Loading...
HomeMy Public PortalAbout2019-08-29 minutes1 MINUTES OF THE BUDGET COMMITTEE MEETING AUGUST 29, 2019 CALL TO ORDER The Budget Committee Meeting of August 29, 2019 was convened at 5:30 P.M. by Councilman Rick Mihalevich, Finance Committee Chairman. ROLL CALL The f ollowing Council Members were present when the meeting convened: Present: Fitzwater, Graham, Hensley, Hussey, Mihalevich, Prather, Schreiber, Ward, and Wiseman Absent: Kemna A quorum was present. COMMITTEE DISCUSSION OF BUDGET Chairman Mihalevich opened the floor for Staff updates . Gail Strope, Human Resources Director and Steve Crowell, City Administrator presented three options related to the City’s self-funded, group health insurance (see attached email). Lee Wilbers with Wallstreet Insurance Group attended the meeting and answered Councilmembers’ questions. MOTION #1 Councilman Fitzwater motioned to balance the parking lot by proceeding with Health Insurance Premiums Option #2, offset by the “Ongoing Infrastructure/Facility Needs” line item under Capital Projects. Councilwoman Ward seconded the motion. T he motion passed unanimously by voice-vote. MOTION #2 Councilman Graham motioned to add one police officer to the parking lot for $58,398.57. There being no second to the motion, the motion died. MOTION #3 Councilman Graham motioned to add one police officer to the parking lot for $58,398.57, offset by the “Chemicals” line item under Public Works and Streets. Councilman Hussey seconded the motion. The motion failed by voice-vote. 2 MINUTES OF THE BUDGET COMMITTEE MEETING AUGUST 29, 2019 MOTION #4 Councilwoman Wiseman motioned to move the balanced budget to City Council. Councilwoman Ward seconded the motion. The motion pas sed unanimously by voice- vote. MOTION #5 Councilman Graham made a motion, directing the Finance Committee to discuss a sinking fund plan to support City-wide fleet requests. Councilman Schreiber seconded the motion. The motion passed unanimously by voice -vote. ADJOURNMENT There being no further discussion, a motion to adjourn was made by Councilwoman Wiseman, seconded by Councilman Fitzwater, and approved unanimously at 6:40 P.M. . Crowell. Steve From: Sent: To: Cc: Subject: Council, Crowell, Steve Wednesday, August 28, 2019 5:32 PM G_CounciiMayor G_DeptDirectors; Health Insurance for FY20 We had our final meeting this afternoon with Wallstreet Insurance Group on our group health insurance for next year. As you know, the City moved to a self-insured plan three years ago. Wi~h the exception of one very large on-going claim, the program has done very well. Unfortunately the one large claim is causing our re-insurance to increase significantly. In order to fund our plan to the maximum level of potential claim costs, we would need to fund $5,559,338 for 2020. However, it is standard to not fund a self-insured plan at the maximum cost because it is very unlikely to end up with all claims at the maximum. United Healthcare recommends funding a plan at 85%, which has been our goal the past three years. In order to fund our plan at 85% for 2020, we would need to increase our premiums approximately 18%. We have talked with Wallstreet Insurance and they believe we are OK funding our plan just under 75% for 2020. Although this is not ideal, this plan would fall in line with current rates with the 1.9% increase which is in the proposed FY20 budget. This would also provide staff and Wallstreet additional time to monitor and consider potential additional strategies to help manage the one large ongoing claim. Our self-insured fund balance of approximately $800,000 could be used to fund claims jf needed. In addition, staff could ask the City Council for a supplemental appropriation if this were to happen. Finally, we will need to plan on addressing the rates next year. Below is the proposed budget funding and two additional options for Council consideration, as well as the pros and cons of each option. lee Wilbers with Wallstreet Insurance Group will be attending the Budget Committee meeting tomorrow in case you have any questions for him. Please feel free to contact me, Margie or Gail if you have any questions or would like any additional information prepared for tomorrow night. 1. Increase the health insurance premiums by 1.9%. a. Pros: • No further offsets need to be made to the proposed FY2020 budget. b. Cons: • The self-insured fund balance (currently $800,000 may need to be used.) • A supplemental appropriation may be needed during FY2020. • A higher than normal funding and employee premium increase may be needed in FY2021. • This funds the plan at 73% of maximum claims, well below the 85% recommended by United Healthcare (note: 2018 claims without our large claimants finished just over 70%.) c. Possible funding source: • Already included in the Mayor's approved budget. 2. Increase the health insurance premiums by 5%. 1 a. Pros: • Lowers the impact of a higher than normal increase being needed next year. • The City and the employees share in the increase due to the lowered likelihood of needing a supplemental appropriation in FY2020. b. Cons: • An additional $75,000 will need to be funded in the general fund in the FY2020 budget. • The self-insured fund balance (currently $800,000 may need to be used.) • A supplemental appropriation may be needed during FY2020. • This funds the plan at 75% of maximum claims. c. Possible funding source: • Use FY20 proposed funding from the Ongoing Infrastructure/Building fund budgeted at $71,600. This would reduce the FY 2020 Building Fund allocation to $0. • Roll-over of lapsed FY19 funds from the group health insurance line items (similar to the internship funding discussion.) 3. Increase the health insurance premiums by 18%. a. Pros: • This funds the plan at the 85% of maximum claims as recommended by United Healthcare. • Unlikely the self-insured fund balance will be used, leading to a greater possibility of getting the fund to the desired $1,000,000 level. • Unlikely a supplemental appropriation will be needed. • The City and employees will share in the increase. b. Cons: • An additional $481,875.22 will need to be funded in the general fund in the FY20 budget. • An 18% increase in premiums would be a heavy burden for many employees, particularly those with families. c. Possible funding source: • Use FY20 proposed funding from the Ongoing Infrastructure/Building fund budgeted at $71,600. • Combination of roll-over of lapsed FY19 funds from the group health insurance line items, fund-balance and the self-insurance fund balance. 2