Human Resources Changes Face on Health Insurance

City council 9 17-13 discussion of contingency fund from City of San Angelo Texas

City employees have had raises eaten up by health insurance cost increases in the past.  This prospect looms again.

This budget year comes with a twist, albeit one hard to discern.  Lisa Marley, City of San Angelo Human Resources Manager, gave a convoluted, complicated presentation that mixed employee raises and health insurance, when each item should have been considered separately.

After presenting three scenarios to City Council at their September 17 meeting Marley threw health insurance into the pay scenarios:

This is a drastically different story than Marley told Council in an August 13 budget workshop.  She said she expected significant savings in health insurance for the coming budget year and Council approved a budget with $471,277 fewer dollars for health coverage.  Now she says an increase of $448,000 is needed and suggests that employees need to share in paying this increase.

If the City budgeted the same amount as 2012-2013, there would be no discussion whatsoever.  This looks like administrative sleight of hand to shift more of the cost of health insurance to the employee/retiree.  How would you feel if you got a 2.5% raise and had to pay 3.4% more in health insurance premiums?  Worse, how would you feel about no pay increase as a retiree and having to pay 3.4% more?

I believed the City was being irresponsible in cutting their health insurance budget by nearly $500,000 for the coming budget year and asked about staff's budget assumptions.  Marley had this to say in the budget workshop in mid-August.

"In our budget what we proposed was a 10% increase for the city's portion and a 6% increase for the employees' premiums...   I'm expecting they'll come in much less than that.  We meet next week to go over the new numbers." - Lisa Marley 8-13-13

City Council approved the budget with almost $500,000 less for health insurance on September 3, 2013.  The next council meeting found expected savings to have evaporated.

"But I think we need to be realistic about the costs that are going up with insurance " - Lisa Marley on 9-17-13

The man who ruled the 2013-2014 budget chimed in

"Mayor, I'd like to express special appreciation for HR for looking ahead on this issue.  They didn't want to just blow the raises by you without giving you a head's up on insurance and they worked the weekend in order to work those scenarios up.  So, a special thanks to them for going the extra mile" - Michael Dane, Assistant City Manager/Chief Financial Officer.

I didn't know Lisa Marley would confess to their error so quickly and Michael Dane would refer to this quick flip-flop as "looking ahead."  Oddly, there was no mention of the $201,000 in ERRP money which needs to be used prior to 1-1-14.

I look forward to the day when paid staff can tell a straight story on health insurance.

City Staff Repeatedly Ignore Council's Pleasure

Massive turnover at the senior ranks of San Angelo City officials is a recent fact.  So is City staff failing on numerous occasions to bring items to council or implement council's wishes in a timely manner.  Here are but a few of what I've seen over the last few years.

1.  Failure to update the city's health insurance budget for significant budget savings.  This happened the last two years and is in play for the coming budget year.  Last year this occurred for months after council specifically approved a budget amendment. 

2.  Failure to bring two items regarding the renovated City Hall to Council for approval.  Roger Banks purchasing manager cited the infamous $104,000 in Water Department Furniture and a series of construction change orders that he deemed as needing Council approval. 

The one person that didn't change was Michael Dane, the City's Chief Financial Officer who served as interim City Manager during the Furniture Fiasco.  

City Council members have been most dissatisfied with the last two budget cycles.  Oddly, Dane was promoted to Assistant City Manager post Furniture Fiasco and the first poorly led budget cycle.  Dane is famous for saying at Council meetings, we're ready to act on council's pleasure.

3.  Councilwoman Charlotte Farmer researched the water joint venture between the city and Midland/Abilene and found another breach of a council stated commitment.  The City is essentially $150,000 over the amount Council approved for the joint water effort.  

City Manager Valenzuela and Mayor Morrison issued a statement blaming the faux pas on the lack of our City Attorney's signature and the failure to set up a dedicated account from which to draw down the approved $100,000.  I see the attorney signature as a red herring and the dedicated account as much the same. A budget with clear limits and annotated notes is a tool that can perform the same function.

