Memorandum

City of Lawrence

City Manager’s Office

DATE:	June 4, 2008
TO:	David L. Corliss, City Manager
FROM:	Casey Liebst, Budget Manager
CC:	Cynthia Boecker, Assistant City Manager Diane Stoddard, Assistant City Manager
RE:	Healthcare Committee Recommendations for 2009

Attached is a memo from the Healthcare Committee outlining their recommendations for funding for 2009.

The memo outlines that the 2009 total liability for the group health plan is expected to increase 9.6% or $634,159 from 2008 to $7,222,676. The Healthcare Committee recommends that City funding be increased 3%, or $190,978, and that employee contributions be increased 8%, or as follows:

Single	Employee/Children	Employee/Spouse	Employee/Family
$0	$62 (8% or $5 increase)	$69 (8% or $5 increase)	$98 (8% or $7 increase)
These totals are per pay period

Using risk analysis and the funding levels recommended by the Healthcare Committee, retained earnings in the Health Insurance Fund as of 12/31/2009 are estimated to be $3,123,356.

The City Manager is likely to recommend maintaining 2008 funding levels for the health care program in 2009. This would create a savings in the City’s General Operating Fund of approximately $110,220 and result in 2009 ending retained earnings of $2,932,378.

City staff is comfortable with using additional retained earnings to fund the 2009 obligations provided that we are cognizant that rising health care costs will likely not allow additional depletion of retained earnings in future years.

Alternatively, using the funding levels likely to be recommended by the City Manager, and by using annualized 2008 actual data and 2009 Blue Cross Blue Shield and MedTrak projections to calculate worst-case scenario, 2009 ending retained earnings are estimated to be $3,902,929.

As noted in the attached memo staff plans to market our third party administration for the 2010 year.