001[Music] [Music] Hey, hey, hey, hey, hey. [Music] [Music] [Music] I wonder. [Music] [Music] [Music] Hey. [Music] [Music] [Music] Good evening. My name is Kathleen Brown and I call this special school board meeting to order at 6 p.m. on this 27th day of August, 2025, pursuant to Virginia Code 2.2-3707 and bylaw 146 section B, C, and D at the call of the chair and on the request of the superintendent or designate with the concurrence of the chair and on the request of three school board members in writing to the chair and clerk of the school board. The purpose for the special meeting is namely to discuss consultation with legal counsel in close session as needed, presentations regarding health insurance premiums, employee health care costs, and potential future steps. Madame clerk, would you please call the role?
002Thank you, Madam Chair. Present in the school board chamber are Chair Brown, Vice Chair Williams, Mr. Bowensteel, Mr. Kalen, Mr. Cummings, Miss Belton, Dr. Green, Miss Melnik, and Miss Rogers. Thank you. And um Miss Dwire is on the way. Would you please join me in a moment of silence followed by the pledge of allegiance as you're able I aliance to the flag of the United States of America and to the republic for which it stands. One nation under God, indivisible, with liberty and justice for all. Okay, we are now on to the adoption of the agenda. We'll accept a motion to adopt the agenda as presented. Moved by Mr. Callen, seconded by Miss Melnik. Any discussion? Seeing none, I call for the vote to adopt the agenda as presented. So, Madam Chair, we have nine
003eyes. The motion did pass for the adoption of the agenda as presented. Okay. And Mr. Cummings has something to say. Uh, thank you so much, Chair. Um, as many of you folks know, I'm a strong supporter of public education and I do want to acknowledge that I'll be stepping away from tonight's discussion and any votes because of my work with Cinta Health Plans, which is the selected vendor of our health plans. Um, because of this, I'll be recusing myself from tonight's board discussion just as I did previously when Mercer presented. Um, I will still be present to listen, but will not participate in the conversation. Okay. Thank you. Um, we are going to read into close session, but the school board is going to go down the hall to the Einstein lab so that everybody
004here today can stay in chambers during that time. Vice Chair Williams, would you please read the motion to go into close? I move that the school board recess into close session accordance with exceptions to open meetings laws set forth in code of Virginia 2.2-3711 part A paragraphs seven and eight is amended to deliberate on the following matters. Seven, consultation with legal counsel and briefings by staff members or consultants pertaining to actual or probable litigation where such consultation or briefing and open meeting would adversely affect the negotiating or litigating posture of the public body. For the purpose of this subdivision, probable litigation means litigation that has been specifically threatened or on which the public body or its legal council has a reasonable basis to believe will be commenced by or against a known party. Nothing in
005this subdivision shall be construed to permit the closure of a meeting merely because an attorney representing the public body is in attendance or is consulted on a matter. Eight, consultation with legal counsel employed or retained by a public body regarding specific legal matters requiring the provision of legal advice by such counsel. Nothing in this subdivision shall be construed to permit the closure of a meeting merely because an attorney representing the public body is in attendance or is consulted on a matter namely to discuss a status of pending litigation or administrative cases. B. Consultation with legal counsel regarding probable litigation, retention of outside legal counsel and pending litigation matters. Moved by Vice Chair Williams, seconded by Miss Rogers. Any discussion? Seeing none, I call for the vote to go into close session. So, Madam Chair, we
006have eight eyes and one abstension. So, the motion to pass to go into close session. Thank you. [Music] Daddy. [Music] I'm baby. [Music] [Music] Heat. [Music] Hey, Heat. [Music] [Music] Hello. Heat. [Music] Whereas the school board of the city of Virginia Beach has convened a closed meeting on this date pursuant to an affirmative recorded vote and in accordance with the provisions of the Virginia Freedom of Information Act. And whereas section 2.2-3712 of the code of Virginia requires a certification by the school board that such closed meeting was conducted in conformity with Virginia law. Now therefore, it be resolved that the school board of the city of Virginia Beach hereby certifies that to the best of each member's knowledge, only public business matters lawfully exempted from open meeting requirements by Virginia law were discussed in the
007closed meeting to which this certification applies, and only such public business matters as were identified in the motion by which the closed meeting was convened were heard, discussed, or considered. Okay, I'll take a motion on the certification of close moved by Miss Melnik, seconded by Dr. Green. Any discussion? Seeing none, I call for the vote to certify close session. Mr. Ken, how do you vote? Thank you, Madam Chair. We have nine eyes and one abstension. So, the motion to pass for certrica certification of close session. Okay. Thank you. We are now on to our presentations regarding health insurance premiums, employee health care costs, and potential future steps. and we welcome Crystal Pate, chief financial officer, and Linda Matkins, director of benefits. Actually, uh, Madame Chair, I'm going to start, uh, the meeting tonight. I'd like
008to thank all of our attendees tonight for coming out to learn information about how we got to where we are. And for those of us those of you who are joining us live um from home tonight administration and our partner Mercer will be presenting detailed information on the projected healthc care coverage and rates for 2026. The information in this presentation is vital to everyone's understanding of how we arrived at decisions regarding health care which includes multiple factors. So let's begin if you go to the next slide. So in this presentation we will begin with an introduction of the dilemma which in a nutshell is the rate increase of nearly 100% to health coverage costs that for the past three years have been kept very low. This sticker shock was unexpected and sounded an alarm with
009employees. They felt blindsided and wanted to know how this happened and whether any other actions could have been made. Because of this, we have front-loaded the presentation focusing on staff who may be watching or in attendance so they can receive the information of greatest interest to them before moving into the complexities of healthcare coverage and costs. To assist in the explanation of how we arrived at this point, we will begin by sharing employee compensation data for the past five years. This is important as providing all employees with an an attractive compensation package is a school board and superintendent priority as this promotes recruitment and retention of staff. We will then share information on the 2026 projected healthc care coverage contributions from Virginia Beach City Public Schools and from employees who select one of our health
010care options. This will be important for everyone to see how costs are shared. Determining health care coverage costs is an annual process. To help level set this work, we will share historical health care funding and how funding impacted rates. From there, we will conclude the first part of the presentation by sharing a communication timeline to outline work completed over the past 10 months and more specifically over the past five months. Marshall will then join us and share detailed information on potential rate change scenarios before diving into the complexities of projecting health care costs using a number of key drivers and variables. We will then provide answers to any remaining questions sent to administration by board members before ending with an FAQ to further assist staff. As I mentioned, the real dilemma is in how to
011address the everinccreasing cost of health care. Every school division or business that offers health care coverage to their employees is grappling with this issue. The issue we have before us as an employer, how do you balance available funding in a manner that provides an attractive compensation package to your employees? And when a sudden change occurs, how do you keep your employees informed? It is obvious the increase to health care costs in 2026 caught employees by surprise and we must do better and we will do better keeping employees informed in the future. Know our strategic plan compass of 2030 has two goals that will guide the work to come. Goal three sets the priority to value and invest in staff. When staff received the news of the projected health care rates for 2026, they didn't feel
012valued and that we were investing in them. Tonight, my team will share information that will show how we have invested in you and will continue to invest in you. It will also show that my actions when notified of the recommendation to increase rates back to where they were from 2019 to 2022 were immediate, made with the best intentions and represented a major change to how and when healthc care rates had been shared with staff in prior years. Goal five also plays a role in all budget decisions as we seek to advance organizational excellence. An important point for everyone to understand that impacts this dilemma is that every organization, in this case a school division, must establish an annual budget that is grounded in priorities and available funding. When funding increases, organizations can do more. When
013funding is flat or decreases, organizations can do less. When costs go up and funding has not changed, organizations must adapt. Virginia Beach B City Public Schools has a fiscal responsibility to allocate funds within a projected budget and may not overspend that budget. Any decisions to add more funds to one area of the budget must be balanced with an equal reduction to another area of the budget. Despite any wish to do more, no matter how important it is, will be accompanied by a loss in funding to another area. Over the past two weeks, my team has been diligently reviewing our work, identifying areas for improvement and problem solving to address this dilemma. Tonight, you will get just a glimpse of that work as we are committed to working within the confines of an improved budget at
014the discretion of the school board. And now I will turn the presentation over to Crystal Pate, our chief financial officer. Thank you, Dr. Robertson. Good evening, Chair Brown, Vice Chair Williams, schoolboard members. Dr. Robertson. Joining me this evening is Linda Matkins, director of consolidated benefits, and David Kio, principal with Mercer, who will provide more in-depth detail on tonight's topic. Before turning it over to them, I would like to briefly share with you and with our viewing public the highlights of our compensation investments over the past five fiscal years. A compensation package represents the full value of what employees receive in return for their work. This includes salary, health benefits, and other financial and non-financial rewards that support support both their professional contributions and overall well-being. Over the past 5 years, Virginia Beach City Public Schools
015has dedicated additional funding of approximately $171 million to salary and wage increases and an additional $27.5 million to employer contributions for the health plan. Together, that is nearly $200 million in added investment to our employees compensation packages. Drawing your attention to last year, 202425, the school board allocated over 32.1 million towards salary and wages, which supported a step increase of 1 to one.5% effective July 1st for employees along with a 2% raise for all employees effective August 1st. In addition, the school board committed an additional 11 million to keep healthc care rates flat for 2025. The total investment in compensation for 2024-25 was over $43.2 million. For this school year, 202526, the school board allocated over 29.1 million towards salary and wages, supporting a 4 to 4 and a.5% raise for all employees. They also
016set aside an additional $8 million to maintain health care costs for 2025. The total compensation investment for 202526 amounts to more than $37.1 million. We wanted to highlight this broader view to document how important it is to the school board to provide employees with the best possible compensation package each year based on available funding. By stepping back, we can better see the substantial long-term investment that has been made in our employees compensation. And with that perspective in mind, I will now turn the presentation over to Linda and David to walk you through the additional detail of information. Good evening. Good evening. Um, and if I could just as you get to slides with charts, I've had a couple board members ask if we could briefly pause um, if there is a lot of complexity. So,
017in mind, thank you. In the next several slides, we will review employer contributions towards employee and retirey uh, coverage in response to a schoolboard member's request for this information. You can see that um schoolboard employees or or school employees are offered a point of service or POS plan and a consumer-driven health plan or CDHP. You can see that we offer five tiers of coverage. Employee only, employee and child, employee and children, employee and spouse and family. To review these costs, we will first focus on the school employee POSOS family coverage outlined in red. The 2026 total annual cost for the school employee POSOS family coverage is $35,69543. The first column shows cost without an employer contribution to uh health savings account or HSA and the second column is the cost of coverage with the HSA.
