HomeMy WebLinkAboutMinutes - Finance Committee - 03/17/2014 -_____C .Finance Administration____I 0—I I 2~FIoorI-Ort CoLLins Fort Collins,CO 80522
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Council Audit &Finance Committee
Minutes
3/17/14
10:00 to 12:00
CIC Room
Council Attendees:Mayor Karen Weitkunat,Bob Overbeck,Ross Cunniff
Staff:Darin Atteberry,Mike Beckstead,Tom Demint,Kelly
DiMartino,Andres Gavaldon,Kirstin Howard,Bev McBride,
Angie Rhodes,Amy Sharkey,Greg Tempel,John Voss,Wendy
Williams,Katie Wiggett,Rick Vandervelde
Others:Dale Adamy,Jonathan Carnahan,Gerry Horak,Ann
Hutchison (Chamber of Commerce),Drew Peterson (Hayes),
Janet Ox (Hayes),Lisa Poppaw
Approval of the Minutes
Mayor Karen Weitkunat moved to approve the minutes from the February 10 meeting.Bob Overbeck
seconded the motion.Minutes approved unanimously.
PFA IGA Revenue Allocation Formula
Mike Beckstead introduced the discussion on the Poudre Fire Authority (PFA)Intergovernmental Agreement
(IGA),an agreement which forms PFA,and the associated Revenue Allocation Formula (RAF),a formula
which allocates a share of City revenue toward the provision of fire and rescue services within Fort Collins.
The IGA was originally drafted in 1981 and was last modified in 1987.Over the past six months,City Staff
and PFA Staff have worked together to update the current IGA.Staff is seeking Finance Committee feedback
on the updated RAF in the proposed IGA between the City and the Poudre Valley Fire Protection District
(PVFPD).
Chief Demint noted that the updated RAF helped define a sustainable funding mechanism while allowing
PFA to retain its autonomy.The original RAF was based on an 80%/20%split in the total costs of operating
PFA between the City and PVFPD.
Chief Demint showed that,over the past 20 years,PVFPD has seen an average of 3%annual improvement in
productivity.While total employee numbers have been growing,the number of calls has grown even faster.
Bob Overbeck asked the Chief if he could give an average cost per call and if that data would be useful in
comparison.The Chief replied that they didn’t use the cost-per-call metric because it implies that Staff is
discouraging calls;however,he can provide that information.
Mike explained that because the City’s share of call and assessed value has increased,current funding needs
to shift to align with the relative contribution share.The mayor asked if a five year history can actually help
Staff project the future growth.Mike replied that Staff did not use the five year history to project;rather,
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they used the history to create a better formula that will need to be reassessed with future changes,such as
large annexations.Darin agreed that,because the past trends have been fairly stable,using the past to help
create a formula is a good way to solve this funding need.Staff should highlight the importance of
reassessing the RAF with such changes as annexations.The IGA has worked for the past 30 years;this
update will allow it to continue to work.
Mike explained that Staff considered three alternatives,and chose the best of the three:to develop a Level
of Service Budget and Modify the Existing RAF.The proposed RAF variables (29%of one cent of sales tax
and 64%of property tax)were determined based on the City’s 2014 revenue forecasts and the targeted
$22.7M for the City contribution.At $22.7M,the City’s contribution equals 82.5%of the PFA Level of
Service Budget and requires an additional $2.6M of funding over the budgeted 2014 funding of $20.1M.The
82.5%reflects a blend of service calls and assessed value between the City and the District.City Staff is
proposing that the $2.6M funding gap be closed over a five year period.The City RAF calculation below
assumes a 3%per year growth assumption and is not a forecast of anticipated revenue,but is provided as an
illustration only to show how the phase in of additional funding will occur
2014 2015 2016 2017 2018 2019 2020
City RAF Amount $18.6 $19.3 $19.9 $20.6 $21.3 $22.0 $22.8
÷ 1 mill Capital 1.8 1.8 1.9 2.0 2.1 2.1 2.2
÷ KFCG $2.3 $2.4 $2.5 $2.6 $2.6 $2.7 $2.8
City Calculated Contribution $22.7 $23.5 $24.3 $25.1 $26.0 $26.9 $27.8
Escalation Adjustment
Yrs Total =5 80%60%40%20%0%
-Escalation Adj Amount -$2.6 .$2.1 -$1.6 -$1.0 -$0.5 $0.0
City Actual Contribution $20.1 $21.4 $22.7 $24.1 $25.5 $26.9 $27.8
Chief Demint explained that several other updates were made to the IGA including updating the IGA to
reflect previously approved amendments,to reaffirm selection of the 5th member of the Board,to update
the Chief’s authorities,and to outline the impact of annexations and URA’s included with the IGA.The IGA
states that if a large annexation is made,the RAF’s variables will be adjusted to be revenue neutral.URA TIF
will be discussed on a case-to-case basis to determine the implication.All GA changes have been reviewed
by both the City and District Attorneys.
The Mayor thanked Staff for their work,commending their emphasis of the differences between the City,
PFA and the district—a distinction that is often unclear to residents.Gerry Horak added that this shows a lot
of progress for the PFA Board which has been pushing for many improvements,including fixing PFA’s capital
plan.
Council Finance recommends moving forward with this topic.It will go to the PVFPD Board and the PFA
Board in late March and to Council on April 2.
