1. Creating a Better, More Efficient Healthcare System for Your Members August 4, 2010

2. The Problem San Diego Unified School District is facing unprecedented budget pressures Retaining talented employees with competitive salaries is becoming increasingly difficult Healthcare costs are continuing to rise The existing healthcare framework has serious limitations 2

3. The Solution Create a new trust to administer the healthcare needs of your members Save $48 million over next five years –Apply savings to protect future wages and benefits 3

4. 4

5. VEBA Limitations 50 percent of trust, 16 percent of vote Subsidization of other school districts Lack of accountability, control and flexibility One-size-fits-all approach Higher premiums Only district without retiree coverage 5

6. VEBA vs. EBT 6

7. Projected Annual Cost Savings of New Trust $1.3 million: Rerating of early retirees $1.7 million: VEBA administrative fee* $4.2 million: HMO co-pay modeling $1.3 million: Cross-border HMO $1.5 million: Self-funding * Based on 2007 numbers. 2009 numbers are $2.67 million 7

8. Five-Year Cumulative Cost Savings 8

9. VEBA Premiums vs. Administrative Fees 9

10. Keenan Experience 37+ years of experience 950 California public agency clients Privately-held, employee-owned Largest block of public sector business with Kaiser and Blue Cross Commitment to product and service innovation Leader in insurance, employee benefits and financial solutions for California schools 10

11. California Members Covered VEBA vs. Keenan 11

12. Benefits to Your Membership No changes to the plan Reduction in furloughs Maintain competitive pay scales Preserve benefits Maintain co-pay levels Keep current doctors 12

13. Timeline/Next Steps Week of August 2Meet with all bargaining units August Schedule meet and confers with SDUSD September 13 SDUSD votes for new EBT Jan. 2011 Members realize savings and benefits 13