Item Text

24. INCREASE EXPENDITURE BUDGET FOR EMPLOYEE BENEFITS FY2014-2015 Approve an increase to the FY 2015 Employee Benefit Trust Expenditures in the amount of $7,600,000. This action will increase the expenditure appropriation in Employee Benefits and Health (390) Medical HDHP Fund (606) Operating (0000) by $4,400,000, and the expenditure appropriation in the Employee Benefits and Health (390) Co-insurance Pharmacy Fund (608) Operating (0000) by $3,200,000. Budgeted expenditures in the Benefits Trust can be increased pursuant to A.R.S. § 11-981 (C), which states that expenditures during the fiscal year from a trust are not subject to the provisions of title 42, chapter 17, article 3. There are three major factors that have contributed to the increase in expenditures over the budgeted amount: 1) The total number of members enrolled in plans has increased by approximately 750 over the June 2014 count, a 3% increase. 2) Medical Claims are higher than anticipated, as the budget was based on optimistic actuarial projections of claims per subscriber which was developed in the fall of 2013. Subsequently the trend turned more unfavorable. 3) New specialty drugs launched in 2014 including those for Hepatitis C were not budgeted for in Fiscal Year 2015. The expenditure increase was forecast by actuarial consultants in September 2014 during their annual review of the Trust’s self-insured liabilities and reserves. The increase is funded by reserves within the Benefits Trust, but will not reduce reserves below the levels established by the Board of Trustees. Adjustments have been made in premiums and plan designs to bring revenue in line with expenditures in the upcoming fiscal year and maintain reserves at reasonable levels. (C-39-15-025-2-00)