This isn't a big item, but it occurred on Valenzuela's watch. 

4.  Failure to bring continued pumping of the South Pool at Twin Buttes back to council after 90 days, per council's stated pleasure.  

Tickler files can help leaders truly wanting to implement council's pleasure.  A clear record exists for city staff as City Council meetings are recorded.  One can look through the agendas and minutes to see which topics occurred when.  Video can be fast forwarded to hear the gist of Council's pleasure.

I'm sure there are multiple reasons for repeated failures in this regard.  That said, a number clearly fall in Micheal Dane's court.  At some point Valenzuela will been here long enough for the buck to stop at his desk.  I'd venture that's not far off.

ERRP Help: Too Little, Too Late?

San Angelo's number of early retirees covered under the city's health insurance plan plummeted from 280 to an expected 215 for the coming fiscal year.  The 65 person decrease amounts to a 23% drop.  Ironically, during this time the city had access to hundreds of thousands of dollars to keep early retiree health care affordable. 

The City of San Angelo qualified for federal Early Retiree Reimbursement Program funds three years ago.  The city received $343,000, an amount less than originally projected, but a significant sum.  The first two years the city spent zero ERRP funds.  City leaders, staff and elected officials, painted ERRP money as uncertain in November 2010.  Council refused to use any expected funds to ease the pain of back breaking premium increases foisted on the city's employee and early retiree dependents.   

Only recently did the city tap these funds.

Council approved the use of $142,000 for this fiscal year in order to keep premiums flat from 2012 through 2013.  $201,000 ERRP funds remain, and I will likely ask Council to approve use of those funds for the upcoming premium calculations.

Council instructed City leaders to spend ERRP money in early 2012 to avoid "federal strings."  There is only one string associated with ERRP money, one which staff and council fail to understand.  The City cannot displace local money with federal.   It remains to be seen if the City can comply with this requirement and utilize the $201,000 in remaining ERRP funds.

City Explains Expected Drop in Health Insurance Budget

Below are answers to my questions regarding the budget assumptions that allow the city's health insurance to drop by nearly $500,000 from this budget year 2012-13 to the upcoming one 2013-14.  Human Resources Manager Lisa Marley's responses are in blockquotes below.

During the budget process each year, I am provided a target amount from the Budget Division.  When the budget is turned in it must balance to zero between expenditures and revenues.  At the time that the proposed budget is due, HR only has 4 months of claims data.  Using 4 months of data, I try to estimate what may happen with claims.  Every year this is only a place holder in the budget until more detailed claims data is available later in the calendar year.  To make it balance to zero for this exercise, any differences are deducted from projected claims. The final budget for the self-insurance fund is taken to Council after 10/1 each year. 

1)  How many people are assumed to be in each category for the two budget years - employee/dependents, early retiree/dependents and over 65 retiree?

The demographics are as follows:  2012/13 Assumptions = 805 employees; 237 pre-65 retirees; 229 post-65 retirees.  2013/14 Assumptions = 790 employees; 215 pre-65 retirees; 228 post-65 retirees. (NOTE: The decline in the employee count in this year’s assumptions can be attributed to 34 vacant positions.)

2)  How much are the monthly rates projected to change from the current year to the next?  Lisa Marley said she would have those rates by now in one of the public budget/City Council meetings.

I said I hoped to have them soon and said we had a meeting scheduled with the consultants to start determining upcoming premiums.  The rates have not been finalized.  At this point, I am planning to take the rates to Council at the October 15, 2013 meeting.

3)  Will the city cover fewer people as a result of using temporary employees (from public bids)?  If so, how many fewer due to this one strategy?

