but it would have been this afternoon. So, we had two choices on Friday at 4:45. Choice A, we go to the chair and we punt the presentation or we get the right presentation in the right format and give it to you
044today. We chose to get the right presentation in the right format and give it to you today. This is this is a situation that was a little beyond our control. This is what happens when you try to turn information around quickly. uh Mercer was not originally going to have this information to us until the middle of November and I said that is not acceptable. The board needs information on the budget in a format that's going to give them time to digest the information. So I am going to fall on the sword on this one. This is on my this is on me and um but I want you to understand why the situation occurred. Well, I thank you for the explanation and again the intent of my comments is to just give feedback so that
045we get better at the process that we engage in. And process is a key word in lots of different circles these days. And so if we can enhance our process, especially on something as important and significant, but at the same time, as one of my colleagues has said before, this is rocket science. And if I'm looking at something for the first time when I show up tonight to participate in the meeting, you're not going to make much headway with me comprehending the comp complexities that accompany this stuff. So if we can just do that to get better in our process, then that's my contribution to the team. Thank you for your feedback. You're welcome, Miss Melik. Okay, two things. Um, you mentioned that the o the weight the diabetes drugs, the injectables, the ompics um
046are specifically for diabetes. Is there ever going to be a chance that it will be open for weight loss? I was looking into that prior to the RFP process and then during the RFP process I had to, you know, suspend those discussions because it was with Cindera. Um, and they they can create a disease management program around that. Um, unfortunately, and David can speak to it, um, we're just not in a position to take the risk at this time, um, a lot of employers that had implemented it before things were skyrocketing are actually like he he has seen where people have changed their plans midyear to remove it because it's unsustainable. But it's certainly something that um, we're interested in exploring in the future. Yeah, it's been an issue. I've heard from somebody over the
047years. It's been an issue for for quite some time. And for some people, that's honestly a good a a good option for them, but it's just so cost prohibitive. Um, you know, and when your option is surgery, gastric bypass, which has a high failure rate, you know, all of those things. Yeah. if you feel bad for people who um yeah would like that option. The other thing is is um you know we don't address board members but I am going to address the um pharmacy. So we did initially really start looking into that and we put a little team together with city council and I remember just straight away um it was more than just prescription and by sheer volume we see what we you know this can't be a one-site place right and and
048then it was finding a brickandmortar so there is more to it if you if you investigate it again I know it's a it's a huge undertaking Um, and Chesapeake does not have consolidated benefits, right? They do not. Okay. So, we're talking about a school division that's half our size, half Yeah. half the employees. So, that's why it's a a lot more manageable for for them. I know in theory it sounds great. It's just it's a it's a huge thing. And they are self-insured. So, just because they have an on-site pharmacy doesn't mean the drugs cost less. Okay. um it they may or may not the experience when I was looking at the difference in the drugs is some drugs were less expensive some were more expensive and then specialty drugs they don't dispense some specialty
049drugs so you would have to get them from a specialty pharmacy which is some of these high cost um the way they set their co-pays would be no different than us being able to set a co-pay on our plan that's lower okay Um I don't know what their total um pharmacy costs are for their you know for the percentage of their total um how that compares to what the percentage of our total is. Okay. They do, you know, have they also incorporated an on-site clinic. Um, they have, yeah, that they don't offer a consumer-driven health plan with the health savings account. And those in our plan would not be eligible for something like that because you can't have first dollar coverage from another health source um, other than your consumer-driven health plan and your HSA.
