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Date
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November 20, 2006
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Agenda
Item No. 50 Roll
Call No. 06- Communication No. 06-739 Department: Tom Turner, Director of Human Resources |
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AGENDA
HEADING:
Approval
of labor agreement extensions and Blue Choice Managed Care Network.
SYNOPSIS:
Recommend
approval and authorize the Mayor to execute three-year extensions of five labor
agreements with the various City bargaining units; receive and file extension
of labor agreements with unions representing library employees; and authorize
the Mayor to execute a binder with Wellmark Blue Cross and Blue Shield of Iowa
(John Forsythe, Chairman and CEO, 636 Grand Avenue, Des Moines, IA 50309) to
change to the Blue Choice Managed Care network, effective January 1, 2007.
FISCAL
IMPACT:
Amount:
$6,300,000
Annual Health Insurance savings due to network change
($174,000)
Average annual cost of various benefit improvements in addition to 3.25% wage
increases over the extended contract periods, as detailed below.
Funding
Source:
The
City’s change to the Blue Choice Managed Care Network will significantly reduce
the City’s health insurance costs. In
spring 2006, the City’s FY 07 health and dental costs were projected to be
$21.2 million (net of employee contributions). In summer 2006, FY08 health and
dental costs were projected to be $25.2 million, a $4 million increase from
FY07. The network change under
consideration will result in an annualized cost of $17.2 million and a
projected FY08 cost of $18.9 million, which is $6.3 million less than the
original FY08 projection. Because
approximately 75% of these costs are covered through General/Road Use Tax
funds, $4.7 million of the $6.3 million cost savings will accrue to this
funding source with the balance accruing to the various enterprise
operations. Various benefit improvement
costs will likewise be shared between General/Road Use Tax funds and enterprise
funds.
ADDITIONAL
INFORMATION:
The
City of Des Moines provides health insurance to its employees through a plan
insured by Wellmark. This plan essentially provides the same level of benefits
across the various unions with slight differences in office visit and
prescription drug co-payments.
In August 2006,
staff made an inquiry to Wellmark regarding the possibility of switching to a managed
care network without altering the negotiated benefits. This was to determine
whether or not there were sufficient cost reductions to warrant a network
change. After several meetings, the Blue Choice Managed Care Network was
identified as offering the most flexibility to employees. It would maintain
current benefits and reduce premiums more than twenty percent (20%). The
current family and single premiums are $1046.28/mo. and $418.51/mo. The new
family and single premiums are $827.41/mo. and $330.99/mo. These rates are the
lowest incurred since FY02.
Staff presented
this option to the City Manager. It was understood that health insurance is a
mandatory item of bargaining and implementing this change would require some
level of negotiation with the various unions. After presenting the concept and
the legal issues surrounding this change to the City Council in closed session,
the plan was presented to representatives of each of the bargaining units,
Supervisory, Professional and Management (SPM) employees’ representatives, and
Federation of Retired City Employee (FORCE-1) representatives. These
representatives were provided information (a question and answer sheet) and had
the opportunity to talk directly to Wellmark representatives about the change. Each of the unions engaged in various
levels of bargaining, which led to new agreements with them in exchange for
changing to the Blue Choice Network effective January 1, 2007. The following is
a summary of the agreements:
Central Iowa Public Employees Council (CIPEC)
CIPEC agreed to
accept the Blue Choice Network in exchange for a three-year extension of its
agreement from June 30, 2009 to June 30, 2012. The current agreement’s annual
wages increases of 3.25% per year will continue for each year of the three
years of the extension period. Additionally, CIPEC employees will receive a
shift differential of $0.25 per hour beginning on July 1, 2009. The estimated
cost of this additional benefit is $40,000 per year.
Municipal
Employees Association (MEA)
MEA agreed to
accept the Blue Choice Network in exchange for a three-year extension of its
agreement from June 30, 2008 to June 30, 2011. The current agreement’s annual
increases of 3.25% per year will continue for each year of the three years of
the extension period. Additionally, MEA employees who normally contribute 5% of
the difference between the family and single premium for family health coverage
will have their contributions reduced by $17 per month for a period of three
years, beginning January 1, 2007 and ending December 31, 2009. The new
calculated premium contribution for the period of January 1, 2007 to June 30,
2007 is $7.82 per month. The estimated cost of this premium reduction is
$43,300 per year or $129,900 total.
Des Moines Association of Professional Fire Fighters, Local 4
Local
4 agreed to accept the Blue Choice Network in exchange for a three-year
extension of its agreement from June 30, 2008 to June 30, 2011. The current
agreement’s annual increases of 3.25% per year will continue for each year of
the three years of the extension period. Additionally, Local 4 employees will
have the City’s match to their section 457 plan deferrals increased from 2.0%
to 2.5% beginning July 1, 2008. The cost of this additional benefit is $75,000
per year.
