'Insurance is not cheap': School board debates absorbing $1.3M premium hike

Shenandoah County Public Schools was staring down a 30 to 40% health insurance rate increase earlier this year. By Monday's school board meeting, Superintendent Melody Sheppard had negotiated that number to 15.2%.

The division would absorb the entire increase. Employee premiums would not change.

"We do not want health insurance to be a reason that an employee leaves," Sheppard told the board during a work session on the proposed fiscal year 2027 budget. The division, the county's largest employer with more than 1,000 workers, currently pays approximately $11 million in health insurance premiums to cover roughly 750 participating employees.

The successful negotiation reshaped the budget Sheppard first presented on Feb. 12. The proposed increase on the health insurance line dropped from $3.2 million to approximately $2.3 million, and the division's total new funding request from the county fell from $2.15 million to $1.3 million.

But several board members questioned whether the approach, absorbing 100% of the increase year after year, was sustainable — or even fair.

The board did the math in the room: $11 million dollars divided by 750 insured employees comes to roughly $14,500 per person, per year.

"Insurance is not cheap," Sheppard put it plainly.

"I'm just thinking about the employees that aren't on our insurance," board member Mike Rickard said. "That's really short-changing them when it comes to salaries."

Twenty-five percent of the division's staff does not participate in the health insurance plan. Both Rickard and board member Mike Scheibe made the argument that employees who take insurance are effectively receiving $14,500 more in total compensation than those who don't, a gap that grows each year the division absorbs premium increases.

"I'd like to figure out a way to spread that love out a little bit," Scheibe said.

He raised the concern that the combination of insurance absorption and the proposed $5,000 special education stipend could create unintentional tiers of compensation.

"If I'm a teacher and I don't take health insurance and I don't work in the SPED department — I'm a gen ed teacher — well, I'm kind of being left behind," Scheibe said. "Everyone else right now is getting something more."

Sheppard pushed back, noting that any employee has the opportunity to participate in the insurance plan.

"I completely understand the logic because I have had employees reach out and say, 'Well, I don't take health insurance. I would like to have some of that compensation,'" Sheppard said. "I get that, too. But any employee has the opportunity to take health insurance."

Rickard questioned whether the division could work with Anthem Blue Cross Blue Shield to raise co-pays.

"I'm just not a big proponent on eating all that cost," Rickard said.

He suggested that higher out-of-pocket costs might encourage employees to be more cautious about when they visit the doctor.

Sheppard said the high claims driving the increase are not discretionary visits.

"The number of claims that we have over $50,000 is extreme," Sheppard said. "And that's not people running to the doctor for a sniffle or the flu. That's people who have serious health conditions."

The division had approximately $2.3 million in combined claims exceeding $50,000 individually — chronic illnesses, diseases and high-cost prescriptions. Sheppard said the division's total claims amount to $10.5 million against $11 million in premiums paid to Anthem, leaving the insurer less than $500,000 to cover its own administrative and processing costs.

"They're losing money on Shenandoah County schools," Sheppard said.

The board zeroed in on one potential cost-saving measure: eliminating the KeyCare 250 plan and moving those employees to the KeyCare 500, which raises the deductible from $250 to $500. The savings would be approximately $200,000 — enough to fund two teaching positions — but would affect the roughly 190 employees currently on the 250 plan.

Sheppard said she is also negotiating with Anthem to cap next year's increase at less than 14%, though she acknowledged that at some point employee premiums may need to rise or the division will need to restructure its plan offerings.

"At some point, the health insurance rates may need to increase, or we'll actually have to start looking at different plans," Sheppard said. "Maybe our deductible is a little higher. Maybe we don't have the 250 plan any longer."

The board asked Sheppard to return on March 12 with a detailed proposal on the KeyCare 500 option.

The rest

The remaining budget initiatives were unchanged from Sheppard's Feb. 12 presentation, including the proposed 3.25% cost-of-living adjustment, $5,000 special education stipend, new instructional positions and grant-funded position absorptions.

Rickard, who attended a recent meeting of the Special Education Advisory Committee, described the workload disparity driving the special education vacancies the stipend is designed to address.

"When you get to hear from the SPED teachers and you start breaking down a gen ed teacher that only has to prepare one lesson plan to a SPED teacher that has to plan out 27 individual lesson plans, that's when you start to notice the difference," Rickard said. The division is currently short six special education teachers.

Board member Thomas Streett was absent.

The board is expected to vote on the budget during its March 12 meeting.