Sunday, October 19, 2014

City Council to Act on Health Insurance

Last month San Angelo City Councilwoman Charlotte Farmer talked about getting staff salaries up to 85 to 90% of the national averages.  Other council members offered a different comparison group, cities our size or in our region.  Wages are but one component of total compensation, which includes benefits.  One key benefit is on City Council's published agenda:  

29. Consideration of matters related to Request for Proposal HR-01-14: 

a.Discussion of proposals submitted for Request for Proposal HR-01-14 for benefits regarding health/Rx, clinic, dental, flexible spending accounts, employee assistance program (EAP), voluntary benefits and COBRA administration. 

b. Consideration of selecting Benefit Providers related to Request for Proposal HR-01-14, authorizing staff to negotiate contracts, and authorizing the City Manager to execute said contracts and related documents Presentation by Human Resources Director Lisa Marley) 
The city budget projected health insurance costs to soar, with the city picking up a portion of the increase.  How much will employee costs for health insurance rise?  How much will retiree health costs increase?  Several years ago the city hammered employee and early retiree dependents with massive health increases.  It caused nearly 200 people to drop city sponsored health insurance.  The irony was City Council had access to Early Retiree Reinsurance Program funding and chose not to use a penny.

Last year HR Director Lisa Marley changed faces on health insurance costs between budget and council proposal   In one month the projected number swung nearly $1 million.  (fiscal year)

The City's 2013 Comprehensive Annual Financial Report (CAFR) revealed the health insurance fund to be much lower than budgeted, $469,000 vs. the expected $1.23 million. (fiscal year).  The actual drop was even larger.. 

In July Marley flashed a slide showing a projected $2 million increase in health insurance costs (fiscal year).  Staff proposed Council fund $750,000, leaving $1.25 million for employees and retirees to shoulder. 

Former Police Chief Russell Smith has been the voice of retirees on this issue.  Their pay was a fraction of their peers in other cities, yet the selling point was city benefits.  These retirees got neither fair pay or the promised free lifetime healthcare. It must gall retirees to see staff get a 5% across the board increase while their retirement income remains fixed.

Both staff and early retirees will pay more for health insurance coverage.  The question is how much?  Another question is how many positions will no longer have health insurance benefits due to the city's contracting out numerous functions formerly performed by employees? 

Council's discussion should include a deep and honest discussion on health insurance.  That has not occurred in years.

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