City Achieves Finance Gold or Lead?

The Standard Times reported:

The city received the Gold Leadership Circle Award from the state comptroller’s office for its efforts to give local taxpayers a transparent view of how their tax money is spent, according to a city news release sent out Friday.

The state agency tracks the financial transparency of local governments statewide, including annual budgets, financial reports and check registers.

Consider the City's health internal service fund (employee/retiree health insurance) balance at the end of FY 2012, which becomes the beginning balance for 2013.  The Gold level finance department had this ending balance for FY 2012/beginning balance for 2013 at $1,571,629.

The City's Comprehensive Annual Financial Report (CAFR) for FY 2013 shows a beginning balance of $1,100,401. That's a difference of -$471,228.

This was not covered in the May 20th CAFR presentation to Council.  There's more that needs explaining as the city did a poor job of projecting health insurance revenues and costs in FY 2013.  The City started off projecting a breakeven year, then revised that to a negative $343,287.  The CAFR said the loss came in at $622,404. 

Rather than the expected $1.23 million in the health insurance fund, the City of San Angelo has a mere $469,306 for the current fiscal year.  Human Resource Director Lisa Marley told Council two different stories within a month on projected health insurance costs.  Savings evaporated, such that Council voted to use remaining ERRP funds of $201,000 and much of the City's weeks old Rainy Day Fund to spare employees an increase.

The City issued a Request for Proposal for health insurance, amongst other employee benefits.  Bidding closed at 2:00 pm Friday, June 13th.  

Health insurance should've been a major theme in the recent City Council Strategic Planning Session.  That and the city's looming pension liabilities.  From media reports there's no indication either subject made the list.  There's a dearth of information from city officials on the session, but that's the subject for another post.

Former City Councilman Kendall Hirschfeld indicated at a publicly aired strategic planning session that staff were to keep health insurance costs static.  His message in June 2011 essentially was "Don't bring us a health insurance increase.  I want it flat or preferably lower." 

The current council's preference could be seen by there not taking up the topic at all.  A transparent finance department should have informed Council of the City's deteriorating health insurance fund balance.  City staff seems to prefer waiting for an item to achieve crisis levels before informing council.  It's more like lead than gold.

Update:  San Angelo Live also did a piece on the Gold Leadership Circle Award

Update 6-19-12:  A presentation to City Council on 6-17 identified a Health Insurance increase of 12-14% or $750,000 as not being in the draft budget.