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HomeMy WebLinkAboutMIN 07.09.2013 CC-WThe City Council of the City of Georgetown, Texas, met in Regular Session on the above date with Mayor George Garver presiding. Council Present: Council Absent: Mayor George Garver, Patty Eason, Troy All Council Present Hellmann, John Hesser, Steve Fought, Jerry Hammerlun, Rachael Jonrowe and Tommy Gonzalez Staff Present: Paul Brandenburg, City Manager, Bridget Chapman, Acting City Attorney, Micki Rundell, Chief Jessica Brettle, City Secretary, Shelley Nowling, Asst. City Secretary, Jim Briggs, General Manager of Utilities, Chris Foster, Utilities Financial Analyst, Andrew Spurgin, Planning Director, Laura Malloy, Acting Human Resource Director A Update on the implementation of the City's proposed Self-insurance Plan -- Micki Rundell, Chief Financial Officer Mayor Garver introduced Micki Rundell, the Chief Financial Officer for the City of Georgetown. Rundell presented the update and clarifications on the proposed Self -Insurance Healthcare Plan for City of Georgetown employees and their families. Rundell explained that staff has been researching and studying the proposed plan for about six months now. In tonight's presentation Rundell will explain self insurance and its benefits and risks. Rundell said that the City assumes all or a portion of the risk with a self insurance plan. She said the City pays claims but is also able to customize its plans. She added the City pays claims up to a "stop loss" policy deductible. She noted the City is able to retain funds if the claims paid are less than the budgeted figure for claims. Rundell went on to explain and clarify some of the significant terms in self insurance plans: 1. Administrative Fee: The charge for claims adjudication, billing, eligibility, customer service, plan document maintenance, access fees and managed care. 2. Set Up Fee: A one time charge for input eligibility and benefits for plan administration. 3. Expected Claim: Total claims that the underwriter expects in one policy year. The amount is actuarially determined by the City's past claims and experience. 4. Specific Stop Loss Insurance: Protection when eligible claims paid during a policy year on any 1 individual exceed a specific liability limit. The City would be reimbursed by the insurance company for any amount exceeding the specific deductible. 5. Aggregate Stop Loss Insurance: Equals 125% above the expected claims level - claims that exceed the level reimbursed by the Stop Loss carrier at the end of the policy year. The 125% = Aggregate Attachment Factor. The percentage can vary, but 125% is the most common. Aggregate Stop Loss Insurance protects the City from eligible claims that exceed the annual Aggregate Liability Limit (the total liability "cap" for the entire City) or when claims are more than the Aggregate Liability Limit reimbursed by the Insurance Carrier. City Council Meeting Minutes/ Page 1 of 7 Pages Rundell further explained terms used for Unexpected Claims. She explained Specific/Individual Stop Loss or Shock Loss as an abnormally large or unexpected claim, usually for a severe accident or illness. Insurance companies build a margin into the premium to help offset financial impacts caused by shock loss. Stop Loss Insurance helps protect against excessive claims by limiting the risk on any individual covered by the Plan. The City is reimbursed 100% for any individual who has met the deductible in the remainder of the policy year. Aggregate Stop Loss covers multiple "shock loss" claims by individuals covered by the plan. There are "Caps" on potential costs if multiple events occur. Rundell explained how a $225,000 claim would be handled. The City would pay the deductible amount of $150,000. If the individual Stop Loss Deductible is $150,000 then the Insurance Company pays the excess over the deductible, in this case, $75,000. Rundell then said that federal tax savings would benefit the City with a Self Insurance Plan. The new health care tax does not apply to self-insured plans. That savings alone is estimated at $150,000. There is a State Tax Premium savings also. Carriers build costs into the premium for total funded plans. This would result in another 2% savings or approximately $80,000. Another benefit, explained by Rundell, comes in the way of Retention. Administration is less expensive, without sacrificing services. She reiterated the ability to customize plans and the benefit of no disruption to employees. Another advantages is an added cash flow from potential interest earning on balances. There would be a reduced margin to the insurance companies. The savings now stays with the City. A big benefit, explained by Rundell, is the ability to make employees better aware of cost effective health care. The City would be able to develop or expand added incentive programs for health and wellness. Rundell went on to explain some of the disadvantages of self insurance plans: 1. Risk Assumption: The City assumes the risk between the anticipated claim level and the Stop Loss level. 