Minutes 04-24-2012 - Laserfiche WebLink

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retirees for the fiscal year ending June 30, 2013. Staff estimates the increase and the effect on the FY2012-13 budget to be as follows: • Employee health insurance $0.75 million • Retiree health insurance 0.85 million • Total $1.60 million Additionally, staff anticipates, based on past experience that our health insurance costs will continue to increase by 15 to 20 percent per year as a result of claims paid in previous fiscal years, and the current average age of the County's workforce. Annually, this would represent an increase of$1.1 million to $1.5 million per year in health insurance for current employees and retirees. Clarence Grier said in the next few months staff and County insurance consultants will be bringing forth proposals from which the Board of County Commissioners can select an appropriate course of action. Frank Clifton said they had a big spike this past fall in elective surgeries due to changing insurance companies and employees concerned about their new coverages. He said if they go self- insured then how will this affect retirees. Other Post-Employment Benefits (Retirees Health Insurance Funding) Clarence Grier said that the County currently funds post-employment benefits/retirees' health insurance (OPEB) on a pay-as-you-go basis. Our required annual actuarial contribution is approximately $5.1 million per year. As a result, this leaves the County with a funding deficit and an unfunded OPEB liability of$62.8 million, as of June 30, 2011. Putting this in perspective, the County recently issued debt to fund an elementary school, equipment, and refund existing County debt that totaled $58.9 million which represent the County's largest, most current, combined debt issuance. Our current unfunded OPEB liability is greater than that debt issuance. He said that they will be proposing an approach to fund the liability beginning in the FY2012-13 Manager's Recommended Budget. Frank Clifton said that if the County does not start addressing this issue, it can and will impact discussions with the bond rating agencies, impact our bond rating and the ability of the County to issue debt in the future. Additionally, as previously mentioned, the annual cost is increasing proportionately with the number of retirees. Clarence Grier referred to articles at their places and said that some of this will affect how they issue debt. Frank Clifton said that as part of the budget ordinance, staff will bring forward an action to change the benefits plan for new hires and to restructure the retiree benefit. The requirement for retirees will be proposed to be for employees that have served 20 years instead of 10 years.