FY 2013 Amended City Health Insurance ContributionTHE CITY OF
DUB E
Masterpiece an the Mississippi
TO:
FROM:
SUBJECT:
DATE:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Fiscal Year 2013 Amended City Health Insurance Contribution
February 25, 2013
Dubuque
recoup
2012
Budget Director Jennifer Larson is recommending an increase in the City health
insurance contribution per contract for Fiscal Year 2013, subject to a future budget
amendment.
In Fiscal Years 2012 and 2011, the City had to transfer funds into the health insurance
reserve due to health insurance claims being higher than anticipated. The one -time
General Fund operating reserve of one million dollars that was implemented in FY 2010
and FY 2011 was partially used in FY 2011 to boost the health insurance reserve due to
unexpected claims in the amount of $475,000. In FY 2012, health insurance claims
were higher than anticipated and the one -time General Fund operating reserve of one
million dollars that was implemented in FY 2012 was transferred to the health insurance
reserve. In addition, $1,111,912 in industrial park land sales was transferred to the
health insurance reserve to fund the reserve in FY 2012. It is a best practice to fund the
health insurance obligations through regular contributions making the health insurance
reserve self - supporting without the need for transfers from the General Fund. This best
practice is supported by the Moody's Investors Service review of the City's bond rating
and helps to support the current Aa1 bond rating.
At the time the Fiscal Year 2013 budget was recommended, projections based on
actual claims through February 2012 indicated that the City would meet the minimum
reserve requirement with a City health insurance contribution of $835 per month per
contract based on 553 contracts.
Actual claims through January 2013 have exceeded the projections used for the Fiscal
Year 2013 budget. It is necessary to increase the Health Insurance Reserve revenue in
order to have an ending reserve balance that will meet the minimum reserve
requirement. Based on the actual claims received through January, to meet the
minimum health insurance reserve requirement the City must increase the City health
insurance contribution of $835 per month per contract to $1,105 per month per contract
for the rest of the fiscal year.
The major impact will be to the General Fund, where most employees are budgeted.
The General Fund has a one -time operating reserve of one million dollars that was
budgeted in FY 2013 to boost the health insurance reserve in case health insurance
claims were higher than anticipated. The City would use $429,885 of this one -time
reserve to fund the increased health insurance contribution.
I concur with the recommendation to increase the Fiscal Year 2013 City health
insurance contribution for the remainder of the fiscal year from $835 per month per
contract to $1,105 per month per contract, and respectfully recommend Mayor and City
Council approval.
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Randy Peck, Personnel Manager
Ken TeKippe, Finance Director
THE CITY OF
Dui
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director
SUBJECT: Fiscal Year 2013 Amended City Health Insurance Contribution
DATE: February 25, 2013
Dubuque
'111'
2012
INTRODUCTION
The purpose of this memorandum is to recommend increasing the City health insurance
contribution per contract for Fiscal Year 2013, subject to a future budget amendment.
BACKGROUND
In Fiscal Years 2012 and 2011, the City had to transfer funds into the health insurance
reserve due to health insurance claims being higher than anticipated. The one -time
General Fund operating reserve of one million dollars that was implemented in FY 2010
and FY 2011 was partially used in FY 2011 to boost the health insurance reserve due to
unexpected claims in the amount of $475,000. In FY 2012, health insurance claims
were higher than anticipated and the one -time General Fund operating reserve of one
million dollars that was implemented in FY 2012 was transferred to the health insurance
reserve. In addition, $1,111,912 in industrial park land sales was transferred to the
health insurance reserve to fund the reserve in FY 2012. It is a best practice to fund the
health insurance obligations through regular contributions making the health insurance
reserve self - supporting without the need for transfers from the General Fund. This best
practice is supported by the Moody's Investors Service review of the City's bond rating
and helps to support the current Aa1 bond rating.
DISCUSSION
At the time the Fiscal Year 2013 budget was recommended, projections based on
actual claims through February 2012 indicated that the City would meet the minimum
reserve requirement with a City health insurance contribution of $835 per month per
contract based on 553 contracts.
Actual claims through January 2013 have exceeded the projections used for the Fiscal
Year 2013 budget. It is necessary to increase the Health Insurance Reserve revenue in
order to have an ending reserve balance that will meet the minimum reserve
requirement. Based on the actual claims received through January, to meet the
minimum health insurance reserve requirement the City must increase the City health
insurance contribution of $835 per month per contract to $1,105 per month per contract
for the rest of the fiscal year. The health insurance reserve projections based on the
$1,105 per month per contract for the remainder of Fiscal Year 2013 is attached
(Attachment I).
The impact of the City Health Insurance increase by fund is as follows:
Water Fund
$ 28,080
Sanitary Sewer Fund
$ 28,284
Solid Waste Fund
$ 21,600
Parking Fund
$ 8,640
Stormwater Fund
$ 7,312
Road Use Tax Fund
$ 28,080
CDBG Fund
$ 8,813
UDAG Fund
$ 1,080
Lead Paint Fund
$ 3,240
Section 8 Fund
$ 10,670
Cable TV Fund
$ 4,136
Internal Service Fund
$ 13,143
Garage Service Fund
$ 12,960
Landfill Fund
$ 10,800
General Fund
$410,402
Total
$597,240
The Water Fund has uncommitted debt service savings of $29,187 in FY 2013 due to a
portion of planned debt not being issued and savings from refunding a prior debt
issuance which could be used to fund the increased health insurance contribution per
contract.