050Okay. We do live somewhere between theory and reality with so many things that we do and this is this just happens to be one of them. Thank you. Thank you. Um I have a question for Dr. Robertson related uh to all of this. So there was a presentation um about previously the potential infusion of five or $10 million. Um when um do you anticipate that we're going to be having that discussion again? So the first $5.8 million um the board put into the reversion resolution which the city council will take action on November 18th. Uh if the city council approves a reversion uh resolution as presented, then we would come to the board and ask the board to take that action on the $5.8 million at that time. At that point, I think it would
051be a a prudent to perhaps wait until 2025 is completely over and the February data that we get that'll really show us where we are. Maybe we don't need to put $5 million in. Maybe we only need to put $3 million in. I think we wait until February to make that request. So, that would be the timeline to get to go back in and rebuild the health fund balance. Okay. Thank you for that. Um, and you know, I I just want to bring that up. um as there is some historical uh things that have happened not with this board and these people sitting here but um in 1996 uh related to budgets and so we can't be in a deficit um and so I would just ask that um perhaps uh if that comes back
052in February that you know we have a conversation about which things weren't spent to make those allocations um happen. Um that would just be my request, Miss Milnik. And I think it's important to note for the public that infusing that 5.8 million is not going to change the employees contributions. And that's the saddest part about this conversation. It sounds like, you know, it's going to help some way and it it'll help our bottom line, but it's not going to help the employees at all. So that's a tough pill to swallow. All right. Well, I don't see any more questions at this time, so thank you. And we um will now have a facilities update. And we welcome Jack Freeman, chief operations officer, and Melissa Ingram, executive director, Office of Facility Services. Um so, good afternoon,
053Chair Brown, Vice Chair Williams, members of the board, and Dr. Robertson. uh as executive director of facility services. I am looking forward to discussing with you today a facilities update prior to this this upcoming budget season. We'll start today's presentation looking at our maintenance projects, capital improvements that keep our schools running safely and efficiently. These projects impact building systems such as HVAC, roofs, and foundations. our first tier building system that we've spoken with you about in most detail over the past few years along with fire alarms, windows, and uh doors and uh turf field installations and accessibility for athletic fields or ADA compliance. Next, we'll shift to new construction projects, tricampus additions, and the Princess High School replacement project. And finally, we'll look at funding as we are preparing for the upcoming budget season for
054fiscal year 2627. So on this first slide, we'll take a look at our roofing systems. Starting with good news, completed roof replacement projects. We've done a tremendous amount of work over the past four years, completing about a dozen re-roofing projects across our schools. Most of these projects are multi-phased lasting about two years with the majority of work occurring in the summer months. As you can see at the bottom of the list, our last two re-roofing projects have completed phase one construction this last summer with phase 2 work scheduled to pick back up next summer 2026. So the next slide on roofing highlights roofing work to come. Starting with our phase 2 projects from the previously previous completed list uh with re-roofing projects listed above the red line to be started over the next two years
055and below the red line are projects we are evaluating for future years. Overall, we're continuing steady progress in addressing priority roofing needs. And with funding provided, we are working to catch up to our deferred replacement unsatisfactory needs. With almost a third of the roofs on this list being in fair condition, as our buildings get older, their condition can change. Our maintenance teams regularly update these lists and focus on preventative maintenance to reduce roof areas in unsatisfactory conditions or at high risk of failure across our schools. We'll now take another look back over the last four years, this time with our HVAC projects and again the progress we are making on deferred replacements with funding provided. This list comprises almost two dozen HVAC projects completed over the last four years. With HVAC systems being complicated, only
056the parts of each HVAC system that truly need replacement are prioritized while extending the life of other HVAC system components whenever possible. In many cases, keeping systems running nearly twice as long as their expected lifespan. As you can see from the list from boilers, chillers, rooftop units abbreviated RTU and many others. You'll see this completion list varies in which portions of the system replacements were needed. Some schools on this list have required almost the entire HVAC system to be replaced, such as at Cook Elementary School shown at the end of the list with phase one completed this last summer. We're also adding HVAC to kitchens, listed second to last in the list above Cook, where none existed before, improving efficiency and working to meet occupational and safety and health standards, with now only 18 kitchens
057operating without HVAC, down from 24 kitchens four years ago. So this next list in front of you now shows that there's still work to be done on our HVAC systems with temperature and humidity control important in maintaining healthy and safe learning environments. Continuing with Cook Elementary, which is now at the top of the list for phase 2 construction to be done this coming summer 2026. This chart shows the projects above the red line that are scheduled to begin construction over the next two years. For systems below the red line, we are carefully evaluating and scoping projects to replace only what's absolutely necessary, just as prioritizations were made with projects above the red line and those on the completed projects list. Reviewing this list, you can see that all of these systems are in unsatisfactory condition,
058meaning hard to maintain and at high risk of failure. But through phased work and strategic planning, we're making steady progress in addressing HVAC needs across our schools. We're also continuing to add HVAC to kitchens that are without, as you can see from the red arrows, with six in planning over the next two years or above the red line, and over 10 being evaluated on this list in total, planning to bring our kitchens without HVAC down to 12 in the next several years from 24 just four years ago. So now looking at the last of our top three building system that we have been uh sharing with you over the years are foundations. These are nearly complete. Bayside Middle School is on track to wrap up by summer 2026 while Chemville Middle moves into phase two
