HomeMy WebLinkAbout2002-12-12 Council Packet - Work SessionKenai City Council
Wo?k
Se~~ion
Employee Insurance Benef it~
December 12,
2002
REMINDER:
COUNCIL WORK SESSION
THURSDAY
DECEMBER 12, 2002
7:00 P.M.
COUNCIL (;HAMBER5
TOPIC:
EMPLOYEE INSUP. ANCE
BENEFIT5
COUNCIL POLICY WORK SESSION
DECEMBER 12, 2002
CITY COUNCIL CHAMBERS
7:00 P.M.
ITEM 1:
ITEM 2:
EMPLOYEE INSURANCE BENEFITS
SCHEDULE ADDITIONAL WORK SESSIONS TO DISCUSS REMAINING
TOPICS
ao
Maintenance of roads
Water/sewer rates
Donations
Legislative issues
Other Information Included:
11 / 18 / 02 Work Session Notes
CITY OF KENAI
"Oil Capital of Alaska'
210 FIDALGO AVE., SUITE 200 KENAI, ALASKA 99611-7794
TELEPHONE: 907-283-7535
FAX: 907-283-3014
MEMORANDUM
TO:
FROM:
Mayor Williams and City Council Members
Linda L. Snow, City Manager
DATE:
December 5, 2002
Health Insurance Review Committee Report
In response to the increasing cost of health insurance premiums and direction given to the
Administration during budget work sessions held last year, I requested that each city
department designate a representative to sit on a Health Insurance Review Committee. A
list of committee members is attached for your information. The basic purpose of the
committee was as follows'
· :o To identify and examine various alternatives to reduce the cost of health insurance
premiums to the City;
· :o To survey and examine the premium payment plans from a sampling of local,
regional, and state public and private employers;
o:o To identify a premium contribution plan that presents the least objectionable
methodology to city employees.
Beginning on September 10th the committee proceeded systematically with the above noted
tasks in the order they are noted. The Committee reviewed informational materials from a
variety of sources and discussed several different health coverage options, e.g., cafeteria
type plan~, self-insurance, joining with the Borough or an AML or other insurance pool,
medical savings accounts, and increasing the deductible amonnt again. Upon review of the
materials and discussion, the general consensus of the committee is that there are not other
insurance companies that will provide the same coverage to the City at less cost. In
addition, other types of plans are more costly to administer and would present new
problems such as adverse selection, less coverage, higher deductibles, etc.
On September 24th, the committee reviewed informational materials describing the health
insurance premium payment plans from a sampling of public and private sector employers,
e.g., the Alaska Municipal Salary and Benefits Survey which includes all municipalities,
Agrium, SBS, Peak, and Unocal. Also reviewed at this meeting was the 2002 Employer
Health Benefits survey results, published by the Kaiser Family Foundation and the Health
Research and Education Trust. In addition, Larry Semmens explained the COLA vs. CPI
chart that he prepared for prior year budget work sessions with the City Council. I stated
that neither Larry nor I wanted to see employees lose ground in terms of wages by
contributing to the cost of their own health insurance premiums, even though we know that
will undoubtedly be the case with our lowest paid employees. There followed a brief,
general discussion of scenarios that could be structured to balance a COLA with some level
of health insurance payment participation by employees.
On October 22nd, the health insurance review committee had a more in depth discussion to
formulate possible options for an employee participation plan. There was much discussion
to come up with more ideas that could work to balance an employee contribution with a
COLA wage increase. Other discussion included the relative importance of looking at the
entire benefit package. The meeting concluded with my direction that committee members
meet with their department employees and bring back employee feedback from the
attached Options for Employee Participation sheet, which was based on discussions at
earlier meetings and prepared by Larry Semmens.
On October 31~t, the committee members discussed the input they received from the other
employees in their departments regarding the options previously identified for
participation. To summarize from the employee's perspective by using the COLA vs. CPI
chart, the last COLA they received was in the amount of 1.5% and was effective July 1,
2000. COLA's were not authorized for the next two years, so employees have effectively
lo~t 2.7% in wages. According to Larry Semmens, each COLA percentage increase equates
to about a $50,000 additional cost to the city's operating budget. Many employees believe
that if the cost of the expected increase in health insurance premiums is $116,000, then they
have more than made up for that cost by lost wage inerease~.