018But the POSOS plan that we're focusing on at this moment is not eligible to offer an HSA. And therefore, these amounts for the POSOS are the same in those first two columns. The funding sources to pay for this coverage include, if you're looking from right to left, an annual employee contribution of $7,96128, an annual employer contribution of $23,54543 and an annual health fund draw down of $4,188.172. The combined value of the employer contributions and the health fund drawd down for the school's employee POSOS family coverage is 27,73415. That number is not shown up there. It's just those two columns added together. As mentioned, there are no HSA contributions for the POS plan and therefore this column is zero. To review the CDHP plan, we'll focus on the school employee CDHP family coverage also as outlined
019in the red at the bottom portion of this slide. The value of this plan includes an employer contribution towards a health savings account. So, we will review the funding sources for the second column to the left, which is the total annual cost with an HSA. The 2026 total annual cost for the employee school employee CDHP family coverage with an HSA is $31,867.91. The funding sources to pay for this coverage from right to left again. An annual employee contribution of $4,140.60, an annual employer contribution of $23,54543. an annual health fund drawdown of $3,462.11 and an annual employer contribution towards the HSA of $719.77. The combined value of the employer contributions for health, the employer contribution to the HSA and the health fund fund draw down equals 27,727.31. And just for clarification, um, as this is confusing
020when looking at the rate sheet, the employer contribution provided to those enrolled in an HSA plan for single coverage is actually an annual contribution of $750 rather than what you see here of $431.86. And for all dependent tiers, the contribution is 1,250 rather than what you see here of 71977. The reason it is shown differently here is due to the fact that all employees enrolled in the CDHP plan are not enrolled in receiving an HSA funding. So the amount shown are the average cost to the employer spread across all enrolled for accounting purposes. I don't want someone to think that um we have changed the HSA contributions. So I wanted to clarify that they are still $750 for single coverage and 1,250 for all dependent tiers. School retirees are also offered a point of service
021a PO. Hold on. I'm sorry. Um, Miss Rogers, I'm sorry. I just wanted to clarify. Um, and for everyone for so our point of service plan would not be the high deductible plan. The CDHP would be the high deductible. That is correct. So, what is the deductible for the high deductible plan? Just so that I understand what it is. It's 2,000 for if for um those enrolled in an employee only coverage and it's 4,000 for those enrolled in any dependent tier. So after the employee only if you're employee child or employee children, employee spouse or family, it's 4,000 for the high deductible. Yes. Okay. Thank you. Sorry. You're welcome. All right. Looking at this slide, this is actually for retirees. So school retirees are also offered a POS and a CDHP plan. They're the same
022plans offered for employees as well as all five tiers of coverage. And for clarification and looking at this slide, um although the term employee was used in the in these tiers, it this is actually for retirey coverage. So to review costs, we will first focus on the school retiree POSOS retiree only coverage is outlined in red. The 2026 total annual cost for the school retiree POSOS retirey only coverage is $15,122.94 and the funding sources are annual retiree contributions of $3,74.88, an annual employer contribution of $10,400, and an annual health fund draw down of $1,647.97. The combined value of the employer contributions and the health fund draw down for the school's retiree POSOS retiree only coverage is $12,486. The 2026 annual cost for the school retirey CDHP retirey only coverage as outlined in the red at
023the bottom portion of the slide is $13,6949. And the funding sources are from right to left the annual retiree contribution of $1,4598, an annual employer contribution of $10,49, and an annual health fund draw down of $1,210.32 in addition to an annual employer contribution towards the HSA of $431.86. The combined value of the employer contribution and the health fund draw down for the school retirey CDHP retireyonly coverage is 12,427. And the same thing applies that I mentioned about the HSA. The contributions into those plans are still 750 for single coverage and $1250 for dependent tiers. It's the same. they they actually are enrolled in the same plans and offer the same coverage. In the prior slides, we provided employer contribution by plan and tier for each employee and retirey enrolled. This historical health healthc care funding
024is taken from the fiscal year-end reporting for monies paid in total by fiscal year. So this is looking at actuals and not projections. Rates are developed with projected cost on a calendar year basis. The top part of the chart is the total employer contributions and the bottom part represents the employee and retirey premiums. The total employer contributions for the 2019 fiscal year end was 67 million 67.6 million. You can see how the contributions increased year-over-year with the projected cost for fiscal year 2026 of $ 105.8 million. The total employee retirey premiums for the 2019 fiscal year end were 18.1 million. They dropped in the fiscal year 2023 through fiscal year 2025 years to 9.4 million and are projected to be 13.8 million in fiscal year 2026. The employer has consistently paid a significant portion of
025the total cost of coverage. And looking at fiscal year 2019, it was 78.88% 88% and it grew to 90.77% in fiscal year 2025. The projected rates would cover 88 for 2026 would cover 88.46% of cost leaving employees to cover the remaining 11.54%. This slide provides a look at historical employee premiums. In review of the employeeonly coverage for the point of service plan shown at the top, which was formerly called the POS premiere, premiums were $63.29 per pay period in 2019. Premiums remained $63.29 in 2020, 2021, and 2022 with no increase in premiums or changes in plan design. In 2023, premiums were reduced to $29.75 per pay period and remained $29.75 in 2024 in 2025. There were also no plan design changes in those years. In fact, information based upon paid claims data combined for both
026plans for calendar year 2024 indicates that the plan paid 89% of the total costs paid to providers while the members paid 11% of those cost. the 2026 premiums will return to the $6329 which are the same premiums that were in place seven years ago. You can see from this chart that the same held true for both plans available today in all tiers of coverage where the premiums remain the same in the years 2019 through 2022, reduced in years 2023 through 2025 and returned to the 2019 premium level for 2026. It is recognized that employees hired after 2022 when the reduced premiums were already in effect may be more surprised by the premium increases for 2026. Also to note when the middle plan the POS standard was eliminated the plan design for the CDHP plan formerly
027called the POSOS basic was improved to cover a greater co insurance percentage. Over the last three years, the rising cost of health care was absorbed fully by the health fund balance in 2023 and in 2024 and 2025 by a combination of additional investments by the employer as noted earlier by Miss Pate and the health fund balance. The health fund will not have the means to absorb increases in the future and employee funding has already reached the level of covering nearly 91% of cost. As discussed earlier, this is no longer a viable solution and therefore premiums were increased for the 2026 plan year. This is hard to read, but this communication timeline from October 2024 to August of 2025 shows the dates when the need for for increased healthcare funding was communicated, provides highlights of key
028dates when changes in plan projections occurred, necessitating addition additional rate scenarios and ultimately contributing to the larger premium increase and the dates when final projections were received that led to finalizing the rates. The key dates provided indicate a typical timeline. The specifics for 2026 include October 8th of 2024, schoolboard presentation to revenue sharing form formula reconciliation with higher trend reported than prior years. November 12th, 2024 requested reversion funds to close the healthcare gap. November 25th of 2024, updated projections that necessitated an additional 10% increase in the employer contributions beginning January 1st of 2025. November 26 of 2024, 5-year forecast reported an expected increase of 15% in fiscal year 26. January 28th of 2025, schoolboard workshop reported healthc care increasing by double digits. February 25th of 2025, schoolboard workshop reminded need for 10 million in healthcare.
029March 4th, 2025, schoolboard presentation on healthcare with options for increases increases of 15% as presented as option two and 35% presented as option one. May 21st of 2025, updated projections due to increase in cost with updated claims experience and effects of the American Rescue Plan on drug pricing. June 24th, 2025, updated projections with update and expected trend from a 7% to 9% affecting both the 2025 and 2026 plan years as well as um was also factored was expected movement in enrollment from the POS plan to the CDHP. July of 20 July 25th of 2025 were the final updated projections. July 30th of 2025, we finalized the rates. This date to finalize rates was important due to the fact that our configuration changes within our enrollment platform provider with benefit focus were needed by July 31st
030of 2025. Then on August 7th, 2025, a notification letter of increases in healthcare premiums were released to our employees and retirees. If we could wait and until um she's done with her portion and then we'll ask questions. You could just notate which slide it is. This communication timeline dives a little deeper into the key changes and projections and the actions taken in finalizing the rates. Details of these key dates include March 4th of 2025 and some of these are were mentioned earlier, but this goes into a little greater detail. At the time of the presentation to the school board, gross cost was projected at 127.8 million you utilizing a 7% trend in claims experience through December 31st, 2024. In this budget meeting, staff shared two options that would increase the employee share of health coverage
031in 2026. one at 15% and one at 35%. This was a signal to staff that health coverage costs were very likely to increase to somewhere in this range. Dr. Robertson was asked by Chairwoman Brown if any action was needed at the time. He said no as we were waiting on the first quarter of healthcare data for 2025. On May 21st of 2025, Mercer obtained claims experience through March 31 of 2025 and incorporated expected changes in pharmacy spend due to the American Rescue Plan Act with updated projections to gross cost of 130.6 million. They also updated our employer contribution to reflect 105.8 million. the previously reported 110 million had assumed another budget increase of 10% for fiscal year 26 and we had asked them to um not include that as these the the updated created a
032greater reliance on the I'm sorry so the we asked them to change that because we hadn't um budgeted that monies for the fiscal year 2026 year so that's why the change from 110 million to 105.8 in that column. These updates created a greater reliance on the health fund reserves. On June 24th of 2025, projections were updated with an increase in trend assumption to 9% previously at seven affecting both the 2025 and 2026 plan years with gross costs now projected at 135.6 million. a rate um scenario to increase the premiums to the same cost as was in place in 2022 resulting in an aggregate increase of 97%. It also incorporated a 4% change in enrollment migration from the POS to the CDHP plan. This result these changes resulted in a 200,000 deficit projection of the health
033fund balance at 1231 2026. This data resulted in further discussions internally and with Mercer about health care costs for 2026 that could be higher than options shared in March. Since this was the first time we had seen a 9% trend increase, we felt it was prudent to review funding scenarios before making recommendations to the superintendent. On July 3rd of 2025, internal discussions among staff to discuss funding options and rate scenarios took place. On July 25th of 2025, we received and reviewed additional funding solutions that we had requested from Mercer, including the 9% trend in the 4% migration on other options. With no changes to projections from June 24, the benefits and budget team met to investigate options and settled on a recommendation to return health care costs to the rates used from the 2019 to
0342022 time frame, which resulted in a 97% average increase from 2025. On June 30th of 2025, discussions and decisions on direction was made to finalize rates. This was the date when we first notified the superintendent that we would be recommending rate increases that are we are discussing this evening. Dr. Robertson expressed a deep concern about the increase and directed staff to develop a communication to share with staff as soon as possible. He wanted employees to have plenty of time to digest the information and make decisions before the typical process where employees learn of their health care costs when they receive their benefits information long or just before open enrollment. On August 7th, 2025, the employee notification letter was released. And if I could, um, I'm just going to open the floor for any questions that
035we have. Um, seems like a natural spot to ask. Um, I know Miss Rogers. Um, Rogers. Okay. Okay. Hi. I have a couple of questions. Um first of all you just talked about you know that there was um discussion to the board about percentage of increases. Was there at any point like did you guys communicate actual numbers of how much it would cost our staff or did you not have that information? I believe that information I I don't think that we showed employee premiums when we were doing that because at that point we don't typically look at employee premiums but I I can't recall do you know um you talking about the March 4th meeting the March 4th and then I also have highlighted May 21st you are saying that Mercer emailed updated projections um
