From
Lisa Norris, Human Resources Director
Title
Ordinance amending the FY 2016/2017 Employee Insurance and Risk Management Fund Operating Budgets
Presenter
Lisa Norris, Human Resources Director
Recommended Action
Approve
Analysis
Employee Insurance Fund:
The FY 2015/2016 Employee Insurance Fund was amended to account for worse than originally projected high claims costs. That incremental adjustment reduced the ending resource balance for FY 2015/2016 to $2,198,958, therefore affecting the proposed FY 2016/2017 "Beginning Resources" and the fund as a whole. The new Beginning Resource Balance is modified from $2,536,905 to $2,198,958. With the high claims costs assessed by fiscal year-end in 2015/2016, we reassessed projected claims costs and reimbursements expected. We have one claimant that reached $1.2 million so far in 2016. Since we reimburse ourselves from the Risk Fund Stoploss Reserve for any claimant costs over $400,000, we are modifying the Stoploss Reimbursement "transfer in" from the Risk Fund to the Insurance fund from the originally projected $300,000 to $800,000 - a increase of $500,000. Additionally, due to increased claims costs, we reforcasted our active and retiree claims through our benefits consultant. We recommend that active claims be increased by $469,163 and retiree claims by $163,000. Additionally, to help offset these high costs, we recommend reduction of the contingency reserve from $1,000,000 to $500,000. Inclusive of all of these recommended changes, the total appropriations increases from $19,151,992 to $19,784,155 and our "Ending Resources" increases $2,355,506 to $2,461,343 for FY 2016/2017. Additionally, by modifying the contingency reserve, we were able to keep our "Balance Above 45 Days" positive. As we have done in the past, it is our expectation to gradually rebuild the Contingency Reserve over time back to the $2,000,000. This reserve is not mandated, but is done as "best practice" to protect us and provide a funding mechanism for these periodic surges in claims in any given year. Our actuary agrees with this principle and it has proven effective for this past year when it was needed.
Risk Fund:
The 2015/2016 Risk Management Fund was amended to account for increased revenues received and costs. That incremental amendment made via ordinance in a separate item tonight caused the Ending Resources to change to $2,515,097. As a result, that number rolls to the "Beginning Resources" in FY 2016/2017 budget requiring an ordinance to change that fund as well. In addition to the change to "Beginning Resources", we need to increase the one-time "Transfer to the Insurance Fund" from $300,000 to $800,000, and subsequently reduce the "Stop/Loss Reserve for Health Insurance" by $500,000 from $2,129, 728 to $1,629,728. This changes the overall "Ending Resources" to $2,447,915 and maintain both a positive "Operating Balance" and "Balance Above 45 Days."
Financial Consideration
Funding for the FY 2016/2017 Employee Insurance Operating budget appropriation amendment is available by increasing the transfer in from the Risk Fund in the amount of $500,000 and increasing the appropriations of Employee Medical Claims by $469,163 and Retiree Medical Claims by $163,000, modifying total appropriations to $19,784,155. See Attachment 1 for details.
Funding for the FY 2016/2017 Risk Management Fund budget appropriation amendment is available by approving an ordinance transferring out an additional $500,000 to the FY 2016/2017 Employee Insurance Fund on a one-time basis and reducing the "Stop/Loss Reserve for Health Insurance" by $500,000, thereby modifying total appropriations to $3,652,653. See Attachment 2 for details.
Body
AN ORDINANCE OF THE CITY OF GRAND PRAIRIE, TEXAS, AMENDING THE FY 2016/2017 EMPLOYEE INSURANCE FUND BY TRANSFERRING IN FROM THE RISK FUND $500,000 AND APPROPRIATING $469,163 IN EMPLOYEE MEDICAL CLAIMS AND $163,000 IN RETIREE MEDICAL CLAIMS MODIFYING TOTAL EXPENDITURE APPROPRIATIONS TO $19,784,155, AND AMENDING THE FY 2016/2017 RISK MANAGEMENT FUND BY $500,000 FROM THE CONTINGENCY ACCOUNT TRANSFER TO THE FY 2016/2017 EMPLOYEE INSURANCE FUND. MODIFYING THE RISK MANAGEMENT APPROPRIATIONS TO $3,652,653
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF GRAND PRAIRIE, TEXAS:
SECTION 1. That the FY 2016/2017 Employee Insurance Fund be amended by increasing the transfer in from the Risk Fund in the amount of $500,000 and increasing the appropriations of Employee Medical Claims by $469,163 and Retiree Medical Claims by $163,000.
SECTION 2. That the FY 2016/2017 Risk Management Fund be amended by increasing the transfer by $500,000 from the contingency account to the FY 2016/2017 Employee Insurance Fund, modifying total appropriations to $3,652,653.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF GRAND PRAIRIE, TEXAS, ON THIS THE 13TH DAY OF DECEMBER, 2016.