HomeMy WebLinkAbout177 - 12/17/2024 - MAKING A SUPPLEMENTAL APPROPRIATION OF ADDITIONAL REVENUE RECEIVED IN THE BENEFITS FUND FOR THE CITYORDINANCE NO. 177, 2024
OF THE COUNCIL OF THE CITY OF FORT COLLINS
MAKING A SUPPLEMENTAL APPROPRIATION OF ADDITIONAL
REVENUE RECEIVED IN THE BENEFIT S FUND FOR THE
CITY'S MEDICAL, DENTAL, AND LIFE INSURANCE PLA'\JS
A.The City's Benefits Plan is a self-funded health plan in which collection of
premiums from both the employer and employees are recorded as revenLe in the Benefits
Fund to pay for plan administration, medical/dental claims, and insurance premiums.
Accordingly, the Benefits team makes efforts to project out and budget fer all benefit plan
expenditures based on market cost trends of medical, dental, and pharmaceutical
expenses, insurance premiums, and the projected number of subscribers to the plan.
Forecasting these variables is required to calculate the amount of revenue the City will
need to collect from both the employer and employees to meet the budgeted plan
expenditures. This is accomplished during the Budgeting for Outcomes (BFO) process.
B.Evaluation of Medical and Dental plan performance through September
2024 demonstrates that the City has experienced higher claims activity than what was
projected for the 2024 Benefits budget, resulting in a year-to-date overage in Dental
claims of roughly $170,000 and Life Insurance and Fire & Police Pension Association
Insurance premiums of roughly $296,000.
C.In addition, the Medical Plan has experienced a 100% increase in the
number of high-dollar claimants (>$100,000), with 23 active claimants. In a typical year,
the plan would have only 10-13 high-dollar claimants. For this reason, trere has been a
year-to-date impact of over $700,000 in unanticipated medical claims expenses.
D.The higher claims activity and insurance premiums have a direct correlation
to the number of subscribers in the Benefits Plan, which has increased by approximately
6% (140 subscribers) over the last 1.5 years, as compared to a budgeted 2-3% subscriber
growth. When this happens, the Plan collects enough premium revenue to cover the
number of subscribers. The Plan is bound, however, by the original expenditure
appropriation based on 2-3% subscriber gr owth, as was projected back in the first quarter
of 2022 during the 2023-24 BFO process. As a result, the Benefits Fund has collected
year-to-date unanticipated revenue of $1,137,041 for Medical, Dental, and Life Insurance
premiums.
E.Historically, both Medical and Dental plans experience higher claim
expenses in Q4 resulting from participants reaching plan deductibles and scheduling
procedures before year-end. The Benefits team budgets for this seasonal increase, and
our projections are showing the plan will come very close to hitting budget. Given the
impact of the number of high-dollar claimants and growth of subscribers. however, it is
recommended that the excess $1,137,041 in unanticipated Benefits Fund revenue be
appropriated to cover any potential expenditure overages in the City's Medical, Dental
and Life Insurance Plans. This appr opriation would be a "self-funded" appropriation
requiring no use of reserves.
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F.Article V, Section 9 of the City Charter permits the City Council, upon
recommendation of the City Manager, to make a supplemental appropriation by ordinance
at any time during the fiscal year, provided that the total amount of such supplemental
appropriation, in combination with all previous appropriations for that fiscal year, do not
exceed the current estimate of actual and anticipated revenues and all other funds to be
received during the fiscal year.
G.The City Manager has recommended the appropriation described herein
and determined that this appropriation is available and previously unappropriated from
the Benefits Fund and will not cause the total amount appropriated in the Benefits Fund
to exceed the current estimate of actual and anticipated revenues and atl other funds to
be received in this Fund during this fiscal year.
H.The City Council believes that the appropriation recommerded by the City
Manager is in the best interests of the City.
In light of the foregoing recitals, which the Council hereby makes and adopts as
determinations and findings, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS that there is hereby appropriated from new revenue or other funds in the
Benefits Fund the sum of ONE MILLION ONE HUNDRED THIRTY-SEVEN THOUSAND
FORTY-ONE DOLLARS ($1,137,041) to be expended in the Benefits FL11d for the City's
Medical, Dental, and Life Insurance Plans.
Introduced, considered favorably on first reading on December 3, 2024, and
approved on second reading for final passage o ecember 17, 2 2
ATTEST:
Effective Date: December 27, 2024
Approving Attorney: Aaron Guin
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