036and that we had a presentation with Mercer I was just wondering I don't recall seeing any of the premium increase numbers numbers. I mean, we discussed that there was a going to be a gap and I recall it being asked, but I don't recall us getting those numbers because I recall being told that we didn't have them yet. Is that correct? No. If they had provided a a 15 and a 35% rate scenario, it wouldn't have been that we didn't have them yet. We may have just been tal and we'll have to look to find out if we had provided those. I have the presentation. We did when we discussed those options on March 4th. There were rate tables that showed what the increase to the employee would be under each employee. Right. And looking
037at the rate tables, there was an option one and option two. But are those the two things that we presented when we presented it to the staff? No. And that's I think the timeline that Linda's going through is that that was very early on. And as cost increased and things kept going in the wrong direction, that's when we started monitoring and trying to increase employer contributions in order to try to keep those rates stable. And we just got to a point where we had to make a decision and we couldn't keep it stable. So what was presented then was presented to the board in a public meet, you know, in a public workshop, but it was not communicated because there's been no decision at that point. We were looking at scenarios. Right. Okay. So that's
038what I I I just wanted to make that clear that we weren't presented with the I guess we'll call it option three that went out because we were told option one could be, option two could be, but it actually wound up option three, which wound up being much higher. Correct. If you want Yeah, if you want. There's were there were other scenarios that were also looked at, but that those were not presented as well as we looked and tried to see what the trend was and what was happening to the cost and and all of that. But with regard to the timeline, so we have to have our budget completed at some before the governor signs off by the state. But you guys don't have your final numbers correct until the end of June. That
039is correct. If you look at some of the stuff on the communication do um timeline, you know, by code, we have to have a budget approved by city council on May 15th. And so if you look at some of that those earlier dates when they're looking at claims data, we're in 2024, very early 2025. So, we're working with the most recent data we have, but there is quite a delay from when we have to approve a budget and when that trend continues to go and we only have one window when we can increase employee premiums and that's a January one on the plan date for we we do have some options as an employer during the year. It's a programming thing. If we look and we have done that where we think we need to
040increase employer and if we think we can fund it and we're trying to to do that, we we do do that but it's not like every month or anything like that. No. So we basically don't get the finalized numbers after June 30th every year. Yes. Correct. But we have to have our budgets. That's correct. So there is always going to be like an information gap so to speak because we will never get our numbers on health care finalized until well after a budget has to be established. Yes ma'am. And that's always been the case. It's just that what you see now is a little bit of an unusual anomaly with the way things move. Right. So here's my last question I guess. Was it communicated via email or letter or any kind of communication to
041the staff after the March 4th or the meeting that we had where we were discussing percentages that it was a possibility that healthcare could increase? Did we give some sort of like general statement out to staff that basically said we're looking at our healthcare costs but it's possible they could be increasing for next year year. No, a lot of that was just done in public meetings. it was not done as directly staffed because I mean I don't have a good reason. My my thought would be I I don't want to put stuff out which may or may not be happening. what we tried to communicate and advise the board that because we as far as back as July of 2024 when we did school board retreat and I know some of you are not on
042there but we I talked about at that time we were starting to experience double digit increases in our trend and that we would likely have an increase on 11 126 but at that point there was no percentage mentioned at that time right because there wouldn't be able to be that unless we had a crystal ball which we don't have. All right. Thank you. Okay. So on these charts you talk about the annual health draw draw fund draw down. Is that with the proposed increases on um I'm on slide seven and on slide six the um when we're talking about the health fund draw down. So typically your contribute your total cost is made up of your employee and your employer funding that equals your total cost. But because as you all were made aware our
043health fund balance was very healthy back in 2023 and that's when the decision was made to reduce rates. And when doing that, the employer and the employee funding uh when you start relying on the health fund itself to pay for your ongoing cost, then um at some point, you know, that will be depleted. So I'm not sure if that answer right. I I guess this says 2026 annual health fund draw down. So that in 2026 it is relying on I think it was 11.4 million for the for the scenario that we provided in the 97% rate increase and David will be um going over the details of that information in just a moment. Um but yes the the 2026 year is still relying on the health fund draw down. Okay. Um all right. Um and
044then on slide 10 under uh 5212025 uh the American Rescue Plan effect on drug pricing. Um that's pretty interesting. Could you speak a little bit more about that? Sure. So what uh and David probably can fill us in with a little more information, but that bas in essence is lowering diabetic drug insulin pricing. So, when the member goes to have their prescriptions filled, they're going to actually see the reduction in their rates. Um, some drugs, as you may be familiar with, but there is rebating rebates that come back to the plan um based on certain drugs and that was diabetic drugs is one of those. And so, there's large rebates that come back to the plan. They get deposited back into the fund for the benefit of the the group. But with this change, it's
045going there the members themselves will receive the benefit of that. So then the rebates don't come back to the total plan. So that did have um an impact, Miss Melnik. Okay. So looking back at slide nine where you showed the historical employee rates. Yes. So, our employees are basic are paying the same rate for 2026 as they did for 2022. Yes. Okay. And then just so the public knows in that graphic 23 24 25 was when we were able to make a more significant impact on the healthcare. So okay I just wanted to make sure I understood that and that the public understands that. So for those three years when we had more money Okay. All right. So, we're back at the exact same number from 2022. That's correct. Okay. Miss Rogers, I had another
046question. Sorry, I thought of um the you mentioned that the benefits and budget team met. Is is that I know that we're kind of tied to the city. So, is the benefit and budgets team the one that you met with? Is that just the school side or is that the combined? That was just the school side. Okay. So are there like I'm guess I'm trying to understand how this all gets decided because if we have a benefits and budgets team on the school side I'm assuming they do on the city side. So then who are we going to get into who decides on all of this? So um we do have a joint benefits executive committee with executive leadership from both the city and the schools. We do meet together monthly. Um sometimes those meetings
047are canceled if there's not updates to discuss. Um we do receive quarterly projections or updated projections from Mercer. So we are all meeting together. We are all talking about this together. But um in the year that we reduced rates for 2023, we no longer have the same, you know, had the same rates as the city. They also, which I can't speak to, but you know, their budgeting is is different than the schools. And so we got to a point where when we were meeting jointly that we had to either focus on the schools or focus on the city. So sometimes if it went if we needed to discuss specific budgeting and rates and and so forth associated just with the schools, we would have separate meetings that were not a benefit a full benefits executive
048committee meeting. So that's what that's referring to. Okay. And so you said that there was executives is but I've heard from other board members that elected school board members are not allowed to be at those meetings. Are there elected city officials in those meetings? There are not. And is there a reason why? And I'm asking because at the end of the day, it's our responsibility, fudiciary responsibility to ensure that we are being responsible. So I'm kind of confused as to why we're barred from those meetings or not allowed to be there, but it's our responsibility and we have to take that like we're we took an oath for that responsibility. And oh, Kim's going to tell me the information they have is brought back to you. There are many many committees that we have that
049we meet that the schoolboard members aren't on. So you've got your list of committees under ballot 128 that you appoint to. These are just committees working internal committees and again we have so many committees within the school division that we're meeting. The information we have here comes back to you in generally budget or other types of meetings on there. But that is these are working sessions that we're dealing with, right? But if we wanted to sit in and understand like especially if we're doing RFPs and we're trying to understand what's going on like I I've I've been told that we have been told we are not allowed to. Is that correct? Or can we sit in and see what's happening since we're responsible? That is the discussion your board ends up having with your superintendent.
050The problem is once I get to a three on it now becomes a means open to the board. We have to have notices. We have to have everything we have in a meeting. It's not efficient for us to be running all of our meetings where you show up, which is why we're always careful why you're coming to it. You don't have a voting right for it. Right. Other committees that you have, you have made a decision. That's file 128 where we need a leaison. The this is simply this is one of those committees we've not determined a leaison is necessary to it because all the information eventually comes back to you. Right. I understand that. I think just because there's so much questions and confusion and lack of understanding maybe we should consider having somebody
051once a I don't know it's so if I may just make want to be clear to everyone I've never indicated that board members can't be a part of that committee. I've never been asked in fact my comment has been when this has come up is well perhaps a board member and a council member do need to be on me on yeah benefits committee. So, I have never been asked nor would I ever deny a board member or from wanting to be on a committee. Very big. I did not. No, ma'am. You did not. I just want to make sure the way people hear I know and this is where I'm trying to clarify because again I feel like that we are responsible and again I have I mean and I don't know if this is
052the right place to ask about RFPs or not is are we going for like I have no idea what if we're going to be talking about that but I think that like there's question I have questions about the RFP process. So should I ask it here or is there another part where I would be more beneficial? There is not a specific part of the presentation that talks about the RFP. We do mention it I think somewhere, but we did do an RFP for health last year or this into into this year and reawwarded to Cinta. And so let me ask then if I may um about the RFP process, how often do we do it? Typically there's uh it depends on the on the vendor. Um the past ones have been seven years. Okay. And
053then um do we have like quantitative and qualitative criteria for our scorecard on who we choose? Yes, we use Mercer Consulting to help us with our Okay, so Mercer is the one that helps us with that scorecard and I guess if so if you can't answer Mercer can I can wait for these but like I'm just kind of wondering about the focus um the factors that led us to choose Centara like if there were specific qualitative factors that led us to choose them. Um because it's Yeah, go ahead. I think I'm going to need to step in here. Under the procurement process, there are certain decisions you do and don't make that are made available. Other decisions that may not be available for you. Um, you can get the procurement documents afterward to see what
054they some of the information is not necessarily available to the public. It's could proprietary. So, that may be stuff we cannot provide you. Then I'm gonna ask just one last question because I'll ask for that documentation, but do do our audit team or the city's audit team, does anybody do any kind of like audit of the RFP process? Do we know or if they have done it recently or anything of the specific medical healthcare pause or the overall I'm kind of looking at like um like if they've done an RFP on how we do the I mean sorry if they do an audit on how we do the RFP process and including like any relationships that we've had with our providers um and if there's any results with regard to that if we've done audits
055on that any officer would be responsible of making sure you're doing it in compliance with the Virginia Public Procurement Act. That's her responsibility to make sure that's happened. Audit is going to go in either on a performance audit or when they have reason to believe that there's it's a risk factor for us to check and that's not been on our risk analysis. Okay. I I didn't know if we like conducted any in that capacity where we were looking at ensuring that the RP process is going smoothly. if you know we making sure that we're not awarding based on whatever. So we are required to be in compliance with the Virginia Public Procurement Act and that is what your auditor is your your I'm sorry your procurement officer is responsible. Okay. Thanks. Okay, Miss Melnik and
056then we're going to move on with the presentation. And just a heads up, I'm getting some reports that some people that are viewing may be having a little bit of trouble hearing you. So if you could just maybe move the microphone up. So, as a school board, let me just clarify. I've been on the board for 11 years. We've never voted on health care premiums before. This is something that Consolidated Benefits takes care of, and your job is to find the best product at the best price for our employees as best you can. That is correct. So, this is not a Virginia Beach City Public Schools problem. I believe that health care across our nation has increased exponentially. And so I will leave my one comment here, my personal comment that um my health insurance