The City does not have a strategy to make current fulltime/part time employees temporary.  The City uses temp agencies when employees are off long-term, or if there is a special project that requires more employees, etc.  Presently when temp agency employees are needed, we must call around and get 3 quotes from local agencies and provide this to Purchasing before a request can be approved. The temp agency bid is to simplify rates when temp employees are needed and to have an approved sole vendor for temp services.  Through the bid process if we have one source to use, it will make it more efficient to get temp employees faster by not having to call around for quotes and it will be easier to give consistent prices to the departments who are requesting the temps.

4)  Does the city plan to drop its over 65 retiree group plan and shift this to a private health exchange?

No.

I request to be informed on the reasons, however many, the city budgeted far fewer dollars for health insurance in the coming year than represented in the current budget.

See first response above.  

This leads me to my final questions:

5)  What is the city's health coverage cost year to date?  How does it compare with the budget, which is all the public sees in budget documents?

The latest figures available are through July 31, 2013 (which is 83% of the fiscal year).  Budgeted expenditures = $6,746,767.  Through July 2013 = $5,655,510.  (Not reflected in this amount are five claims paid in August which were in excess of $100,000 each.)

6)  Has the city spent any ERRP monies in this fiscal year?  If so, how much of the roughly $343,000?

Yes.  Council approved the use of $142,000 for this fiscal year in order to keep premiums flat from 2012 through 2013.  $201,000 ERRP funds remain, and I will likely ask Council to approve use of those funds for the upcoming premium calculations.

7)  Will the city bid any of its health insurance plans this year?  If so, when.  If not, when might this topic come before City Council?

No.  The current health insurance contract expires on 12/31/14.  An RFP for health insurance should go out in the spring of 2014.

"Thank You TTU Ethics Point"

Sep 14, 2013, 3:53 PM - TTU
Comment: Hugh Cronin is no longer with the university. After his departure, administration continued to seek opportunities to partner with the campus and the
student organization in an effort to strengthen the viability of the program intended to relocate the feral cats away from residence halls, dining halls, and child development center. 

 Since your report, the university has partnered with the campus feral cat caregivers to ensure no cats are trapped under Drane Hall. During this process, another opening was discovered in the basement allowing cats to freely enter and exit the building once again confirming cats had never been completely trapped underneath the building. 

Before the remaining opening is sealed, a university employee will again put on protective hazmat gear and crawl under the building to verify there are no cats. As soon as the campus feral cat caregivers and anyone else interested in this process witness the search and are satisfied with the results, the opening will be permanently sealed.

Thank you for using the Ethics Point reporting system.

Sep 15, 2013, 9:49 AM - Reporter
Reply: Finding a hole after the fact does not impact facilities management's behavior or intent in the handling of this situation. It promised to collaborate, then never did.

Your response did not address the unprofessional behavior of Hugh Cronin (verbal abuse) or Chris Cook (lying). It did not address President Nellis' or Chancellor Hance's ignoring the problem for weeks to months.

If this is the quality of investigation at a University level I am sorely disappointed. It confirms my assessment that corporate compliance programs exist for show.

Thank you TTU's Ethics Point for your non-answer to my identified concerns.

For those interested the complete report (as of this moment) is below:

Report Submission Date
8/27/2013
Reported Company/Branch Information

Name	Texas Tech University
Location	Texas Tech University - Lubbock 150 Administration Bldg. Box 42005
City/State/Zip	Lubbock, TX, 79409

