Mayor: 'Trim the fat from within'

New Castle Mayor Greg York announced his plan Monday night to help the city climb out of its multi-million dollar hole.

The City of New Castle is nearly $10 million in the red, with the majority of that debt coming from the city employee health insurance fund.

City Council President Rex Peckinpaugh formally requested in May that the mayor provide details at the council's June 3 meeting to address the financial situation.

York told the New Castle City Council on Monday that he wants to combine some job duties among employees and sell off several properties the city owns but is not using. He also announced changes to the health insurance fund and additional changes that could save money every year.

Health insurance changes

York said the city's number one goal is to get the health insurance costs under control.

The City of New Castle has a self-funded insurance plan for city employees. The city also provides healthcare benefits for city retirees.

In mid-April, the health fund had a negative balance of $9.595 million.

The New Castle City Council borrowed $3.3 million in new 10-year bonds in April to make sure there was enough cash available to be able to pay city workers that month.

"It's very obvious that the insurance is the problem," York told the council Monday. "We've got to get insurance fixed, number one."

He told the council members that one step is to increase insurance premiums for city employees.

"Our insurance is not going to change," York said. "It's the exact same coverage. (Employees) will not lose any insurance, will not lose HealthLink. Will not lose anything that we've had. Just the premiums are going up a little bit."

York said he is working "extremely hard" to not implement a "spousal carve-out." If the City of New Castle adopted a spousal carve-out measure, it would require city employee spouses to get insurance offered by their own employer, rather than the City of New Castle providing coverage.

Other local public institutions — including the Henry County government, Henry Community Health and the New Castle Community School Corporation — have adopted spousal carve-outs in order to save money.

"We're trying to do all we can do to work around the spousal carve-out," York said.

The city has also added a third tier for employee insurance coverage. York said new hire employees will start at this tier, paying a $3,000 deductible and not receiving spousal coverage if their spouse has other insurance options.

York clarified that any current employees who move to the this insurance option will not lose coverage for their spouse.

York told the council that the City of New has spent about $1.5 million in insurance claims so far in 2024. For comparison, the city paid out $6.3 million total in 2023.

"Month by month, we're in better shape right now than we were last year, as far as having to pay on insurance claims," he said.

York said the city's biggest Achilles' heel right now is in the "insurance-for-life" plan given to city retirees.

Since the 1970s, New Castle city employees have qualified for a Humana secondary insurance plan for $48 per month. The city pays $310 per month for each account.

"If that was affordable then, that's a good thing," York said. "But today's day and age, that's not exactly affordable. So we need to address that with the unions and see where we end up there."

As of Monday, 116 city retirees are on this Humana plan. York said the City of New Castle spent $650,000 in 2023 on the Humana plan. He added that the city has not looked for different, less expensive options to the Humana plan since it was adopted decades ago.

York also told the council that the City of New Castle offers continued insurance coverage to "early retirees" who are 45–65 years old, even if those former city workers are working somewhere else that offers insurance.

As of Monday, the city had paid $241,000 in medical bills for early retirees and $90,000 for their spouses.

"I'm a bit concerned, at the present time, we have (former) employees that work a full-time job in the county (government), and we're paying their full-time insurance. We're paying all their insurance. Well, the county offers insurance," York said. "In my opinion, if they can get insurance at the county, they should go to that insurance."

York would be fine with early retirees coming back to work for the City of New Castle and getting back on the city insurance plan, if that is how things work out for them.

York said the city can save more than $1 million a year if it changes the insurance-for-life plans.

Immediate changes

York announced Monday that all city employee overtime is frozen, unless approved by the department heads and reported to the mayor himself.

"We've had some departments that have been taking advantage of that (overtime) that we're putting a halt to in a hurry," York told the council Monday evening.

The mayor said his administration is also going to restructure the capital improvement process.

York said the city has about 15 positions that are budgeted but not filled. He plans to combine those job responsibilities and job titles with current employees.

Peckinpaugh said eliminating a position is not really a cost savings because the funds are not being spent right now anyway. Council member Aaron Dicken said the budgeted salaries can be spent if the positions stay open.

"It would save us on salary and on insurance both," York said.

York estimated that combining job roles and not hiring new staff would save the city $1 million a year.

Other plans

"The plan that I've got is trim the fat from within and sale off some properties that I don't think that we need," York told the council.

York told the city council he is getting multiple appraisals on seven city-owned properties, including land on Washington Street and the house at West Lawn cemetery.

The mayor will bring those appraisals to the city council once they are complete. The council members will make the final decision on whether or not to sell the land.

York acknowledged that selling off excess property will be a financial "shot in the arm" but will not have a year-after-year impact on the city budget.

"We're looking at at least $2 million where we have to trim some department from within, every year," York said.

Clerk-Treasurer Ashley Huffman praised the city's department heads for the work they have already done to tighten their individual budgets.

"The department heads are rocking this," Huffman told the council. She said they are each meeting with her weekly to prepare for the 2025 budget.

"All of them are doing everything in their power to figure out how we can make cuts and save money," Huffman said.

York told the city council it is also a priority for New Castle to get its employees raises "as soon as we possibly can" in order to keep the public jobs filled.

"That's the second most important priority," York said.

The Courier-Times will continue coverage of the New Castle City Council meeting in an upcoming edition.