HomeMy WebLinkAboutCity Council Meeting - Council Workshop - Minutes - 03/18/2003 COUNCIL WORKSHOP MINUTES
• MARCH 18, 2003
COUNCIL MEMBERS PRESENT: Chair Judy Woods, Tim Clark, Connie Epperly, Leona Orr,
Julie Peterson, Bruce White, Rico Yingling
STAFF PRESENT: Mayor White, Mike Martin, Larry Blanchard, Sue Viseth, Becky Fowler,
Levin Conway, Don Wickstrom, Charlene Anderson, Jackie Bicknell
PUBLIC PRESENT: Mel Roberts, John Walsh
The meeting was called to order at 5:02 P.M. by Chair Judy Woods.
State Leeislative Update
Chief Administrative Officer Mike Martin said that Sales Tax Streamlining had been placed on hold
so a study could be done. Legislation to fix problems with voter passed Initiative 790 was being
pushed by the public safety people because that initiative would cause a tremendous increase in cost
to their own members. The City is interested in this legislation and doesn't want to get only half of it
fixed. Tax Increment Financing/"EDGE" Legislation: some legislators are concerned that this is a
tax disguised or it will somehow have a consequence that wasn't intended by the legislation.
Originally there was to be a pool of money available annually for agencies to come to for funds and
then they would use that appropriation to bond against in the future. State Transportation: the state is
very reluctant to raise the gas tax to support any sort of road improvements because gas prices have
• gone up so much recently, and there is no consensus around how to fund the sort of package needed.
International Building Codes: staff is very much in favor as it unifies the building codes.
Annexation: the bill died. The Early Retirement Bill—HB 1458, is not going anywhere.
Employee Services Director Sue Viseth said that there were two early retirement bills being heard,
and one of the bills had died. The way it's written now, it would provide one year of additional
service credit for every five years of service, but it requires that the City pay the actuarial difference
and what additional pension benefits would have to be paid out for those employees who take
advantage of it. ES staff is working with Finance to calculate what the impact might be and are still
waiting to see whether that bill is going to make it. Ms. Viseth said the City was not opposing early
retirement,but was concerned about what the fiscal impact would be. The program would be
voluntary as to whether the City wanted to offer it, and costs would need to be analyzed to determine
how much of a benefit it would be. As far as retirees coming back to work for the City,the position
has always been that the more flexibility there is, the better.
Public Works Operations 2002 Annual Report
Public Works Operations Manager Larry Blanchard presented the 2002 Annual Report in a Power
Point Presentation. He said that with the budget constraints this year there had been some challenges
in trying to get the work done that was authorized in the 2002 budget. The division works very
closely with its Mission Statement, and the Strategic Goal is Valued Government Services. 100% of
the work done is tracked.
. Mike Martin commended Mr. Blanchard and said that since Larry had taken over the department
there had been nothing but improvement. The whole division had done a very fine job.
Council Workshop, 3/18/03 2
Retiree Health Care
. Sue Viseth said that in April of last year Governor Locke had signed a bill requiring public sector
employers to provide access to a health plan for retirees no later than January 1, 2004. The City
would not be required to subsidize the plan. The law was written to include only PERS employees,
but the decision has been made by the City to also include the LEOFF2 employees. The City of Kent
hosted round table discussions with other cities who might find themselves in a similar situation to
figure out how to address the new mandate and to put together an interlocal agreement so there would
be more purchasing power. The City's broker, Doug Evans, helped lead the discussions.
Initially, the direction was to work with Premera Blue Cross, the third party administrator for the
City's claims administration of its active self funded plan. Premera Blue Cross needed authorization
from their office to be able to put together this kind of a plan and offer it to a limited group such as
public sector employers. Last week, the broker received a letter from Premera saying they had made
a decision not to underwrite retirement health care in the State of Washington. Benefits Manager
Becky Fowler said the Premera plan would have been a scaled down version of a retiree plan that
might have a 80-20 hospitalization plan (the active plan provides 100%), a$2000 maximum
deductible, no vision or dental coverage, and higher co-pay for pharmaceutical coverage. Since they
have backed out, that option isn't available. Sue Viseth continued by saying that Regence also had
said they were not interested They do offer retiree health care through the AWC Trust,which half
the cities in the State of Washington participate in. Self funded cities and those who purchase outside
of that still have to find a solution. Staff has given serious consideration to the City participating in
the AWC Trust because they have a full service plan, and that would allow the ability to know what
the budget was going to look like for the entire year.
