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Home My WebLink About(1) JANUARY 17, 2010SUIIDAY, JANUARY 17. 2010 PA to look again at re health insurance fund By Sherry Koonce The News staff writer million liability for current and and believes the method emba k d Au future health care benefits paid for the benefit of retired city. emplo - r e on very likely is not le al. A as 60 percen ~ er hearing the concerns of y ee8, t issue is the amount of money Thrqugh tl Port Arthur's former -human ~ ~ the city is no~v paying toward the fimded heattl resources manager who retired a issue $ a $93 million liab lity that C~ s 165 retiredemployees' health "pay as you g year ago, City Council has agreed t i has become an albatross for the e }~b~ ~~ °S~zing .the o rev sit the cost., of providing city," Fitzgibbons said d ~ o - Past years as accruing for c insurance to retired em Igyees. p In the .process, City Manager • . Harvey Robinson,. former HR m premiums rose, the city opted sometimes against his advice to many of whici Under new ac Steve Fitzgibbons said he hopes the anager and assistant city manage er, told the City Council he w absorb a higher share of rising lished by city leaders will focus on the big pic- tore - how best to decrease a $93 as con- cerned with the way the city, is ' employee health care ..premiums, Over time, the city went frame a - P Accounting St ernments are 0 g ing about decreasing the liability y ing roughly 50 percent to h as muc See PA Continued from Al coats for retiree benefits,. including future health care expenditures and those from previous years. Cities not complying would risk losing a favorable bond rating. In recent months the city has hired a consulting firm to look at ways the city could reduce the unfunded health burden. In September, the City Council approved changes to the way employee health care premiums are paid. Based on the recommends- tion of the consultants and the Texas Municipal League, the City Council opted to unblend health insurance premiums paid by current and retiree employees. ana to pass a higher sharp ~ °~.he premium payment to retired employees who have their families insured. The shift will save the city an estimat- ed 27 percent on the project- ed liability, and allow the city to move back closer to the 50 percent share it once paid. Because retirees' typically are considered a higher risk to insure, their premiums have gone up as a result a disapportionment amount, Robinson said. Rate increases associated with the unblending process are to be implemented over a five-year period -the first during 2010. "The unblending of the plans will affect tremen- dourly the health insurance costs for retirees," Robinson said. In November, Robinson said premiums for medical insurance for he and his wife increased by $77, from $646 a month to $723. "And, that's just the first increase," he said. The amount each retiree pays is different, depending on whether their family is insured and whether they have reached the age of 65 when they become eligible for Medicare. Robinson said he is not surprised ~ at the unfunded health care liability owed by the city.. In fact, he said he cautioned the city on numer- ous occasions against absorbing the coats. Robinson said the costs absorbed by ,the -city while employees were working became part of their benefit package, earned while they worked. To pay less on the premiums now and charge more to the retiree is much like decreasing someone's pension after they have retired. `t'he city cannot unitarily go and in and reduce the contribution rate. The bene- fit they are paying is an earned benefit. This is the benefit that was available when I retired, and you can- not go back. and change it now," he said. Fitzgibbons said both the unblending and passing an iwc~reased share of the cost of health insurance on to the retired employees is within the framework of the law Last year the city hired A.R. Panzera, a consulting firm that specializes in employee benefits, and is one of the best in the state, Fitzgibbons said. "The: benefits. attorney feels we are on solid legal ground for what we have done to address this prob- lem," )~tzgibbons said. The city's liability is about five or -six times larger than other cities in the state. The liability per capita, would cost each Port Arthur resi- dent $1,600, Fitzgibbons said. At Tuesday's City Council meeting, Bob Williamson, .District 6 councilman, said he was willing to look at the method of unblending pre- miums again -especially since it was not meant to be a solution to the $93 million liability. `What we did was buy time. The unblending was done first to give s time, we had to do something quick," Williamson said. "What we've done though is put about $100 burden on retirees and that is un#'ortu- nate. I don't think our retirees should be unblend- ed." The city council has agreed to consider the issue in a yet-to-be-scheduled work session. At the city's request, Robinson said he was willing to attend the session and be part of the process. skoonces~panews. tom