MANAGER’S REPORT
For Council Meeting
Wednesday, January 2, 2008 

       TO:  MAYOR & HONORABLE MEMBERS OF CITY COUNCIL 

FROM:  Joseph J. Slocum, City Manager 

 DATE:  Friday, December 28, 2007 

A healthy new year filled with success and friendship to each of you. 

Non-Agenda Items: 

Update Health Insurance Cost:  The new rates reflecting a 29% increase go into effect on the 1^st of January.  We have identified a Plan with fewer benefits that will save some money for some employees but on the whole the increase is having a significant effect. One employee who formerly insured her children has stopped because the increase is too high. Newer employees in the Police Department are considering other employment options as the increase to them is making it cost prohibitive. Different employees have different experiences depending on their situation. 

We have three financial delivery systems for providing Health Care Coverage to Employees and Dependents. 

Administration

-100% coverage for the individual employee

-$100/ per month towards the cost of family or dependent care 

Public Works UNION Negotiated Contract (exp 6/30/09)

-90% for individual employee (Employee pays the other 10%)

-$100 per month towards the cost of family or dependent care 

 Police Department UNION Negotiated Contract (exp 6/30/09)

-100% for individual employee

-100% family and dependent coverage if hired before 1/1/99

-$100 per month towards the cost of family or dependent care if hired after 1/1/99

I note that in the last negotiations the Public Works Union elected to opt for a larger increase in pay #5, 4% and 4.5% in lieu of getting individual insurance at the 100% rate like other City Employees. The Police received 3%, 3% and 3%. 

We are offering a POS plan with slightly lower benefits to our employees, which will provide only minimal assistance in their cost. I provide the MONTHLY comparison of last years plan (2007) to this year’s Plan (2008) to the 2008 POS Option plan we are offering for your review. 

                                                             2007               2008              2008(POS)           

            Employee                                  532                 685                   649

           Employee w/Spouse             1,330              1,714                1,623

            Employee/Spouse/Kids    1,187                 1,714                1,623

            Employee/Kids                        904              1,165                1,104

If you were a public works employee making $30,000 a year a 1% increase is $300. That same employee is now paying $822 per year for their 10% portion of their individual health insurance.

 If you are a police officer with 5 years of longevity on the force making about $37,500 per year and you were hired after 1999 then your annual coverage cost for your kids alone just went up $1,300 and your annual coverage cost for spouse and kids went up $2,772.  The same would be true for administrative staff. 

There are no easy answers here. We will constantly be looking for less expensive options. Roger Lee asked that we inquire about the new County Health Coverage Plan and we have done so. The County has now withdrawn from commercial insurance and is now self-insured. Unlike the City the County has apparently experienced a low experience rating over the last couple of years resulting in a low rate of actual claim payment. The County is now accepting full responsibility for the risk that this low claim history will continue. They hope to use their monthly insurance cost to build up some kind of reserve so that they have the money to pay for big medical claims should they arrive. This is a risk that I would not take. Self insurance works much better for larger employers as the odds favor Self Insurance Plans that make more employee monthly contributions than Self Insurance plans that make fewer employee monthly insurance contributions. Stated another way there is equal likelihood of a severe loss within a Plan covering 400 employees as there is in one covering 100. The plan with 400 employees is making 4 times the contributions to reserves and can better sustain the large loss hit than the Plan with 100 employees. The smaller plan should brace itself for the high risk that that one high value claim will come in.  

Here is what our consultant has advised us: 

“The City of Belfast is in no position to be self-funded at this time because of your risk with high number and large dollar claims”  

I agree. With know existing high dollar claims we would be exposed to very high reinsurance cost, as there would be a high risk of high value claims.  

I will update you again as circumstances warrant.  Please let me know if you have any questions. 

Agenda Items:

 11.A   Reappointment of Code Enforcement Officer.  I recommend re-appointment of David Studer as Belfast Code Enforcement Officer, Licensed Plumbing Inspector and Electrical Inspector from July 1, 2007 to June 30, 2009.   Wayne Marshall has filed a supporting Memo on this. Until recently I was unaware this reappointment was overdue. I asked that the appointment be retroactive to July1, 2007.   (Lilac) 

11.B   Final Reading on Amendment to Code of Ordinances on size of Parks and Recreation Committee.  We have discussed the recommendation to expand the Commission membership from 5 to 7 members to permit greater participation and added hands for our programs. 

11.C  Second/ Final Reading on General Assistance Ordinance Amendments:  Again we are simply updating our ordinance to reflect the annual State income guidelines calculated for our region. 

11.D  Second/Final Reading to change the Zoning classification for Map 2 Lot 51 from Protection Rural to Residential Agricultural 1.  Wayne Marshall, City Planner has an attachment and map for you on this subject.  (Salmon) 

11.E  Discussion on a joint work session with the Planning Board and Comprehensive Plan Committee regarding large retail in the Route 3 area.   This is an important meeting to plan for. Committees make recommendations and the Council sometimes accepts them and sometimes chooses another course entirely. This is the nature of our Charter form of government. We ask people to volunteer on committees and to work very hard and to make their best recommendation with the understanding that the elected officials who appointed them- and who are charged directly by the people with far broader responsibilities - may not always agree. It is hard, often thankless, awkward, sometimes inefficient and painful but it is nonetheless a system at the heart of any democracy. The alternative is to ask our elected officials to be experts in everything leaving no time or opportunity to do anything. Participation is a good thing but it does not always translate into control. This is a good meeting to plan for and the Council should identify its expectations and concerns. Committees speak as bodies not as multiple different members. I encourage open discussion but if the Council wants a “Committee View” then I recommend they ask the Committee to Poll its members for a response.  Whatever we can to narrow the discussion and identify an orderly way to proceed for the three bodies to meet will benefit everyone involved.  Wayne Marshall, City Planner has supplied material for this item.     (Gray)