1. Anchorage School District The Search for High Value Benefits to Sustain Competitive Compensation Prepared by Anchorage School District Office of Management & Budget 2013 State of Health Reform Conference Friday, October 4

2. ASD OMB Page 2 4 Oct 2013 Overview Quick Financial Overview Anchorage School District Health Coverage Challenges – Review of basic cost drivers/allocations – Health Coverage/Medical Care price escalation challenges – K-12 Education Investment Benchmarks – Anchorage School District Response to Cost Driver Analysis Health Coverage Opportunities – Consumer Value – Employer Value – Employer/Retiree Life Cycle Alliances

3. ASD OMB Page 3 4 Oct 2013 State Foundation Formula Basic Demographics (FY14 Projections) ANC MatSu FAI Kenai JNU Source: Legislative Finance Division, FY14 Projection of K-12 Funding, August 2013

4. ASD OMB Page 4 4 Oct 2013 History of Educational Investments in Anchorage K-12 Education Investment Levels (2012$/student ADM, cpi-u adj.) Source: ASD Audited CAFRs -20 years-30 years

5. ASD OMB Page 5 4 Oct 2013 History of Educational Investments in Anchorage Compare Cost Drivers – Real Compound Annual Growth Rate (2012$/student baseline) Source: ASD Audited CAFRs

6. ASD OMB Page 6 4 Oct 2013 Educational Investments in Alaska Medical Care Cost Driver Effects All Sectors and Is Well Above Benchmarks Source: MAFA Memo to Alaska Health Care Commission

7. ASD OMB Page 7 4 Oct 2013 Education Investments Benchmarks Considerations in Responses to Excessive Medical Cost Inflation Sources: McKinsey (2010), ASD OMB Analysis

8. ASD OMB Page 8 4 Oct 2013 Educational Investment in Anchorage Current Realignments in Response to Anchorage Cost-Driver Analysis and Classroom Effectiveness Assessments - Strategic Pivots to Realign on High Value Direct Classroom Instruction Source: ASD OMB Analysis

9. ASD OMB Page 9 4 Oct 2013 Educational Investments in Anchorage Near Term Strategic Realignment in Response to ASD Cost-Driver Analysis Bonus + 1% Migrate medical benefits from ½ to ¾ FTE Eliminate waiver payments; Freeze medical Eliminate waiver payments; Freeze medical

10. ASD OMB Page 10 4 Oct 2013 High Value Health Coverage Opportunities Distribution of Cost/Value across the covered population Enhanced Wellness Reference Pricing Bundled Pricing Employer Coalition(s)