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Home My WebLink About08/16/2011-BAKERSFIELD ~~ ~ City Council members: Ken Weir, Chair David Couch Haro ld Hanson Assistant to the City Manager SPECIAL MEETING OF THE PERSONNEL COMMITTEE Tuesday, A ugust 16, 2011 12 :00 p .m. City Hall North -Conference Room A 1600 Truxtun Avenue Bakersfield , CA 93301 AGENDA SUMMARY REPORT Meeting called to order at 12:00 p.m. 1. ROL L C A LL C ommittee members: Councilmember Ken Weir, Chair C o un c ilmember David Couch Councilmember Harold Hanson Ci ty sta ff: Alan Tandy, City Manager Steven Teg lia, Assistant to the City Manager Rhonda Smiley, Assis t ant to the City Manager/PIO Chris Huot Administrative Analyst -City Manager's Office Nelson Smith , Finance Director Virg inia Gennaro, City Attorney Jessalee Tal ley, Associate Attorney Rhonda Barnhard, Assistant Economi c Development Director Christi Tent er, Human Resources Manager Ginger Rubin , Benefi ts Technician Jo e Bianco, Captain -Police Department Sc ott M iller, Police Detective I BPOA Jeff Mull ich, Captain -Fire Department Tim Luk e n, Capta in -Fi re Department John Patterson, Maintenance Craftworker-Fire Department/SEIU Re tir e d empl o yees/SCARE : Margaret Ursin , Bi ll Descary, Ralph Wenzinger, Patti Phoenix, Gene Bo gart, Florn Core, Fred Baugher, Robert Ennis, Charles Graviss O th e rs p rese nt: Jo hnny Wu and Tom Morrison-Segal C o mpany Chuc k Waide and M arlene Valdez, SEIU Membe rs of the media S: \Council Committees \2011 \Pe rso nnel \August \Au g ust 16 Agenda Summary Report-Fi nai.Docx Page l ST:a l 2. ADOPTION OF SEPTEMBER 29 2010 AGENDA SUMMARY REPORT Adopted as submitted 3. PUBLIC STATEMENTS No ne 4. DEFERRED BUSINESS A Discussion regard in g 201 2 Hea lth c are Re newal Rates City Manager Tandy said that staff is caut iously optimistic about the changes proposed this year. There is positive new s for t he majorit y of ret ir ees who are enrolled in a PPO p lan in the form o f a major ra t e decrease. For activ e emplo yees enro ll ed in a PPO plan, there w il l be a minor rote increase . Most of the misce ll aneous plans will remain stable. There is a proposal to reduce the $9.6 million reti ree medical liability, that was previously unfunded due to budget constraints, to $1 .4 million. As part of the Fiscal Ye ar 2011-2012 Adopted Budget, the City Council approved a recommendation to set aside $3 .0 million t o wards that liability. Plu s, there is a poss ibility of an additional $3 .3 mill ion reduction from another source; and w hen combined with a rate dec rease, all factors will result in the red uced liability . Further, one minor change is being recommended to a mai l-in presc ription plan, and a new plan is being recommended t hat may be more advantageous to those e mployees who currently have dual insurance or who may be healthy and prefer a lo w-cost o ption . To m Morrison , with Segal Company, dis tr ibuted information to the Committee and o ther attendees, and provided an overview of the material. Some highlights include : • There is no increase proposed for the A nthem HM O p lan for active employees. • The prescr iption mail order process under the Anthem PPO plan for active employees is proposed to change from one co-payment to two co-payments for a three-month supply of medication . • The Anthem PPO p lan for retirees wil l decrease by 18 .78 %. • Retirees enrolled in the Med icare Advantage p lan w ill see a 9 .2% increase, as directed by the federal government. • There is no increase proposed for the Kaiser HMO plan for active employees. Approximately 20 % of active employees ore enrol led in this plan. S:\Coun ci l Committe e s\2011 \Pe rso nne i\August\August 16 Agenda Summary Report -Finai.Docx Pag e 2 ST:al • There is a 17.6% increase proposed for the retirees who are enrolled in the Kaiser HMO plan and who are under 65 and not eligible for Medicare. • For those retirees who are enrolled in the Kaiser Senior Advantage Plan, there will be a 9.1% increase, as directed by the federal government. • Employees enrolled in the dental plan with Metlife have not seen an increase in the past two years of the three-year plan; however 10% is proposed this year . This translates to a monthly increase from $0.74 for a single enrollee