Discussion on medical insurance fund challenges is ‘precursor’ to difficult Cedar Falls city budget decisions | Political News


CEDAR FALLS — While discussing a big loss within the medical insurance fund, town’s top two employees hinted at needing to have difficult conversations upfront of developing its next municipal budget.

The town is observing a loss within the self-insured medical insurance fund of $1.3 million. On Tuesday, the City Council discussed a $900,000 transfer from the end-year general fund surplus to assist offset it. Finance and Business Operations Director Jennifer Rodenbeck told the council that officials can have discussions about future worker advantages and their costs.

Those are examples of conversations that may lead to “difficult” decisions for officials this November after they establish goals for the upcoming fiscal yr.

“That is sort of a precursor, we’ve got some big budget items which can be going to be in front of us this upcoming goal setting session,” said City Administrator Ron Gaines. “We’re going to have to have a look at making some very difficult decisions. I can inform you financially town continues to be in a extremely great spot. You, as a council, can do almost any project you would like, but we will’t do all of them. That’s going to be the challenge moving ahead.”

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Despite the challenges, Rodenbeck said after the meeting that town is just not at the purpose where it’s considering abandoning the employer-established fund to cover financial risk for providing health care advantages to its employees, neither is it looking into other medical insurance “plan design changes.”

The town’s been operating under its self-insurance fund for a long time. And any change also would mean agreeing to amendments to collective bargaining contracts with the worker unions, she identified.

In the course of the meeting, Rodenbeck said town has avoided buying insurance from a vendor due to the idea that what’s provided is less cost effective.

“We (town) don’t have a profit margin in-built,” she said. “Whenever you’re buying insurance, you’re also having to pay for that company to become profitable, so we’ve all the time thought that it’s less expensive to be self-insured.”

Moreover, Rodenbeck noted the administration is hesitant about asking employees to chip in additional toward the medical insurance fund due to “the market we’re in right away.”

“Advantages are very essential to employees,” she said in explaining its one tool they use to compete with other employers to rent and retain employees.

Before the council approved the transfer in a 6-1 vote, with Councilor Dave Sires dissenting, Rodenbeck said the medical insurance fund was right down to $1.9 million.

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She noted that “$1.9 million appears like lots but, when you will have a lack of $1.3 million in a single yr, that’s not going to take very long for those reserves to be gone. Quite truthfully, the $900,000 may not even be enough. However it ought to be not less than for one more yr or two, or to get us into this next budget cycle where we’re going to need to speak about what we’re going to wish to do about worker advantages.”

The $900,000 taken out of the $2.2 million surplus realized at the top of fiscal yr 2022. The last day was June 30, and town is midst of closing out the overall ledger.

After subtracting out the $900,000, that leaves about $1.3 million in the excess, $328,333 from an Iowa fitness center relief program grant of federal COVID-19 relief funds.

The council’s vote authorized those grant dollars to be transferred to the recreation fund to assist pay for projects on the aquatics center or others involving recreation.

One other $595,874 is town’s annual backfill payment.

These payments make up for the revenue lost by cities, counties and schools when the state cut industrial and industrial property taxes in 2013. That cash is being phased out and the council previously requested or not it’s put aside for one-time capital projects.

Similarly, the remaining roughly $300,000 of the excess might be transferred to the capital projects fund to “help offset any project that’s seeing increased costs attributable to inflation, or to make use of for a project identified as using General Fund Savings (GFS) on the CIP,” in accordance with city documents.

Sires argued that by keeping among the $2.2 million surplus in the overall fund, it may very well be used to assist reduce any future property tax hike, because, as was the case earlier this yr, the council was on the lookout for possible areas it could cut from its budget.

But Rodenbeck refuted his claim, that it’s advantageous for the taxpayer if deciding to not transfer it.

“Whether you utilize the cash for projects and medical insurance now, and alleviate future property taxes within the CIP or your trust and agency levy, otherwise you’re saving the cash in the overall fund and relieving property taxes in the following yr budget, it’s really the identical,” said Rodenbeck. “It’s still property tax relief.”

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