San Angelo Human Resources Director Lisa Marley offered City Council a stocking with nearly $500,000 in savings, which became the basis for the 2013-2014 budget. A month later she returned with a lump of health insurance coal, a $450,000 increase. That number settled to a $381,000 increase, which City Council will consider on December 3rd, after approving $201,000 of the amount needed in their November 19th meeting. Clear as mud, right?
What's missing in the city's world of delta numbers for health insurance are history and totals. These come from the city's FY 2014 budget.
FY 12 had a $1 million difference between self insurance revenues and operating expenses. In FY 13 that was projected to narrow significantly to $100,000. If the cost increase was due to experience, i.e. the rate/cost of health care, that increase would be carried forward in FY 14. It wasn't. (In early November I asked the city to provide their assumptions for the budget pictured above, as well as how FY 13 closed health insurance wise. I have yet to receive this information.)
Looking at the peak of operating expenses, it's reasonable to assume one or more "one time expenses" were projected for FY 2013, i.e. the were not expected to repeat in FY 2014. Based on Council's vote to engage ACAP Health in May 2012, I expect the city budgeted some amount for ACAP in the $6.6 million for FY13. Those funds, if not lost in a lawsuit or legal settlement, could become available later for employee/early retiree health insurance.
City staff proposes to fund the $381,500 via two existing funds. The background packet calls for $201,288 in ERRP funds, which the city has held for over two years, and $180,300 in Rainy Day Funds, a fund created this budget year for future needs.
If Council agrees with the recommendation no premium increases will be passed onto employees and early retirees.
In 2014, all insurance plans will go out for bid, with new policies becoming effective in January 2015.
Next year could be a completely different story. Let's hope it's not as fragmented, whipsawing or convoluted.
(Click on the graph to make the image larger)
Update 12-4-13: The Rainy Day fund, created by savings in health insurance via the prior year, will be drained by the increase in health insurance costs. This is budget sleight of hand.