Friday, August 26, 2011

Zero New COSA Health Insurance Funds for 2012

A critical San Angelo City Council meeting did not air on public television due to technical problems.  An audio feed failed, making the June 28 meeting a silent, six hour movie on Channel 17.  Oddly, enough audio channels worked for the DVD to play on a computer, however citizens needed to request a copy.

While minutes summarized the discussion, they left out critical guidance for the 2011-2012 budget.

Discussion was held on a proposed stratified pay plan and related percentages, proposed percentage salary rates for employees making less than $50k, proposed innovations for better services and efficiencies, health insurance premium contribution rate and percentage, employee health committee, the percentage allocation for salaries from the general fund, decreasing the property tax rate, and increasing franchise fee rates.

While Council talked health insurance, there was no discussion of the "premium contribution rate and percentage," only a "desirable" budget increase.  The following summary did not make the minutes.

At the 4:36 minute mark with public seats virtually empty, Council heard staff's health insurance proposal.  CFO Michael Dane described the work done to date, much of it by Human Resources and an Insurance Review Committee appointed by City Manager Harold Dominguez.   Councilman Morrison asked if any retirees were on the committee.  The answer was no, but staff indicated they could be added.  Dane suggested the city increase the health insurance budget by $250,000 for 2012.

Councilman Kendall Hirschfeld quickly indicated his expectation that there be no increase for health insurance for the coming year.  He referred to meetings in January and February where he thought this expectation had been shared with city staff. 

Dane and Human Resource/Risk Management Director Lisa Marley explained why the city thought it should do something to help employees.  Marley said renewal under the current plan design would require a 35% increase, 24% relative to the existing plan and 11% due to health reform requirements.  The $250,000 proposal amounted to 5%, which would leave employees and retirees to pick up the other 30% or $1.5 million.

Last year's increase, roughly half that amount, drove nearly 200 from the city's health insurance rolls, 47 city workers and 147 retirees or employee/retiree dependents .  Marley stated the city solicited bids with specified changes to the plan.  She discussed eliminating the Low, Medium & High designations, i.e. offering one plan with large deductibles like the Low option.  Committing to a single provider, Shannon or Community, would result in savings.

Marley cited the need to cut benefits by increasing copays and deductibles.  While she used the language of cutting costs, a better description would be cost shift.  The city will simply pass more costs to the employee.

Council budgeted for a 4% pay increase for staff, but decided on no increase for health insurance.

How much of employee salary increases will be eaten up by higher health insurance or medical care costs.  Retirees won't have an increase to apply. Their voice wasn't at the table, given their lack of representation on Harold's Insurance Review Committee.  This appears to be a pattern, given City leaders kept retirees out of the communication loop on a number of health related issues the last few years. 

The meeting punctuated many things for city workers and retirees.  City Council prioritized capital items, property tax cuts, roads and storm-water drainage over health coverage.  It shouldn't be a surprise.  This is the same organization that qualified for federal funding to help pay for retiree health insurance.  A year later the city is yet to file a claim, while other Texas cities were able to do so.  This raises serious doubt about Lisa Marley's August 2010 health claim:

"It will either be a better benefit or their premiums can be lowered." 

Sorry, city workers and retirees.  It's clearly neither.  This was the meeting to be seen and heard.  It set the agenda in motion.  The axe will fall in early October when the city brings its recommendation to Council.  I bet the seats are full.

Update 8-26-11:  Council direction supersedes the draft budget, but that document has stories to tell.  Search "FUND 310" if interested.  Also, the City scheduled two public hearings on the budget, which take place during regularly scheduled City Council sessions.  Council meetings and public budget hearings will begin at 9:00 a.m., Tuesday, August 30, 2011, and September 6, 2011, at the McNease Convention Center, South Meeting Room, 500 Rio Concho Drive.

Update 9-1-11:  COSA accepted an extra $640,000 from Texas Department of State Health Services for a capital projected, renovating WIC facilities.  DSHS is funding $1.6 million in renovation costs.  Despite this gift, City Council squeezed city employees and retirees for more capital.

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