057increased unbelievably. I've made no I've not hidden my health insurance costs, which from my family was $2,400 a month. I am the employer. I have no employee contribution. I have to pay that. and my health insurance just increased to $3333 [Music] a month. And so I feel that pain too. Um and so I am correct though in assuming that healthc care coverage across the board like across this nation has increased. Okay, I'm getting a head nod from Mercer. So, I just need to know that and um but mostly that we have never had a vote on healthcare. Correct. That is correct. Okay. Thank you, Miss Mel. If I if I can add um to that because I think this is important as well. So, my responsibility as superintendent is to not overspend the budget. So,
058the board approved the budget, the city approved our budget. um when we consolidated benefits does their work, it's my fiduciary responsibility as a superintendent of Virginia Beach City Public Schools to ensure that any decision I make does not overspend the existing budget. And so and that's the school board's number one responsibility as well. And and so when consolidated benefits provided that information on July the 25th and I received the information on July 30th for the first time, we took immediate action. So Thank you. Go. There we are. I was trying to get to the right slide. Um, we did put together a frequently asked questions document that was created and is available on the consolidated benefits office website in the open enrollment section on the uh www.benefitsthebe.com. on the screen you can see where the
059long um actual URL is listed, but it can be navigated to by getting to the open enrollment site. Open enrollment is Monday, September 29th through Monday, October 13th for most of our employees and retirees. Um, and employees and retirees with additional questions may contact the consolidated benefits office by emailing benefits vbschools.com or contacting us at 757-2631060. All right. We will be addressing questions uh additional questions raised by the school board as we continue with the presentation. A request was made to provide additional premium options and to understand how those scenarios would be funded. Two additional options will be presented that provide average increases of 75% and 50%. The ability to provide additional funding, as Dr. Robertson mentioned, will require shifting budget priorities to reallocate funding from the operating budget. With that, I'll turn it over
060to Dave David Kio, senior principal with Mercer. Thank you very much, Linda. And I'll I'll address uh if I may, Miss Mrs. Milmick's um question about the impact of rising health care costs uh nationally and on a statewide basis. And that is absolutely the phenomena that we are seeing. uh when we look at our clients across the uh country and across the Commonwealth of Virginia, we're seeing uh for 2026 the impact to budget rates for the employer uh self-funded employer sponsored uh segment uh increasing 3 to 5% above what they traditionally have. And the range on those is anywhere from uh you know uh the the average was 10.9 the range is 8 to to 20 plus. Uh so it this is this is not unique to Virginia Beach uh city public schools for for
061certain. All right. So as Linda mentioned uh we were asked to provide some details around a couple of different funding scenarios and this first one here so the original uh released uh contribution scenarios called for a 97% increase to employee contributions. This first alternative that I'll talk about here uh calls for a 75% increase to employee contributions. Um and so I'll give you just a couple of stats and tell you where we'll focus on this because there's a lot of numbers on this page, but uh 73% of your active employees are enrolled in the point of service plan. Uh and uh just shy of 60% are in single coverage. So with that context I'll ask you to focus on the very first row the employee only under the point of service program and you'll see
062there uh the black segment is the uh original 2025 contribution is in uh is in blue under this new scenario and you'll see the increase dollar amount and percentage basis. So this scenario calls for an increase of $496.79 per year. When we compare that to the 2022 contributions that the original scenario that was released matched, you'll see that it's uh these this scenario is about $174 below the 22 contribution requirements. Uh and that's about 14%. So this um so and for that particular tier of coverage, this scenario would uh call for Virginia Beach City Public Schools to fund approximately 90% of that cost. So when you look at the total cost with HSA in the very first column in the black and then you take the contribution the employee contribution percentage or dollar at uh
0631,9175 um it is uh it's about approximately 10%. And that is up from 88% that the uh employer would fund under the originally released uh scenario. So, the figures for the uh the family coverage, you'll see there uh in that row and the point of service on the top. U the total cost with HSA 30 uh just shy of $36,000 per year. Uh this uh this scenario would be would call for them to contribute $6,866. Uh and that's an increase from 2025 of 3,124. but it would remain still uh about a,000 about $1,100 below the 2022 rates. Uh again, about 14% lower. Um so unless I'm asked, I'll refrain from going into the detail for for each and every tier, but I hope that gives you the the perspective there. So recall in aggregate, Linda
064talked about the employer contribution towards the rates being at 90.6 77%. So if you think about it on a per tier basis, those two that I referenced were pretty close. Um actually I will talk about one one more under the CDHP plan. That's the lowest cost option uh that provides the most affordable plan. U and so with that particular option the total cost with HSA for the single is 9,848. Under this scenario um the contribution would be 8667 per year and that is less than 1%. So in in that scenario for that type of coverage and that tier of coverage the employer responsibility would be in excess of 99%. And so when we roll that all up that in aggregate uh comprises the 90.77% that we referenced. Can I just ask you really quick before
065you move on? Um, what is the total dollar cost to us of that change? Because I know that we're talking about individual situations here, but when we're combining it all together, what's the total cost to make it to this 75% um in aggregate for the employer? um in the increase from where it's from what was originally released is uh is just a little over $2 million. And there's a aggregate slide that's coming up here that'll that'll illustrate that more clearly, but it's uh but it's a little over $2 million. Okay. Thank you. Yeah. Thank you. Yes. I'm sorry. So everything in the black is what was what the employees already have been given and the blue I'm a little bit confused as to what the employee would be asked to spend because of what is
066up here. Yeah. So I'm just asking like this is what we were asking that what we're currently asking them to spend for 2025 26. But if we spend the $2 million, it would take the employee contribution from what to what? Cuz I this is confusing to me, this chart. It would I won't try to do that math in my head, but it'll take the 2025 contribution and uh well, yeah, there it is. 55 59496 is 2025. the first row and column in the blue under the Okay, so that's what we're asking them to spend or that's what they would be that's what they're currently paying per year in 2025 and that would under this scenario increase to,9175 increase you mean so the the black represents the scenario that is being proposed the alternative scenario that's
067being illustrated 2025 is shown for reference. And then if you look at the increase column, the second column under the lighter blue shade, it increases by 49679. So it's going from 594 to 1,91. And that increase represents a $496 increase. Okay. Totally lost because I'm just asking what are we asking the our employees on employee only? What would they be paying without our $2 million contribution? And then what would it change to is what I'm asking. Does this make Am I making sense? No. Because I'm just trying to figure out under the originally proposed. Yeah. Yes. That's what I'm trying to figure out because this is a lot of numbers and they're not making sense to me that like this is what the employee would be paying without our 2 million. With our 2 million,
068here's what they would be paying. That's all I want to know. Yeah. All right. So, let me I'm going to be a little little lower level, I hope. So, Thanks. So with the proposed 2026 rates, we went back to the 2022. So right now the proposed rates for 1126 for an employee only would be $1,265.88. Is that on this chart? It is. It's the first dart only. Okay. Got it. Yes. Thank you. So that was what they paid in 2022 and then we're going back to that rate is what the proposed is. But with the 2 million they it would go down to 594.96. No, the 594.96 is goes back to when we had all those huge rate reductions when we were able to infuse money and our trends were really low. Okay. So the
0692 million would take us from the 1,265.88 to $1,91.75 for an employee only. Thank you. That's the comparison I couldn't Thanks. That's all I needed. Thank you. Thank you, Crystal. The next exhibit is uh the figures for the alternative scenario, the 75% scenario for the retirees. So, you'll see there the contribution relative to the 2025 contribution uh is in that first row in the in the uh dark shaded green. The increase is,51 for the year. And when that's compared to uh the 2022 contribution, it is still about $270 lower. And so that was the target as well. So that's that's the increment from the original proposal. Are there any tiers or any rate questions specific to the retirees? If not, I can move over to the second alternative, which is alternative uh at a 50%
070increase. So, this would require uh a little bit uh little bit greater investment. The 75% scenario called for a little over 2 million. Uh this one will be u a little over four million. And again, there's a chart that will summarize that coming up here shortly. Um, all right. So, looking at the same uh schools POSOS employee only row, the top row, uh you can see the that investment that I described there would require an increase from 2025 of $330 per year. And uh that increased investment would make it uh a little bit further lower than the 2022 rates by about $340. Any questions about the individual tiers for this scenario? I would actually if we can because we have probably 20 more slides to get through if we could just try to hold as
071many questions as possible. Um and I I know there's a lot of details in here but um I think we're almost to the end of the the charts and then is the schoolboard questions on 21 that continue on. Are those related to your presentation as well? um they are and there are some utilization based charts that we talked about looking at the historical trends that follow those questions. So I'm happy to move ahead to those. Yeah, I mean if it's okay I would like to um kind of get through the presentation part that way everybody has an opportunity to chime in. Um absolutely it's okay with everybody. Thank you. Okay. All right. So that's the same scenario for the retirees there. um the you I think the concepts are are uh have been discussed so
072that you can look at those um at your at your leisure. So this this is uh the chart that summarizes the aggregate financial impact. So we work to update the projections on an annual basis. the 2025 projection. The deeper we get into 2025, we will update that as data becomes available as to the plan's performance. So that's in the first column there. So the gross cost for the plan year, this is plan year is the same as the calendar year of 2025. Gross costs are projected to be 123.3 million. Employee contributions that we talked about uh some to 9.4 million. for a net cost that has to be funded by Virginia Beach City Public Schools through either budgeted amounts or um accessing the health fund equals 113.9. The budgeted funding amount is 100.3 uh and
073that requires 13.6 million draw down from the health fund surplus. So recall that that health fund surplus in years where the funding rates exceeded the actual cost, that amount accumulated to the funding to the health fund account, that's what's being relied upon here. So that health fund balance, I skipped over that row intentionally. Uh the balance as of May is 19.1 million. 2025 uh is going to use up 13.6 million of that. Um some of that has already been booked as this year's worn on. So the draw down remaining to year end is is is approximately 8 million. So the estimate of the balance of the health fund is 11.2 million at the end of 2025. And I'll stay in that column for just a minute. We may talk about the the two months reserve
074uh in more detail. Um but that projected two months reserve that is um the recommended funding to have on hand that represents about 212 months of spend to cover the costs in a given plan year of claims expenses that have been incurred but not yet paid and build to the city. So there is a lag in the time it takes from healthc care providers to um record and send the bill to Cantara and for them to to review it and and pay it. So uh so there's uh in general healthc care financing u recommends keeping a reserve of that amount. So right there in 2025 you can see that the projected healthcare fund balance is uh is not going to cover that amount that desired amount. that doesn't have immediate repercussions, but it's a target
075goal to have that 212ths of the gross cost funded, the two months uh of reserve. So, if we move to the next column, the the first column was the initially released uh employee contribution scenario. So, you'll see the the uh we're moving into 2026 and it's about a 10% increase projected in gross costs. So the total plan costs adjusted for any changes in enrollment is expected to increase from 123.3 to 135.6. That's about 10%. The employee contributions under this initially proposed scenario will contribute 18.4 million and that leaves 117.2 2 million to be funded by the city of Virginia Beach's public schools either through uh specific budgeting or reliance upon the healthcare fund. And so that uh you'll see so we talked about the healthcare fund balance being 11.2 million at the end of 25.
