Houston ISD is set to increase health insurance contribution rates for its employees, a decision outlined in the draft budget proposal for the upcoming year.
During a recent budget workshop, Monica Zdrojewski, the district’s chief of staff, explained that the current cost model is not sustainable. For years, HISD has been reallocating funds from other areas to maintain health insurance costs, but that approach can no longer hold. “Employee rates have not kept pace with rising healthcare costs,” she noted. This situation has put financial pressure on the district’s health plan, especially as medical and pharmacy costs rise nationally.
Details on how much the contributions will increase haven’t been disclosed yet. However, the district plans to inform employees about any changes during the open enrollment period in October-November, with new rates effective starting January 2027.
To help offset these increased costs, the district plans a 4% pay raise for eligible employees and will raise the minimum hourly wage from $15 to $17. These changes could impact around 22,000 staff members, making HISD one of the largest employers in the city.
Interestingly, Zdrojewski highlighted that HISD contributes significantly more to employee health insurance than other large Texas districts like Cy-Fair ISD and Dallas ISD. This year marks the second major shift in employee health insurance costs, following a controversial switch from Aetna to United Healthcare last year without prior union consultation.
According to a recent study by the Kaiser Family Foundation, many school districts are facing similar financial strains. Nationwide, health insurance costs for public employees are rising at a rate of about 5% annually, outpacing general wage growth. This trend showcases the broader economic challenges around healthcare in education.
Furthermore, Zdrojewski pointed to several factors contributing to the need for increased employee contributions. She mentioned a rise in high-cost medical claims, escalating pharmacy costs, and increased usage of medical providers exceeding district estimates. The federal No Surprises Act, which protects patients from unexpected medical bills, has also had an impact since its enactment in 2020.
HISD has been grappling with an imbalance where operating expenses consistently exceed revenues. The health fund balance is projected to turn negative due to this ongoing issue. Superintendent Mike Miles emphasized the urgency of balancing the district’s approximate $2 billion budget, especially in light of declining state and federal funding.
The HISD board, appointed by the Texas Education Agency, is expected to vote on this budget in June. This critical decision will affect thousands of educators and staff members, highlighting the ongoing challenges facing public education in Texas.
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