HomeMy WebLinkAbout2009-02-26 - TB TOWN OF ULYSSES
SPECIAL TOWN BOARD MEETING
FEBRUARY 26TH, 2009
PRESENT : Supervisor Douglas Austic ; Council David Kerness, and Lucia Tyler; Absent
Elizabeth Thomas and Rod Ferrentino ; Town Clerk Marsha L. Georgia.
Mr. Austic introduced Mr. Locey of Locey & Cahill, LLC and turned the meeting over to
Mr. Locey to review the Tompkins County Municipal Health Insurance Consortium .
Mr. Locey presented the following :
THE INITIAL OVERVIEW
WHY JOIN A CONSORTIUM
For the smaller municipalities this is a common and easy question to answer. The
Consortium set-up provides cost savings, protection, stability, and control .
In terms of cost savings, the reduction in costs will come from lower
administrative fees, the elimination of commissions, a more aggressive claims trend,
elimination of insurance company profits, and the ability to hold and invest excess funds
in reserve accounts .
The protection is found in the same principle which is the foundation for an
insurance company, the law of averages or law of large numbers . By being part of a
large, credible pool of insured members, the employer benefits from the spreading of
risk. In a given year, one municipality may have worse losses than the average and this
result will be balanced with a municipality who experiences better results than the
average . Over the long-term, the annual increases are more stable and more predictable.
In a Consortium, the Participants (Municipal Corporations) control the finances of
the Plan as through the Board of Directors they are charged with the development of the
budget and premium equivalent rates. This allows the Board of Directors to control the
rate of increase at the timing of the budget decisions . Currently, most Municipalities
receive their health insurance renewals in November or December for a January 1St
Renewal Date. This provides very little time for negotiation and is well past the budget
development process for most Municipal Corporations . In the Consortium, Municipalities
will be provided with regular financial report and budget projections . This will allow for
decisions to be made well in advance of the local government ' s budget development
process.
In addition to the above, the Consortium will operate under the rules and regulations of
the State of New York Insurance Department which will provide regulatory oversight to
the Consortium .
GOAL OF THE CONSORTIUM
The goal of the Consortium is to have the individual Municipalities pool their resources
in an effort to provide a health insurance plan or plans which is or is less costly than that
which could be purchased each Municipality on their own.
CONSORTIUM MAKE-UP
The proposed Consortium structure is to include the County, City, Towns, and Villages
located within the geographical and political boundaries of the County of Tompkins, New
York.
OPERATING AGREEMENT
The Consortium will be operated under and governed by a Municipal Cooperative
Agreement which will be passed by resolution by each Participating Municipality. A
draft of this Agreement has been sent to each potential Municipality. In addition, this
draft Agreement has been submitted to the State of New York for their review and
response. This Agreement provides the detail as to how the Consortium will operate and
what each Municipalities responsibilities and obligations will be to the Plan and to the
Consortium.
BENEFITS MODEL
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The Consortium's goal is to develop cost-effective medical benefit plan offerings which
are equal to or better than the plans of benefit currently being offered by each
Municipality to their Active Employees and Retirees. The Committee is working
diligently to ensure there is no diminishment in benefit to the covered members . These
benefit designs will include indemnity-style plans, preferred provider organization (PPO)
style plans, some high deductible health plans, and Medicare-Retiree plans. Premium
equivalent rates will be established based on the estimated overall cost of operating the
Consortium and variances will be established to account for the risk differences
associated with each plan design.
FINANCIAL MODEL
All premiums will be paid to the Consortium where the monies will be pooled and used
to cover the expenses of the Plan (paid claims, administrative expenses, insurances, legal
fees, auditor fees, consultant fees, and other related expenses) . Excess funds will be
invested in various accounts to develop interest earnings . All expenses, liabilities, and
surplus funds will be "owned " by the Participating Municipalities on a proportional basis.
WHAT Do You NEED TO DO
At this point, we are asking each Municipality to become familiar with the Municipal
Cooperative Agreement and the concept of a Municipal Consortium for Medical Benefits.
We will provide more detail as to the exact benefits available and the premium costs once
we have finalized the financial review and the Tompkins County Council of
Governments selects a qualified insurance company or third party administrator for this
most important project.
