City targets benefits, double dipping in budget [The Frederick News-Post, Md.]

May 13--City leaders are proposing a budget that would bring to an end some of the little-known and controversial retiree benefits of public service.

Mayor Randy McClement's proposed $76.5 million general fund budget would prevent civilian employees from receiving retirement benefits if the retiree/employee returns to work for the city. Instead, eligibility for retirement benefits would be based on the most recent hire date.

In 2009, 67 employees retired early, accepting a two-year salary buyout. Some of those returned to work for the city. The estimated cost savings from the early buyout action ranged at the time from $7 million to $0 or even a loss, depending on what costs were accrued to fill the vacancies and repay the retirement fund.

The new policy would not apply to those retired and rehired employees.

Public comment during the budget process this year has included an admonition that the city should have started with the rehired employees who had accepted the early retirement packages when it decided to lay off 37 employees. Alderwoman Karen Young said that it would not have been legal to target any specific group during the layoff process.

The proposed budget also expects all civilian retirees to pay 100 percent of premiums for dental insurance. Before the proposed change, the city paid 100 percent of premiums for dental insurance on 125 civilian retirees and their eligible dependents. The estimated savings for fiscal 2011 will be $77,099, said Kathryn Nicolato, the city's human resources director. A recipient of those benefits, Young is in favor of the proposed changes. She is a dependent on a city retiree policy that covers her husband, Ron Young, who was mayor of Frederick from 1974 to 1990.

They married in 2006, and she said the dental coverage came as a surprise to her and to him when she went to find out about her benefits coverage. She said she informed her husband of the dental benefit and has since used the dental coverage, but her husband has not.

Young said it is reasonable to expect retirees to pay for the dental coverage and a share of the health insurance. The cost ranges from about $9 to $29 per month, Nicolato said.

The budget also adheres to federal regulations by requiring all Medicare-eligible retirees to come off the city's health insurance plan. They will be eligible to participate in the city's Medicare Advantage Plan for a monthly cost.

Each Medicare Advantage enrollee pays $30 per month, with the city contributing roughly 94 percent of the monthly cost and the retiree paying the rest, Nicolato said in an e-mail.

Non-Medicare eligible retirees of the 206 who were hired on or after July 1, 2003, to the present will be able to participate in the city's health insurance plan by paying the same cost share as that paid by active employees. The city will pay 75 percent and the employee/retiree will pay 25 percent under the proposed budget. The city would continue to pay 100 percent of premiums for health insurance for the 152 retirees who were hired before July 1, 2003.

The savings in the city's portion of Cigna health insurance costs for retirees is estimated at $89,640 under the proposed budget.

Eligible dependents will be limited to those dependents at the time of retirement. Young said the policy would not apply retroactively, and she would still be eligible as a dependent on her husband's policy.

The aldermen have asked the mayor to extend eligibility to dependents that result from adoption or pregnancy that were ongoing at the time the employee retired or died.

None of the changes affects employees subject to collective bargaining, as the police are.

The Board of Aldermen will vote on the budget on May 20, and on amendments the mayor is considering to make based on this and other workshops.

To see more of The Frederick News-Post, or to subscribe to the newspaper, go to http://www.fredericknewspost.com/.

Copyright (c) 2010, The Frederick News-Post, Md.

Distributed by McClatchy-Tribune Information Services.

For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.