July 24--The effect of rising health insurance costs on the city's 2013 budget was the chief topic of discussion Monday as the Bloomington City Council held its first night of budget hearings.
Despite innovation efforts that will save the city about $1.2 million next year, the city's Category I expenses -- personnel costs -- have risen about 5.6 percent, largely because of health insurance costs. Cuts in Categories II, III and IV -- supplies, services and capital improvement -- mean, however, that the city's total budget request is up 1.44 percent, or about $877,000, from 2012.
Budget hearings are planned at 6 p.m. every day this week through Thursday at City Hall. In the hearings, council members hear presentations from each department head and ask questions about their budgetary requests. Representatives from the mayor's office and the human resources, legal, information and technology service, city council, city clerk and controller departments or offices spoke Monday.
Discussion of health insurance and compensation made up more than an hour of the four-hour meeting, as human resources director Daniel Grundmann walked the council through the reasons behind rising personnel costs. Those costs would account for almost all the additional funding requested by department heads speaking throughout the evening, even as some requested funding for fewer employees than in 2012 thanks to positions being vacated by attrition or the city's early retirement and separation incentive plans offered this year.
Grundmann estimated that the 29 employees who left or are leaving through the city's retirement or separation incentive plan, a brainchild of the city's innovation efforts, will save the city more than $1 million in 2013. Factor in the money saved in 2012 by some of those employees leaving, and the number rises to $1.3 million.
About 13 of those 29 positions will not be filled, Grundmann said. He noted that every vacancy gives the city the flexibility to rethink how it works without having to lay people off.
Grundmann gave a brief history of the city's change from being a partially self-insured program to a fully insured program offered through the Indiana Association of Cities and Towns. The city actually had a budgetary surplus in its health insurance trust fund until 2010, when a "catastrophic year" for claims drove up costs by 40 percent and ultimately led to the switch to a fully insured plan.
Grundmann estimated that the switch will have saved the city a total of at least $2.8 million from 2011 to the end of 2013.
As of 2013, the city will be budgeting $10,790 per employee for insurance, a number that jumps dramatically from $6,489 budgeted in 2012. However, Grundmann notes that costs have not actually jumped as much as they appear, because in the past three years the city has "repurposed" money from the general fund and used the city's rainy day reserves to cover the shortfall.
Projecting into the future, Grundmann said he anticipates health insurance costs continuing to rise at about 12.5 percent per year; revenue is conservatively anticipated to rise about 2 percent a year on average.
Grundmann also said the city is proposing a one-time $1,000 salary increase for 2013 for all nonunion full-time employees, with half-time employees receiving $500. That figure accounts for 1.17 to 3.79 percent of eligible employees' salaries, depending on the recipients' salary, though it will not continue in 2014. Mayor Mark Kruzan has said, however, that he hopes the city can return to percentage-based wage increases in 2014.
Union employees will be receiving the prenegotiated raises in their contracts: 3 percent for police officers, 3 percent for firefighters and 3.35 percent for American Federation of State, County and Municipal Employees members.
The budget, which projects a net deficit of $780,000 for the year, will maintain reserve funds worth a little more than 20 percent by the end of the year. Kruzan has said those reserves are healthy, but emphasized the need to maintain them in case of future economic downturn or unexpected expenses.
Kruzan touched on several highlights of what he called a "surprisingly strong" budget Monday, focusing on what the city is still investing in despite the tight economic conditions.
Kruzan said the city will maintain its "ongoing commitment to social services providers, despite cuts in almost all of our budget lines," by continuing to provide $250,000 in Jack Hopkins Social Services grant funding. The city will also set aside an additional $50,000 toward the city council's sidewalk program.
The mayor also hopes to complete 18 projects on the city's Platinum Bike Task Force list, among them creating additional bike lanes in town and completing the Allen Street bike boulevard to College Mall Road.
The city will also "retrofit" a roundabout at High Street and Winslow Road to improve pedestrian safety, as promised during last year's "great roundabout debate," Kruzan said. The budget also includes funding for a roundabout at 17th Street and Arlington Road.
Each department head speaking Monday also addressed improvements its employees are trying to implement in hopes of improving the city's sustainability.
Among the initiatives brought up was the legal department's focus on communicating more using electronic documents, rather than printing out drafts of documents to be sent for review, according to corporation counsel Margie Rice. Her department has also reduced its fuel usage by 25 percent.
Grundmann also said his department will continue to offer incentives to employees who choose to ride a bike or use public transportation to get to work.
The city's information and technology services department will also be taking on added responsibilities as part of the innovation team's efforts to streamline the way city government works.
Rick Dietz, director of information and technology services, said his department will take over management of landline telephones and the management of copiers, as it already handles printers.
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