HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/15/2002 - SECOND READING OF ORDINANCE NO. 144, 2002, APPROPR AGENDA ITEM SUMMARY ITEM NUMBER:
DATE: October 15, 2002
FORT COLLINS CITY COUNCIL FROM: Rick DeLaCastro
SUBJECT :
Second Reading of Ordinance No. 144, 2002, Appropriating Unanticipated Revenue and Prior
Year Reserves in the Benefits Fund to be Used to Cover Medical Insurance Claims and Other
Expenses.
RECOMMENDATION:
Staff recommends adoption of the Ordinance on Second Reading.
EXECUTIVE SUMMARY:
Benefits Fund Revenues and Expenses for 2002 were projected in early 2001, and were based on
enrollment and cost trend information available at that time. Actual revenues exceed budgeted
projections due to increased plan enrollment and unanticipated shifts in plan selection by
employees. Expenses exceed budgeted projections due to higher than expected claims activity.
This Ordinance, which was unanimously adopted on First Reading on October 1, 2002, increases
the 2002 Benefits Fund appropriations by $1,600,000 to cover benefit expenses.
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AGENDA ITEM SUMMARY ITEM NUMBER: 15
� FORT COLLINS CITY COUNCIL DATE: October 1, 2002
STAFF:
Rick DeLaCastro
' SUBJECT:
First Reading of Ordinance No. 144, 2002, Appropriating Unanticipated Revenue and Prior Year
Reserves in the Benefits Fund to be Used to Cover Medical Insurance Claims and Other
Expenses.
i
RECOMMENDATION:
Staff recommends adoption o CeOrdii0i
FINANCIAL IMPACT:
This Ordinance increases the 2002 Benefits Fund appropriations by $1,600,000 to cover benefit
expenses. Funding for these appropriations is comprised of unanticipated revenue in the
Benefits Fund and Benefits Fu soipdture'
ions e Current budget projections
indicate that actual revenues ill ex anu b approximately $900,000. The
remaining $700,000 is reque d fromrese . s. This Ordinance also requests
the use of funds on hand, n rev ues and funds from prior years'
reserves for unanticipated medical claims and expenses. No additional funding is requested
from outside of the Benefits Fund.
EXECUTIVE SUMMARY:
Benefits Fund Revenues and Expenses for 2002 were projected in early 2001, and were based on
enrollment and cost trend information available at that time. Actual revenues exceed budgeted
projections due to increased an r me pa shifts in plan selection by
employees. Expenses exceeVudgette: rojec n o hr thanexpected claims activity.
During 2002 to date, the te ims er a in exc of $63,000; one claim exceeds
$115,000, and one claim ex0,0 . Cat ophic C s of this nature are difficult to
project, and contribute significantly to the $1.1 million in unanticipated claims experience.
Besides unanticipated increases in claims expenses, administrative expenses increased at a
higher than expected rate. PacifiCare's fees increased approximately 25%, five-times higher
than its historical average. Stop Loss Coverage (which pays claims in excess of $120,000)
increased by 40%, one-third higher than anticipated. The Stop Loss coverage in particular was
affected by the events of September 11, 2001. Together, these unanticipated expenses require
that prior year plan reserves be used to fully fund currently projected claims and expenses.