HomeMy WebLinkAbout1987-12-15; City Council; 9242; Health insurance cost increases\B# y2qz
ATG. 12/15/87
IEPT. PER
RECOMMENDED ACTION:
Adopt Resolution No. 9 ?/F amending the group benefit
consulting services with Towers, Perrin, Forster and Crosby and transferring funds and Resolution No. ?J/? , authorizing the transfer of funds to pay increased employee health insurance costs.
TITLE: DEPT. HD. b
HEALTH INSURANCE COST INCREASES CITY ATTYYIM
CITY MGa
ITEM EXPLANATION:
Two separate but related issues are addressed in this agenda
bill. The first is a request for additional funds for
continued benefit consultant services. The second request is to pay for the increased health insurance costs.
Towers, Perrin, Forster and Crosby provide benefit consultant services for the city. Since the beginning of the fiscal
year, this service has cost $9,782. Additional services will
be required during the remaining part of the fiscal year. The
City Council is required to approve an expenditure in excess of $10,000. Therefore, is requested the City Council approve Resolution No. d authorizing the transfer of $15,000
from Contingency Funds to Account No. 001-820-1510-2479,
Professional Services, and amending the consultant agreement.
The policy year for employee health insurance ends December 31,
1987. Insurance increases for renewal are 4.85% for the
Kaiser plan and 39% for Northwestern National Life's indemnity
plan.
Increases to health insurance costs were expected. Data from
the city's consultant showed that Carlsbad's experience closely
parallels that of other employers. Hospital use decreased
while outpatient and overall plan utilization increased greatly.
Cost containment programs implemented over recent years stemmed
increases for a time, but have now been overwhelmed by medical
care inflation. The medical care Consumer Price Index nearly
equaled that for all items in 1981. In 1986 it was four times
greater and is growing.
In light of this information, staff reviewed several options in
search of a method of managing increasing health care costs
over the short term and long term. Two viable courses of action were identified.
The first and recommended choice is to continue with our present carriers and plans. The city will absorb increases for the balance of Fiscal Year 1987-1988 and budget for these increases
next fiscal year. Concurrently, staff will begin working with
employee groups to make cost saving plan design changes and
create a Flexible Benefit Plan for calendar year 1989. This provides a long term plan to control increasing medical care
costs, provides employees with choices and begins to change
the concept of health care from benefit to compensation.
The second viable plan would be to contract for health
insurance with the Public Employees' Retirement System. This is an attractive option for the short term. Employees can select from several plans and change plans yearly. Health
insurance administration and employee assistance is removed from the city to PERS. The disadvantages are lack of dental, optical and life insurance coverage. The long term disadvan- tage is that the city will eventually pay the increasing costs of health insurance for retired employees. This would be a new and growing cost not now required nor paid by the city.
It is requested the City Council approve Resolution No. 93f9 authorizing the transfer of $130,000 from Contingency Funds to various other accounts.
FISCAL IMPACT:
The requested fund transfer will reduce the General Fund
Contingency Account 001-840-1990-2999 by $145,000. Health
insurance costs for Plan Year 1987 are estimated to be
$840,000 and $1,150,000 for Plan Year 1988.
EXHIBITS :
1. Resolution No. ?-3/r .
93/9* 2. Resolution No.
3. Chart of Health Insurance Monthly Rates Effective January 1, 1988.
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RESOLUTION NO. 9318
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AMENDING THE AGREEMENT FOR GROUP BENEFIT CONSULTING SERVICES BETWEEN THE CITY AND TOWERS,
PERRIN, FORSTER AND CROSBY AND TRANSFERRING FUNDS.
WHEREAS, the City Manager and Towers, Perrin, Forster and
Crosby signed a benefit consultant agreement on January 20, 1987;
and
WHEREAS, that agreement under the provisions of Section
3.28.170 of the Carlsbad Municipal Code charges for services
cannot exceed a sum of $10,000; and
WHEREAS, the services of the consultant will generate fees
exceeding $10,000, and
WHEREAS, additional fees of $15,000 will be needed for the
remainder of the fiscal year; and
WHEREAS, the City Council must approve the amendment of the
agreement, it is attached hereto and made a part hereof and is
offered for City Council consideration.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Carlsbad, California, as follows:
1. That the above recitations are true and correct.
2. That the Mayor is authorized to sign the agreement
amendment attached hereto and made a part hereof as Exhibit A.
3. That the transfer of $15,000 from General Fund Contingency
Account 001-840-1990-2999 to General Fund Personnel Account,
Professional Services,001-820-1510-2479.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the
City Council of the City of Carlsbad on the 15th day of
De cembe 1: , 1987, by the following vote, to wit:
AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and Larson
NOES: None
ABSENT: None
ATTEST:
a- ALETHA L. RAUTENKRANZ, City dVerk
( SEAL)
2.
AMENDMENT
This will serve to amend only the approval authority portion of the agreement of January 20, 1987, between the City of Carlsbad
and Towers, Perrin, Forster and Crosby.
This amendment is required by Section 2.28.170 of the Carlsbad
Municipal Code, as services rendered under the provisions of
the agreement are expected to exceed $10,000.
In Witness Whereof, we have hereunto set our hands and seals.
Title
At kest:
Approved as to Form:
City Clerk
neY
Exhibit A
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9319 RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, AUTHORIZING THE
TRANSFER OF FUNDS TO PAY INCREASED EMPLOYEE
HEALTH INSURANCE COSTS.
WHEREAS, costs of employee health insurance have increased
for 1988; and
WHEREAS, under existing Memorandums of Understanding most
additional insurance costs are borne by the City; and
Whereas, funds must be transferred to departmental budgets
to ensure payment of health insurance costs.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Carlsbad, California, as follows:
1. That the above recitations are true and correct.
2. That the following amounts are hereby appropriated:
From Account No.
001-840-7990-2999
131-890-3330-0000
161-890-0000-0000
180-890-8123-0000
181-890-8119-0000
181-890-8120-0000
181-890-8118-0000
501-890-6310-0000
511-890-0000-0000
620-890-5210-0000
640-890-0000-0000
810-840-3410-0000
To Account No.
001-840-Various-1940
131-840-3330-1940
131-840-6210-1940
180-840-8123-1940
181-840-8119-1940
181-840-8120-1940
181-840-8118-1940
501-840-6310-1940
511-840-6110-1940
620-840-5210-1940
640-840-1920-1940
810-840-3410-1940
Amount
118,190.52
1,160.70
499.07
465.69
441.87
21.86
77.22
2,519.04
2,969.42
2,140.78
274.34
1,239.49
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the
Carlsbad City Council held on the 15th day of December
1987, by the following vote, to wit:
AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and Larson
NOES : None
ABSENT : None
ATTEST :
&& A. R-
ALETHA L. RAUTENKRANZ, City Cherk
(SEAL)
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