2. Asset Exposure: The City is exposed to liability due to legal action against a self-funded plan. 3. Fiduciary Responsibility: The City is responsible for proper accounting and controls that are essential. Rundell then summarized with an overall recap of her presentation. Rundell said, based on the current year's claim impact, the City's insurance premiums will increase 20-25%. The City is expecting higher medical and administrative costs from insurance companies with the new medical mandates, including higher margins in renewal rates to offset potential risks. Additional mandated fees, regardless of anything else, will be a $2 fee per member annually for a "best practices" continuity management fee and a transitional re -insurance fee of $5.25 per month per individual covered on the plan. If the City was self-funded, the fees would need to be tracked and remitted to the government electronically each month. Rundell explained that the City Budget for 2013/14 includes a 25% increase in costs to implement a self insurance plan. The City would retain Aetna as the plan administrator. Employees would still deal with Aetna on claims. Aetna would quote the Stop Loss Insurance. If costs seemed higher than projected, the City would have the ability to "bid" that element of the plan. Once the quotes are received, the City would develop rates and plan features. Negotiations with the carriers would take place and the City would determine employee contribution rates. This gives the City the opportunity to set rates to impact behavior (possibly higher rates for tobacco users). Contracts would be approved by the City Council and the Plan would become effective January 1, 2014. Rundell went on to note that a new City position would need to be created for plan administration and internal services after January 1, 2014. She said that funds will be low the first year. It will take approximately 3 years to become even. Self insurance has potential for savings and the ability to manage your own plan. Employees would not have to change doctors. Self-funded plans are being recommended by the General Government. Hesser asked what our claim loss is currently. Micki said that Jeff Kloc from BeneTex would be able to answer the question better than herself. Mr. Kloc said that the claim loss for 2011 with TML was 92%. The claim loss in 2012 was 111 %. The claim loss so far for 2013 is 204%, although this is expected to adjust because of one claim that will level off. Hesser asked for the administrative costs for the plan and if administrative costs are all rolled into one. An exact answer was not available and Hesser asked that the figure be provided to Council in the near future. Fought asked that Lone Star Circle of Care be included. Jeff Kloc said that BeneTex was in current negotiations with them. City Council Meeting Minutes/ Page 2 of 7 Pages Hammerlun asked about wellness programs. He asked who on the team is the champion for such programs or the inspirational leader. Rundell explained that the City's Wellness Committee lays out vigorous opportunities and the Human Resources Department helps coordinate the programs. Hammerlun then asked about individual testing. Rundell told of the City's biometric screening. She explained that Aetna helps with coaching these programs. Hammerlun said that his company is living the benefits of promoting wellness. The programs they are using have been significantly effective. Rundell said TML was not successful. Currently with Aetna, people are going to the doctor again and the programs are much more effective. Hammerlun explained that he is a proponent of rewarding behavior. Rundell agreed that it is a key part to a program's success. She said that how funds are managed is up to the employees. She went on to explain Day Off Certificates for incentives that are currently being used. Hammerlun then asked about the stop loss bid issues. Rundell said that Aetna will include stop loss because the aggregate will be included. The employee will not know who the stop loss carrier is. Rundell explained that adding controls would be important. There is plentiful information available. Safe guards will be in place to comply with HIPPA. Jonrowe thanked Rundell for a good presentation. She asked if self-insurance has been run by the employees. Rundell said no. She explained that the cost to employees is going up. She wanted to examine the options first. Jonrowe asked if the City was happy with Aetna's customer service? Rundell said that the customer service has been wonderful. Jonrowe asked if the city pays deductibles per individual in the self-insured plan. Rundell discussed the cap amount ($150,000) and how the Aggregate amount is set annually. She went on to explain the additional 25% corridor and added refunded amounts, funds not used, are reimbursed in March or April. Jonrowe asked about nutritional services. Laura Maloy, the Acting Human Resources Director said that the City provides regular speakers who talk on nutrition topics. She added that Aetna and Humana provide nutritional coaches. Information newsletters are distributed quarterly and health information is also included in a monthly employee newsletter. Jonrowe asked that Council members receive these newsletters in the future. Gonzalez asked about the person to be hired to manage the self-insurance plan. He wanted to know