HomeMy WebLinkAbout09-12-12 Personnel & Finance PERSONNEL & FINANCE SEPTEMBER 12,2012
4:00 P.M.
2013 BUDGET REVIEW—SESSION#6
Committee Members Present: Karen White, Gavin Ferlic,
Dr. David Varner, Henry Davis
Other Council Present: Tim Scott,Valerie Schey, Dr. Fred Ferlic
Derek Dieter
Citizen Members Present: Tammy McNally, Julaine James
Others Present: Mayor Pete Buttigieg, Mike Schmuhl,
Mark Neal, John Murphy, Bob Allen,
Ned Broadwater
Agenda: 2012 Budget Review—Session#6
Chairperson Karen White opened the review by asking the Council to list their questions
following today's presentation and correspondingly asked the administration to answer
all questions at future review sessions now scheduled for Monday, September 17,2012
and Wednesday, September 19, 2012. In addition she asked the administration,to list
and justify all new positions along with their funding source. Karen then turned the
hearing over to Mark Neal, City Controller. Mark began noting a new state law requiring
the Council to review the 2013 Transpo budget. This would be scheduled for Monday,
September 17, 2012 at 5:00 p.m. The Controller then moved to a review of the city's
health insurance plan for its employees. Before introducing Ned Broadwater from
Gibson Insurance the firm managing the city's self-insured plan, Mark cautioned that the
current plan needed a thoughtful structural review. For years the plan has been low on
cost premiums for employees but high on benefits. This approach had always been seen
in the past as a way of providing a generous benefit to employees somewhat
compensating for lower salaries than found for comparable skills in the private sector.
Today with rising health care costs exuberated by an aging work force this model
requires a$1.4 supplement from cash reserves to break even. This is the case in spite of
the city's wellness program whose benefit though real are hard to quantify. Also taken
into account is a recently commissioned actuarial analysis of claims history. Mark
referred to fund 711 for actual budget history.
Ned Broadwater from Gibson Insurance took over to explain the City's current plan. As
previously stated, it is a self-funded plan in which the City purchases stop loss coverage
for losses over$300,000 per claim. Gibson acting as an advocate for the City negotiates
rates with Anthem Blue-Cross Blue Shield based upon claims history.
Ned explained the contract they encouraged with Milliman Actuarial Group, an industry
leader. Milliman projects an 18%rise in health care costs and points to a 12% cost over
budget for the City. In response the City increased its budgeted figure by 10%for 2013
in effect eating the loss with cash reserves. The caution being this scenario can't go on
forever. Hard financial and ethical decisions will have to be faced beyond 2013.
The Mayor then spoke to overall cost containment efforts; but did not shy away from the
need for tough calls in the years ahead.
Karen White opened the hearing to Council questions which ranged from over
comparison to plans in the private sector and comparisons to the public sectors as well.
Fundamental considerations to be faced in the future such as Body Mass Index measures
for hiring were pointed out as necessary considerations by Dr. Ferlic. Several
cost/benefit questions regarding the wellness program efficacy followed. In discussion,
wellness costs were pegged at$160,000 for 2013.
Moving on to consideration of Public Works budgets Gary Gilot took center stage. Gary
referenced the 26 page handout provided at an earlier interrupted hearing referring to p.
14 as a starting point. Gary launched into a litany of programs, initiatives, and cost-
saving efforts under his public works purview.
Gary was open to answering Council questions during his review and received many.
Among them was David Varner's observation that lower interest rates and construction
costs overall,there should be money freed up in a sense which he felt should be saved
instead of looking to spend this "new"money.
Derek Dieter, at one point, said if 80-85%of the inquiries from the public come from
utilities is the 311 system worth the expenditure. The dial 311 system for public queries
is in the process of being installed currently. Henry Davis questioned the value of
outsourcing as opposed to doing our own work feeling the quality and flexibility to
provide services suffers. He also suggested the city's energy director position need more
justification or a cost/benefit type analysis. Gary Gilot responded to each question. Then
Tim Scott asked how much New Energy,the ethanol plant,pays the city for water and
sewage annually. The answer was $2 million. Given the current state of the ethanol
industry, Tim suggested contingency plans be looked at should a plant closing become
imminent. Valerie Schey focused her queries on whether the City was using technology
enough to enjoy fuller cost savings from efficiencies that could be realized.
Karen White facing time considerations urged early thorough rate increase considerations
if that need be the case for rising utility expenses.
There being no further business to come before the committee at this time, Chairperson
White adjourned the meeting at 6:08 p.m.
Respectfully Submitted,
aren L. White, Chairperson
Personnel &Finance Committee