076So that's the starting point for 2026 11.2 million. under that scenario, uh, this fund, the health fund impact is is estimated to be 11.4 million. So, it's a couple couple hundred thousand off, but but that was intentional when when looking at the rate setting process. Uh, as Dr. Robertson said, the intention was um to to preserve, not go in the red. And in fact, that number cannot go negative. It has to be paid in some form or fashion. Um, and so that was the scenario that was generated. Um so you'll see the projected health fund balance at the end of 2026 is a negative. 02 million. Um not not perfectly zero uh but but essentially um use the healthcare fund is or the health fund is um is is is gone. And so the the
077two months targeted reserve um is is basically 100% unfunded. Um and so that all of that went into the rationale to arrive uh where where the the initial uh rates were set. So we talked about some alternative if some additional funding uh is infused into the plan. We talked about uh the 75%. So that's that next column over and uh you know I'd mentioned it was a little bit over $2 million in aggregate. Uh you can see that by um if you go to the bottom the projected health fund balance at year end uh instead of being negative -2 it go it grows to negative -2.5. So that 2.3 million is not the source of that funding is not reflected here. It's just shown as a negative number until there's a source if if and
078when there is a source of that funding identified. the 50% option that we talked about um increases again an additional uh um 6.6 million or excuse me 4.3 million uh from the originally released scenario and that would result in a negative 4.8 8 again a number that cannot be negative if those costs materialize and these are all projections and we'll talk about some of the details and methodologies of how we arrive at these projections um but but but that's the result. Um any questions about those aggregate figures um Miss Rogers, do you have any questions about the aggregate figures? No, I mean I basically we're in the red in our healthcare fund no matter what. Even if we choose to not change anything, we're in the red. I I think my question more or less
079and I don't think that Well, maybe you can answer it. Are we do we have the most cost-effective plan? Is this do we have that? Like is this the most coste effective plan that we can get at the moment? So, we haven't talked about uh changes in plan and there's multiple dynamics that that might influence the definition of the most cost effective, but a lot of it is plan design. And Linda talked about the plans that you all offer are uh are very rich, very competitive programs in the sense that um when services are rendered, the patient pays for 11% of the cost of the care that they receive and the plan pays for 89%. Right? But she we also talked about the high deductible and I know that it was encouraged for um employees
080to move to the high deductible plan. But when you are a single employee and your high deductible is $2,000 and you are you know not a high paid employee that becomes an impossible situation where we then have our employees not going to the doctor. So then in the end of the day, we are encouraging our employees to stay away from the doctor until it's an emergency and then we are actually increasing our claims. So I don't want to do that. I think that that's foolish. Um and so this is where I I mean I'm trying to figure it out. So like that's what I'm asking is do we have the most cost-effective plans for our employees? because right here kind of doesn't seem like we know, but I'm just asking. Yes. Um, so so I'll
081touch on the the funding element of this. So from a funding standpoint, self-insured while it requires uh uh sophisticated budgeting exercises like this and projection exercises, that is in the long run the cheapest funding because you're not paying the risk premium that's charged by the insurance uh insurance carrier. So that saves somewhere, you know, five to probably five five to 8% uh over the long run. Now, you're at risk for fluctuations yeartoear. Um so from that standpoint, um you're in the most cost-effective funding, right? Being self-insured, but but the plans that we're offering is that like Yeah. Sorry. And and not to be labor, I I think if we can try to continue to move forward and make sure that everybody on the board has the chance to come in Is there any questions about
082this one and then this will be our last until the end of the presentation and and you know I just want to make sure everyone's included. Um so this one and I'm just going to isolate that is is key but if you can make that your last question for this being well I I think if I if I may uh I will move forward to some of the cost drivers and the trends to help you all understand. And so when you think about what's happening in your plan, that's the overarching question is what is happening to make our costs as high as they are. And we've got some slides in here. So um if if it's okay with you, I'll I'll move forward past the the questions. Okay. So I will talk a little bit
083about general market trend and we'll get specifically into the drivers or the influencers of your plan. Um so the the uh the observation we talked about uh increases for 2026 for all employers are are averaging in the in the uh you know three to three to 5% higher than what they have historically been. uh and the inflators that you see here on the left side. Um there's there's unit cost challenges contracting with providers for all payers. Uh Cantara included are uh there's upward pressure on those unit costs and and a lot of that is post-pandemic related uh shortages and clinicians. Uh there's some consolidation going on. Uh so there's a lot of dynamics there that are that's making that harder. um higher demand and utilization of services and the prevalence of chronic conditions. Um we'll
084see that in your data uh a little bit um in particular high-cost claimments. Um the prescription drug trend so RX is prescription drug trend uh is driven by a lot of factors. Uh specialty drugs u high-cost specialty drugs GLP1s uh these are extremely effective life-changing medications. uh they they are wonderful uh sources for for treating for treating uh many many conditions but they come with a very high cost uh and the demand for that we've seen about a 17% increase in your experience in specialty medications and and so when I say specialty medications um you know I'll give you some examples and a lot of these you you may well have heard on uh commercials uh Humumera uh the average monthly cost average per prescription cost of Humumera is $7,000 um Stellara ARA is $26,000.
085Uh Dupixent $4,000. Um again, life-changing medications, but they come with a with a a very very high cost. So, those are some of the sort of macro factors. Um there are a few deflators on the uh on the right hand side there. Uh the shift to to lower cost settings and in particular virtual care. um you all your population uh does take advantage of virtual care and that's a that's a that's a cost-saving uh scenario or or setting I should say u availability of bio similars is going to bring down the cost of some specialty medicifications um and then a couple specific to you all you all have a very very high generic dispensing rate so that's helping you out uh and you've got u very very solid rates of preventive care utilization so that
086uh that's a that's a positive All right. So, this is just a highle summary of the health plan spend and this is 2024 spend. Uh you'll see it was overund 111,000 uh which was up about 14%. And we've got some other uh another exhibit that'll show historically. But um one of the I'll make one quick comment about one of the questions we we skipped over in terms of the methodology for the projection. So what we do is is actuarily sound um approach to projecting forward and it's based on the actual experience that is reported uh for your population. And what we do is we look at 24 months. We put uh about twothirds waiting on the most recent 12 and about a third waiting on the prior 12. And the hope is that that's going
087to pre provide some smoothing uh over time. If there's one one bad year or one really good year, there won't be an overreaction. Um and and what we'll see in your trend is it's really been a multi-year in the most recent years uh really since 2022. So the timing is unfortunate because it coincided with the reduction in rates in 2023. Um uh I'll I'll show share uh some more on high cost claimments here in just a minute. So I'll skip that bullet there. Um but the spend on a per member basis so that's the purest understanding of the of the cost change in a population is when you isolate on a per member basis uh increased about 13%. Uh which is about 11% above benchmark. Um the diagnostic categories in 2024 that were driving this
088you'll see there uh cancer is number one and that increased 12%. And that's a phenomenon too that is not unique to you all. it's it's number one or two. Uh the the your top three are everybody's top three. Maybe the order fluctuates. Um but they are in everybody's top three. Um and so circulatory increase 4%, muscularkeeletal 8% uh in your in your population. Um so those are the those are the drivers. Um and I'll I'll I'll share with you what the the biggest indicator of the performance of the health plan uh from a budget standpoint is the presence of high-cost claimants. And so we'll define that for purposes of this exhibit as individuals who have uh claims over $100,000. Um and so I you know I I first want to want to say we talked
089about these lifesaving drugs. They're they're they're life-changing and life-saving uh medications. Um individuals that have these high-cost claims, you know, often these are not um not something that's preventable. They they just happen. The actuarial tables tell us these high-cost claimments are going to happen. We don't typically see the year-to-year increase in the in the number of claimments that we've seen with with you all. This is not uh this is not uh ab abnormal uh to have high cost claimments to this uh to this degree just not every year. That's what's abnormal. Um and so there's a lot of detail in the chart there that shows you the history and and I'll steer you to the bar graph to the right that is uh the number of claimants over $100,000. And that trend line has been
090going up uh very very steadily with uh you know with with one anomaly there in 2020 which um I think has had a compounding effect uh post pandemic where folks deferred care or didn't access care they might otherwise have gotten um is is in a lot of respects uh coming back to to impact claims um in in the more near term 23 and 24. Um so the prevalence of high-cost claimments and the intensity and by intensity I mean the the amount paid per high-cost claimment. Uh both of those are going up in the teens. Um now I will make one one comment. The uh we do have reinsurance in place and that covers the cost. Uh so the school the schools pay for individual claimants in a given year their claims up to $600,000. Beyond
091$600,000 there's a stop-loss reinsurer to whom we pay a premium and they absorb the risk of any and all claims uh above that above that threshold. Um so that provides an important an important layer of layer of pro of protection. And so when we look about look at the history uh the recent history from January 2022 through May of 2025 um we see that the the trend is it's a composite 8.5%. And historically it's been five to six uh and it's been 8.5. So that sustained delta between um you know what what you were seeing and and what was used for for predictions um you know has has has caused the impact of the health fund. Now I will say the health fund has operated as as it as it was intended which is to
092help subsidize in years where there is uh you know there's really high costs. Uh so it has it has served its purpose. Um unfortunately the the three years in a row here of 8.5% trend that's been above average um have depleted that uh and the fact that the contributions employee contributions were held flat and in fact decreased in 2023. So there was no additional money coming in from employees trend was going up 8.5 and then the budgeted amount was going up um around 3%. uh that creates the impact to the health fund that's made the uh significant draw down uh and get the balance where it is. So um that's the end of of my material. I'm happy to answer any questions if there are any. Otherwise, I'll turn it back to Linda. Miss Melnik,
093it's really not a big deal, but just out of curiosity, the number five top diagnostic categories. Number five is injury poisoning. I just was curious what the poisoning like what's an example of poisoning since it's in the top five. Are you talking about children? Are you talking about Yeah. So, so that is an anomaly that that would make your top five. um because that means there was multiple scenarios of of accidental injury or poisoning. But that um I don't I don't recall the specifics of it, but it could be anything from a child getting into a you know a substance that was that was toxic or um or or or even an adult for that matter. Okay. But an anomaly nonetheless. That's right. I'm not sure if mine's a question for you or if it's
094a question for um Miss Mackkins, but I think that the slide that we had where it shows the draw down um and that is slide 18. Um, I think this is really important and I want to bring this up because it shows that our health fund balance is going to be in the negative regardless of the proposed increase this year. um which concerns me a lot and I don't know if you're going to cover the questions um that the board members had asked in the slides so you all but um I just wanted to draw extra attention to this slide because it's showing that um we're going to be in the negative with that um fund balance and this isn't me really pointing any fingers but um at the time and when we decreased it
095and we had a um healthy fund balance. I feel like um the decision may have been a bit risky. I wasn't here on the board. Um but I I don't think that the board actually made the decision, but I do think that um based on what we're looking at now, in hindsight, the risk was great. Um and Miss Melnik, are you still in mine or Okay. All right. Go ahead. So, we are going to finish through the presentation with schoolboard questions. Um, in response to a question raised by the school board for a timeline for planning and decision-making, this information um which is going to be displayed on two slides so you can see it um provides a timeline of re research, decision making and actions required for the health plan changes. This slide takes
096you from the planning stages through a budget development. And this is a continuation of the timeline and takes you through the review of updated financial projections with first quarter claims data, finalizing plan design and development of rates, communication for open enrollment, and ultimately to the plan effective date, which is in January each year. A question was raised by the school board to explain the process by which healthcare data and rate changes are shared with division leadership and staff. The schools have a joint benefits executive committee with the city comprised of executive leadership with monthly scheduled meetings. Updated financial projections are provided quarterly by our health and actuarial consultants at the benefits executive committee meetings and as requested if the committee asked Mercer for additional information. Committee members are expected to share information with senior leadership.