059of three next summer. Holland Road annex is in the design phase and planned, but all related work is paused at this location until we are more certain of the needs related to Princess Anne High School replacement project. Now looking at fire alarm replacement projects, also critical to keeping our buildings and students safe. Above the red line, you can see projects completed and those we'll tackle in the next two years. Below the red line, systems are still in unsatisfactory condition and are being carefully evaluated, monitored, and planned for. Our next list, windows and exterior doors, also keep our building envelopes, air quality, and humidity intact, much like our HVAC and roof systems do. Replacements of these systems also take time, not just for planning and funding, but because environmental assessments are required for integral materials such
060as caulking. Above the red line are those schools we are working to address in the next two years. All at various stages of evaluation. We continue to identify needs and monitor those below the red line along with our other building systems. Now looking at turf field installations, only three high schools remain without turf fields with Tallwood High School, which we looked at when we spoke about uh Turfields last year in terms of drainage issues, completed this last summer, 2025. Lancetown High School is scheduled to be replaced next summer in 2026, which you will see on an agenda item in the near future. and Cox High School to be installed in summer of 2027. We are planning for the final school, Princess Anne High School, to get new turf installed with the school replacement project. As
061we also discussed with you last year, once all schools have turf installed, we'll plan an average of one returf per year, averaging $900,000 annually with fields continuing to be monitored for safety and longevity. And accessibility is also a top priority for our school division. All high school athletic fields are now ADA compliant thanks to collaboration with school leadership. athletics and our parks and recreation teams at the middle school level. Brandon Middle School and Corporate Landing Middle School are fully addressed and we're currently constructing accessible sidewalks, bleacher pads, and portable restroom pads at Salem Middle School and Bayside Middle School. Remaining schools on this list are being evaluated with needed improvements planned over the next three years, making sure students and visitors can safely access our fields. So now shifting from maintenance uh to new construction
062projects. Uh in front of you here is Triampus additions and we are making strong projects process on this project. Design is continuing. Bidding is planned for late winter 2026, just a couple months away, with construction to begin in summer of 2026. This slide shows the same information shared at our last briefing to you with no significant changes from what was previously presented. We've been discussing Princess Anne High School replacement project with the board for several years now. Most recently over this summer as updates from the superintendent CIP working group were given in which moving forward Princess Anne High School replacement project was a large focus. This slide reflects the same information shared during the last CIP update presented to you. To keep the Princess High School replacement project moving forward, Miss Lenetti recently addressed procurement
063options as recommended by the city with the policy review committee in October. And so, um, as I mentioned in our first slide, again, we're here to you today with the objecting of sharing this update in preparation for the upcoming budget season. You can see on this slide uh the current year's approved fiscal year 2425 CIP funding sources. Over the past year, we've collaborated through Dr. Robertson CIP working group with school division members and city leadership most recently at the joint modernization committee meeting in October. You can see on this table in year one and above the total line that the school special reserve fund was increased to $20.5 million. And later this month, the school division's reserve re reversion request goes to city council, which will include funding for next year's special reserve fund of
064$10 million and additional reversion funding not shown on this list with the objective of of continuing to increase cash contributions to the CIP. We look forward to continue working with city staff on CIP funding and continuing to work together on joint needs of our schools and the community. And so this concludes uh my presentation tonight, but I'm happy to take any questions you might have. Dr. Green, thank you and thank you for your presentation. Um my question is would is just confirmation that um what I am thinking the process is in place for the tri campus. Frequently when I'm out and about in the community, I get questions about um do those numbers reflect uh enrollment? What happens if we all of a sudden have a major boom or or growth with students? and and
065I have been assuring the community that, you know, we have a specialized department with demographers and that um that information is being monitored um because we certainly will not have trailers out there. Um so could you address a little bit again how we're monitoring the enrollment trends um in u that community in my district in district 4 with uh New Town and uh the collapsing of Betty F. Williams and Diamond Springs. Absolutely. Thank you, Dr. Green. Yes, we um we have just recently received September 30 data and are monitoring all three schools and their membership. Um everything is on track right now. We definitely as we looked at the number of classrooms needed in the in the additions at each of the two schools, Diamond Springs and U10 Elementary School did apply a planning factor
066to that as well in case there was slight growth. We also have room there for preKVPI and ECSSE classrooms. So in the case um something needs to move around, we do have contingency plans there. However, all the data is tracking this current year and we expect uh that the additions will be uh satisfactory to what enrollment trends are showing. Thank you. All right. Thank you. Um, so I was happy to see on hold uh the Holland Road Index, the foundation is the re-roofing also on hold as well. Yes, ma'am. So, we have um put on hold, we had quite a bit of designs done during the PPA and then somes where we're trying to continue on for interest of time and then also um possible use such as like our gym floors by other schools.