to $2.54 for the family plan per month. • There are no increases proposed to any of the other dental, vision, life insurance or long-term d isability plans. • Kaiser presented a new high-deductible health plan that will result in significantly lower premiums. The deductible is $1 ,000 per year, a hospital co-payment is 30%, a doctor visit is $30 , and the maximum medical cost per year for the employee is $3,000 , which includes the deductible . There is no cost for wellness and preventative services. Prescription medications will cost the same as the Kaiser HMO plan; but if an employee chooses a brand -name medication, there is a $1 00 per year deductible plus a $20 co-payment. The addition of this new plan positively impacts the City 's unfunded medical liability. • An accounting conducted for 201 0 reflects that Anthem has an excess balance of $3,325,887 in the claims stabilization reserve. That amount will be refunded to the City upon the City 's approval. According to City Manager Tandy, a previous refund was applied to the retiree medical liability at the direction of the City Council. Staff is proposing the same action this year in an effort to further reduce the City 's unfunded medical liability . • The average rate increase for the Anthem HMO plan over the past five years is 2.3 %; the Anthem PPO plan, 4.8%, and the Kaiser HMO plan, 4.1 %. The average rate increase over the last five years for retiree plans include Kaiser at 20% and Anthem PPO at -2.5%. Medicare Advantage rates increased by an average of 6 .3% and the Anthem Senior Secure rates by 13 .1% over this same period . Mr. Morrison discussed the GASB liability. As of the last valuation on June 30 , 2009 , the t o tal liability was $113 million. Due to actions taken by the City Council , the amount is now approximately $93 million . An updated valuation will be presented once decisions have been made about plan changes and the new alternative plan . More detailed information, including corresponding calculations, is included in the information that was distributed at the meeting . City Manager Tandy stated that the reduction means that the City is better able to meet the obligation, and is less subject to future challenges. S:\Counci l Committees\2011 \Personn e i\August\August 16 Agenda Summary Report-Finai.Docx Pa ge3 ST:al Assistant to the City Manager Teglio reported that the Insurance Committee met the some day and was presented with the some information. By a split vote, those Committee members approved the increase to the moil-in prescription drug benefit, but hod questions in regard to the new Kaiser high-deductible plan and the proposal to allocate the excess Anthem funds to the retiree medical liability . Members will meet again to formulate their questions for staff. When those questions ore received, another Personnel Committee meeting will be scheduled. It is anticipated that the second meeting will toke place in the next two weeks. Committee Choir We ir asked for confirmation that the Personnel Committee members must wait to make a decision until the Insurance Committee has registered a final vote on all of the issues. City Manager Tandy explained that it is port of the process to do so; however, staff did request feedback as to whether the course of action was consistent with the desires of the Committee members. Chuck Waide with SEIU stated that he was very impressed with the way the City is handling the retiree medical issue, as most other agencies hove not token any steps to reduce their liability . He commended the City Council and Mr . Tandy for their efforts, and Mr . Morrison for his work. Committee Choir Weir said that the report was excellent and he was ready to toke action today and move forward. Committee member Couch said that he was ready to move forward , also . Both City Manager Tandy and City Attorney Gennaro recommended that the Committee wait until the Insurance Committee con return with their recommendations on all items. Committee member Hanson indicated he would follow staff's recommendation to wait . 5. NEW BUSINESS 6. COMMITIEE COMMENTS None. 7. ADJOURNMENT The meeting was adjourned at 12 :45 p .m. S: \Council Committees\ 20 ll \Personnel\ August\ August 16 Agenda Summary Report -F i noi.Docx Page4 ST :al