if these costs were included in the cost of the self-insurance plan. Rundell said the cost of insurance plus the stop loss and savings will keep building. She explained that the potential savings will still outweigh the typical costs we experience today. The City will be building reserves. The reserves are not there initially, but they are definitely building. Gonzalez said he favors giving employees better product and no more cost. Rundell noted that there are so many unknown factors in healthcare coverage. This plan keeps the City in better control by having the ability to choose plans and programs. Rundell said that the City should have done this type of insurance a few years ago. B Presentation of the 5 Year Business Plan for discussion and possible direction to staff -- Paul E. Brandenburg, City Manager and Micki Rundell, Chief Financial Officer Paul Brandenburg, the City Manager, began the presentation with the history of the 5 year business plan. He explained that the original implementation of the 5 year plan came from a Council Directive. The City needed to ask "What do we want to be in 5 years?" Council members and staff determined that " Quality of Life" and "Sense of Community" were of utmost importance. The definition of the City of Excellence is one that maximizes a citizen's quality of life. Such a plan needs to incorporate everything. It needs a common theme - a common vision. There is a benefit to everyone working together, instead of separately, on business plans and public safety. Brandenburg explained that this presentation will be the genesis of what will be seen in the budget for the next two years. No numbers will be presented in this presentation. Brandenburg said that the City will have the benefit of a growing tax base. He said that an update was brought to Council in March, and was projected through 2018. The study included tax implications. It concentrated on focus areas and working through the goals of the 2030 plans. Micki Rundell then presented the 5 Year Business Plan Update for the City of Excellence. She started by saying that business plans are a tool. They identify and mitigate financial challenges. They stimulate discussions and long-term perspective for decisions made. Business plans stimulate long-term and strategic thinking and build consensus on policy direction. Business plans allow communication between internal and external stakeholders. Rundell went on to describe the City of Excellence and its origin. This was originally presented to the City Council Meeting Minutes/ Page 3 of 7 Pages Council during the 2012/13 budget process. Council directed staff to continue the strategic visioning efforts. The Council Visioning Session was held in September 2012. "The City of Excellence is one that maximizes its citizen's quality of life," was born in a council update on April 9, 2013. Rundell then explained the City of Excellence Focus Areas: Economic Development; Signature Destination; Public Safety; Transportation and Utilities. Economic Development will create new quality jobs and maintain a reasonable tax rate. Creating a Signature Destination will ensure that visitors contribute tax dollars to the City, enhance the quality of life opportunities and create the opportunity for an amphitheater and conference center. The Public Safety focus will be to ensure a safe community by providing adequate police and fire coverage by providing premier training, competitive pay and excellent equipment. Transportation's focus will include street maintenance, airport maintenance and operations, public transportation and traffic efficiency. Utility Services, using economic development tools, will leverage City Electric & Water Systems, provide expansion opportunities and maintain competitive rates. The 2012/13 Accomplishments of the City of Excellence was shared by Rundell. 1. Economic Development - Sales tax growth was higher than projected. Local residential growth fuels sales tax revenue. Two special care hospitals were built and Grape Creek Winery was completed. 2. Public Safety - Fire Stations 2 & 5 are open and operating. The Public Safety Facility is near ground breaking. The new civil service compensation plan has been implemented. 3. Signature Destination - The Arts & Culture Center is nearing completion. Thundercloud & Grape Creek are completed. Sidewalks and pocket parks are complete along Austin Ave. The Westside Park Land was purchased. Garey Park is under discussion. There is rehabilitation work going on at San Jose, Village, McMaster & Booty Parks. 4. Transportation - The South East Arterial 1 and the 1460 ROW Purchase are underway and street maintenance continues. 