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HomeMy WebLinkAboutApprove Fiscal Year 2016/17 Budget Adjustment for the WorkerDept. ID HR 17-010 Page 1 of 2 Meeting Date: 9/5/2017 CITY OF HUNTINGTON BEACH REQUEST FOR. CITY COUNCIL ACTION MEETING DATE: 9/5/2017 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Michele Warren, Director of Human Resources SUBJECT: Approve Fiscal Year 2016/17 Budget Adjustment for the Workers' Compensation Internal Service Fund Statement of Issue: The Finance Department and Human Resources have conducted a review of the Workers' Compensation Internal Service Fund (551). Certain technical adjustments need to be made to reconcile the budget with actual expenditures incurred and to comply with auditing, actuarial, accounting and/or legal requirements. City Council authorization is requested to appropriate an additional $500,000 to cover expenses for the remainder of FY 2016/17. Financial Impact: This action will result in increasing the Workers' Compensation Fund (Fund 551) appropriation by $500,000 to cover the additional expenses related to the Workers' Compensation Fund. There are sufficient revenues in the FY 2016/17 to cover this request for a net neutral impact. Recommended Action: Approve additional appropriation of $500,000 in the FY 2016/17 for the Self Insurance Workers' Compensation Internal Service Fund (551). Alternative Action(s): Do not approve the recommended action and direct staff accordingly. Analysis: California Workers' Compensation Law provides state mandated benefits to employees for work - related illness or injury. Benefits may include payments for medical treatment, salary continuation, Total Temporary Disability (TTD) benefits, and permanent disability benefits. The City is self - insured for its workers' compensation program and is liable for all costs up to $1 million dollars per claim. The costs related to claims are paid for by the City as the Employer. Workers' Compensation expenses continue to rise annually, primarily due to increasing heath care costs related to on -going medical treatment, surgery, hospitalization, and post -surgical care. Moreover, the City has experienced several catastrophic claims over the past couple of years, further adding to the overall high medical care costs. The City's most recent actuarial report demonstrates that the City's long-term unfunded liabilities for the Workers' Compensation program continue to grow. Based upon the City's preliminary estimates, this will require year-end adjustments to account for unfunded liability increases of approximately $5.8 million. The final numbers are still under review and will be submitted to the City Council at a later date. Item 2. - 1 1413 -58- Dept. ID HR 17-010 Page 2 of 2 Meeting Date: 9/5/2017 In FY 2016/17, the City has incurred extra -ordinary claims costs for claims expense and to effectuate the compromise and release of select claims. The aggregate cost of certain select, on- going claims exceeding $50,000 in expenditures for FY 2016/17 is currently $2.18 million. Further, the aggregate cost of certain select claims that have been settled via compromise and release is currently $812,000. The Workers' Compensation fund requires additional appropriation to cover outstanding invoices and pending claims expense through September 30, 2017. The current funding needed in FY 2016/17 is $500,000. Environmental Status: N/A Strategic Plan Goal: Enhance and Maintain City Service Delivery Strengthen Economic and Financial Sustainability Attachment(s): None HB -59- Item 2. - 2 Harper, Gloria From: Estanislau, Robin Sent: Thursday, August 31, 2017 5:38 AM To: Harper, Gloria Subject: Fwd: Workers Compensation agenda item SUPPLEMENTAL 06,0M UNICA p ION Sent from my iPad a � fitter, t3 ; q I / Begin forwarded message: 2 .+oenda Item No.' From: pacj <pacj 03n,yahoo.com> Date: August 30, 2017 at 10:37:23 PM PDT To: Robin Estanislau <robin.estanislaunsurfcity-hb.org>, CITY COUNCIL <city. council g.surfcity-hb. org> Subject: Workers Compensation agenda item Reply -To: pacj <pacj 03wahoo.com> In Sept 2015 the council was considering awarding workers comp related contracts for claims administration and medical bill review. At that time I asked questions regarding workers comp regarding vendor selection and audits of the city's we program.(see attached) My we questions were never answered. In the upcoming council meeting the council is being asked to approve additional monies to cover workers comp costs. Has the council reviewed the state's compliance audits of the city's we program? Has the council had an outside audit of the city's claims administration and claims practices? Where can I view those results? Thank you. Pat Quintana On Thursday, September 17, 2015 2:21 PM, "Flynn, Joan" <iffllynn@surfcity-hb.orq> wrote: Pat -- I have received your email and am forwarding it to the appropriate individuals for a response and to all the council. This will appear as a supplemental communication to the item on the agenda. I cannot answer your questions as I am not involved with this specific item, but will get your request for info into the right hands. Joan Joan L. FLynn, City Clerk City of Huntington Beach 714-536-5404 Please consider the HB City Clerk's office for your passport needs -----Original Message ----- From: pacj [mailto:pacj 03o)yahoo.coml Sent: Thursday, September 17, 2015 11:40 AM To: Flynn, Joan Subject: Transparency issue Dear Miss Flynn Am not sure if my emails to the council and you have reached you or them. I will restate my question and add another. I am in support of transparency in collective bargaining and in contract for services. Recent focus by the council appears to be limited to transparency in collective bargaining. In listening to council meetings, Council members Posey and Peterson, are championing this issue and if I understood correctly the City Manager was directed to meet and confer with the city's various bargaining units to discuss the proposed transparency concept/proposal. The surf pipeline responder to my email to the council indicated that the city attorney has been directed to draft an ordinance as the city manager is continuing to meet and confer. Please clarify the current status and who has been charged to do what and when this will be publicly discussed. Also, I noticed that the city website has a transparency section. There are charts on salaries, benefits, pers contributions, employer contribution, employee contribution. The charts are helpful but in the spirit of transparency they need some text to explain the pers portion (what the city is charged, what the city pays, what the employee pays. Is the formula (2.5% at 55, 3%at 50) negotiated? If so is the formula on the table in current negotiations? Lastly, the agenda for the next meeting mentions a workers comp contract. It appears that the city pays for all we assoicated costs plus an adminstrative fee for claims administration. The agenda also lists a contract for medical bill review services. Who is the current workers comp third party administrator? What firms competed for the contract(s) the council is now reviewing. Who handles workers comp litigation for the city? Another firm? How has the city fared in workers comp audits by the state? When was the city last audited? Thank you in advance for your response and please forward this email to the entirety of the council. Sincerely, Pat Quintana