On-Site Health Clinic
Kelly DiMartino and Amy Sharkey introduced Hays consultants Drew Peterson and Janet Ox to Council
Finance,noting that Hayes experts have helped Larimer County and other municipalities open onsite
Wellness Centers.City Staff is recommending the implementation of an Employee Wellness Center to
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support the health and wellness of City employees and their dependents.Kelly gave an overview of the
City’s current landscape:
•Solid reserves (intentionally drawing down over past 2 years)
•Lower than average claims historically;higher than expected in 2103
•Healthcare Reform increasing costs
•Aging workforce
Bob asked if the fact that the average dollar amount of claims had increased in 2013 was at all due to
the natural disasters.Amy responded,no,the increase in claims reflects several of claims for
catastrophic medical situations.The mayor asked if these numbers affect predictions for 2014.Drew
Peterson answered that this increased number in 2013 cannot predict future numbers.
Amy outlined the affects Healthcare Reform will have on the City’s benefit program,noting that the City
anticipates adding 150 to 190 FT employees as participants in 2015.They also must plan for a
reinsurance fee that will cost the City approximately $200,000 each year for 3 years starting in 2014,as
well as a Patient Centered Outcomes Research Fee of $5,500.Amy then showed the workforce
demographics for current City employees,pointing out that 20%of the current workforce is retirement
ready.
Creating a Wellness Center would help the City accomplish several of its benefit plan goals.Advantages
to offering a Center include:
•greater ability to manage health risks through coaching and onsite disease management
•anticipated reduction in health care cost trends
•integrated medical records
•established medical home for employees and dependents making health information available
to providers
•enhanced wellness efforts by supporting proactive health care management
The Wellness Center would provide the following services:
•Preventative care
•Treat primary care,acute and urgent care need~
•Annual exams and screenings
•Immunizations
•Prescription Management
Bob Overbeck asked the HR team to add budget estimates for each of these services.Drew said that the
team can provide amounts for what the Plan currently pays for these services.
Mike Beckstead explained that the cost recovery model for the Employee Wellness Center is dependent
on two factors:staff adoption of the services provided by the Wellness Center and preventative care
lowering the overall annual health care cost increases over time.If only 40%of staff utilize the facility
rather than the assumed 80%,the City will incur added costs.To achieve break-even on the cost of the
clinic,a 70%adoption rate is estimated.A Wellness Center providing staff with more preventative care
should favorably impact long term cost trends.
Amy agreed that there is a risk and added that HR would be looking for way to provide members
incentives for using the onsite clinic.The Wellness program,which has a large percentage of employee
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participation,will be one way HR Staff will work to increase employee participation.
The Employee Wellness Center is intended to augment primary care,not replace it.However,some
employees may not have a primary care physician,so the Wellness Center will provide primary care
resources for those employees.
In order to fully evaluate the feasibility of a clinic,it was necessary to select a specific vendor with whom
the City would work.In May 2013,the City of Fort Collins posted a Request for Proposal (RFP)for an
Onsite Employee Wellness Center.Staff worked closely with Hays Companies to construct an RFP that
identified the potential needs of a Center with many different options for services.Nine proposals were
received.Three vendors were interviewed.Marathon Health has been selected as the potential vendor
to provide the City with an Employee Wellness Center.
Bob asked if Staff had looked into partnership with other agencies which already have onsite clinics.
Amy answered that the City has explored partnerships with other entities,including Larimer County,
Loveland and Greeley.Staff determined this was not a viable option;however,staff gained valuable
insight that was utilized during review of the vendor proposals.
The ongoing cost for the Employee Wellness Center will be approximately $750k -$800k,in addition to
set up costs of approximately $350,000 ($150,000 for Center equipment,and $200,000 for
facility/infrastructure costs).The Center is projected to recoup %of the cost in year one and break even
by year two.
The Mayor asked why 2014 was included in the “On Site Clinic Costing Analysis —5 Year ROl Projection.”
Drew answered that the costs could be bumped forward one year without change;2014 was used
because the analysis was done in 2013.The Mayor asked that the number and years be updated before
presentation to Council.The Mayor also asked for data predicting employee adoption rate of the
Wellness Center,considering the importance buy-in plays in the success of this program.
Ross Cunniff moved that Council Finance recommend that Staff move forward with this request.Bob
Overbeck seconded the motion.Motion carried unanimously.
tln answer to questions during the meeting,Staff prepared a Wellness Center Costing Analysis —5 Year
ROI Projection and an Additional Information sheet.See Attached.
2013 Financial Highlights
Mike Beckstead presented the Financial Highlights from 2013,noting that the financial condition of the
City continues to be healthy.In 2013,revenues increased as did expenditures.
Mike also went over the City’s expenditures,noting that Staff has put together a Monthly Operating
Report (MOR)that is reviewed monthly by the Executive Lead Team.This report has enhanced
leadership’s knowledge and awareness of overages,savings and opportunities.Mike also noted that
personnel costs have seen a rise in all service areas.
Concerning debt Mike noted that bonds were issued by the URA,yet total outstanding debt was still
lower at the end of the 2013 than at the beginning.Per capita debt in 2013 is 47%less than in 1986.
Staff will review fund balances for all funds in more detail at the May CFC meeting.
Attachments
1.Follow Up to On-Site Health Clinic Discussion -Additional Information
2.Wellness Center Costing Analysis—S Year ROI Projection
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