Employees also pointed out that after 10.5 years of city employment, there is no provision
to provide them with further salary increases other than COLA's. They think it would be
reasonable to adjust the schedule beyond 10.5 years, e.g., every three years after 10.5 years.
There were also concerns that the mileage and per diem rates have not kept up with costs
and have not been reviewed since 1996 or, in some cases, since 1977.
There was significant concern from employees that the City does not participate in Social
Security and, consequently, that they are losing valuable retirement benefits. Since the
City opted out of Social Security, its contribution to an employee's 401 account has only
changed once and is currently only $1,500. Employees are aware of the savings gained
from not participating in this program. Many employees believe this matter should be
2
reviewed and that an increase at least equal to the Social Security contribution to
retirement should be made.
Many employees also commented that there are some incentive areas the City could
implement without increasing the budget, such as flexible work scheduling to include some
font ten-hour day scheduling.
Committee members urged that the employee's perspective, as summarized in this memo,
be forwarded to the City Council for informational purposes. The committee agreed to
survey' employees to determine which of two main options for health insurance
participation was preferable to employees:
1. All covered employees pay the same contribution amount.
2. The City pays the entire premium for the employee and employee's who want
dependent care coverage will pay a portion of the premium for dependent
coverage. The amount paid would depend upon the level of dependent coverage
that is wanted.
OR
3. Do not want to participate in choosing the method of employee contribution to
health insurance.
On November 14th, the committee met to review the survey results and to discuss
formulating a recommendation to the Administration for pre-budget planning purposes.
The survey results show that more city employees favor Option 2 above (45) than Option 1
(23). Thirteen employees selected option 3, and fifteen city employees did not return the
ballot.
The consensus of committee members was to recommend to the Administration that a
COLA be budgeted in an amount that will be no less than would bring the wages equal to
the CPI and that employees contribute no more than 50 percent of the increased cost of
health insurance premiums. To equal the CPI, a COLA would have to be at least 7%. An
employee contribution of no more than 50 percent of the increased cost from this year
would reduce the expected increase in health insurance costs to the City by about $50,000.
CITY OF KENAI, ALASKA
HEALTH INSURANCE REVIEW COMMITTEE
Public Works
Marilyn Kebschull, Stephen Ramberg, Mark Langfitt
Bob Springer and Mark Johansen, alternates
Senior Center Legal
Kathy Isaac
Cary Graves (withdrew)
Airport
Library
Mary Bondurant
Linda McNair
Parks & Recreation
Police
Joanna Cole
Jan Echternach, alternate
Randy Kornfield
Kim Wannamaker, alternate
Finance
Fire
Larry Semmens
James Dye
City Clerk
City Manager
Sharon Harris Linda Snow
OPtions for Employee Participation
Current Premium Costs
200/80/5000
AK Mental Health
AK P,X 10/20
AK vision II
AK Dental I 000/2000
14% Projected increase
Total Increase
Number in category
Current Dependent Cost
EE
226.49
5.2
29.18
16.91
40.95
318.73
363.35
13
Next Year Dependent Cost
Total
Increase in Dependent Cost
Options
Everyone at same rate
Monthly @
Total
Monthly @
Total
Monthly @
Total
Monthly @
Total
..E~--e~urea, Ali ~3epenclent
Coverage At same rate
Monthly @
Total
Monthly @
Total
Monthly @
Total
Monthly @
Total
Monthly
868.34
5%
10%
15%
20%
..