• What also has come to light is another option, the Group Health Program, that is also a current option
for active employees. They can go through the self funded Premera Blue Cross program or the
Group Health program, which is an HMO with a closed system. Group Health currently has a
provision in their contract that allows an employee at the time they retire to continue their coverage
through Group Health, paying their own premiums, all the way through to MediCare. What is
unattractive to retirees is a closed HMO system here in the State of Washington. Group Health also
has some extended Options Programs that the City may have access to, which allows a person to
move outside the Group Health HMO network and have access to a PPO Plan called First Choice.
That is still limited, but would provide more doctors and hospitals and employees wouldn't have to
stay within just a Group Health HMO. Options apparently also will allow a person to stay on their
plan as a retiree even if they snow bird for six months of the year as long as they are a resident here
for six months of the year. The City doesn't offer Options right now but staff is evaluating it.
The brokers met with representatives from Group Health and talked to them about the requirement to
offer this retiree health care. At this point, a meeting is scheduled with the round table group of cities
on April 22"a. Staff will receive feedback from the brokers on what they learned from their meeting
with Group Health, and will also be working with the City's actuary to help do an analysis of the self
funded program—the risks, pros and cons of self funding retiree health care, and also looking at the
AWC Trust. Some analysis of AWC Trust has been done, and right now when looking at their
premiums for full family versus the City's premiums for full family, it's at $1063 a month for AWC
premiums and $1113 a month per employee through the City. AWC Trust's premiums are set in
advance and can be budgeted even though they are increasing into double digits as well. The City
. wouldn't have to deal with the spikes in health care costs that hit the stop loss and having to find$1.2
million at the end of the year. The catch with the AWC Trust is that the only way the City can have
access to retiree health care is to move at least 85% of the employee population into the AWC Trust.
Council Workshop,3/18/03 3
In addition to that, for their own protection, they also have the ability to assess employers with over
• 250 employees a 10% surcharge for the first three years.
Ms. Viseth suggested that Group Health would not feel like much of an option to many of the
employees. Out of 776 employees, 34 are on Group Health, and the 65 eligible retirees right now
would not be happy having to go with Group Health. But for now at least, it would be a place card
holder until an alternative could be figured out that wouldn't put the City at further financial risk
when it comes to health care costs. It wouldn't cost the City—employees would have to pay the
premiums that Group Health sets out, and since it is purchased insurance, it wouldn't impact the
City's self funded plan. The only downside is that it wouldn't be popular,but it is better than what
retirees have now, which is COBRA access to their current plan for 18 months and at a higher
premium rate. After 18 months, they are out of insurance until eligible for Medicare. For people at
55 who are eligible to retire, 18 months doesn't come anywhere close to the age to receive Medicare.
Councilmember Bruce White asked if the state would require that the City offer healthcare to people
that had retired previously, or if it would be to the people that were currently working and would
retire this year. Sue Viseth said that the legislation hadn't addressed eligibility very clearly. AWC
has done some analysis and they determined that it was talking about not going back any further than
the date that the bill was signed, so the City would be picking up employees back to January of 2002.
A person has to be actively on Group Health at the time they retire, or if on COBRA, they have to
switch over during an open enrollment period before the COBRA runs out to be eligible for the
Group Health retirement program. There is a potential that some employees may be in a gap
situation and one of the questions for Group Health is whether they will allow the City to pick those
folks up and offer the program to them.
• Chair Judy Woods said this was an issue that had been talked about for a long time. It's timely and
it's making headway. The solution may not be the answer that a lot of folks would want it to be, but
having insurance at all is a blessing. It gives people an option. They can make the decision whether
to retire or not on the basis of what is available.
The workshop adjourned at 6:05 P.M.
•
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