Board of Education (BOE) members listened to a presentation on health insurance at the board’s Tuesday, December 16 meeting.

Finance Director Glenys Salas presented a revision of the Medical Self Insurance Fund (MSIF) Strategic Plan to the BOE, along with an explanation of premium plans.

As they prepare to head into the budget season, Superintendent of Schools Anne Uberti said it is important to have an understanding of how insurance cost is balanced by employees and employers.

When they initially drafted the plan, Salas said she had only been with the Town for a few months and did not have audited financial statements for FY2024 yet.

She learned in that first year how important it was to include the BOE on major decisions about the MSIF, and wanted to deliver an update on the revision process.

Salas said the plan is broken into two parts, the first being situational analysis, which covers the fund’s financial history and underlying medical cost increases over the last five years.

The MSIF ended FY2024 with an audited fund balance deficit of $1,154,378. This deficit widened in FY2025, with an anticipated fund balance deficit of $3,537,071. It has such a significant deficit, Salas said, because revenues have been insufficient to cover expenses.

There have been operational deficits going back to FY2019, according to Salas.

“Those operational deficits were persistent and expanded in size, with the most significant budgetary shortfall occurring in FY2024 and FY2025,” Salas explained.

She said there is never an excuse to avoid budgeting properly, but that it is fair to say medical costs have risen significantly — up 48% — over the last five years.

“That’s versus 25% inflation in 2020,” Salas noted.

With the cost of covering true medical costs becoming a general point of concern, Salas wanted to understand why the MSIF’s costs had significantly outpaced inflation in the last five years.

Salas found that the root causes of this increase in costs had to do with High-Dollar Claims (HDCs), which are any claims over $50,000. She said HDCs have increased 94% over the last five years versus Non-HDCs, which only increased 23% — a number comparable to inflation.

Salas identified four main drivers to the HDCs increase: neoplasms (malignant or cancer), newborns (typically premature births), musculoskeletal conditions, and behavioral health.

“These represent the most expensive and fastest growing conditions by claims costs in the fund,” Salas explained.

However, Salas said they also have an issue with Non-HDCs, as the per-member costs are up 46%.

Strategies

Having reviewed the situational analysis of the MSIF, Salas went over some of the new strategies presented to address the underlying causes and medical care cost increases.

The first section of strategies in the MSIF targeted financial stabilization and fund balance restoration. Salas noted they identified some surpluses thanks to the availability of funding in the debt service fund. This allowed them to transfer an additional $250,000 to the MSIF in FY2025.

However, the Town’s unassigned fund balance is only at 9.5% — well below the 12% maximum. As such, Salas said they are not anticipating significant surpluses, but are keeping an eye on any future opportunities.

Salas said they also loaned General Fund cash to the MSIF to pay bills through June 30, 2025, successfully floating the fund through FY2025. Beyond that, she said they set premiums for FY2026 at a level that covers professionally estimated costs, plus an additional five percent, and set the fund balance target to 20% of annual expenses.

Starting with FY2027’s budget cycle, the MSIF will follow a structured six-year repayment plan to eliminate debt and rebuild fund balance.

The second section focuses on cost containment and curve flattening. Salas said their medical insurance consultant is actively working on a Request for Proposals for a new plan administrator to ensure competitive pricing and services.

Other strategies in this section include: mandating all quasi-governmental agencies contribute 100% of the employer cost share, streamlining health care plans to a single HSA High Deductible Health Plan (HDHP) for all members, continued review of the top ten red flag condition claims, and offering yearly financial incentives to adult members that complete at least one annual wellness visit in the form of an HSA contribution, among others.

The last section focused on monitoring and communication. Salas said they will conduct quarterly reviews of the fund’s financial performance going forward. In addition, Salas said they will maintain transparent communication with all stakeholders, including elected boards, unions, employees, and quasi-governmental agencies, on any changes and their impact on the fund’s health.

After her presentation, Salas took questions from BOE members regarding the fund.

Public Participation

Newtown Federation of Teachers President Trent Harrison spoke during the first public participation, which occurred before the MSIF presentation.

He said nine to ten years ago, Newtown teachers moved from the Preferred Provider Organization (PPO) to the High-Deductible Health Plan (HDHP) to save the district money.

Harrison continued by saying they negotiated their contracts in good faith and are still on that plan.

The issue at hand, he said, is the MSIF. Harrison noted the Legislative Council approved the fund’s strategic plan in September 2024.

He added that the fund closed FY2024 with a deficit because the budgeted revenues were insufficient to meet the fund’s needs, according to a 2024 report previously mentioned by the Employee Medical Benefits Board.

Harrison said the MSIF ended with a deficit last fiscal year, and is anticipated to end with a deficit this fiscal year, because the Town has not run it properly for seven years.

“To me, this kind of says Newtown should not have a self-insurance fund. I know that’s beyond the scope of this board, but they just have not run it properly,” Harrison said.

He continued by saying they negotiate in good faith, but he does not think the Town can provide the needed services. If this goes on, Harrison said the district will lose teachers.

“People will leave to go elsewhere for insurance, or just leave the plan all together,” Harrison added.

Harrison also said there have been communication issues regarding the fund.

“Last year, a memo went out in December saying it was gonna need to go from 18% to 22%. We learned about it May 15 [this year]. That’s not being transparent,” Harrison told the BOE. “And I hope you hold the boards accountable and the insurance fund accountable for what they’re doing, and stay knowledgeable.”

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Reporter Jenna Visca can be reached at jenna@thebee.com.