Tuesday, December 20, 2011

City Council Jeopardizes ERRP Funds

The Standard Times reported on San Angelo City Council's designated use of Early Retiree Reimbursement Program funds:

The council ended up voting 5-1 to apply the $343,287 to pay 2012 (i.e. current, immediate) claims and then take a comparable amount out of the city's self insurance fund and put it into the fund balance (i.e. the savings account fund within the health insurance fund), so that there are not "federal strings" attached to how that money can be used in the future. The motion approved stipulated that the money will be used for rate stability or possible catastrophic claim experience.
ERRP states funds can be used to increase benefits or reduce premiums.  Under their vote Council will not use funds for either purpose.  ERRP.gov noted:

To the extent a sponsor decides to use the reimbursement for its own purposes, it may use the reimbursement only to offset increases in the sponsor's health benefit premiums or health benefit costs.
Council's November decision on health insurance ensured the city's portion would decline.  Benefits did not increase.  They decreased dramatically for "out of network" care.  While employee/retiree premiums will decrease in 2012, the source of that premium break is not ERRP funding.

Since qualifying for ERRP in August 2010, the City funded a consistent $4.77 million for health coverage.  Council's decision knocks down the city's contribution from $4.77 million to $4.43 million for budget year 2011-2012.

Rather than use ERRP money to impose a less draconian burden on employee and retiree dependents in 2011, COSA plans to "pay claims" in 2012, when it supposedly will save $483,000 under an exclusive arrangement with Community Medical Center, this after coming in $1 million under budget in their self insurance fund.

One could argue the fairness of the city passing on the vast majority of premium increases in 2011, while holding the lion's share of savings in 2012.  That seems patently unfair, a scorching of employees, retirees and dependents.  However, a greater issue is the City's compliance with ERRP regulations.

In this citizen's mind this clearly fails ERRP's maintenance of contribution requirement.  Might the feds ask for their money back?

The city has been evasive and obtuse on this issue since getting approval from the feds. If the city has the feds snooping around their use of funds, it's earned and well deserved.

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