HomeMy WebLinkAbout2008-11-17 Finance Committee Minutes
FINANCE COMMITTEE
November 17, 2008
Minutes
Councilor Attendance: Stone, Blanchette, Bronson, Nealley, Gratwick,
Wheeler
Staff Attendance: Cyr, Hupp, Barrett, Farrar, Wardwell
Others: Jim Higgins and Fred Brewer
1. Consent Agenda
A motion was made and seconded to approve the Consent Agenda.
a. Workout Agreement – Makridis – 93 Center Street
2. Bids/Purchasing
a. Building 457 Insulation – BIA – Standard Waterproofing - $64,500
Cyr said bids were issued for Building 457 which is the old repair station
hangar which is next to the terminal. It currently has no insulation. These
improvements along with others are being made in exchange for a lease
extension with Sargent Corporation, which is on the upcoming TIC agenda.
The budgeted balance is $158,000 which is for renovations of Building 457 in
total. It is not just for the insulation piece. A passenger entry door and some
upgraded security measures will also be done as well as some new windows
and replacement of the bifold hangar door replacement. For a return on
investment analysis, Cyr said there was an estimated $194,000 to be put into
the building and the costs would be recovered over the next 4.77 years if the
lease amendment is approved at the TIC committee meeting.
Three bids were received and the recommendation is to award it to Standard
Waterproofing of Waterville, Maine, the low bidder, at $64,500.
Responding to Bronson, Hupp said the term of the extension of the lease is
for two years. Nealley asked about the upgraded security improvements and
asked if it might attract federal funds or grant monies. Hupp said that
security projects and upgrades are eligible for federal funds but not in this
particular case as this is a leased hangar. The security measures in this case
are changing out locks.
Responding to Gratwick, Hupp said that if Sargent vacated the premises
during the agreement that it would not necessarily mean that another tenant
would step in. She did note that Sargent is comparing this option with
another option.
Stone asked if a bond is required. Cyr said there is a performance bond on
all of the City’s construction in large dollar items contracts.
Bronson said he assumed the work would not be done on Building 457 until
Sargent has indicated they will stay at BIA. Hupp said they have agreed to a
two year lease option providing that the City completes the improvements.
Blanchette noted that the airport needs to build up its rental income in light
of the aviation industry’s economic future. Responding to Blanchette, Cyr
stated that the item coming before TIC is to approve the lease extension
agreement. The bifold doors haven’t yet been bid out at this point. Unique
pieces are usually bid separately because there are different vendors who
would bid on waterproofing versus bifold doors, as an example. An overall
construction project would be bid at one time.
Barrett said the amount for this project was included in the Airport’s annual
operating budget and reviewed and approved by full Council in the budget
process. Blanchette stated that the City has recently gone through a bid
process for doors for the Fire Department. She asked if the City is combining
its bidding power with doors. Cyr said these are hangar doors versus just the
overhead doors. Due to maintenance issues, the Fire Department could not
wait to bid doors for Central Fire at the same time it would bid for the new
Station 6 doors.
Hupp notes that the lease extension will go to full Council for final approval.
A motion was made and seconded to approve staff recommendation.
Pursuant to a question by Blanchette, Councilor Gratwick was appointed by
Committee Chair Stone as an alternate voting member for this meeting.
b. Request to Waive Bid Process – Guardrails – Public Works – C.A.
Newcomb & Sons - $13,150
Cyr noted that Kenduskeag Avenue from Griffin Road in-town bound has
been fully repaved. Some guardrails need to be replaced. The two vendors
who perform this type of work were contacted. C.A. Newcomb was the only
one willing to do the work due to the lateness in the season. The work needs
to be done prior to the snow season. Wardwell said that the price is in line
with what was paid out for Ohio Street and other projects. Per lineal foot,
the price is comparable to past projects. Gratwick commended staff for
various streets widening. A motion was made and seconded to waive bid
requirements and award the bid to C.A. Newcomb and Sons.
c. Electricity Supply – Police Station – Fixed Rate Multi-Year Supply
Rate – Information will be provided at meeting
As noted on the agenda, Cyr provided information at the beginning of the
meeting. By way of background, the City is a member of MainePower
Options, which is an energy purchasing consortium that is available to local
governments and non-profits. Until 2000, electricity rates were fully
regulated by the Maine PUC and at that time the rates became deregulated or
restructured. It allows customers to find their own supplier of electricity and
the ability to find a good price. The City is currently under contract with
MainePower Options for its medium service electrical accounts through
December of 2009 at a rate of 9.72 cents per kilowatt hour. The large
service electrical accounts are good through December 2011 at 8.75 cents
per kilowatt hour. The current standard rate for medium and large accounts
only goes through February 2009 because the new rates are to be set in
March. The old Police Department building was part of the City’s contract for
medium service accounts but the new Police Station is not and one building
cannot be replaced with another. The City had to return to MainePower
Options to ask for a supply rate for the new station. Bids were sought and
MainePower Options can supply electricity to the new Police Station for 8.65
cents per kilowatt hour for one year; 8.96 cents for two years; and 9.14 cents
for three years.