Des
Moines Police Bargaining Unit Association (PBU)
The
PBU agreed to accept the Blue Choice network in exchange for a three-year
extension of its agreement from June 30, 2009 to June 30, 2012. The current
agreement’s annual wages increases of 3.25% per year will continue for each
year of the three years of the extension period. Additionally, PBU will have
its longevity schedule increased to more closely match the longevity schedules
of the other bargaining units. The PBU has a fixed annual payment for each of
the six levels of longevity. The fixed amounts were as much as three-fourths of
a percent below what the other units receive. This change will be implemented
July 1, 2009. The cost of this change is $65,000 per year.
American
Federation of State, County and Municipal Employees, Council 61, Local 3673
AFSCME
represents the City’s Housing Services Department Employees. AFSCME agreed to
accept the Blue Choice Network in exchange for a three-year extension of its
agreement from June 30, 2008 to June 30, 2011. The current agreement’s annual
increases of 3.25% per year will continue for each of the three years of the
extension period. Additionally, AFSCME employees who normally contribute 5% of
the difference between the family and single premium for family health coverage
will have their contributions reduced by $17 per month for a period of three
years, beginning January 1, 2007 and ending December 31, 2009. The new
calculated premium contribution for the period of January 1, 2007 to June 30,
2007 is $7.82 per month. The estimated cost of this premium reduction is $6,200
per year or $18,600 total.
Professional
Employees Lodge No. 254, International Association of Machinist and Aerospace
Workers , Unit 11 (Librarians)
The
Librarians agreed to accept the Blue Choice Network in exchange for a
three-year extension of their agreement from June 30, 2008 to June 30, 2011.
The current agreement’s annual increases of 3.25% per year will continue for
each of the three years of the extension period. Additionally, the Librarians
who normally contribute 5% of the difference between the family and single
premium for family health coverage will have their contributions reduced by $17
per month for a period of three years, beginning January 1, 2007 and ending
December 31, 2009. The new calculated premium contribution for the period of
January 1, 2007 to June 30, 2007 is $7.82 per month. The estimated cost of this premium reduction is $3,280 per year
or $9,840 total.
Professional
Employees Lodge No. 254, International Association of Machinist and Aerospace
Workers , Unit 10 (Clerks)
The
Clerks agreed to accept the Blue Choice network in exchange for a three-year
extension of their agreement from June 30, 2008 to June 30, 2011. The current
agreement’s annual increases of 3.25% per year will continue for each of the
three years of the extension period. Additionally, the Clerks who normally
contribute 5% of the difference between the family and single premium for
family health coverage will have their contributions reduced by $17 per month
for a period of three years, beginning January 1, 2007 and ending December 31,
2009. The new calculated premium contribution for the period of January 1, 2007
to June 30, 2007 is $7.82 per month. The estimated cost of this premium
reduction is $2,669 per year or $7,980 total.
Supervisory,
Professional and Management (SPM)
SPM
employees who normally contribute 5% of the difference between the family and
single premium for family health coverage will have their contributions reduced
by $17 per month for a period of three years, beginning January 1, 2007 and
ending December 31, 2009. The new calculated premium contribution for the
period January 1, 2007 to June 30, 2007 is $7.82 per month. The estimated cost
of this premium reduction is $56,400 per year or $169,200 total.
PREVIOUS
COUNCIL ACTION(S):
Date:
April 10, 2006
Roll
Call Number: 06-712
Action: Contract
with Wellmark Blue Cross and Blue Shield of Iowa (John Forsythe, CEO) for
health insurance coverage for City employees with a retiree option July 1, 2006
through June 30, 2007. (Council
Communication No. 06-192) Moved by Vlassis to adopt. City
Manager will appropriate up to $100,000 to fund an Employee Wellness Program
and will deposit the remainder into the fund balances of the City. Motion
Carried 5-1. Council Member Brooks declares a conflict of interest and
abstains from voting.
Date:
February 20, 2006
Roll
Call Number: 06-406
Action: Labor Agreement with the American Federation
of State, County and Municipal Employees (AFSCME), Council 61 and its
Affiliated Local 3673. (Council
Communication No. 06-077) Moved by Kiernan to
adopt. Motion Carried 7-0.
Date:
December 19, 2005
Roll
Call Number: 05-2998
Action: Approve agreements with Municipal Employees
Association (MEA), Central Iowa Public Employees Council (CIPEC) and the Des
Moines Police Bargaining Unit Association, and authorize the Mayor to sign
formal agreements when available. Moved by Hensley to adopt. Motion
Carried 7-0.
Date:
February 7, 2005
Roll
Call Number: 05-354
Action: Approving new bargaining agreement with Des
Moines Association of Professional Fire Fighters, Local No. 4.
SPONSOR: Vlassis. (Council
Communication No. 05-065) Moved by Coleman to adopt.
Motion Carried 6-1. Nays: Kiernan
ANTICIPATED
ACTIONS AND FUTURE COMMITTMENTS: NONE