Committees discuss health insurance, budget, union negotiations
Lead Summary
By
Brandy Chandler-brandychandler@gmail.com
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The finance committee and the civil service employee relations committee of the Hillsboro City Council met Thursday evening to discuss a potential increase to the city's health insurance and how that will impact the overall budget for 2011 and into 2012.
The meeting was scheduled to begin at 6:15 p.m. at the Hillsboro Fire Station. Finance committee chair noted the time to be 6:12 and called the meeting to order. Finance committee member Dave Shoemaker was not in attendance due to being out of town. Bill Alexander, chairperson of the civil service employee relations committee and a finance committee member, was in attendance, along with committee member Mary Brown Turner.
Hillsboro Mayor Dick Zink, Safety and Service Director Ralph Holt, Hillsboro Auditor Gary Lewis, and the city's insurance agent Doug Wagoner were also in attendance.
As Pence called the meeting to order, he noted that law director Fred Beery had advised him that general discussion regarding the insurance figures' impact on the budget could be discussed. However, since negotiations are still pending with the fire and police department unions, specific figures should be discussed in executive session.
As The Highland County Press reported earlier this week that following the acceptance of health insurance bids Oct. 29, the city could face an increase as high as 19 percent over what was paid last year.
Two companies submitted bids, including Anthem, the city's current provider - which according to law had to bid, Wagoner said - and United Health Care from Chicago, which later withdrew.
Wagoner told the committee Thursday that the 19-percent figure is the highest the increase can be, and depending what the city chooses and what can be negotiated with the union, it can be lower. A health savings account, he said, would be an increase of 17.2 percent.
"I understand you shopped it around to several different carriers and they all declined to quote," Pence said to Wagoner during the meeting. "I know I've spoken with a couple other agents who were going to put in a bid, and everyone I've talked to said none of the carriers would even give them a quote. So the only person we could get to quote this was the existing carrier. And that's because they had to."
Alexander asked why the potential increase was so high. Wagoner said that insurance companies look at several factors in determining a cost for coverage.
"They have what they refer to as a loss ratio, for them to feel like a group is operating to where they can make money," Wagoner said. "Their claims cannot be more than 80 percent."
Wagoner said that for the city, 20 percent of the employees are using 80 percent of the claims. He shared a generalized breakdown of figures with the committee that showed more than 78 percent of city employees used less than $5,000 in health care expenses. The remaining people - seven employees - used a combined $735,000 in health care expenses.
"I think it's important the citizens know ... I think there may be some sentiment out there that we didn't actively seek multiple bids and that we're kind of laying back and not trying to do the best we can do, but that's not the case," Pence said.
Wagoner said that the city had extended the time frame in which is was accepting bids by a week in order to allow additional bidders.
"There has been a concerted effort to try to do the best that can be done with the taxpayers' money," Pence said. "Although 19 percent is unfortunate, it is what it is and we're going to have to work with what we've got."
Pence asked Lewis if he had figures on how the increases could impact the 2011 budget.
"That really depends on which way everything else falls out," Lewis said. "The way we've been looking at it, I really can't say. Things are going to be tight going into next year. If the year ended today, we're probably looking at places where we'd have to cut everything. Exactly how much that is going to be, I really can't say at this point in time. Get a good handle on the expenses, and there's some things there that I believe we could probably trim back. But that call though is Ralph and Dick's. It's going to be a tight year."
Lewis said the 19-percent increase is a "worst-case scenario," which is 9 percent over what he had originally budgeted in the preliminary budget for 2011.
Earlier this week, Lewis told The Highland County Press that 7-10 percent may need to be cut from the 2011 budget.
Holt told the committees that union negotiations are pending and that he postponed meetings until the city decided what it would do regarding insurance.
Another contributing factor includes the unresolved fire and EMS contracts with seven area townships. The city proposed significant increases to those townships, which township leadership said they cannot afford, and in some cases cannot legally fund. The townships area looking at alternatives other than contracting with the city, including joining other fire districts or creating their own fire district.
At 6:26, the committee voted to go into executive session to discuss the insurance figures and union negotiations.
The city of Hillsboro had been facing a deficit by the end of 2011. The projected deficit had been as high as $730,000 and as low as $164,000 in recent months. In July, council voted to have the auditor prepare the tax budget so that there would be a carryover between $400,000 and $450,000 into 2012. The finance committee had voted in August to make a recommendation to a full council to cut 10 percent across the board in the general fund for the months of September to December 2010. However, that recommendation was never presented to council.