You can check-out additional information about the Consortium by going to the
Tompkins County web- site at www.tompkins-co . org/ and " clicking" the link for the
Shared Services Health Benefit Study
A significant amount of work has already taken place in the development of the
Consortium. We will be asking each municipality to join the Consortium by adopting the
Municipal Cooperative Agreement by Board Resolution between the months of May and
July 2009 . In the meantime, please keep your eyes open for more information about this
exciting new venture.
We are available to address questions and issues as they arise. We would ask you to
submit any inquiries through your representative on the Tompkins County Council of
Governments and we will address them as needed.
We thank you for your time, cooperation, and patience as the Greater Tompkins County
Municipal Health Insurance Consortium continues its development. We will continue to
provide you with updates and information and we ask you to embrace the opportunity
that is before you as we find a new way of providing health insurance to your employees
and retirees which will be more efficient and cost- effective.
What will the process be for the Board of Directors to vote on matters?
The Municipal Cooperative Agreement defines those matters which the Board of
Directors may act upon. For most items, a simple majority of the entire Board of
Directors is necessary to take official actions . However, there are several areas in the
Municipal Cooperative Agreement which require a " super majority" to be
approved . We have summarized those items which require approval by 2/3 of the entire
Board of Directors, unless otherwise indicated :
1 . Section A (5) - Allowing membership to municipal corporations outside of Tompkins
County's political and geographical boundaries .
2 . Section A (6) - Allowing a municipal corporation to re-enter the Consortium.
3 . Section D - All matters in which the weighted voting model has been invoked,
4. Section G (3 ) - The removal or replacement of Officers of the Board of Directors .
5 . Section I - Selection of a Plan Administrator (insurance company or third party
administrator to provide plan administrative services) .
6 . Section K ( 1 ) - Acceptance of the rate setting methodology and changes to the rate
setting methodology.
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7 . Section 0(2) - Early withdrawal by a Participant .
8 . Section P (1) - Dissolution of the Consortium.
9 . Section P (2) (d) - Changes or Amendments to the Agreement.
10 . Section P (3 ) - Expulsion of a Participant (this requires 75 % of the entire Board as
opposed to 2/3 of the entire Board) .
WEIGHTED VOTING MODEL
Q. How are the numbers of votes determined for weighted voting?
A. The weighted voting process is defined on Page 4 of the January 22, 2009 Draft of the
Municipal Cooperative Agreement in Section D, Paragraphs 1 and 2 as follows :
D . WEIGHTED VOTING.
1 . Except as otherwise provided in this Agreement, any two or more voting Directors,
acting jointly, may require a weighted vote on any matter that may come before the
Board. In such event, the voting procedure set forth in this Section D shall apply in lieu
of any other voting procedures set forth in this Agreement. Such weighted voting
procedures shall apply solely with respect to the matter then before the Board.
2 . For purposes of this Section D, each voting Director shall receive votes as follows :
a. each voting Director representing a Participant with five hundred (500) or
fewer Enrollees shall be entitled to one ( 1 ) vote .
b . each voting Director representing a Participant with more than five hundred
(500) Enrollees shall be entitled to a number of votes equaling the total number of
votes available under subsection (a) divided evenly by the number of Participants
eligible under subsection (b) of this section and rounded down to the nearest
whole number.
Example :
All 17 municipalities (County, City, Towns, and Villages) in Tompkins County
participate in the Consortium. In this example, the County and City have more than 500
Enrollees and all other municipalities have less than 500 Enrollees . As a result, we have
15 municipalities who are given 1 vote each for a total of 15 votes, while the City and
County share a total of 15 votes (7 . 5 each) rounded down to the nearest whole number.
Based on this example, the County would have 7 votes, the City would have 7 votes and
each remaining municipality would receive 1 vote each.
Before adjourning the meeting Mr. Locey reminded the Board that the draft plan is
available on the County web site. Mr. Austic also said that he had a copy that he could
make copies of. They would like to see an approved plan by July Of 2009 and more
information will be provided throughout the summer. Mr. Locey also said that the cost
figures should be available to everyone by early April or late March.
Hearing no further discussions the meeting was adjourned.
Respectfully submitted,
Marsha L. Georgia
Ulysses Town Clerk
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