No New Money for Health Insurance

San Angelo City Council's summer budget guidance suggests no new money for health insurance.  Budget discussions show $1.15 million in new revenue and nearly $3 million in reasonable requests, none of which were employee/retiree health insurance.

Budget numbers showed a half cent property tax decrease and $435,000 in tax rebates to three area employers.  That money is not available to help with any increases in health insurance premiums for city retirees/workers.

Council discussed 3% raises, which could be distributed on a merit basis.  How much might rising premiums eat into this?  The City's recent history had the lion's share of cost increases going to employees/retirees, while the savings went into city coffers. 

City Council cancelled their July 3rd meeting, setting a budget workshop for July 10.  The odd thing about the city, which received an award for financial transparency, is Council is dealing only with budget numbers, proposed vs. current year.  There is no actual history, i.e. what happened and what we project to happen in the final months.  It's an intelligent guess vs. another in the making.  Watch the end of the June 19 Council meeting for confirmation.  I don't expect this information to make the minutes.

Angelo State's Corporate Presidential Search

Angelo State University's Presidential Search Committee has a corporate bent.  Four members of the committee are businessmen. 

Mickey L. Long: Search Committee Chair & President of Westex/WLP Well Service.

Alvin New: San Angelo Mayor and former CEO of Town & Country Food Stores

John D. Steinmetz: President of Vista Bank in Lubbock

Jorge Velarde: Vice President and CFO of Multi-Chem

Two members are academic:

Leslie M. Mayrand, Ph.D., RN, CNS:  Dean of ASU’s College of Health & Human Services and Professor of Nursing.

David J. Tarver, Ed.D:  Professor of Curriculum & Instruction in the College of Education at Angelo State and former President of ASU’s Faculty Senate.

The remaining two members include:

Nancy Neal, RN:  Chair of the TTUS Board of Regents’ Academic, Clinical & Student Affairs Committee.

Suzanne Williams Taylor:  Student regent for the TTUS Board of Regents and ex officio member of the committee.

As an ex-officio member, TTU law student Suzanne Williams will have input but no vote.  That means the four businessmen, if aligned, can recommend ASU's next President to Chancellor Kent Hance.  I don't expect any Teresa Sullivans in ASU's future. This committee could ensure they fly a corporate flag.

Texas Tech's Odd Reporting of Carr Trust Funds

Texas Tech University submits Investment Reports to the State of Texas.  Something odd happened in late 2010 and early 2011, at least report wise.  Carr funds plummeted from nearly $80 million to less than $1 million for at least four months.

What happened during that period for total ASU Carr Trust funds to be so low?  ASU's investment reporting sheds but a little light on the question.

It would've been understandable to see such precipitous drops in a financial meltdown.  Two years after seems odd.

Carr recovered to over $90 million.  ASU's Presidential recruitment materials indicate the Carr Trust is over $100 million, good news for students who need financial assistance. 

ASU's Rallo Says MedHab Jobs Coming

Angelo State University President Dr. Joseph Rallo was the first to say MedHab jobs are definitely coming to San Angelo.  He did so in ASU Magazine's summer edition.

“In the long run,” Rallo said, “this private- and public-sector partnership will benefit San Angelo and the Concho Valley with a new firm that will employ dozens, if not more, from this area in production.”

I don't know how MedHab's $3.6 million in economic incentives qualify as a public-private partnership.  It's a taxpayer provided nondebt, nonequity capital injection. 

ASU Magazine broke the information vacuum on MedHab's future plans.

If everything goes according to plan, MedHab will launch its U.S. sales by year’s end, pending FDA approval. Additionally, MedHab plans to market the device in Australia, England, Germany, Italy, France and Spain, potentially opening up additional opportunities for ASU participation in adapting software to those languages.

MedHab was slated to launch its product in Australia in Summer 2012.  Ross failed to address this issue, however he did say:

“MedHab’s relationship with ASU is nothing less than spectacular, and I expect it to continue to grow,” Ross said.

Maybe MedHab will update their news section of their website and include the ASU Magazine story.  Surely, these developments are more significant than winning an elevator pitch.

TTU's "Replacing Rallo" Website

Texas Tech University unveiled a new website for its Presidential Search for Angelo State University.  The search firm on the case is AGB Search.  Senior consultant Robert W. Lawless, Ph.D is assisting Replacing Rallo (RR).  Documents state:

Angelo State seeks a strong and visionary leader who has the following characteristics:

• Terminal professional degree or earned doctorate.
• "Right" blend of experiences: as a senior professional...in management and administration of a complex organization...in research...and in communicating clearly and effectively with people inside and outside the organization.
• Demonstrated exceptional leadership skills and integrity in an academic, research, and/or service environment.
• Knowledge of and/or experience with the business operations of large and comprehensive organizations.
• Exemplary record of scholarly, professional and individual achievements.

AGB Search posted three documents relative to ASU's search on their website, a prospectus for ASU, the AGB press release and a position description.  Funny, accreditation is not explicitly mentioned.

The Curious Case of Johnny Ross' MedHab

San Angelo City Council approved a $3.6 million incentive package for MedHab Inc, a medical device maker.  In the presentation city leaders said MedHab would launch their product in Australia by June 2012.  Abilene's Reporter News wrote in January:

According to a city memo, its first product will hit the market in Australia in June, "with a launch in the U.S. as soon as they receive final FDA (Food and Drug Administration) approval."

