Maricopa Unified School District’s Governing Board has unanimously approved drafting of a new employee-benefit trust agreement, which allows the district to work with Phoenix law firm Gust Rosenfeld to create an initial draft for management of the district’s employee-benefit funds.
Since the district’s benefit program is self-funded, state law mandates it have a trust agreement.
While MUSD funds its own benefits, it does not function as its own insurer. Blue Cross Blue Shield is the insurance provider. Other companies provide medical, dental and vision coverage. Third-party administrator AmeriBen manages the benefits.
Self-funding means the district does not participate in an insurance pool. It is responsible only for claims of its own employees. Some districts join a pool to spread costs and claims over a larger group, but MUSD Chief Financial Officer Jacob Harmon said that was not the best solution for the district.
“If we are in a pool, our rates are dictated by the average annual rate of the pool,” Harmon said. “Being self-funded, our rates are based only on claims within our district. We only use our money, and it comes from no one else or no other district. If we had a really high-cost membership that were not as healthy, it would benefit us to join a pool and spread out those costs.
“We decided to change to a self-funded model because we like the transparency and ability to look at all our categories of costs. When you are in a pool, there is less transparency because there are so many people in the pool. Also, in this model we can help target wellness efforts to the specific needs of our employees rather than to people all over the country.”
The board also authorized creation of a committee to identify members of the Board of Trustees for the trust. That will likely be a five-member board, with one member being an MUSD employee, Harmon said. He added that the district employee would likely be Harmon or Human Resources Director Tom Beckett, as they are most familiar with the benefit packages.
Harmon said there is less risk in self-funding for a district of MUSD’s size – about 1,000 employees, 700 of whom participate in the benefits plan.
The district pays most its employees’ health-care premiums, Harmon said, which are about $6,000 per person per year. There are two plans – a PPO (preferred Provider Organization) and a high-deductible plan with a small deductible cost.
Benefits are also available to the families of district employees at an additional out-of-pocket cost. All funds collected by the district go into a separate account, as mandated by state law. The Board of Trustees then administers those funds.