Minutes 06/22/2010 - Laserfiche WebLink

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June 22.2010 Financial Impact: . No foreseen impact. Staff Recommends: . Adoption of ordinance. Vision Principle: Bold New Directions. Next Steps Following Council Action: . Update City Code to reflect the adopted ordinance. Motion by Ms. Randall, and seconded by Mr. Smith, to adopt the following ordinance, and was adopted by the following vote: "ORDINANCE TO AMEND CHAPTER 7 OF THE CODE OF THE CITY OF PORTSMOUTH, VIRGINIA (2006) BY AMENDING SECTION 7-2 THEREOF PERTAINING TO THE REQUIREMENT OF A CONTRACTOR'S REGISTRATION AND BOND." Ayes: Heretick, Moody, Psi mas, Randall, Smith, Whitehurst, Holley Nays: None 10 - 310 - Adoption of an ordinance appropriating $1.4 million in the FY 2009-2010 Health Insurance Fund from the unappropriated Health Insurance Fund Balance and authorizing a transfer of $1.5 million from the other post employment benefits category to the health insurance claims category within the FY 2009-2010 Health Insurance Fund to address a potential shortfall for the current fiscal year. Vision Principles: Bold New Directions and a Robust and Prospering Economy. Background: . For FY09 the City's Health Insurance fund balance was $8.1 M which is a vast improvement from FY05 HI fund deficit of $4.5M. The City's efforts to build a fund balance reserve in the HI Fund were specifically designed to assist the City with addressing budget shortfalls due to health insurance claims. . The City of Portsmouth is Self-Insured for its Health Insurance (HI) program. Revenues into HI Fund are generated from employees (insurance premiums) and City's employer contributions, COBRA payments, and Medicare reimbursements. . The HI Fund is accounted for separately from General Fund, is not part of the 15% General Fund balance policy calculation. The HI fund is reported in the City's Comprehensive Annual Finance Report (CAFR) under Internal Service Funds. Discussion: . There is an out-of-balance issue in the HI Fund for FY10; that is, sufficient Employer (City) contributions were not budgeted for or paid into the HI Fund and Employee contributions are well-below budget. In essence, there is a revenue shortfall. . Additionally, FY10 health care claims (expenses) have exceeded budget. . These cumulative negative variances are projected to result in a FY10 $2.9M shortfall in the HI Fund unless the recommended actions are approved by City Council. Effectively, a transfer of $1.5M from the FY10 OPEB appropriation and a transfer of $1.4M from the Health Insurance balance to Health Insurance Claims expenditure budget will counteract the projected $2.9M shortfall in the Health Insurance Fund. . Davenport concurs with the Administration's recommendation to reduce our OPEB contribution and partial use of the Health Insurance balance to offset the HI FY10 potential shortfall. . The Departments of Finance and Human Resource Management will continue to monitor HI fund progress and will continue to utilize HI actuarial analyses to project future costs. Employee and employer contributions will be set for calendar year 2011 (employee contributions) and fiscal years 2012 and 2013 (employer contributions) accordingly.