Minutes 03/31/2014 - Laserfiche WebLink

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March 31, 2014 The City's OPEB liability is directly impacted by health care costs, retiree coverage, and cost-sharing. The City's health care costs increased significantly over the past two years due to a limited number of covered members with very serious medical conditions. We made a number of changes beginning this year that will help contain our health care costs and align the City's health care coverage for retirees with programs offered in neighboring cities: • We established minimum City service requirements before an employee is eligible for retiree medical coverage, subject to certain grandfathering provisions. • Our three categories of members who receive health insurance -active employees, "working age retirees" (those retirees who are less than 65 years old), and retirees over 65 years old are now rated separately to reflect the cost of their coverage. Previously, the rates for these three groups were blended. • Retirees must contribute 50% of the separately rated cost of health care coverage. For the next health insurance plan year, beginning January 1, 2015, the City will make additional changes to its health insurance coverage. Most significantly, we are in the process of working towards a "win/win" for our retirees over the age of 65 by assisting them in getting Medicare supplemental health insurance coverage outside of the City's program. These plans would cost retirees significantly less than what they currently pay for the City's health insurance coverage. Also, this change would reduce the City's OPES liability. In addition to this modification, staff is evaluating other ways to bring our health insurance and retiree coverage closer in line with the market. We will look at plan design, incentive programs, and wellness initiatives. Investments in Capital Infrastructure This proposed budget includes a $72.5 million CIP investment in major City assets, of which $55 million is for water and sewer projects. Funding of $6.5 million is included for the Churchland Bridge project in Fiscal Year 2015 towards a total project cost of $29.5 million. This project will replace the two westbound lanes of the Churchland Bridge with a totally new structure. The funding identified will address the eventual replacement of the bridge. In addition to the Churchland Bridge, $4.6 million is included for Fiscal Year 2015 to fund a number of ongoing drainage, traffic and street improvements. The CIP includes $1.7 million for School projects in Fiscal Year 2015, including continued School bus replacement, design of a new Churchland High School HVAC system, replacement of the Woodrow Wilson High School fire alarm system, design of two roofs and replacement of two Public Address systems. As stated earlier in this message, to support the neighborhood recreation initiative we are proposing a $1,000,000 investment in the City's capital improvement plan. The plan aims to provide improvements in recreation for the entire City. These improvements are described earlier in this Budget Message. The majority of the $55 million in Public Utility funding is for two major water projects: replacement of the Lake Kilby filters ($28 million) and continuation of the Downtown Master Utility program ($18 million). The remaining funds are primarily directed to ongoing maintenance work. The Proposed Capital Improvements Budget can be found in Section 14 of the budget document.