09-06-18 Special Meeting of the La Porte City Council

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It would be a departure from a long standing policy that has been a valuable recruitment tool There was also the idea that each employee could be given a lump sum amount. A lump sum of $1,000 per non civil service employee would amount to $300,000. A lump sum amount of $1,500 per non civil service employee would amount to $450,000. Pharmacy Change $250,000. As discussed at the budget presentation, this change will have very minimal disruption for employees and covered retirees. There is no negative impact with this change. Stop Loss Coverage $480,000. Stop Loss is insurance coverage that we purchase to reduce the City's risk associated with health insurance claims. Currently, the City's stop loss coverage kicks in to pay individual claims that exceed $165,000. There is also aggregate coverage that kicks in should total claims cost exceed 125% of total projected claims. The City has never reached the aggregate for total claims. However, we do at times experience individual claims above $165,000. Since 2013, the City has paid $2,086,521 in stop loss premiums. The City has received a total of $632,194 in reimbursements from claims above $165,000. In short, had we opted to discontinue stop loss in 2013, the City would have saved $1,454,327. Staff also looked at the possibility of either raising (to $200,000) or lowering (to $120,000) the attachment point that is currently $165,000. Using this year's claims as a basis, a lower attachment point (of $120,000) would have saved the City approximately $7,000 over the other 2 options (i.e. holding the attachment point of $165,000 or raising it to $200,000). Please see attached summary of premiums vs re-imbursement summary. As with any insurance, it is not needed until it is needed. Eliminating stop loss altogether could prove to be a very risky endeavor. We will be shopping this coverage this year. I would recommend we retain coverage at a lower attachment point of $120,000. We will pay more in premiums, but will likely see an increase in re-imbursement while reducing risk. Drainage Interconnect $250,000. The developer has agreed take on the expense of this project. $250,000 has been removed from the budget. Spencer Masonry Fence (Southside) $584,000. Removing this project from the budget will not negatively impact operations. However, staff is requesting that we remove $380,400 from the total budget. We would still construct a fence and sidewalk on the north side of the ROW and would use the remaining project budget to do so. Motor Pool Lease Fees. Extending the life of non -emergency vehicles by 1/3 the current life cycle could save $236,000 in lease fees. Keeping vehicles longer will increase repair costs. We have no way of knowing the amount of a potential increase in repair cost that would offset this savings. We also cannot predict the loss of revenue resulting from the sale of older vehicles. A prior effort to extend life cycles was not successful. We could make another attempt and re-evaluate in 2 to 3 years. Public Works Reduction of Force $974,000. Attached is summary data associated with the work that would be impacted by this reduction of force. I believe that any reduction in force could potentially have a negative impact on our provision of services. Fleet Maintenance $159,000. Staff has taken a comparative look at the cost of our fleet maintenance division. We took the cost for certain common repairs/maintenance activities and compared those to the cost of outsourcing the same service/repair at two different vendors. The cost comparatives for the City includes labor costs (plus benefits) as well as indirect overhead costs. In the comparison, the City provided the least cost of 5 out of the 8 cost comparison activities. The largest significant difference in activity cost is related to the replacement of clutch flywheel bearings seals and gasket for a 2015 John Deere tractor. Please see the attached summary of equipment services cost comparison.