097Communications to staff with rate and plan changes have historically been provided in the September time frame prior to open enrollment. I think it's important also to note on that slide, superintendent is not on the benefits executive committee. A question was raised by the school board to ask if COVID funds ESSER, ARP, etc. were used directly or indirectly to offset the help fund balance. No pandemic funds were used to offset the help fund balance. All grant applications were developed following grant guidelines and were approved by the Virginia Department of Education. VBCPS has a strong system of internal controls in place to make sure grant money is only spent on approved and allowable expenses. BDOA also reviews every grant expense during the reimbursement process to confirm cost uh um are allowable and included in the approved application.
098Questions were raised by the school board asking for the projected dollar amount of the stated premiums increase that would go into the health fund balance and ask for further clarification of the health fund being depleted by the end of 2026. The additional premiums will not increase the overall health fund balance and will instead be used to help keep weekly um to pay weekly claims. As David had explained, even with this increase, the health fund is projected to have a 200,000 deficit by December 31st, 2026. By June 30, 2026, the end of the fiscal year, the fund is projected to have a 9.7 million surplus. However, best practice is to maintain two months of total health care costs in reserves. As David had mentioned, for fiscal year 2026, the projected amount that should be maintained in
099reserve is 21.5 million. I think I didn't go to the next slide. Oh, yeah, I did. Um, sorry about that. So, for fiscal year 2026, the projected amount that should be maintained in reserves is 21.5 million. And for the full 2026 calendar year, the projected amount that should be maintained is 22.6 million. Restated, we should maintain 22.6 million in reserves for calendar year 2026, while our ongoing employer and employee premiums pay for normal expenses. Reserves should be reserved for larger than expected increases in claims and for large payments as needed for high school highcost claimants. I think I went backwards a minute ago. Let's make sure we're on the right question. Sorry about that. The school board requested the current health fund balance and project and the projected two months worth of claims. The health
100fund balance at the end of fiscal year on June 30th, 2025 was 16,855,45. The projected cost of two months of health care costs for fiscal year 2026 is projected at 21.5 million and for 2026 plan year which is our calendar year is projected at 22.6 million. And these figures are illustrated in the slides that follow. As mentioned on the previous slide, the help fund balance for the schools at the end of the fiscal year on June 30th, 2025 was 16,855,45 shown at the bottom of the fiscal year 2025 column there on the left. This is a look at the fiscal year financial projections for the plan and is provided here to show that the amount of desired two-month reserves for the fiscal year is 21.5 million on the bottom right. This provides the calendar year
101fiscal year projections for the plan and is provided here to show that the amount of desired two-month reserves for the calendar year is 22.6 million. Questions were raised by the school board to determine what reports and data are currently accessible to the school board and recommendations on how reporting can be enhanced to ensure the B board has timely, transparent, and actionable information. reports are available upon request for Mercer's quarterly financial projections, Centara's quarterly and annual re review presentations. Cinta Quality Care Network's annual performance review. And just an explanation on that, the Centa Quality Care Network, otherwise known as Sequin, is a clinically integrated network of providers that utilize their data and evidence-based guidelines to drive quality, highquality, cost effective care decisions. information can be shared with the school board more frequently with scheduling determined and
102aligned with updates from thirdparty consultants. A question was raised by the school board asking for an explanation of how healthcare costs are incorporated into the division's annual budget planning and forecasting. The office of budget development imports position information for all full-time positions, including vacancies each November. This data includes prior year's enrollment benefit selections and does not reflect open enrollment changes that began January 1. Mercer shares updated trend information during their quarterly presentations and based upon their findings, we may request additional modeling or scenarios to better understand the overall fiscal impact. The budget is then adjusted as needed based on available funding and other identified priorities before the annual operating budget is formally adopted. A schoolboard question asked about the impact of health care expenditures on staffing decisions, employee benefits, and overall financial sustainability. Employee benefits
103are the division's second largest expense after salaries and wages. As benefit costs rise, they impact the ability to develop a compensation package that includes larger pay increases. Increasing health care costs can make it more difficult to offer competitive benefits, making it more challenging to attract and retain retain top talent. Greater costs may be passed on to the employee through increased premiums and deductibles that can lead to dissatisfaction and higher turnover. It is difficult to measure the direct impact of health care cost on overall financial stability. With greater than 85% of our operating budget in the area of personnel cost, any increase to healthcare premiums will have an impact. A question was raised by the school board ask for asking for potential strategies to mitigate cost growth while maintaining competitive benefits for employees. The school division
104has embraced best practices for healthcare cost containment strategies that include multiple plan options within and out of network and out of area coverage, HSA eligible highdeductible health plan, employer contributions towards a health savings account, valuebased benefit arrangement with providers engaged in quality care services through a clinically integrated network, lower co-pays and co- insurance for services at providers participating in the valuebased care. Lower pharmacy co-pays and co- insurance for prescriptions filled at preferredies. Lower cost tele medicine options for acute care and behavioral health services. Price transparency tools for medical services and pharmacy. Pharmacy benefit formulary with pre-authorizations, step theory therapy and closed formulary for high-cost medications with lowerc cost alternative drugs with the same efficacy. an annual claims audit and a comprehensive wellness program. Additional cost containment strategies that the school division could further develop include
105greater education of the value of the consumer-driven health plan and health savings account. The CDHP plan encourages greater accountability when obtaining services and provides a tax-free HSA. Oh, think I'm here. Um, so the CDHP plan encourages greater accountability when obtaining services and provides a tax-free HSA financial account that never forfeits and remains with the employee postemployment. Could also consider changing our teleaalth coverage to allow services to be paid by the plan before having to meet the deductible for the CDHP plan, which is newly released legislation. can engage in greater healthcare data analytics to understand cost drivers and develop targeted communications for greater awareness and resources for members and explore additional options with thirdparty admin or thirdparty administrator or wellness vendor and other contracted providers. We're happy to answer any questions at this time. Mr. Ken,
106this is a question I have for David. David, if I was following you correctly, and that's a huge if, but if I was, uh, on slides 16 and I believe 14, yes, there's an indication on 14 that these would be the rates if there was a 75% increase in the employees premium. and on 16 it's a 50% increase. I believe you made reference to the dollar result from those increases. And if I took notes correctly, the 75% increase is representative of approximately a $4 million requirement in order to satisfy. And the 50% was at 2 million. But that's a huge if. So I'm already getting the nod from my my my coach here that I've got him backwards. You are very close. So you had them reversed. So the 75% increase asks employees to pay
107more. So that means the investment required by you all uh is a little bit lower and that's the one that's uh 2.3 million and the the 50% contribution is a lower contribution. So you all invest more and that was the 4.3 million. Okay. So those are the numbers 2 million and four 2.3 and 4.3. That's right. That's what we could expect if we were to embrace those. That's right. Uh second question has to do with the information found on the slides that uh Linda was just going through and that is on slide 38. and I'm trying to follow the bouncing ball. And on page 38, there is a spreadsheet fiscal year 2025 projected and 2026 projected with categories down the left hand side with references that it is as a result of following different categories.