Violation Information

Issue Type
	Inappropriate Supervisor Directive
Relationship to Institution
	Other/Anonymous
What is the general nature of this matter?
	Assistant Vice President Hugh Cronin of Facilities Management is purposefully barricading Texas Tech's Feral Cats under buildings without food or water, which is defined as animal cruelty under Texas law. Multiple times Cronin has said all cats have been removed and multiple times cats have been seen barricaded under buildings with no food or water.
How did you become aware of this possible violation?
	Other
If other, how?
	TTU employees and area animal service organizations
Where did this incident or possible violation occur?
	Drane Hall over the last week, other buildings prior to this
Please provide the specific or approximate time this incident occurred.
	Thursday evening August 22 all cats removed Friday morning August 23 two cats sighted behind metal grate with no food or water Friday evening Cronin orders sheet metal installed so cats cannot be seen Monday August 26 - two more cats sighted after someone removed sheet metal. Tuesday August 27 - one more cat sighted
How long do you think this problem has been going on?
	1 to 3 months
What leads you to believe the problem has been ongoing?
	A June 3rd Tech announcement said the University would partner with local animal service organizations on cat removal. This turned out to be a complete untruth. Hugh Cronin did not ask for and turned down numerous offers of aid on the safe and ethical removal of Tech's community cats.
Please identify the person(s) you feel are engaged in this behavior.
	Hugh Cronin - Asst. VP Chris Cook - Comm/Mktg
For the persons named above please indicate whether or not they are affiliated with Texas Tech.
	Yes, they are affiliated with TTU
Have you or someone else previously reported this problem to your supervisor or management? If so, by whom, to whom, when, and how?
	I wrote President Nellis on this very issue and received no reply
Do you suspect or know that a supervisor or management is involved?
	Yes
If yes, then who?
	Chris Cook wrote that PETA was involved in helping TTU address the issue. PETA officials, when contacted regarding Tech's animal cruelty, said they had not been contacted by TTU. Cook's blatant misrepresentation is an ethics violation.
What leads you to believe that a supervisor or management is involved?
	Chris Cook wrote that PETA was involved in helping TTU address the issue. PETA officials, when contacted regarding Tech's animal cruelty, said they had not been contacted by TTU. Cook's blatant misrepresentation is an ethics violation.
Please identify any persons who have attempted to conceal this problem and the steps they took to conceal it.
	President Nellis ignored it Chancellor Hance ignored it
Details
	There are many e-mails and pictures. The e-mails can be gotten internally via an IT search of Cronin's and Cook's communications. Pictures exist on the website for the Humane Society of West Texas and the State of the Division blog.

Follow-Up Notes
Sep 02, 2013, 12:38 PM - Reporter
A petition for TTU to install one way excluder devices instead of sheet metal barricades was submitted to President Nellis. This petition had over 330 signatures and was sent due to the urgent need to allow cats out of crawl spaces to obtain food and water.

The Humane Society of West Texas has a second petition with roughly 1,000 signatures asking TTU to reconsider its heavy handed, uncooperative stategies in regard to feral cat removal.

As of Labor Day 2013 cats have been barricaded under Drane Hall with no food or water for two weeks. TTU administration has shown no concern over the welfare of these animals and ramped up its intimidation of people on TTU's campus who are concerned about Tech's animal cruelty.

In one incident the TTU police were called and animal cruelty reported. Assistant Vice President Hugh Cronin was verbally abusive to the person making the report

Sep 02, 2013, 1:54 PM  -  TTU
Comment: Thank you for using the Ethics Point reporting system and for your additional information. We are currently looking into this matter.

Sep 04, 2013, 7:39 PM  - Reporter
Reply: I request a formal reply to concerns stated in this report.

Sep 11, 2013, 11:00 PM  - Reporter
It's been two weeks since I submitted this concern. When might I hear something other than "we're looking into it?"

Sep 14, 2013, 3:53 PM - TTU
Comment: Hugh Cronin is no longer with the university. After his departure, administration continued to seek opportunities to partner with the campus and the
student organization in an effort to strengthen the viability of the program intended to relocate the feral cats away from residence halls, dining halls, and child development center. Since your report, the university has partnered with the campus feral cat caregivers to ensure no cats are trapped under Drane Hall. During this process, another opening was discovered in the basement allowing cats to freely enter and exit the building once again confirming cats had never been completely trapped underneath the building. Before the remaining opening is sealed, a university employee will again put on protective hazmat gear and crawl under the building to verify there are no cats. As soon as the campus feral cat caregivers and anyone else interested in this process witness the search and are satisfied with the results, the opening will be permanently sealed.

Thank you for using the Ethics Point reporting system.
 
