Montgomery County Public Schools' employee health care fund ended FY2026 with a $97 million deficit. The gap could force cuts to school programs, higher costs for staff or a bigger ask of county taxpayers.

The Employee Benefits Fund (EBF) balance was disclosed in a presentation delivered to the Board of Education's Fiscal Management Committee on Sept. 15 by Chief Financial Officer Ivon Alfonso-Windsor and Executive Director Carly Thompson. Five years ago, the same fund held a $56.9 million surplus. The turnaround amounts to roughly $154 million.

GLP-1 drugs driving the surge

Weight-loss and diabetes drugs known as GLP-1s now account for about one-third of all MCPS prescription spending, the committee presentation noted. Montgomery Perspective, first reported by Adam Pagnucco on Monday, Oct. 12, detailed the trajectory: GLP-1 costs hit $34 million in FY2024, $64 million in FY2025 and $80 million in FY2026. The district projects they will exceed $100 million in FY2027.

Board member Karla Silvestre asked staff at the Sept. 15 meeting how much MCPS could save by dropping GLP-1 coverage for obesity alone. Staff estimated $40 million, according to Montgomery Perspective.

County funding hasn't kept pace

The EBF's expenses jumped $73.4 million in FY2026. The county appropriation increase that year was $3.3 million. MCPS plugged part of the gap with $37 million in one-time funding, including transfers from its general fund balance and retiree-benefit reserves, per the presentation.

Health care costs are rising statewide. Maryland insurance officials approved a 14.6% average premium increase for individual plans on the state's Affordable Care Act (ACA) marketplace for 2027, the second straight year of double-digit hikes, Maryland Matters reported on Sept. 25.

Limited options, active bargaining

Montgomery Perspective's Pagnucco identified three paths: shift money from other budget lines toward health care, risking more position cuts; push higher costs onto employees or trim benefits through union negotiations; or ask taxpayers for additional funding.

The district has already tried smaller fixes. A phased-in employee cost share is projected to bring in roughly $10 million a year once fully in place by FY2028, per the presentation. Separate contract changes with Cigna and Caremark add savings in the single-digit millions. None of that closes a $97 million gap.

MCPS and the Montgomery County Education Association (MCEA), which represents about 14,000 educators, are negotiating a new collective bargaining agreement for FY2028. The talks have been tense. MCEA President David Stein called the district's proposals "unacceptable" in a Sept. 24 statement reported by Bethesda Magazine.

MCPS spokesperson Liliana López said on Sept. 24, during the same bargaining dispute, "Time and time again, we have said that we are facing a structural deficit in our benefits funds that needs to be addressed, but we have not threatened to strip coverage from employees."

The district already cut 255 positions and eliminated 160 proposed positions when the school board adopted its $3.72 billion FY2027 operating budget in June, Bethesda Magazine reported on Sept. 17.

The FY2028 budget season is the next decision point for how MCPS addresses the deficit.