• Council looks at short-term band-aid and long-term challenges after healthcare crunch hits city employees
By Hannah Heimbuch
After months of public testimony regarding the strain of increased healthcare costs to city workers and their families, the City Council opened a worksession discussion Monday afternoon to look at possible options to alleviate the financial pressure on employees.
Budget cuts and the rising cost of healthcare, particularly under a self-insured program, forced major changes to the employee benefit package last year.
City Manager Walt Wrede announced that an early August meeting will host an insurance broker to discuss Alaska’s healthcare trends, and potential bids from the private sector. That special meeting will also be a time for a broader discussion about employee compensation packages and the real costs of healthcare for the City of Homer.
While there’s not a long-term solution immediately available, he said, the realities of the issue are clear.
“We’re not as competitive as we used to be compared to our comparable cities, and we’re having a harder time recruiting or retaining employees,” Wrede said.
The employee committee, representing the city’s 104 workers, met Friday to discuss the healthcare issue, going over several options for mitigating the financial strain they’ve all felt trying to meet the plan’s costs.
Last year, said committee chair Melissa Jacobsen, the employee contribution to the health care fund was approximately $145,000 for medical, dental and vision. This year, medical alone is up to $223,000 — a 54 percent increase over the previous year.
One of the options they are discussing includes asking the city for money out of a potential $300,000 general fund surplus, the numbers for which should be finalized by auditors at the end of May.
Committee members are meeting with their respective departments to decide what kind of support they plan to ask for, Jacobsen said, a one-time payment to employees to assist with cost burdens, or an allocation to the health insurance fund that would reduce premiums by 40 percent.
This is far from a permanent fix, however, Wrede noted.
“One of the possible risks is that next year, when we have a new plan, the premiums could go back up again,” he said. “So this is a stop gap, one-time thing for this year.”
The realities of the employee pool, and its history of payment and use, make it very difficult to solicit competitive bids from the private insurance realm, Wrede said.
“We have a small number of employees, we have an aging workforce and we have really high utilization,” he said.
The same things that eventually made self-insurance extraordinarily expensive, are also the reasons private bids are coming in high.
“We had a plan that encouraged people to use it a lot, but our pool is really small,” Wrede said.
Several council members were encouraged by the presence of any kind of plan to alleviate the immediate pressure on city families.
But Councilman Beau Burgess was hesitant to further discuss an issue that had no real solutions on the horizon, he said, despite the compassion he had for the obvious strain families were under to pay for healthcare. The city needs to follow the steps they have in front of them, he said — potential for one-time assistance, and future efforts to solicit lower bids in the private sector.
“These are not problems that we can solve without more money,” Burgess said. “We know what we have to do, and we know when we’re likely to be able to do it…We can’t just say we’re going to spend whatever it takes to make the employees super duper happy. That means taxing the taxpayer, that means services that don’t get done, and that’s a big deal.”
Also on the regular meeting agenda, and in an earlier Committee of the Whole agenda, was the discussion of council member stipends. Mayor Beth Wythe and councilman Gus Van Dyke were strongly opposed to an ordinance that would increase stipends to the mayor and council members to $75 per attended council meeting – a maximum budget allowance of $8,775.
“I see it as a privilege and an honor,” Wythe said. “I don’t understand how council compensation makes this seat more or less attainable.”
Council scheduling can be flexible to accommodate work schedules, she said.
Van Dyke echoed that sentiment, saying that he is strongly opposed to any compensation for council members or the mayor.
Council members Beau Burgess and Francie Roberts were supportive of the measure, however, saying that the time it takes to be a council member is prohibitive for some members of the public.
People that do not have means, Burgess said, would be burdened by the 25 to 40 hours a month it requires to do the job well, preventing a large Homer demographic from being represented on the council. While the $75 per meeting would not be a salary or work compensation, he said, it might be enough of a boost to revitalize participation that has been lacking.
“We all have means,” Burgess said, indicating his fellow council members. “This is a small price to pay to give one or two people that don’t have means the opportunity to sit here.”
Roberts voiced similar support, saying the stipend could go to cover the expense of supplies used to perform council duties, or to a babysitter for a council member with young children.
“There are people in the community that the $75 would make a difference,” she said, adding that the cost would be worth the result of bringing young people to the table.
If council members do not wish to collect the stipend, they can donate it back to the general fund or to the nonprofit of their choice. Burgess said he would be happy to do this should the measure pass, as an indication that his support of the ordinance is based on backing future participation, and not his own bottom line.
The ordinance was successfully introduced in a roll call vote, with council members Van Dyke and Bryan Zak opposing.
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