5. Utilities: The LCRA Contract ended. Chisholm Trail Special Utility District negotiations continue. Enterprise Asset Management system has been selected. Rundell mentioned the continuing framework for the compensation program (Phases 1, 2 & 2.5 are done), the business plans prepared and the citizen survey, which has been completed, with the results incorporated into the next phase. Rundell went on to share the Business Plan - Caveats: Assume 2013/14 Budget is Balanced. The tax rate increase funds voter approved debt. The M&O rate decreased. The 2014/15 General Fund base will be presented on July 22. It does not include new business plan operating items for 2013/14. Rundell told of the City of Excellence 2018: The City will be nationally recognized as the City of Excellence; there will be continued moderate growth (population from 49,000 to 57,000) (utility customers from 21,500 to 32,000). Sun City will be built out and a new community is breaking ground. The Rivery Conference Center will be operational. There will be a thriving Arts Center, a new parking garage, new expanded sidewalks with street and light posts, a new civic center and festival area (nearing completion), a winery center and expanded retail mix. Georgetown will be a signature destination with neighborhood parks, pools and playgrounds which are all well maintained. The river trails have been expanded. The amphitheater/festival area downtown is nearing completion. The West Side Park construction is underway. There is an historic park and Gary Park Phase 1 is open. 2018 for the Utility Department will increase ROI contribution through growth and business management. Georgetown will be the leader in water management. The City will have higher competitive power rates and will be environmentally sustainable. San Jose area buy outs are complete. City of Georgetown walkability has been expanded. 1460 Project is completed. The Urban Transit is operating. A Traffic System is in place. The streets are well maintained and the Airport is self sustaining. Public Safety in 2018 will continue to ensure that the community feels "safe". The Public Safety Operations & Training Center will have been operational since 2015/16. The East Side Fire Station just opened and there will be an Emergency Warning System that was grant funded. Staff will be well equipped, well trained and well compensated. Economic Development in 2018 will see current businesses retained & expanded. Tasus & Airborn expansion are completed. Data Centers continue to locate to Georgetown in Longhorn Junction and near the Airport. Aeronautical businesses locate at the airport. The Rivery includes new shops and restaurants near the new hotel/conference center. There is new major retail on 29 & the Wolf Ranch area. City Council Meeting Minutes/ Page 4 of 7 Pages The 2018 City Government has a responsive and innovative city staff. The Compensation Plan has been fully implemented and maintained. The City of Excellence has an award winning website and citizen/customer communication programs. A fully integrated financial information system is in place. Enterprise Asset Management has been implemented citywide Rundell then stated the Outcomes & Council Direction. The City will always work on the Vision of the City of Excellence - no balancing the out years. There will be Ownership of the Plan - Implement City Council Goals & Objectives and further implement the 2030 Plan. The overall goal is still the same in 2018 - to attain the "City of Excellence" at the lowest possible tax rate. Rundell was pleased to announce that progress has been made in 2018 in the Cost Gap: In 2012/13 it was estimated it would take $0.66 to fund the City of Excellence in 2017. In 2018 the property tax rate will be $0.57 because of higher property values (this assumes CTSUD inclusion - it will be $0.59 without CTSUD). The Tax Revenue Assumptions for 2018 foresees property values increasing at 2.5% per year. New property added at $125 to $100 million per year (annexations could increase this amount). Frozen properties have been accounted for. Sales tax revenues average 4% growth (consistent with population growth rate - no new major retail business) There will be new operating expenses in 2018 for Fire and Police. There is a federal mandate in 2015/16 that will shift safety officers. The TRV Response Team will be in full operation. Staffing for the East Side Station will take place in 2017/18. The Police Department will add 2-3 staff per year as the population grows. The Department will catch up and maintain the existing service level for officers, communications and technicians The new Operating Expenses in 2018 for Parks & Rec will include the Historic Park opened in 2015/16, Garey Park operations in 2017118 and West Side Park will be under construction. New Operating Expenses for Transportation will include a traffic operations staff in 2014 through 2016 and a new maintenance crew in 2016/17. Transit operation will be continued at the current level. The Fixed Route Transit System begins in 2016. Streets continue to be maintained at acceptable levels. Rundell went on to include IT, Facilities and Fleet - all to continue to be maintained. The IT Master Plan is implemented. The Administrative Staff increases to keep pace with the City's growth. Energy & Water Services will see the Capital Improvement Projects meet demands. There will be added staff to meet customer growth. Rundell said that the General Capital Projects in 2018 will be: 1. Parks debt, Parkland fees & grants - Use 2004 voter approved bonds and limited CO's 2. Sidewalk Expansions - Possible election in 2014 3. Downtown - Debt, CVB TIRZ - Parking Garage 4. Civic Center and Festival Area - Potential CO or voter election in 2014 - Possible