$ 363.35
589.16
5%
10%
15%
20%
Annually
948,229.20
47,411.46
$ 94,822.92
$142,234.38
$189,645.84-
Annual
551,452.43
27,572.62
55,145.24
82,717.86
110,290.49
EE Covered,
Dependents by Category
Monthly @
Total
Monthly @
Total
Monthly @
Total
10%
15%
20%
ES
466.57
10.71
60.11
34.84
84.36
,
656.59
748.51
19
337.86
77,032.08
385.16
87,816.57
Per Person
10,420.10
43.42
86.83
130.25
Per person
7,069.90
29.46
58.92
88.37
117.83
ESC
659.09
15.13
84.91
49.22
119.17
927.52
1,057.37
53
608.79
387,190.44
694.02
441,397.10
0 $ 38.52 $ 69.40
$ 8,781.66 $ 44,139.71
$ 57.77 $ 104.10
$ 13,172.49 $ 66,209.57
$ 77.03 $ 138.80
$ 17,563.31 $ 88,279.42
EC
419.01
9.63
53.98
31.29
75.76
589.67 $ 831,780.00
672.22 $ 948,229.20
$ 116,449.20
6
$ 270.94
19,507.68
$ 308.87
22,238.76
483,730.20
551,452.43
67,722.23
Total
$ 30.89
$ 2,223.88 $ 55,145.24
$ 46.33
$ 3,335.81 $ 82,717.86
$ 61.77
$ 4,447.75 $ 110,290.49
COUNCIL POLICY WORK SESSION
NOVEMBER 18, 2002
CITY COUNCIL CHAMBERS
7:00 P.M.
GROUP "C" ITEM:
CAPITAL IMPROVEMENT PLAN
o
Unified water district
Acquisition of borough land
Capital Improvements/General
a..
Shop replacement
Library expansion
Recreation park
Street improvements/LID assessment allocation
Water/sewer projects
Erosion Control
Other
COUNCIL POLICY WORK SESSION
NOVEMBER 18, 2002
CITY COUNCIL CHAMBERS
7:00 P.M.
MAYOR JOHN J. WILLIAMS, PRESIDING
Council present:
Staff present:
Others present:
Moore, Porter, Jackman, Williams, Bookey, Bannock, and Swarner
Freas, La Shot, Graves, Semmens, Frates, Jankowska, Snow,
Walden, Kopp, Dye, Carter, Komelis
Kathy Heus, Sarah Carter
Williams called the work session to order at approximately 7:04 p.m. The floor was
opened for remarks of council.
Due to concerns stated by Bookey there were still hard decisions for council to make
prior to administration going into the budget season, and direction needing to be made
in order that budget review goes smoother than last year's, council discussed creation
of a policy statement. The following direction was given:
· Administration draft the statement and refer it to council for review and
modifications, if necessary.
· The statement should include the reserve balance target of $4.75 to $5
million.
Williams noted, after shaping the statement, council could then go ahead with forming
the budget. He noted, capital projects now and forward would need to have the full
participation of the community due to no funding being received from the state for
sports facilities, shop maintenance buildings, etc. Bookey stated he felt having a
policy statement would better inform the public of what the council is trying to do.
Porter asked if the policy statement would include raising the mill rate by one mill and
Williams answered no, the budget would be balanced without going past the level on
the General Fund which may take some tax increases and some cuts in equipment,
possibly personnel changes, etc.
Council consensus was to go forward with the policy statement. Points of discussion
were:
· Balance the budget.
· Go to a maintenance budget with no major increases or decreases.
· Any capital spending determined necessary for the city of Kenai will have
to be approved by a bond issue.
· Water/sewer rate increase should be considered.
· No one program or department w/Il be singled out-- anything done will
be across the board {there may be exceptions, but administration will know where
those will be)
· Basics, i.e. fire, police, water/sewer, streets, etc. need to be funded first.
COUNCIL WORK SESSION
NOVEMBER 18, 2002
PAGE 2
· Administration will shape the foundation of the policy statement, but
final form of the statement will be agreed upon by council.
Snow noted, she understood council wanted the policy to be short and to the point
and she will email the draft to council for review.
Williams stated he wanted to set a separate work session to discuss the employee
package as he felt it needed to be discussed separately. He added, he would want to
have both administration and employee sides of the discussion represented. Snow
noted, the employees had reached a consensus from their discussions and she wanted
to provide council with information about their perspective. Discussion followed in
which concerns were expressed in having employee representatives involved in the
work session as it could be seen as a forum for negotiation; that the process has
always been administration presenting employee compensation, etc. with the budget
and these discussions could circumvent that process; and that council did not request
the employees to discuss pay raises.
Snow noted her concern the work session could turn into a negotiation with
employees; that it was her intention to give council the budget as has been done in the
past; she would specifically ask the representatives of the insurance committee to
attend; and because it is an open meeting, anyone could attend. Williams noted,
because the employees are the largest portion of the budget and the entire structure of
the city is employee-driven, he wanted to hear what caused them to arrive at their
decision in regard to insurance packages, etc. as those comments may be important in
council's decision-making process. Semmens noted, discussion of pay raises came as
it was considered part of the whole benefits discussion.
