Tuesday, June 05, 2012

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. 

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