The Sanitary Sewer Fund has uncommitted debt service savings of $71,031 in FY 2013
due to a portion of planned debt not being issued which could be used to fund the
increased health insurance contribution per contract.
The Solid Waste Fund has uncommitted cash balance available in FY 2013 to fund the
increased health insurance contribution per contract.
The Parking Fund has uncommitted debt service savings of $80,811 in FY 2013 due to
refunding existing debt in FY 2013 which could be used to fund the increased health
insurance contribution per contract.
The Stormwater Fund has uncommitted debt service savings of $586,578 in FY 2013
due to a portion of planned debt not being issued which could be used to fund the
increased health insurance contribution per contract.
The Road Use Tax Fund has uncommitted cash balance available in FY 2013 to fund
the increased health insurance contribution per contract.
Due to the public administration cap in the CDBG Fund and limited administrative
revenue in the Section 8 Fund, the $19,483 of increased health insurance contribution
per contract for these funds will need to be funded by the General Fund.
The UDAG Fund has cash balance available in FY 2013 to fund the increased health
insurance contribution per contract.
The Lead Paint Fund has uncommitted grant funds available in FY 2013 to fund the
increased health insurance contribution per contract.
The Cable TV Fund has cash balance available in FY 2013 to fund the increased health
insurance contribution per contract.
The Internal Service Funds will recharge the increased health insurance contribution per
contract to capital improvement projects.
The Garage Service Fund has cash balance available in FY 2013 to fund the increased
health insurance contribution per contract.
The Landfill Fund has cash balance available in FY 2013 to fund the increased health
insurance contribution per contract.
The General Fund has a one -time operating reserve of one million dollars that was
budgeted in FY 2013 to boost the health insurance reserve in case health insurance
claims were higher than anticipated. The City could use $429,885 of this one -time
reserve to fund the increased health insurance contribution per contract for the General
Fund, CDBG Fund and Section 8 Fund.
RECOMMENDATION
I respectfully recommend amending the City health insurance contribution of $835 per
month per contract to $1,105 per month per contract effective immediately, subject to a
future budget amendment. The increase per contract is recommended to be funded as
follows:
• $28,080 Water Fund from uncommitted debt service savings.
• $28,284 Sanitary Sewer Fund from uncommitted debt service savings.
• $21,600 Solid Waste Fund from available cash balance.
• $8,640 Parking Fund from the uncommitted debt service savings from bond
refundings completed in FY 2013.
• $7,312 Stormwater Fund from uncommitted debt service savings.
• $28,080 Road Use Tax Fund from available cash balance.
• $1,080 UDAG from available cash balance.
• $3,240 Lead Paint Fund from uncommitted grant funds.
• $4,136 Cable TV Fund from available cash balance.
• $13,143 Internal Service Fund recharged to capital improvement projects.
• $12,960 Garage Service Fund from available cash balance.
• $10,800 Landfill Fund from available cash balance.
• $429,885 General Fund, CDBG Fund and Section 8 Fund from the one -time
operating reserve of one million dollars that was budgeted in Fiscal Year 2013.
JML
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Randy Peck, Personnel Manager
Ken TeKippe, Finance Director
Fiscal Year
2009
Operating
Expense
$5,862,664
2010 $6,457,506
2011 $7,228,094
Cir
Payments
$4,541,732
$4,281,096
$4,741,500
2012 $7,029,892 $7,184,672
2013 $7,803,652 $6,138,300
(estimate)
2014 $8,076,780 1 $6,735,540
(estimate)
Heakh Insurance Program Funding ATTACHMENT!
as of January 31, 2013
Cobra and
Employee Retiree Investment
Payments Payments Earnings
$490,036 $208,236 $144,068
$490,000 $245,853 $64,261
$540,000 $246,000 $30,000
$576,410 $348,033 $15,458
$648,000 $350,000 $15,000
$648,000 $350,000 $15,000
Reserve Requirements as of:
June 30, 2009
June 30, 2010
June 30, 2011
June 30, 2012
June 30, 2013 1
June 30, 2014 1
$816,498 to $1,900,718
$890,233 to $2,072,858
$1,040,421 to $2,330,789
$1,015,919 to $2,358,830
$1,051,476 to $2,500,154 - Estimate
$1,088,278 to $2,587,658 - Estimate
The reserve as of 2/26/13 is $1,264,804
Reserves
Without
Total Income Amendment
$5,384,072 $3,545,902
$5,081,210 $2,169,607
$5,557,500 $1,018,642
$8,124,573 $2,113,323
$7,151,300 $863,731
$7,748,540 $535,491
Fiscal Year 2010 budgeted amount of $665 /month /contract - 534 contracts
Fiscal Year 2011 budgeted amount of $725 /month /contract - 545 contracts (9.0% increase)
Fiscal Year 2012 budgeted amount of $770 /month /contract - 549 contracts (6.2% increase)
Fiscal Year 2013 budgeted amount of $835 /month /contract - 553 contracts (8.5% increase) from 7/1/12 - 02/28/13
Fiscal Year 2013 budgeted amount of $1,105 /month /contract - 553 contracts from 03/1/13 - 06/30/13
Fiscal Year 2014 budgeted amount of $1,015 /month /contract - 553 contracts (21.5% increase over FY13 Adopted)
1 Based on a 3.5% increase
Reserves
With
Amendment
$1,460,971
$1,132,731
(as of 6/30/09)
(as of 6/30/10)
(as of 6/30/11)
(as of 6/30/12)
(as of 6/30/13)
(as of 6/30/14)