This past July, tragedy struck a handful of employees of the Big Walnut school district in Ohio.
One was diagnosed with cancer. Another’s spouse received a cancer diagnosis. For a third staffer, it was their child.
Those experiences, painful on their own terms, have also put the 4,500-student district in an even tougher financial position, according to Scott Gooding, Big Walnut’s interim treasurer. This fiscal year, 10 of the district’s 336 staff members enrolled in school-sponsored health insurance have had claims exceeding $50,000 apiece.
“Every dollar spent on healthcare is ultimately competing with one of our other district priorities that we have for our students,” Gooding said earlier this month during a session here at the Association of School Business Officials (ASBO) International conference.
At the same time, making insurance benefits less generous isn’t tenable either.
“Benefits are a critical part of recruiting and retaining employees,” Gooding said. “Simply shifting costs is not necessarily the answer to a sustainable solution.”
Districts nationwide are facing similar intractable dilemmas, as a nationwide surge in healthcare costs clashes with a perennial struggle to attract and keep qualified employees and a downward trend in revenue.
The 11,000-student West Aurora district in suburban Chicago spent $26 million for medical expenses in 2026. That figure—more than 10% of its annual operating budget of $215 million—is currently projected to grow by another $5 million next year, said Angela Smith, the district’s associate superintendent for operations and its chief school business official.
“There are always going to be people who get cancer and there are some things you just can’t plan-design against,” Smith said last week during a separate ASBO conference session.
Districts are getting creative to manage pressures
That’s not for lack of trying, though.
With healthcare costs surging, Smith and her team have deployed a few measures to try to reduce the sting for employees—and to keep the district’s line item from ballooning even more.
Smith worked with her district’s health insurance broker to add a new plan option for an individual with a spouse but no children. Previously, employees could choose only individual coverage or a much-pricier family option that was the same price with or without children.
Her team also put more effort into advertising the benefits of its Health Savings Account option, which allows enrolled employees to set aside a portion of their paycheck pre-tax and use it to cover medical costs, and even grow that amount over time by investing it. In one year, enrollment in the HSA nearly doubled, from 105 participants to 207.
Many districts have begun restricting insurance coverage for GLP-1 drugs for weight loss, which cost thousands of dollars a year per customer when routed through insurance carriers. The West Aurora district found a more efficient workaround that preserves the benefit in the process.
Employees with diabetes can still get those drugs through the district’s insurance plans. But for employees taking those drugs for other purposes, the district allots a monthly stipend they can put toward the cost of purchasing those drugs directly from the manufacturer—an option that tends to be cheaper for the buyer.
“We estimate that that’s going to save us between $750,000 and $1 million a year,” Smith said.
The district also contracted with a company that notifies staff members by email and physical mail when prices for their prescriptions from a particular retailer have dropped by more than $15. Employees no longer have to decide whether to devote time and energy to comparing local pharmacies’ prices.
Other ideas Smith offered for districts looking to cut costs include charging lower premiums for employees who visit a primary care doctor for an annual physical; expanding virtual primary care access, which is cheaper; and adding coverage for cancer treatment infusions that can be conducted at an employee’s home, a lower-cost setting than the hospital.
“Even with all the changes we have made, we’re still looking at large increases,” Smith said.
Relief is unlikely as costs continue to grow
During the session featuring the Big Walnut district, Gooding and his fellow panelists solicited written submissions from audience members and displayed them on the screen. Asked for the biggest factor driving their health insurance woes, district finance chiefs submitted a wide range of answers, from the rising cost of prescription drugs to the increasing prevalence of conditions like obesity and diabetes.
Meanwhile, many schools are struggling with fewer enrollment-based state and local dollars as the number of K-12 students drops. In a survey of school and district leaders conducted this summer by the EdWeek Research Center, nearly two-thirds of respondents said their enrollment has dropped at least a little in the last five years. Fifty-five percent of respondents said they expect at least a small decrease over the next five years.
These pressures are forcing tough conversations between district leaders and their employee unions, including over benefits. One CFO at Gooding’s ASBO session said his district, through its collective bargaining agreement, historically has paid 100% of employees’ monthly insurance premiums.
“That, truthfully, is drowning us,” the leader said.
Districts only have so much freedom to make changes in response to these pressures—and states, too, are struggling to control costs.
Alabama’s statewide health insurance plan for K-12 educators needs lawmakers to provide a $222 million year-over-year increase—but the state superintendent of education said at a plan board meeting last month that he expects lawmakers “won’t be able to do it,” leaving districts or their employees on the hook to make up the difference.
Meanwhile, New Jersey’s state-level school health insurance plan—which roughly 200 districts use—was on the verge of collapse earlier this year when members of its governance panel deadlocked over whether to hike premiums by 34% starting in January. They ultimately approved that increase last month, but state lawmakers are now considering a broader overhaul.
And in Georgia, the state requires districts to cover 100% of monthly health premiums for its certified staff members, but districts can only offer their employees coverage through the state plan.
Some district leaders have lobbied for permission to team up with each other and seek out more cost-effective health care plans—but so far, to no avail, said Masana Mailliard, chief financial officer for the Gwinnett County school district.
“Our hands are tied until the state modifies the statutes,” Mailliard told Education Week earlier this year.
Even bigger pressures are on the horizon. More GLP-1s are poised to hit the market next year. And gene therapy for previously incurable diseases is becoming more widely available, according to Steve Algozino, a health insurance broker who manages plans for the West Aurora district. But those medical advances come at a cost, particularly when they’re new.
“It’s very scary right now for insurers and underwriters,” Algozino said during the ASBO session. “There are going to be some huge claims.”
Simply put, he added, “Medical inflation is crushing us.”
