Sunday, July 29, 2012

City's Draft Budget for Health Insurance

The City of San Angelo released a draft budget for 2102-2013.  City Council wants greater headcount reductions, which would save in both salary and benefit costs.  Council intends to shift operating money toward capital items.  One source of savings for this council has been employee and retiree health insurance.  Consider this statement from the city's 2011-2012 approved budget:

Employee Health Benefit Stabilization – The cost of health benefits has increased substantially over the last eleven years. Health coverage in fiscal year 2009-2010 paid by the City is approximately $5.3 million for both employees and retirees. The amount increased to $5.8 million in fiscal year 2010-2011. In fiscal year 2011-2012 the City went to an exclusive provider plan for its employees which generated $525,000 in savings. Additionally employee and retiree only premiums decreased by $3.30 per month and costs for dependents of employees and retirees were equalized and were also reduced by 10%. The remaining savings of $324,500 was set aside for use in future years.

The City already had nearly a $1 million surplus in its self-insured health insurance account.  Year to date figures portend another large surplus.

Add $343,000 in federal ERRP money and the city has nearly $2.2 million in its health insurance cash kitty.  That's a nice chunk of change for City Council to redirect to capital needs, while dancing to stay within ERRP's only requirement of maintaining their employer contribution.

In the past Council committed to a public vote on transferring any funds from health insurance to general purposes.  I expect a lively discussion when they live up to that promise.

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