Williams stated, if employees come to the work session and want to address the
council, he wants to allow them to speak. He added, it is a work session and he would
make sure it did not turn into a negotiation session.
Work Session was set to discussion only employee insurance benefits for
Thursday, December 12, 2002 at ?:00 p.m. A memorandum about insurance
packages/employee benefits will be provided by administration prior to the work
session.
GROUP "C" ITEM:
CAPITAL IMPROVEMENT PLAN
Item 1. Unified water district -- Snow reported she had not received a response
from the City of Soldotna at this time regarding a joint work session with the Soldotna
Council. She will report back to council upon hearing from Soldotna.
Item 2. Acquisition of borough land -- A map indicating the subject property was
provided to council in their work session packets. Public Works Manager Kornelis
COUNCIL WORK SESSION
NOVEMBER 18, 2002
PAGE 3
noted, because the test water well in that area may not develop, requesting the land
from the borough could be delayed. Councilwoman Swarner reported the application
for grant in regard to senior housing was approved and this property could be a
potential site for an assisted living facility. She requested administration to pursue
the donation of land from the Borough to the City with no strings attached for this
use. Council had no objections.
Item 3.
Capital Improvements/General
-ao
Shop replacement
Public Works Manager La Shot reported, because some equipment is now being stored
at the new SRE building and building maintenance moved into a portion of the warm
storage building, administration was exploring a scaled-back shop or the design of a
building that can be developed in phases. La Shot also noted, even with the changes
in equipment storage, etc., there is still the issue of vehicles and equipment fitting into
the shop for service and that the vehicle hoist may need replacing in the next budget.
He added, he believed plans already prepared can be used to formulate a design/build
approach. Snow reported Attorney Graves was investigating the possibility of a
design-build project.
Williams requested Snow to review the new government directives about force account
construction projects and would that allow the city to incorporate differential wage
levels for in-house work (the city woUld be the contractor). He also asked that La Shot
work with Graves on the issue of design/build projects, administration investigate
force account rules and report back to council in February/March with a solid cost
estimate that could be placed as a bond issue on the October ballot. Council agreed
they felt it was worth exploring, but no decision on whether to go forward with the
projects or a bond issue was made.
3-b.
Library expansion
The possibility of placing bond propositions on the ballot for a library expansion and
shop replacement (as separate issues) were discussed. It was noted, the Library
Commission has been exploring other funding sources and having a written
commitment from council in regard to matching funds would help in their search
(wording that could note the city's commitment without tying its hands), i.e. "...it's the
city's intention to place a bond issue on the ballot on behalf of the library."
It was agreed any proposed bond issues would require a lot of community education.
It was also noted, if a mill increase is made, it may be difficult to pass bonds and there
may be other ways to approach the projects that might need to be investigated.
Consensus was to move ahead with bond issues and let the voters decide on whether
the library addition and shop replacement go forward.
COUNCIL WORK SESSION
NOVEMBER 18, 2002
PAGE 4
3-c. Recreation park
A memorandum from Parks & Recreation Director Frates was distributed to council at
the beginning of the work session. It noted two projects that could be considered as
capital improvement projects, i.e. Municipal Park Trail Development Site
Improvements and Sport Complex Development (soccer and baseball fields) located at
Section 36. He noted both the projects would qualify for Land and Water Conservation
funding that will become available in April. Comments from council included
concerns Section 36 property would not be able to be used due to the site being a
former landfill. Frates indicated it was not known whether additional playing fields
within the next four years, however, Municipal Park needed immediate attention.
Council consensus was to sidestep the issue of the development of Section 36 due to
historical use of the property, etc.
Council reviewed the conceptual design for Municipal Park with Frates. Frates noted
they were considering phasing the project and continuing the trail system through the
gully and tying up at the ball fields. Consensus was to proceed with investigation and
application of grants for Municipal park as well as investigating costs for an
underground watering system. Also, the Parks & Recreation Commission are to be
encouraged to research other property which may be an appropriate site for
development of new ball fields, etc.
3-d.