108For example, the projected health fund balance at year end shows for fiscal year 2025 a projection of 18.1 million. But I'm arriving at that number according to the guide by adding column E and column H. And if I'm following that correctly, column E says 95.5 million and H is a negative 1 million. And my simple math says take a million away from 95 a.5 million and you should have 94 a.5 million. But I get to 18.1 million and my brain explodes. And so I don't have an answer and hoping you do. It would help Regina if you could pull that slide up. 38. So that's Yeah. Okay. Um Okay. So um are we able to get that slide up there? Yes. So for 2025 projected, recall that we will initially undertake that activity in 2024
109to project for 2025. Now that we are further along in 2025, we will update the projection and we will have already taken what was needed year-to- date from the health fund balance. Uh and so that 1 million is the draw down remaining to to the year end. And so for the rest of the year, the health fund the incremental draw down from the health fund is a million dollars. So when we take and we so we've updated the health fund balance as of May at 19.1 the figure the 12.1 is what we expected to have been drawn down for the entirety of 2025 1 million of which is left to be drawn down. So the 19.1 is where we are. That's reflective of the fact that we have already drawn that fund down by some
110amount. Um there's 1 million left to be drawn down based on the projection. Uh and that leaves it with 18.1 million estimated at the end of 2025 fiscal year. But I'm seeing that the projected health fund balance at year end is arrived at the addition of E and H. Um at least that's how I'm interpreting it. Yeah. And yeah, I apologize. That that should be um that should be F. Yeah. Okay. It's it Yeah, it I apologize. That's a typo on that methodology. I apologize for the comm for the uh that makes sense. Yes. Yes. Um Yes. Thank you. I apologize. Thank you. Vice Chair Williams, then Miss Rogers. Thank you. Um I I just want to kind of piggy back on something that Miss Melnik had said a while a while back on on
111slide nine, the historical employee rates. So in 2018, our employees had a certain rate and then the next year those rates were raised by three or four dollars. And then in 2019, 2020, 2021, and 2022, the rates stayed the same, zero increases. Okay, so that's basically five years. And then we use the balance of the health fund, which in a very appropriate way to give relief for 23, 24, and 25. And in some cases it was extreme a lot of relief there. Um so now our 26 rates are actually I think Miss Mel said going back to the 22 rate but they're actually going back all the way back to basically the 2018 2019 rate. Okay. Okay. 19. Okay. Thank you. So, I just think that's very important to look at um with our city
112folks because I think a couple my colleagues were on the board when we when we um decided to to give this to our employees from the from the health fund. And I and I know that we kind of got some some indication that that the city may not have been completely thrilled with that because the city employees to my recollection they did not enjoy such a decrease. Is that a correct statement? Do you know? That is correct. They have not raised rates since 2019 and their 2026 rates will be the same and we will be back to the same level on an annual basis as the city. Okay. So, so the firefighters and the policemen, the city employees paid the same thing. They didn't experience the three years of yellow. Correct. And then now we're
113all kind of equal paying the same thing. Yes. And just for clarification, when people look at the rates, the city currently has 26 pay and the schools have 20. So if they're just looking at the premiums, they may think they're different, but the annual cost is the same because of the Yeah. pay. Okay. Okay. Okay. I just wanted to kind of clarify that because I think that's important information for us to remember. Thank you so much, Miss Rogers and Miss Miller. Okay. Um, first I just wanted to make a quick statement on slide 34. This question was asked because I know that it has been put out into the public that we um that the school board used some sort of grant funding to pay down um these premiums. And I just want to reiterate
114that that is not the case that these funds were taken from our health fund balance. And so that was allowable and that we were that was a choice. Obviously, I wasn't on the board when the choice was made, but that this was not a a a one-time grant use funding. That is correct. Deal. So, I just want to reiterate that because I I have even read that on social media and it's just not the case. Um, I think my next two questions, I'm not exactly sure if they're going to be for you or for Dr. Robertson. So, on slide 40, we discussed um the possibility of um how we can get reporting. Are we going to be possibly having maybe um by yearly or even quarterly information because it's given to y'all quarterly or is
115that has that always been done? Like it's going to happen now. Okay, thanks for that. And then the other question I have and I don't know who can answer this but it's my understanding from our discussion on slide 41 that we okay so we have positions that would be fully burdened. So we have a reading instructor and we have set aside their salary and their fully burdened health care and then if that position is not filled then all of that goes to reversion. But I guess my question is is that why would the health care per portion not go back to the health care you am I making sense? So um if an employee has not been hired then we don't account for their health insurance. We have roughly 75% of our employees choose our
116health care options. 25% of our employees do not. So you don't count into the healthc care calculation unless you during open enrollment declare you're picking one of our plans. Okay. Got it. So then so when we do reversion it does not include health care costs. It just includes salary costs. Right. Well and let me explain what happens kind of. So yes, when we have when that employer contribution, which actually would go into the health fund balance, when we do the budget and balance it, that's our operating budget. So I'm budgeting the employer contribution for positions that we bring in to start with the budget based on what positions we're going to fund, our staffing standards, all of that. If we don't hire that position, then yes, that's part of our employer contribution that does not
117go into the health fund because there's no employee to no employee for us to make an employer contribution on. And so that money does fall out into reversion. Does that is it? No, I I understand. I just I guess I I don't understand like why like I mean I do like I hear what you're saying. I I would like to not have to put so much in reversion is what I'm getting at. So, but and I think that's a balance and I understand your your point and and again when we bring positions in it's a to do the budget the timing we have to bring them in in November that'll change the day after we and I'm being a little bit but I mean it can change the next day right and so we have
118to start with a baseline and I have to prepare for those positions to be hired because we've agreed as we've approved the budget that those are the positions if we in a perfect world, we needed those things, right? And I'm totally fine with that. I'm just saying that money that we're budgeting is for our health care. And so I'm like, so why are we having to put it in reversion? Why can't we put it towards health care? Does that you see what I'm saying? Like Yeah. No, I do. And so I will say this. So um when we budget sometimes in the budget system um if we we are working really diligently to make sure that it is in the health fund account and health fund account I mean like a general ledger accounting system.
119So what happens where maybe before it was chunked and so historically and I mean way back when in the day when we had extra money remaining we did what was called a sweep and some people may remember that from many years ago. I'm looking at you so city can and so then they changed that so we couldn't sweep from the bottom line so that stopped and this has been 10 years ago. Okay. So now we've worked really diligently this year depending on what happens that those health general ledger accounts for our employer contribution based on those positions have those funds in there. If those positions don't get filled and that money remains in there, we should be able to sweep what's remaining in those health accounts for the employer contribution into the health fund. That's
120that's that's what I was getting at. So we can do that. We can if the money is remaining. So at the end of 25 that was not the case. And so we worked really hard with Mercer, with Linda, with our budget um system vendor to make sure that those employer contribution rates are where they need to be in that budget system. So at the end of the fiscal year when we look at those those specific accounts, we can say, "Look, there's money left in there. It wasn't used to do an employer contribution for these vacancies will sweep back into the health fund. So it won't be lost to reversion. Correct. Thank you. Okay, that was my question. Sorry I took a minute, Miss Melnik. No, and that's okay. And the piece that other people may
121not have caught was when um the the CFO said we may be able to I saw your finger crossed there. And so that was that was an important nuance in your statement. So I mean some you know and I say that because the methodology is there but again a lot depends on what I mean we you know thanks thanks to HR and the wonderful team that um Dr. Tropman has you know they've been able to fund vacancies pretty well for us and so where back in the day we had a lot more we probably don't see that like we used to. So it's a balance. It is a balance. So my question, not to belabor slide nine, but can we just go back there one more time because what I wanted to talk about because
122you mentioned this separately that the city did not enjoy um what we were able to do. They didn't have that same benefit, right? So, do you know how much that increase would have been 22 uh 23 24 and 25? I'm not sure I understand the question. So, we we were able to put money in, right? So the difference So like the difference between a family plan in 2022 and 2026 like we put in for each year for someone on a family plan a total of $632.91. So you're trying to if if the rates had remained flat with all of the additional funding that was provided, you're wondering where our hold fund balance would be today. Is that the question? No, let's just forget all that. I'll ask you that one offline. But I is there
123anybody else in the queue? No, just I just I just want to thank you for the for the depth of this conversation because this is truly rocket science. Like I think it's easier to put humans in space than it is to really muddle through this process and this and we do talk about this a lot. Um but it is very difficult to understand this. So, I I do appreciate the time you've spent. Um, and uh I guess I guess I can just leave it there, but but thank you. Okay, I'm going to ask a few questions and then Miss Rogers. Um, so and and maybe a couple of comments when I look at it and I'm going back to slide 18. And the reason I'm going back to slide 18 is because of something you
124said during our last schoolboard meeting where you said that the fund balance is going to deplete by the end of 2026 even with the increase. And so I worry I worry about next year also. Um I also and I I recognize we project the best that we can with the information that is available to us. But I am very concerned about the future and what it holds for our health insurance and our health insurance premiums. If the projections are I I don't know that I want to say off, but if it ends up costing more and than projected, how that impacts this bigger picture here? Um, is that something maybe you can speak to? I think that's more of a budget question. Okay. Um, that is something that's of great concern as well. If well,
125we can probably see absorb a $200,000 deficit. If it continues, we will have to as an employer put additional funding into that health fun. We have to pay those claims. Um, we will have we have I mean employee rates will be set and that will be our only option and we would have to look and see where we are with trend and utilization and all of the things that that David spoke about to figure out what next steps would be. But that would truly be a step that we would have to to grapple with. Okay. Um, and so for my comments, um, actually let me ask one more question. Um, why do we do 20 pay periods instead of 26? Wouldn't it be more consistent for our employees to do it across? We have employees,
12610-month employees that don't get paychecks in July and August. I see. Okay. Thank you. All right. Are we on 24 otherwise? 24 pay periods. Yes. Pay periods are 24. Okay. 24 depending on their pay options. Right. Thank you. Contract types. Right. So employees even if they're a 10-month, they can choose to have a 24- pay option if they want to and then the deductions would be in the summer. I mean the um their pay would be in the summer, but because the system wouldn't be able to handle, you know, is yours going to be 20 or is yours going to be 22 based upon your pay option. It's something that we've talked about. Um, and perhaps when we look to the future of a new human capital management system, if it's something to explore, but
127I don't know, I would have to leave that to the others on how um if that's even an option where employees would be paid over 24 pay. Okay. All right. So, I I think it's it's evident that the costs of health insurance premiums are rising, and I don't know that there's anything that the school board can do to stop those costs from rising. Um, we just have to unfortunately um grapple with that. Um I also understand though and I I think there's a community perception that is a very real feeling which is school division has a 1.1 billion dollar budget. Um I know that we've made many many um cuts to that budget. We've cut a lot of positions $4.5 million this year. But you know the question is and I don't know if this
128is a question for Dr. Robertson or Miss Pate um is there anything that we can reallocate and would that be something that can be done to ease and relieve the burden that our staff is currently experiencing? Yes. So, uh, Chair Brown, I appreciate you acknowledging that over the past two years, we've, uh, reduced central office funding by $11 million. Some of that's through positions, some of that's through programs, and we've done that for the sole purpose to help the board meet their priority of compensation. So, really, that 11 million in reductions has gone fully into compensation. Um, as we continue to look at our efficiencies and goal five of our compass of 2030, organ advancing organizational efficiencies and excellence, we continue to look at where are there opportunities for us to leverage new technologies, leverage
129new processes, leverage new systems to be more efficient. Um, the challenge is you can cut programs to save money or you can cut people to save money. And neither option is a good option. In Virginia Beach B City Public Schools, we provide a private school education in a public school setting with the number of academy programs we have, the number of specialty programs we have, the number of athletic programs we have all the way down to middle school. And I don't think the community would tolerate reductions inmies. I don't think the community is going to tolerate uh a reduction in athletic services. We had a long discussion last year about athletic ticket prices. So then it becomes okay maybe you have to too many people. One of the hallmarks of Virginia Beach B city public
130schools is the support that we can provide teachers in in a timely manner. The state of Virginia released today the so results from the spring and once again Virginia Beach City Public Schools is the second highest performing school division in the Commonwealth of Virginia for students more than 20,000. We exceeded the state on a number of a things and that's because we have a phenomenal staff but that staff knows when they need something we are here to deliver. So again there's two ways to save money. You cut programs or you cut people. Neither neither option is palatable but we will do what is necessary based upon the wisdom of the board. Okay. So I think for me it's very difficult to look at the situation without knowing exactly what the fiscal impact of that is.