utilize sale of Albertsons Rundell went on to explain the Tools, Options and Opportunities. She said that the City owned Electric Utility will continue active wholesale power management. The City will create a more competitive rate structure. This will increase economic development opportunities. Solving the CTSUD and Water Supply issues will also increase economic opportunities. Rundell explained that growth in roof tops creates demand for service. The City will continue to be builder friendly, continue to target economic development efforts and consider involuntary annexations of areas to expand and benefit the tax base. Georgetown will maintain the cost recovery rate structure and review development related fees in 2014, including impact fees. Albertson's will be either sold or repurposed as a City facility. Voter approved bonds will be potentially targeted for the road and sidewalk program to voters in 2014. Possible Civic Center options will come in either 2014 or 2015. Rundell said the steps in 2013/14 will go as follows: 1. Adopt balanced 2013/14 budget 2. Continue business planning implementation 3. Continue effective use of resources The Business Plan Usage will include: 1. Continue to update & develop strategies for desired outcomes - renew annually and tune-up the City Council Meeting Minutes/ Page 5 of 7 Pages outcomes 2. Avoid kicking the can down the road - Today's decisions impact the long-term goal 3. Manage the cost of the City of Excellence - timing of projects, costs of improvements and set realistic expectations Rundell ended the presentation by validating that job creation is of utmost importance. She then asked if there were any questions Mayor Garver thanked Rundell for the excellent presentation. He instructed the council members that they would have four minutes each to speak. Gonzalez stated that it was good to look at the concerns over next five years. He voiced concern that costs are averaging a 3% increase per year. Rundell explained that this is a very conservative model because the City does not have the revenue figured into the numbers yet. In reality she sees the City making an additional 9% each year. Brandenburg spoke about Rundell's tendency to be conservative when all of the figures are not yet in. Gonzalez was concerned that the statements in this presentation were set in stone. He was not sure that they were ideal. He explained that he is now comfortable, understanding that this has nothing to do with approving an actual budget. Rundell explained that it is simply setting goals. Jonrowe had no questions but stated that she was pleased to see things much more attainable than previously thought because of the upswing in economy. She shared that she has seen many more people downtown. She congratulated staff on their visioning. Hammerlun congratulated Brandenburg and Rundell on an excellent document and presentation. He called it the core of information of where Georgetown is headed. He said that the presentation prompts certain questions. He wanted to know when water conservation would again be presented and when the Council will hear more on annexation, both voluntary and involuntary. He said he would also like to hear the airport update. Fought echoed excellent work and presentation. He said that when he was first working on General Governement and Finance Advisory Board (GGAF), he realized that Georgetown was the best planned city he had every seen. He thanked the staff for making his membership on council so much easier. Fought said he had no questions but certainly understood everything much better now. Hesser thanked everyone for their vision. He said that success will depend on the City Council's ability to prioritize. Hellmann said he had no questions. Eason said she likes that it has been put into an understandable format. She said the reason for the City Council's support and eagerness for a planning and visioning session was because, year by year, the budgets are more difficult to make decisions. She said she is ecstatic about a 5 year plan and not kicking the can down the road. Mayor Garver suggested a sheet presentation with additional bond issues. He suggested careful wording when speaking of additional bond issues, hinging on growth factor. He explained that the City could have a great deal of additional funds without bonding. He said that the sidewalk projects need to be a priority, both downtown and where residents live. The Mayor also suggested, now that more media is involved with the City, to hold an open session with all media. He added less misinterpretation by media would take place if the City is keeping the information flowing. Mayor Garver commended Rundell for the presentation and Brandenburg for his leadership. Rundell thanked Brandenburg and Chris Foster for making the information possible. Meeting recessed to Executive Session under Sections 551.071 and 551.074 of the local government code -- 4:19 PM Meeting returned to open session and adjourned -- 6:01 PM Adjournment City Council Meeting Minutes/ Page 6 of 7 Pages Approve3l�7 ,4xeldr �5wL— Ma�y-or Georg Garver City Council Meeting Minutes/ Page 7 of 7 Pages The meeting was adjourned at 06:01 PM. C 7 cretary Jrssica Brettle