Street improvements/LID assessment allocation
Komelis reviewed information included in the packet which indicated street
improvement projects and funding available for LID projects. He suggested council
may want to consider increasing the property owner portion of these types of projects.
Because city streets currently need or will need maintenance {chip sealing, etc.),
discussion followed regarding maintenance work for city streets. Comments included:
· Place a moratorium of 24 months on new street paving projects.
· Investigate a street improvement assessment ordinance.
After placing a moratorium on new street paving projects, use the grant
funds for only road maintenance.
Develop an assessment procedure for maintenance of currently paved
streets, requiting a certain percentage of the costs be paid by the property owners.
Administration was requested to investigate special assessments for maintenance of
city streets/roads. Council consensus was to leave the current assessment
requirements status quo.
-eo
Water/sewer projects
COUNCIL WORK SESSION
NOVEMBER 18, 2002
PAGE 5
A brief discussion took place in regard to information distributed to council noting
DEC grant funds and matches for water/sewer projects. Kornelis was requested to do
a review of the water/sewer rates and bring it forward to council within a month or
two for further discussion.
3-f. Erosion Control
Komelis reported a meeting of permitting agencies would be scheduled for the near
future. Williams noted, tons of rock were being placed in the fiver by the Corps in
response to flood damage. Williams suggested a letter be sent to the Corps asking why
the bluff erosion project is not progressing and added, it may be time to politicize the
issue and contact the congressional delegation again.
3-g. Other
Porter stated she would like to talk about the assisted living issue and
whether the current staff at the Center has time to be heavily involved in the
development of a facility. Senior Director Craig stated the Senior Connection was
doing the grant and it was not her intention to do more grant writing.
· Administration is to develop a policy statement and forward it to council
as soon as possible for their review and grooming.
· A work session has been scheduled for December 12, 2002 at 7'00 p.m.
in the council chambers to discuss employee insurance benefits.
At a subsequent work session (needing to be scheduled) council needs to
discuss maintenance of roads, water/sewer rates, donations and legislative issues.
· Swamer noted, at the AML Conference a discussion was held in regard to
council/assembly meetings and what can be done to encourage public to feel more at
ease to speak before the body. A suggestion was to have a table available for the
public to sit at instead of a podium. Council had no objections to making this type of
change in the council chambers.
ADJOURNMENT
The work session adjourned at approximately 10:10 p.m.
Notes transcribed and prepared by:
Carol L. Freas, City Clerk
KENAI CITY COUNCIL
DRAFT FY 2003-2004 BUDGET POLICY STATEMENT
The FY 2003-2004 budget will be developed in accordance with the following
policies:
Establish the Unreserved Undesignated General Fund Balance at no less
than $4,750,000.
Project a mill rate increase from 3.5 to 4.5.
Project no change to the sales tax rate.
No new programs or additional staffing beyond what was authorized in
FY03, unless the staffing will be offset by savings or have a neutral budget
impact, e.g., VISTA.
After consideration of lapsed appropriations, the budget will be balanced,
i.e., the Adjusted (Deficit)/Surplus will be zero or show a surplus.
The budget should include some level of employee contribution towards the
payment of health insurance premiums.
KENAI CITY COUNCIL
DRAFT FY 2003-2004 BUDGET POLICY STATEMENT
_ ~.
The FY 2003-2004 budget will be developed in accordance with the following
policies'
Establish the Unreserved Undesignated General Fund Balance at no less
than $4,750,000.
Project a mill rate increase from 3.5 to 4.5.
Project no change to the sales tax rate.
No new programs or additional staffing beyond what was authorized in
FY03, unless the staffing will be offset by savings or have a neutral budget
impact, e.g., VISTA.
After consideration of lapsed appropriations, the budget will be balanced,
i.e., the Adjusted (Deficit)/Surplus will be zero or show a surplus.
The budget should include some level of employee contribution towards the
payment of health insurance premiums.
--
.--
PUBL]:¢ NOTICE
The Kenai City Council will meet in a work session on December 12, 2002 in
the Kenai City Council Chambers at 210 Fidalgo Avenue, Kenai, at 7:00
p.m. The work session will be held to discuss City of Kenai employee
insurance benefits.
The public is invited to attend. If you have questions, please contact the
City Clerk at 283-7535, extension 231.
Carol L. Freas, City Clerk D751//211