Historically, the City has locked in prices for three to five years. Staff
recommended that a three year contract be authorized with MainePower
Options to supply electricity to the Police Station at 9.14 cents per kilowatt
hour.
Responding to Nealley, Cyr said the rationale for recommending the three
year contract is that electric bills do not decrease over time. She referred to
it as minimizing the downside. Barrett said there is a benefit to knowing the
price for a locked in period of time. Responding to Gratwick, Farrar said that
PERC does sell power at 10 or 11 cents per kilowatt hour. When the power
purchase contract with Bangor Hydro ends, if PERC is interested at that time
in selling it to Bangor Hydro and they wish to buy it, the City would be willing
sell it to them at essentially the market rate in the 3-5 cent range. Although
not pleased with deregulation and rising prices, Blanchette agreed with staff’s
recommendation. Stone asked if consumption needs to be locked in. Cyr
said no.
A motion was made and recommended to approve staff’s recommendation.
3. Update from CIGNA Healthcare Representatives
Farrar introduced Jim Higgins and Fred Brewer from CIGNA. In July 2007, the
City’s then group health care providers, Anthem Blue Cross Blue Shield of
Maine, came to the City with a 49% health insurance increase. Proposals
were sought, five responses were received, and CIGNA was selected as the
preferred provider. After almost a full year of service, Councilor Stone felt it
was appropriate to ask CIGNA to provide a brief update. The City’s total
health care bill including retirees is approximately $5.5M annually. Employees
contribute toward that amount as well. Farrar said he has been very pleased
with CIGNA’s first year of performance.
Stone asked Councilors in attendance to state what information they are
looking to be provided.
Gratwick asked about the wellness program. Nealley asked about the
percentage of the cost of the health program to retirees, breakdown between
the school system and City employees, etc. Stone suggested that Farrar
prepare this information and bring it back to either the Committee or for
review during the budget process. Nealley agreed. Bronson asked about the
City’s experience ratio and where the City is trending in the area of health
insurance. Blanchette praised wellness programs and asked for detailed
information about CIGNA’s. Stone asked about the balancing act between
those employees who do not take care of themselves versus those who do
take care of themselves.
Brewer provided handout materials. CIGNA started out 2008 knowing that
wellness was very important to the City. They have met with the Health
Insurance Advisory Committee as well as the Wellness Committee throughout
the year. The baseline for the wellness strategy was doing health risk
assessments with the employees. The assessment is an important way to
determine who may be at risk for developing a particular condition/disease.
CIGNA representatives went to each City employee location, walked
employees through the assessment process, explained the benefit of the
assessment, etc. There was a 30% participation rate for the assessments,
which is very good, for the first time. Next year, CIGNA would like to double
the participation rate. The assessment allows CIGNA to reach individuals that
may be at risk for developing chronic conditions. These individuals will be
provided an opportunity to enroll in a wellness program. He noted that the
City has 362 disease management enrollees.
For 2009, Brewer said he would like to see the assessment completion rate
raised. In working with the Wellness Committee, he feels it is achievable.
CIGNA is going to increase their City of Bangor wellness funds. Currently in
2008, it is $25,000 and in 2009 it will be increased to $45,000. Gratwick
asked how the money will be spent. Brewer said it is primarily spent on
getting nurses to do onsite biometric screenings and assisting folks to put
that information into the health assessment online.
Higgins said that every clinical program that CIGNA offers is frontloaded into
the medical benefit program. All of the costs associated with the disease
management programs, life style, stress programs, etc., is already built into
the premium rate structure. The wellness fund is above and beyond in
bringing additional resources, communication materials to push wellness at
the City of Bangor.
Brewer spoke about the analysis of the City employee’s health assessment
results noting that the two top risk areas were weight and blood pressure.
Responding to Stone, Farrar said for the first run through with the
assessment it was offered to employees only and not spouses/family.