The finance committee and the civil service employee relations committee of the Hillsboro City Council met Thursday evening to discuss a potential increase to the city's health insurance and how that will impact the overall budget for 2011 and into 2012.
The meeting was scheduled to begin at 6:15 p.m. at the Hillsboro Fire Station. Finance committee chair noted the time to be 6:12 and called the meeting to order. Finance committee member Dave Shoemaker was not in attendance due to being out of town. Bill Alexander, chairperson of the civil service employee relations committee and a finance committee member, was in attendance, along with committee member Mary Brown Turner.
Hillsboro Mayor Dick Zink, Safety and Service Director Ralph Holt, Hillsboro Auditor Gary Lewis, and the city's insurance agent Doug Wagoner were also in attendance.
As Pence called the meeting to order, he noted that law director Fred Beery had advised him that general discussion regarding the insurance figures' impact on the budget could be discussed. However, since negotiations are still pending with the fire and police department unions, specific figures should be discussed in executive session.
As The Highland County Press reported earlier this week that following the acceptance of health insurance bids Oct. 29, the city could face an increase as high as 19 percent over what was paid last year.
Two companies submitted bids, including Anthem, the city's current provider - which according to law had to bid, Wagoner said - and United Health Care from Chicago, which later withdrew.
Wagoner told the committee Thursday that the 19-percent figure is the highest the increase can be, and depending what the city chooses and what can be negotiated with the union, it can be lower. A health savings account, he said, would be an increase of 17.2 percent.
"I understand you shopped it around to several different carriers and they all declined to quote," Pence said to Wagoner during the meeting. "I know I've spoken with a couple other agents who were going to put in a bid, and everyone I've talked to said none of the carriers would even give them a quote. So the only person we could get to quote this was the existing carrier. And that's because they had to."
Alexander asked why the potential increase was so high. Wagoner said that insurance companies look at several factors in determining a cost for coverage.
"They have what they refer to as a loss ratio, for them to feel like a group is operating to where they can make money," Wagoner said. "Their claims cannot be more than 80 percent."
Wagoner said that for the city, 20 percent of the employees are using 80 percent of the claims. He shared a generalized breakdown of figures with the committee that showed more than 78 percent of city employees used less than $5,000 in health care expenses. The remaining people - seven employees - used a combined $735,000 in health care expenses.
"I think it's important the citizens know ... I think there may be some sentiment out there that we didn't actively seek multiple bids and that we're kind of laying back and not trying to do the best we can do, but that's not the case," Pence said.
Wagoner said that the city had extended the time frame in which is was accepting bids by a week in order to allow additional bidders.
"There has been a concerted effort to try to do the best that can be done with the taxpayers' money," Pence said. "Although 19 percent is unfortunate, it is what it is and we're going to have to work with what we've got."
Pence asked Lewis if he had figures on how the increases could impact the 2011 budget.
"That really depends on which way everything else falls out," Lewis said. "The way we've been looking at it, I really can't say. Things are going to be tight going into next year. If the year ended today, we're probably looking at places where we'd have to cut everything. Exactly how much that is going to be, I really can't say at this point in time. Get a good handle on the expenses, and there's some things there that I believe we could probably trim back. But that call though is Ralph and Dick's. It's going to be a tight year."
Lewis said the 19-percent increase is a "worst-case scenario," which is 9 percent over what he had originally budgeted in the preliminary budget for 2011.
Earlier this week, Lewis told The Highland County Press that 7-10 percent may need to be cut from the 2011 budget.
Holt told the committees that union negotiations are pending and that he postponed meetings until the city decided what it would do regarding insurance.
Another contributing factor includes the unresolved fire and EMS contracts with seven area townships. The city proposed significant increases to those townships, which township leadership said they cannot afford, and in some cases cannot legally fund. The townships area looking at alternatives other than contracting with the city, including joining other fire districts or creating their own fire district.
At 6:26, the committee voted to go into executive session to discuss the insurance figures and union negotiations.
The city of Hillsboro had been facing a deficit by the end of 2011. The projected deficit had been as high as $730,000 and as low as $164,000 in recent months. In July, council voted to have the auditor prepare the tax budget so that there would be a carryover between $400,000 and $450,000 into 2012. The finance committee had voted in August to make a recommendation to a full council to cut 10 percent across the board in the general fund for the months of September to December 2010. However, that recommendation was never presented to council.
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