067However, we've put everything for Holland Road annex on hold until we get further um direction and understanding of what Princess High School replacement project might need. Okay. Thank you. Um how long can that feasibly be on hold for before I mean before it becomes too problematic and it's a bigger challenge to deal with? Um how long can we hang on? Uh so we'll work at the discretion of the board. Uh the foundation repairs probably will take the longest. We've done the other schools in three phases. We know of problematic areas that we would probably do first. And the fact that it's an unoccupied building, hopefully we'd be able to speed things up. Um if we would got to be a crunch time, if that's your question. So if we all of a sudden said, "Okay,
068we're definitely a go." We would certainly work with our contractors to speed up um whatever is it is that we could speed up. and the fact that the building is unoccupied could could greatly help us um in terms of getting work done quicker than it would at a school building that's fully occupied by students. Right. I'm I'm actually um so my concern my bigger concern is we're talking about foundation issues and re-roofing and sometimes if you don't deal with those um they become much more expensive problems to deal with in the future. And so I'm I'm curious, you know, are we talking if we put it off six months or a year, it's not a huge deal, but if we do it longer than that, it becomes twice as much money. Um what what timeline
069are we looking at there? So, thank you for the clarification. We're monitoring um constantly uh you know, we do have people just for use of the building uh using the building um both outside community members and others. So we monitor the buildings um with our maintenance team and our inspectors. So definitely a year I I would not see any issue in a year time frame um with upkeeping and if we had to do something um in the interim prior to any replacements we would be able to try to to address that. Okay. And then um I see that we did nearly uh 3.4 million in the rooftop units for that same facility. Um, this is gonna sound a little silly, but it's new. Um, so say we were to do something different with that annex.
070Is that unit any portion of that still usable somewhere else? So then great memory. So that was we needed those when we had the school administration building being done and we had to move over our admin team to Holland Road annex. Um, as we do with all of our buildings, we did it with Alaskan Road Annex. We're looking at Bayside 6 now. We would certainly have the first right of refusal for any contractors and see what would be cost-effective in terms of reusing anything from our school buildings that maintenance might need. Um, and you hit the nail on the head. I think there systems would really be looked at as well. Okay. So, there is a possibility that we can still um benefit from that system more even if something different were to occur. Sure.
071If we would use the whole thing, there would be a cost to remove it. But I certainly uh we are very aware what's in our facilities and anything that um has a similar asset and another building we would try to recoup at the very least parts um and components from. Okay. And then I have one more question then Melnik. So it looks like the cost of these um repairs that are on hold, these maintenance projects are 5.2 2 million. Um, and it's estimated that the swing space um has a cost here. Um, does that cost include those or is that over and above uh that that swing space cost? So, the swing space cost is also for the special education center wing, but the cost does uh consider those type of improvements in them. Yes,
072ma'am. question. I was asking if the uh re-roofing and foundation was in the cost proposal for the swing space at the annex. Oh yeah, that that was going to be my question too because initially it was with the PPA, right? Yes. So, Miss Melick. Okay. I'm good now. Okay. Vice Chair Williams. Yes. I every time we get these like, you know, it's it's shocking how expensive it is to put HVAC in a roof, you know? I mean, it's just very eyeopening to to add all those numbers up, which I think that a lot of people forget about all of our maintenance um you know, work. So, I appreciate y'all being diligent on that. So, um so just like on slide four, the renovations and replacements. So there was a group done in year one and
073then every single one under that line they're all going to be done in year two. They're not in an order necessarily or are they? Um they're main above the year two mark. So the year the red line on slide four um that above that is what we're hoping to start by year two. Okay. And they're mostly in order but that it just depends what prices come in at too and how quickly um we can get things going. So um okay so above everything and then we just get to the others. Now when we get to the others is it because I see a fair I see satisfactory I see unsatisfactory then I see a fair slash unsatisfactory. So, so I would just think that the fair unsatisfactory would not be in as bad of shape
074or on your little metrics as as the unsatisfactory. Is is that not a That's a great observation. So, right below the red line there, um Brandon Middle School, you see it says consider HVAC. So the roof itself um there are portions of it in fair and portions in unsatisfactory. We have an HVAC project. Whenever you have a lot of construction and work going on in a roof, it definitely impacts it as well. So we try to do them in tandem when possible. However, we're trying to do the HVAC project in a way where we will preserve a lot of our roofs. So, we're our hope is that the roof on Brandon Middle School will be deferred and we have over 120 units um at Brandon Middle School to replace, but we'll do it in a
075way where it will preserve the roof as much as possible so that we can defer that roof because there are portions that are fair on it. Um so, we it's nothing doesn't touch one another and that's also a lot of the part of our prioritization as well. So, all right. Well, that that makes great sense because when I looked at this, I'm like, I would have shifted it a little bit, but so I wanted to see exactly why. Okay, great. Thank you so much. Yeah, thank you. Okay, thank you. That's all the questions we have. Um, Miss Lenetti, I just want to confirm we do not have a close session. Correct. I will tell you I'm speaking with outside counsel right now. I think not, but we're trying to verify whether we need to ask
076about settlement authority. So, I just let claims come in the last couple minutes. If I did, I would do it at the end of the school board meeting. Okay. Thank you. All right. Well, with that, we are going to adjourn to recess and reconvene at 6 PM for our formal meeting.