The state didn't fund PEEHIP fully. The Retiree Trust Fund covered the gap.
PEEHIP is the health insurance plan for Alabama's roughly 300,000 active and retired public education employees. Every year the board tells the Legislature what it costs to run the plan. Every year the Legislature decides how much to fund. For fiscal year 2027, those two numbers didn't match — and the way that gap got closed is worth understanding.
PEEHIP board formally requested $1,209 per member per month from the Education Trust Fund. Across roughly 104,000 active members, that comes to about $1.09 billion.
The Legislature's ETF budget (HB238, Act 2026-380) funded PEEHIP at $1,048 per member per month — a $180 million year-over-year increase, but roughly $380 million short of the board's ask.
The PEEHIP board voted unanimously to withdraw up to $200 million from the Retiree Trust Fund to hold FY2027 premiums flat for active members and standard retirees.
The Retiree Trust Fund is money set aside against future retiree health costs. That $200 million is not new revenue. It's savings. And it was drawn down to keep premiums from going up for one year.
That's a delay, not a fix. I don't think Alabama should balance this year's budget by spending down promises we already made to future retirees.
Depending on who you are, this hits differently.
No premium increase for the plan year starting October 1, 2026. The $200 million draw made that possible. But the underlying shortfall didn't disappear — it just got pushed one year down the road.
Same story — no premium increase for FY2027, funded out of the Retiree Trust Fund. The trade is that a chunk of your long-term reserve was spent to protect this year's number.
Premiums did increase substantially in this rate cycle. A Medicare surviving spouse with no dependents went from $65 to $260 per month. Alabama law requires that surviving-spouse coverage cover its full actuarial cost, and the board applied that law. This one is worth knowing about even though it's a smaller group.
FY2028 is going to be harder than FY2027 if nothing changes. The board can't draw from the Retiree Trust every year forever. Either the Legislature has to close the funding gap, or premiums / benefits / both get adjusted. That's the conversation coming.
Health insurance for the people who teach Alabama's kids shouldn't be a year-to-year emergency.
Alabama teachers, cafeteria workers, bus drivers, custodians, and school administrators show up every day for our kids. The plan that covers them and their families should be funded like the essential infrastructure it is.
Spending down the Retiree Trust Fund to close annual budget gaps is borrowing from future retirees to protect current-year politics. I don't think that trade holds up if we keep doing it.
Full state funding of PEEHIP is a choice the Legislature can make. It's a hard choice — it competes with a lot of other real needs in the ETF budget — but it is a choice, not a fixed constraint. I want to be part of that conversation.
Questions I'm working through — and where I want your help.
- Blue Cross admin costs. Blue Cross of Alabama administers the active and non-Medicare-retiree pharmacy benefit. What does the administrative fee structure actually look like, and what leverage does PEEHIP have on it at contract renewal?
- GLP-1 / weight-loss drug coverage. This is a live question in every large employer plan in the country. I have not been able to get a straight answer on where PEEHIP currently lands on Wegovy, Zepbound, and Ozempic for the 2025-26 plan year. If you're a PEEHIP member and you know, tell me.
- The FY28 board meetings. The board will telegraph what benefit design changes are on the table well before they hit anyone's bill. I'm watching those meetings, and I'll write about what I see there.
- Whether the ETF has room. The Education Trust Fund is at a record level. What are the real trade-offs between fully funding PEEHIP and the other things the ETF pays for — and which of those trade-offs actually change kids' outcomes?
I don't have all these answers. I'm trying to get to them the same way I'd want any elected official to try — by reading the primary source, asking the people who are affected, and being honest when the answer isn't clean.
Show up, listen, and be honest about the trade-offs.
- Show up to PEEHIP board meetings and read the board packets. Decisions get made there before they get made anywhere else.
- Fight to fund PEEHIP at the board's actual ask — not the number that fits the political story.
- Protect the Retiree Trust Fund. Draws should be for genuine emergencies, not a workaround for regular underfunding.
- Answer questions from members in plain English. I answer my own email; I don't send form letters.
Every public education employee in Alabama should be able to open their October benefits notice and understand what changed and why. That's not too much to ask of the state that sends them into classrooms every morning. I believe.
Ask me anything about PEEHIP.
Active members, retirees, family — if you have a question, send it. I'll tell you what I know, what I don't, and what I'm still figuring out. Nothing gets ignored.