Houston ISD’s state-appointed superintendent Mike Miles presents a budget proposal to the board of managers at the second budget workshop on May 20, 2026.

Houston ISD plans to raise its employees' contribution costs for health insurance premiums, according to drafts of the district's budget proposal for next year.

The district's chief of staff, Monica Zdrojewski, said during a budget workshop meeting Wednesday the current model is unsustainable for the district. For years HISD has reallocated resources from other areas to keep the existing costs in place, but those only temporarily stabilized the plan and adjustments are now necessary, she said.

"Employee rates have not kept up with increasing costs in the healthcare space," Zdrojewski said. "These contribution levels have created increasing financial pressure on our health insurance plan, particularly as medical and pharmacy costs continue to rise nationally."

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District officials did not provide specifics about how much they plan to raise the contribution rates, saying HISD would communicate any plan changes to employees during the open enrollment period in October through November and no changes would take effect until January 2027.

To help offset the rise in employee contributions, the district is planning to increase pay by 4% for eligible employees and boost the minimum hourly wage from $15 to $17.

The changes could affect thousands of staff members as the district is one of the city's largest employers with a workforce of roughly 22,000.

Houston Federation of Teachers president Jackie Anderson, whose union represents thousands of employees in the district, said a salary increase to offset higher healthcare costs is not a raise at all.

“There is absolutely nothing for our educators to benefit from,” Anderson said. “When there is no collaboration, the poor and oppressed will always lose. They are robbing Peter to pay Paul. Employees should not be the ones to bear the brunt for the increased insurance or HISD mismanagement.”

In her presentation, Zdrojewski said HISD contributes significantly more for employee health insurance premiums than some other large districts in Texas. When compared to Cy-Fair ISD and Dallas ISD, for example, Zdrojewski said HISD contributes nearly twice as much. She also said the district had worked to keep employee contributions lower than those same districts, but now the model is unsustainable.

Houston ISD’s state-appointed superintendent Mike Miles presents the budget proposal to the board of managers at the second budget workshop on May 20, 2026.

Zdrojewski outlined four driving factors behind the need for increasing employee contributions: a small number of high-cost medical claims that account for a disproportionate share of total expenditures, rising pharmacy costs, employees using providers at higher rates than the district projected and the federal implementation of the No Surprises Act. Passed in 2020 and in effect since 2022, the act protects patients from surprise billings for several different emergency services both in and out of network.

For years, HISD's operating expenses have consistently exceeded revenues, district officials said.

"It’s important to note that the health fund balance has, as a result, steadily declined," Zdrojewski said. "The projected ending balance for fiscal year ‘26 is currently forecasted to become negative because it’s been in decline year over year."

The cost increase is HISD's second major change to employee health insurance in a little over a year. In January 2025, the Houston Chronicle reported the district switched from Aetna to United Healthcare without first notifying the Houston Federation of Teachers or engaging the union for its input.

State-appointed Superintendent Mike Miles said he's aiming to balance the district’s roughly $2 billion budget for the first time in years amid a loss of state funding from enrollment declines and the loss of $18 million to $19 million in federal funding, which is decreasing nationwide for public schools, according to HISD.

The district's board of managers, also appointed by the Texas Education Agency in 2023, is scheduled to vote on the budget in June.