Sep 15, 2013, 9:49 AM - Reporter
Reply: Finding a hole after the fact does not impact facilities management's behavior or intent in the handling of this situation. It promised to collaborate, then never did.

Your response did not address the unprofessional behavior of Hugh Cronin (verbal abuse) or Chris Cook (lying). It did not address President Nellis' or Chancellor Hance's ignoring the problem for weeks to months.

If this is the quality of investigation at a University level I am sorely disappointed. It confirms my assessment that corporate compliance programs exist for show.

Eliminating "New" Economic Development Exemption

The City of San Angelo Development Corporation took up "Guidelines for Job Creation Assistance" in their September 11 meeting.  Mayoral candidate Dwain Morrison promised to return rules for business taxpayer subsidies to those that existed prior to January 3, 2012.  That date City Council loosened the rules before granting MedHab a $3.6 million in economic development assistance to locate its production facilities in San Angelo.

Mayor Alvin New sat on MedHab's Board of Directors and had filed two affidavits on his substantial conflict of interest via his MedHab investments.  City of San Angelo Development Corporation Board Member Randy Brooks also was a MedHab investor and similarly conflicted   The January 3rd change allowed the company to get the incentive and these two servants/investors to remain in their public roles.

The irony is MedHab failed to live up to its lofty employment and start up plans.  Council rushed to fund MedHab's product launch in Australia in June 2012, looming FDA approval and 227 San Angelo jobs.  As of September 2013 MedHab has accomplished none of these goals.  However, it did launch a retail product earlier this month with production in Athens, Texas.

The irony of Bob Schneeman's recent presentation to shore up City of San Angelo incentive guidelines is he made the presentation to loosen them in December 2011.  I'm sure former Development Czar Shawn Lewis played a key role in lowering ethics standards.  That said, I'm amazed Schneeman could make his presentation with a straight face.

The good news is higher ethics rules apply to City Council members, Development Corporation board members, and Development Corporation staff.  It covers investment in businesses that might ask council for funding as well as personal real estate holdings from which they might profit. 

Mayor Dwain Morrison substantially fulfilled one election promise on September 11, 2013.  San Angelo won't be a place elected officials or city officials can feather their beds with public money, not until they've been gone from their role for six months.  Hats off to the Mayor.

Texas Tech's Un-Ethics Point

Texas Tech University's lack of forthright communications and public accountability continues regarding administration's harsh actions relative to their longstanding feral cat colony on campus.

Ethics Point is a service TTU employs to give stakeholders, including employees, the opportunity to report unethical behavior on campus.  I made a report of animal cruelty and administrators outright lying in regards to removing feral cats from campus.  I submitted the report on August 27, 2013. 

Sep 02, 2013, 1:54 PM by TTU Administration
Comment: Thank you for using the Ethics Point reporting system
and for your additional information. We are currently
looking into this matter.

Sep 04, 2013, 7:39 PM by PEUReport
Reply: I request a formal reply to concerns stated in this report.

Sep 11, 2013, 11:00 PM by PEUReport
It's been two weeks since I submitted this concern. When might I hear something other than "we're looking into it?"

TTU's lack of response on this issue began well before my Ethics Point filing.  It continues unabated.  TTU is accountable to no one for broken promises, outright lies, breaking animal cruelty laws and having virtually no information on the scope of the problem.  Note the sheer irony detailed below:

The Texas Tech University System is committed to excellence at all levels and supports the highest degree of ethical conduct. In recognizing its obligation to students, employees, and constituents to maintain the highest ethical standards, Texas Tech has established a hotline to provide a confidential avenue for reporting.  

Apparently a concrete response to the hotline is also optional within Ethics Point.

Hugh Cronin's Community Cat War continues unabated.  Given Hugh's termination the offensive is now ably overseen by President Nellis.  He will control the manner, method and nature of TTU's various non-responses.   

Is this the work of an award winning facilities management department?  Hardly.