Responding to Nealley, Brewer said the top five or six risk factors are seen
nationally. The order of the factors from group to group may be different.
Weight is always in the top five or six.
Gratwick praised the wellness program approach. He asked about a follow up
procedure. Brewer said that every individual is looked at uniquely and follow
up is tracked throughout the year. Farrar said there are approximately 500
full-time employees, responding to Gratwick. Brewer said that outreach calls
are made throughout the year as well as mailings. Higgins spoke further
about the Gaps and Care Program. Blanchette again praised the wellness
program in which she is currently involved. She questioned the assessment
results indicating that 40% of City employees are not using seatbelts. She
felt it is totally unacceptable. Brewer said the assessment question asked “do
you wear a seatbelt 100% of the time.” The answers are by percentages.
For example, some employees may wear a seatbelt the vast majority of the
time but not a 100%. 60% of the City employees do use seatbelts 100%.
Farrar noted the there is a Citywide policy that requires all employees to use
seatbelts when on City business. The City cannot control employees when
they are on their own time.
Responding to Wheeler, Brewer said the percentages listed as it relates to the
risk factors of 120 employees who took the assessment. For example, 50%
of the 120 employees have a weight related risk factor. Stone said the point
is that every number is relative to the next one. Higgins said that the
assessment results point out risky behavior in the populations.
Bronson asked how CIGNA plans to reach a higher number of employees.
Farrar said it is a question that is being wrestled with at the Health Insurance
Advisory Committee level and with CIGNA. There needs to be an incentive.
The first incentive was to provide anyone who took the assessment survey
with 50 safety certificate points. To gain a significantly higher participate
rate, a greater incentive needs to be in place. Staff and CIGNA will continue
to work on creative ways.
Brewer provided information about case management. 12 employees have
worked closely with a case manager. The ratio of contact with the
individuals, which is good, ranging from 15-16 interventions. There is a 24/7
help information line has received almost 20 calls from City employees.
Again, it is good to have higher numbers.
Higgins spoke about the health risk assessment’s importance in helping
individuals from going into catastrophic health situations. To increase
participation, one of the challenges is to build a plan to incent people to
participate. CIGNA has incentives in place to pay employees to participate.
They have found it helps to change behavior. The City could build its own
incentive approach specific to its employees.
Higgins said the City’s plan with CIGNA is running as projected. Quarterly
reviews have been provided. Annual trends are 11-12 1/2%. The City came
in slightly below trend at 9.7%, which Higgins cited as a major success.
Higgins praised the City staff and members of the Health Insurance Advisory
Committee and the Wellness Committee.
Stone asked how to obtain perspective employees to take the wellness test to
screen them out before the hiring process. Farrar said there are organizations
that put employees through pre-employment physicals and the City does that
for many departments. Farrar said that Stone’s question goes much deeper
in the process and he did not have an answer. Higgins said there is a
smoker’s and non-smoker’s rate which is allowed by the government.
Blanchette asked if CIGNA has gone the route of providing some clients with
some health equipment at home; i.e. blood pressure unit. Brewer said that
the City plans have a durable medical plan benefit. In some instances, a
formal request needs to be made by the member’s physician.
Nealley asked if there could be two levels of cost sharing – one when an
employee submits to health risk assessments and one for those who do not.
Farrar said it could be investigated and with ten unions it would become a
subject of bargaining. He mentioned credits towards physical programs and
wondered if some of the $45,000 was in part due to get individuals to
participate or to help offset credits toward gym fees, as an example.
Gratwick said the whole issue of screening employees prior to employment is
very complex legally speaking. He does think that Bangor should be on the
cutting edge in this area, however. He noted that the $45,000 for wellness is
less than 1% of the City’s premiums. He suggested the amount should be
increased over time.
Barrett indicated that the $5.5M is not all paid by the City but it is a
combination of City and enrollee payments. The City’s retirees pay the full
cost of the insurance. The City’s share would be close to $3.8M. Secondly, a
lot of ideas have been discussed today, some of which staff has been
discussing, and the issues of dealing with many employee groups. He also
said that Farrar would provide answer to questions raised by Council
members this evening. Unless significant cost issues are dealt with in health
insurance arenas, it will continue to lead in cutting back on benefits through
long negotiating processes or maintaining the current system and having to
look elsewhere in the City budget to make reductions. It is an issue that has
a lot of ramifications. Barrett totally agreed with the wellness program.
Stone thanked the CIGNA representatives for their attendance.
A motion was made and seconded to adjourn at 6:25 pm.