131And you know, there's been some suggestions that we would not have reversion at the end of the year, and I I understand why. Um that would be a suggestion. However, um I think that not preparing for the unexpected would be a failure to exercise our fiscal oversight. And so, um we have to prepare for the unexpected. we have to be prepared for an emergency. Um, including the emergency of if these claims come in higher than projected and that would that would be one of those types of emergencies that we would be faced with. But um I would just be interested to hear from my colleagues at this time um if there's any interest in uh evaluating any of these 75% or um 50 Miss Rogers. Okay. Um I I did want to just ask Crystal
132really quick because I was when I was talking about version funds, I was just specifically talking about putting the positions and you were talking about the sweeps and you're saying that we're doing that and we weren't doing that previously. Is that going to then impact our numbers? If we were not specifically allocating them before and now we are and we're sweeping it won't No. Well, we fiscal year 2025 is done. So, reversion is is um that's already gone being well, it's not gone, but we'll come be coming back to you all. Um it takes us a while to to get the books are closed as of the third week. And so, they've reconciled with the city and then we'll do what's called the the revenue sharing formula will be an actual over budget and that
133will couple with the reversion and we'll bring it back to the board and then to city council for um approval of what we want to do with those funds. So in 26 as we built the budget for this fiscal year, it is in it is the methodology I explained earlier where it needs to be so that we can sweep. So will that though impact in a positive way now that we're going to be sweeping? We hope that it does. I mean again a lot there's other factors but like there's other factors but there should be there should be where we don't have 100% and every single cost center of every single um employer contribution health account that we're actually going to spend to zero. Okay. So that means that that could impact in a positive
134way what's in our healthcare. It could and I can't I can't say what that looks like. No, I and I'm not asking for a projection. I'm just asking if the change is going to Yes. help us. Thank you. That was the one question. As far as your question, I don't know that I can answer. I I would like to have more than those two options. Does that make sense? that maybe we can maybe do something different if the if the 50 75% I mean I don't think this needs to just be one conversation and and if the 50 doesn't look like we can do and 75 that we explore other avenues u so uh Linda we have open enrollment starts uh September 29th what's our what's our re real timeline before we would have to
135make significant adjustments to open enrollment which would then impact. Can you walk us through that timeline? Because I think to Miss Rogers question um the work that is required to turn other scenarios around is not something that occurs in a day. So yes, so our original deadline to benefit focus was July 31st to provide them with all of our plan design changes and rates. um because what that takes is they have to configure their system and then we test the data and then it's you know finalized before it's released. Um we have had conversations with them um to basically say we're you know if if we can get it you know you a change a week before or two weeks before we're running out of that time I guess before open enrollment like we need
136you to make it happen. Um, but there will come a time when we and I don't I guess have that access. I'm I'm gonna give you the answer. So, Miss Mkins is not trying. She The reality is by September 10th. Yeah. We have to be able to say what we're going to do because the longer we wait, we cannot send stuff out and have it wrong. Right. And and I'm not I think what I'm kind of trying to understand is what the choices we've been given is a longterm supplement where maybe if we can't afford that we do a one-time but I don't know what that would look like and how much. Does that make sense? where and if even if we can afford it, but I'm saying if we can't do a monthly, we'll
137give you a like 50%. So if that's not feasible, is there something we can do like just a one-time thing to try and help? I I don't know. That's what I'm asking. So yeah, I would say that if the board decided that let's just say in December they wanted to provide a stipened amount to to staff who chose our health insurance plan. I will just share with you 75% of our staff chose the health plan. 25% of the staff did not choose the health plan. you would really need to give a 100% of the staff the same stipend or you're going to have 25% of the staff, which is well over 3,000 employees who are going to be furious that they didn't get $500. When you look at the total amount you might be able
138to provide, you're probably talking about $500. So, is it something the board could ask us to take a look at? Absolutely. We'd have plenty of time to take a look at that. That just is another option. Again, I'm I if we can't afford the other two, if it's really not soluble, I I I think doing nothing is not an option. So, I'm just trying to do something, Miss Melnik. So, I like that option much better, Dr. Robertson because the thought of negative numbers being thrown at me and having to make a decision by September 10th to tweak this is very scary to me. So, we recently had a million-doll bill to the VEC that we were not expecting. Um, we Oh, what else? I was going to say something else that is significant with uh
139Darn it, I got off track. Um, I'm just very concerned even the health plan itself and the and that balance um and the the potential for a negative number there that's very scary. Um, we I I call myself classically trained uh over the last 11 years by people who have been doing this job for a very long time. Frell Hansicker, you you are under Frell. um and and the work that you do, the work that HR does, the work that we do as a group to budget. Um we've already planned our budget and so right now it's very very tricky. Oh, this is what I was going to say. It's really what's coming from the federal government also. So we had a cut. So as you all know, we had an executive order that that
140slashed money from school divisions across the nation. And we have to be prepared. We have to be smart with our money. and we have to keep a percentage in in the bank technically, right, to offset any of these federal cuts that might happen on a whim. And and that's very scary. Um and I think we worked very hard this year together. I think we walked away from budget together and all of us agreed that was tough, but look what we did and we planned appropriately and none of us could have predicted. I mean, we knew it was there technically, but not to this level. And I'm sorry for this, but I am very interested in once we get over this hump and we get in and we see what we have left um giving um
141investigating giving our teachers a stipen and that's where I stand on that. But today and getting it done by September 10th, I just can't. Yes, Dr. Green. It's me. All right. Um, thank you. Um, I also, um, concur with not rushing as well. And then a question I have um Miss Mackinson and and and Miss Pake. Um we we have a robust benefits package and and I think uh I would be remiss if we did not also reference that other benefits that we pay for employees is a portion of their VRS for the Virginia retirement system. So my question, and I know you may not have an answer, and this is another reason why I would I lean toward postpone. Do we know whether or not we're given the economy, are we going to have
142an increase to the employer's contribution for the V? I know you may not know that right now for the VRS anytime soon. We do not. I mean, I think we just received some actual reports from the state. Um, and we can look and see, but usually we kind of get that information right when we're doing the beginning of the budget. Um, so it's not an increase for this year for 27. Um, I know the city's projecting that, but theirs is different than ours. And so, um, we can check into that and see, um, those reports, the timing of those comes as we're trying to do our our financial reporting. and we do a bunch of notes in our um ACT for and all that kind of stuff. So, we'll see um if we can get
143that sooner rather than later. Right. Thank you. And and just to add to that V the voluntary contribution of employee of hybrid employees will directly impact an employer match and that's unpredictable but so it you know there's attempt to to budget that but to your point that's a factor as well right and that's why I I wanted to make sure that and especially for our viewing public that they understand even though we're having a very good conversation about health benefits um you know the VRS, the Virginia Retirement System contributions as well are as equally and could be significant for employees as well if there were an increase. Mr. Ken, Madam Chair, I don't know if you're taking a headcount on people's perspectives, but uh I'd like to second Mrs. Melnik's commentary, not only her caution
144as far as the speed at which we're moving, but also the heart that accompanies the desire to try to do something to address the issue that exists. So, I'd like to just go on record in support of her rationale and reasoning. Vice Chair Williams, I agree with that. Also, I think that we need to be very cautious and we do not we cannot have a negative balance and we do not need to get close to a negative balance because of unintended costs that are definitely going to come in one way or another. So, um I agree with my colleagues on that as well. Mr. Bowensteel. Yes. I just want to say that I agree, you know, on where we're looking at going and I want to say thanks to uh Miss Melnik and Miss Rogers
145for kind of bringing up the discussion on ways that we could save some money and make it, you know, more affordable for the teachers. So, thank you for bringing that up, Miss Falton. Thank you, Cher Brown. And I just like to say to um all the presenters today, thank you for your hard work and giving us a detailed discussion on all that we've heard today. I I would go in deep, but I was talking with the state uh delegate with a couple of them this week and they informed me that everything is going to be tight. They're working tightly too in Richmond because of all the things that has come down from the from Washington, from the federal government. uh Medicaid, Medicare, all those cutbacks and they're going to have to try to find monies
146to figure what to do to figure it out. And so that they were saying to me in the subliminal message, education probably won't get anything at all or if you get anything be very slim. You know, I'm very passionate about public education. I guess a lot of you know that and most of my board me up here are as well. But public education has never been fully funded. uh we've had to do things with mandates whether unfunded mandates or a mandate was not fully funded and I could go off and name a couple of them that we had to do. idea was one of them as well and a lot of things that came down but this division found a way to uh do what we had to do and but no one people see
147it going people see it happening but no one asked how are you doing this what did you have to move or move around and and Dr. Robert spoke so spoke to really well. When you move one thing to address another, it's like a domino effect. When you move a staff, what happened to their position? What happened to our teachers that have to take take on more because you move three teachers out of that that school or you move uh a part of the transportation. So we have to be very cautious how we move with this and how we move out. There are consequences of moving too fast and there are consequences moving too slow. So I'm looking at all that we are having to do and it's a crunch time. Nobody's letting them when they
148said when they talked about dismantling public education. You know parents are totally losing it. What are you all what are you all going to do school? Well, how are you all going to address this? And it became a burden on our shoulders as well. Um, I like um what my colleagues have said, Miss Milick, Miss Rogers, and Dr. Green, not rushing into anything and and reviewing options of what we can do and moving forward and not going into a negative. I totally agree with them what they're saying and I hope that um we can come back with some resolve on making sure that these things happen. But when you having your support team that well or people that you get your money from the the the state delegates in your city talking things that doesn't
149sound too good then you go back into another crunch. It is fearful. I don't want to be in a negative as well. I want to make sure that we do uh fiduciary responsibility well because when it falls down the crack it'll look like you know you did not do your job. So, I'm all for what my colleagues Mil Rogers and Dr. Green are saying and uh let's have some options to make this happen. Thank you, Miss Dwire. So, I guess I have to speak to everybody else did, but I just want to say thank you to both of you and Crystal. Um, this wasn't easy and you guys were concise. You brought a lot of clarity and you enlightened us to a tough topic and I think all of us benefited from the information that
150came forth tonight and I just want to say thanks. You're welcome. Okay. Um so thank you very much for your presentation and all the information. Um I want to thank the teachers that have tuned in, the custodians, the bus drivers. um nurses, really all of our staff, every single person that works in this division is very important in making sure that our division does really great things for our students. Um I personally, um as much as I would love to, you know, have evaluated some of this, there there just isn't enough support at this time. And I I think the reality is that I'm hearing from the board is that all of us would love to find a way to do this and find a way to reduce it and find a way to get
151it to what the cost was last year, but the reality that we're faced with is that we can't actually um do that without being extremely risky. I like the concept of seeing if there's a stipend, although I am a little bummed that it would be post tax versus pre-tax, but um we're going to work with what we what we have and we will all work together on that. Um it doesn't sound to me from the comments on the board that we're going to want any allocation recommendations uh at this time at our next school board meeting. Although I do believe we still have some presentations related to healthcare uh perhaps on our agenda and we are going to be discussing health core care very robustly on this school board um because of all the information
152that you've seen here tonight. So I imagine we we may be dealing quarterly. Dr. Robertson, it'll be built into the budget calendar which uh Miss Pate will share with you uh on September 9th. Okay. Thank you. Um Miss Rogers, I just wanted to add that um I completely acknowledge that it is our staff that keeps our schools running. Our so scores are what they are because of our staff. Um, and that I completely understand that we can't do this without you. And so we will work to try and remedy this as best as we can. Um, while we can't control our health care costs on our own, if I could, I would. Um, we're going to work towards solutions in other ways to make this um, more affordable, and that's what I'm going to do.
153Okay, thank you. Um, it is 8:53 p.m. and we are now adjourned. [Music]