Donna Osborne, San Angelo's economic development coordinator, said if it takes the deal, the company plans to start operations in San Angelo in March, creating 11 jobs in the first year and 23 the following year. At first, the company would be located in the city's "Business Incubator" facility in the Village Shopping Center on Beauregard Avenue.

The public never heard if MedHab "took the deal."  If not, where is MedHab producing product for Australia, assuming that launch goes on schedule?

The eerie silence on MedHab since early January is not inspiring.  What's MedHab launching, where and when?  San Angeloans have a right to know, if they have a potential $3.6 million nondebt, nonequity investment in the firm.

Update 6-19-12:  Newspaper reports show no sign of MedHab discussion at City Council.

City Council Meeting June 19

The upcoming City Council meeting has little direct information on two issues I follow, MedHab's economic incentive package and City sponsored health insurance.  However, two general agenda items could address these issues. Budget discussion pointed toward major health insurance changes last year.  The agenda packet stated on page 134 of 135:

We will begin discussions of the fiscal year 2012-2013 budget. We will review the budget calendar, budget processes, and the general economic climate. In order to prepare the 2012-2013 budget in accordance with Council’s goals and priorities, it is necessary to begin budget discussions now.

An un-televised June 2011 City Council meeting set the stage for a budget with no new money for employee/retiree health insurance.  This expectation came while other employers faced 25-30% increases.  Councilman Kendall Hirschfeld referred to meetings in early 2011 where this target was set. What surprises await as Council provides budget direction for the coming fiscal year?

The following item could open the door for a MedHab update:

Executive/Closed Session
Exceptions to Requirement that Meetings be Open, Section 551.087 to discuss an offer of financial or other incentive to a company or companies with whom the City of San Angelo is conducting economic development negotiations and which the City of San Angelo seeks to have, locate, stay or expand in San Angelo 

After awarding $3.6 million in economic incentives to MedHab in January, there's been no word from Council, nor the company as to progress on their production site.   One might expect such news to make MedHab's website.  Their latest news item is from summer 2011, despite eight stories between three West Texas newspapers.  Ironically, MedHab's last news story is dated 6-19-11.  San Angelo City Council meets exactly a year later.  Welcome to the West Texas Twilight Zone....

COSA Health Insurance Under Budget

How is the City of San Angelo doing on its health insurance budget for 2011-2012?  After eight months the city is at $3.95 million in health insurance expenditures, well under its $7.5 million budgeted expense.  If expenses continue at the current rate, San Angelo will have spent $1.15 million less than budget by the end of FY12.

Roughly $500,000 is expected savings from the city's exclusive agreement with Aetna and San Angelo Community Medical Center.  Another $350,000 could come from Uncle Sam's ERRP largess.  One key for employers receiving ERRP money is maintaining their level of contribution.  It remains to be seen how COSA will meet this obligation.

COSA's Health Insurance Budget Update

Ever since San Angelo City Council voted for an exclusive health insurance arrangement in November 2011, I've tried to get an updated budget projection.  After numerous attempts, a City Budget Analyst responded to my inquiry:

You're right, the budget was adopted in September before City Council’s decisions regarding health insurance.  Unfortunately I’m not aware of a mid-year budget review or presentation.  The Finance department does not conduct a formal mid-year review with City Council.  We do however amend division’s budgets as needed throughout the year which is probably what HR staff was referring to.  When necessary, division managers alert me of a need by submitting a budget amendment form.

The health insurance fund budget has been amended this year.  Occasionally divisions have a need to amend individual accounts in their budget.  The most common need is to fund a new, unforeseen expense by cutting elsewhere in the budget.  For example I could cancel a training event and cut my Conventions and Schools budget to replace a computer that died.  The health insurance fund has executed this type of budget amendment (see attached Original Budget vs Adjusted Budget).

It does not appear that the budget was amended due to the exclusive provider arrangement nor the reinsurance costs.  It may not have been necessary to amend the budget for these items.

Not adjusting the budget for EPO savings or higher reinsurance costs seems odd, as these are material changes.  This is a pattern with this City Council and operations management.  The last two years COSA's health insurance budget has little basis in reality to what is later approved. 

Governor Perry's Vought Employment: Margin of Error

Texas Governor Rick Perry awarded Vought Aircraft Industries $35 million in 2004 for a promised 3,000 new jobs, on top of the existing 3,300 positions in the Dallas/Grand Prairie area.  By 2007 Vought knew those new jobs would go elsewhere, according to Vought CEO Elmer Doty.

To his disappointment, Doty added in an April 17 interview with the Dallas Business Journal, expanding in Dallas is unlikely, as are plans to buy the old Naval Air Station from the U.S. Navy. So a $35 million cash grant in 2004 from Gov. Rick Perry's Texas Enterprise Fund most likely will be repaid. 

How many jobs did Governor Perry's office claim Vought created?  Over 29,000, when in reality Vought cut 35 positions, a grant award of $1 million per job lost.  In the Governor's latest report, he claims Triumph/Vought employs 2,000 in Texas.  That's a 27,000 job margin of error.  It's also a 1,300 job loss from the 3,300 base.

Given Vought CEO Elmer Doty's confession that Texas jobs weren't coming, How much did Vought repay in 2008?  Zero. It went up marginally from there.

The Carlyle Group's Vought had $35 million for five years before paying a pittance back to Texas taxpayers.  The obligation for payback shifted to Triumph, not Carlyle's co-founders.

Rick Perry's PEU sweetness is clearly on display...

Update 6-7-12:  The Carlyle Group will sell the remainder of its stake in Triumph/Vought. Texas taxpayers should demand their $35 million plus interest from Carlyle.