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HomeMy WebLinkAbout10/31/2007 B A K E R S ~" '~ 1 F I E L D ~ ~ Staff: John W. Stinson Assistant City Manager AGENDA SUMMARY REPORT Harold Hanson, Chair David Couch Ken Weir SPECIAL MEETING of the PERSONNEL COMMITTEE Wednesday, October 31, 2007 1:00 p. m. City Manager's Conference Room 1501 Truxtun Avenue Bakersfield, California 93301 1. ROLL CALL Called to Order at 1:03:29 PM Committee members present: Councilmember Harold Hanson, Chair Councilmember David Couch Councilmember Ken Weir Staff present: John W. Stinson, Assistant City Manager Rhonda Smiley, Assistant to the City Manager Rick Kirkwood, Management Assistant -City Manager's Office Steven Teglia, Administrative Analyst -City Manager's Office Virginia Gennaro, City Attorney Javier Lozano, Human Resources Manager Ginger Rubin, Benefits Clerk Pamela McCarthy, City Clerk Nelson Smith, Finance Director Sandra Jiminez, Assistant Finance Director Ron Fraze, Fire Chief John Patterson, Maintenance Craftworker -Bakersfield Fire Department Bill Macauley, Firefighter -Bakersfield Fire Department Scott Monroe, Engineer -Bakersfield Fire Department Derek Tisinger, Engineer -Bakersfield Fire Department Bryan Perry, Captain -Bakersfield Fire Department Brian West, Detective -Bakersfield Police Department Brad Underwood, Operations Manager -Public Works Department Sam Russell, Communications Technician -Public Works Department Retired employees: Margaret Ursin and Gene Bogart Others: Jim Summers and Vivian Nuedeck, Buck Consultants Chuck Waide, SEIU Local 521 Miscellaneous members of the media 2. ADOPT SEPTEMBER 4, 2007 AGENDA SUMMARY REPORT Adopted as submitted 3. PUBLIC STATEMENTS Bryan Perry with the Bakersfield Fire Department asked for assistance with insurance issues surrounding a family member's illness. This matter was referred to staff for follow-up. 4. DEFERRED BUSINESS A. Discussion regarding Educational Incentive Program -Lozano Stinson Committee Chair Hanson requested that this item be brought back for further discussion. Information was distributed. Staff requested guidance from the Committee. City Attorney Gennaro pointed out a concern on page 2, 4th bullet, regarding the employee signing a pledge note. It may cause tax consequences for the employee if they were to sign the pledge note and then have it forgiven. It would then become taxable income and no longer a benefit. In response to a question by Committee Chair Hanson, Assistant City Manager Stinson reported that, as an example, in 2003, 113 employees participated, 2 of whom left the City's employment. It varies from year to year, but it is a small number. Human Resources Manager Lozano reported that training costs outweigh retention and recruitment costs. Committee member Weir indicated that the Committee and staff have taken all the steps to limit exposure and still provide a valuable benefit. He does not want the employee to incur the tax consequence. Committee member Couch stated that having the employee sign a pledge note would provide an incentive for that employee to stay employed with the City. The Committee voted two to one to move forward with the program as proposed by staff, with the deletion of the 4th and 5th bullets, which contain the reference to the pledge note. 5. NEW BUSINESS A. Discussion reaarding Medical Insurance Renewals -Lozano Stinson Chuck Waide with SEIU Local 521 stated that the process, which has worked well in the past, has been for all bargaining units to meet throughout the year as an insurance Committee to receive preliminary information on medical insurance from consultants and provide subsequent recommendations to the Council. During the past year, the only time a meeting was held was to meet the new Human Resource Manager. No data was received regarding insurance. There is a contractual requirement to meet and confer in good faith to reach an agreement prior to October 31St, and that has not occurred. He requested that the Personnel Committee make an immediate recommendation to the City Council that they terminate the contract with Buck 5:\Council Committees\2007\07 Personnel\October 31\October 31 ASR.doc Page 2 Consultants and find a new group to assist with the insurance. He further stated that this is a charge for unfair labor practice. Retiree Margaret Ursin agreed with Mr. Waide's statements regarding the process. She has received numerous calls from retirees asking about the new rates and when open enrollment will take place. There is concern that there will not be enough time to consider the options and make the appropriate decisions about health care. Firefighter Scott Monroe also agreed with Mr. Waide's statements regarding the process. He has been on the Committee since 1991 and has never seen it run this way before. He also is concerned about the time in which employees will have to make educated decisions about health care. Human Resources Manager Lozano stated that he is now responsible for the process and that Buck Consultants has performed well. This is an opportunity for both the Personnel and Insurance Committees to share the preliminary findings as provided by Buck Consultants. Assistant City Manager Stinson said that staff is not asking for a decision at this time and that Insurance Committee meetings are being scheduled. City Attorney Gennaro stated for the record that what Mr. Lozano indicated was not an unfair labor practice. Jim Summers and Vivian Nuedeck with Buck Consultants gave a presentation regarding the 2008 insurance renewal results which are based on current plan trends as provided by all medical insurance carriers. Hard copies of the presentation were distributed. Plan design change scenarios were detailed and recommendations made for the City to consider. The information also included the GASB 45 liability and cost related to post-retirement benefits. Blue Cross: The recommended rate increase for active employees enrolled in the PPO Plan is 20.2%. The large increase is due to a high utilization of emergency rooms. Retired employees in this plan would have no increase in rates. A 0.9% increase is recommended for the HMO plan in which active employees are enrolled. Retired employees enrolled in this plan would see a 19.4% increase. This large increase is due to the typical large claims as filed by seniors, such as those related to heart condition, respiratory ailments, and conditions directly related to obesity. The year 2008 is year 3 of a 5-year plan to unblend rates between active and retired employees. The Retiree Senior Secure Plan is the Medicare supplement associated with Blue Cross called Medicare Plus Choice. There is no increase recommended for the Vision or Dental plans. Kaiser: The recommended rate increase is 11.9% for active employees and 56.7% for retired employees. The large increase for retirees is due to 2008 being the first year in a three-year plan to unblend rates between active and retired employees. Additionally, Kaiser stated that they are now automated and can more accurately track claims. S:\Council Committees\2007\07 Personnel\October 31\October 31 ASR.doc Page 3 The recommended increase for the Senior Advantage Plan is 44.6%. The 2007 premium was a mistake by Kaiser by decreasing the rates by 15.7% instead of increasing it by 22.0%. The 2008 rate does not attempt to recover those funds. Other benefit plans: • There is no increase recommended for Dedicated Dental. • Pacific Dental HMO rates are based on a two-year rate guarantee. Rate increases are recommended at 6.0% for active employees and 4.0% for retired employees. • There is no increase recommended for Medical Eye Services, and that is a two-year guaranteed rate. • Life and disability plans are not up for renewal until 2010. Overall, active employees have a proposed increase of 11.7%, and retired employees 11.6%. The annual cost in 2008 and 2007 are based on the same work population numbers, not a growth in the census. Premiums for active employees are paid 80.0% by the City and 20.0% by the employee. Retired employee rates are based on a formula according to years of service. Last year, the consultants and staff the health plans and the decision was made to stay with Blue Cross. Some plan change scenarios were discussed, which included raising deductibles and increasing co-payments. They are included in the materials presented by the Health Care Consultants. Mr. Monroe inquired about which cities were surveyed. Both he and John Patterson of the Fire Department cited a City resolution that defines which cities can be surveyed. According to Mr. Summers and Ms. Nuedeck of Buck Consultants, no cities were surveyed. The analysis was the result of data provided by all insurance carriers nationwide. Comparing cities will not give an accurate picture as trends fluctuate from city to city due to differing populations, utilization, and provider reimbursements, among other variables. GASB 45: As of July 1, 2007, the post-retirement medical liability must now be measured by employers who are subsidizing retiree premiums. Buck Consultants summarized the results of the July 2007 actuarial report and provided regarding a possible rate cap on City subsidy of retiree medical premiums. Human Resources Manager Lozano is expecting to call a meeting of the Insurance Committee on November 14, 2007. According to Benefits Technician Ginger Rubin, the City Council must approve the contracts before open enrollment can be held. Should the process extend into 2008, the rates will still increase although the benefits will not change. Assistant City Manager Stinson stated that there were concerns in the past that decisions were being made before the Personnel Committee saw the information. Staff attempted this year to provide the information to all parties at the same time. Committee member Couch directed that staff be timelier next year. City Attorney Gennaro suggested tabling this issue until the next Personnel Committee meeting. S:\Council Committees\2007\07 Personnel\October 31\October 31 ASR.doc Page 4 Mr. Monroe stated for the record that since 1991, the Insurance Committee has always received information from the consultants earlier than November. There has not been a problem with the process until this year. 5. COMMITTEE COMMENTS None 6. ADJOURNMENT The meeting was adjourned at 2:50:49 PM cc: Honorable Mayor and City Council S:\Council Committees\2007\07 Personnel\October 31\October 31 ASR.doc Page 5