As Independence city officials work to finalize the budget for fiscal year 2018-19, a large point of contention is some proposed health insurance changes.
While health insurance premiums for current employees will not be increased – the fourth straight year they will remain the same – City Manager Zach Walker's proposed budget calls for increase in employees' share of dental coverage, converting retiree health insurance to 100 percent employee participation for anyone hired after July 1 and increasing the employee contribution for pre-November 2009 retirees.
The last point, in which the employer-employee split for Open Access Plan 1 would go from 83/17 to 80/20 (which retirees after 2009 pay), has particularly drawn ire. Some retirees say it mostly hurts a group of former employees, or widows, who are on fixed incomes and can ill-afford the additional burden.
In a budget town hall meeting last week, Walker said such a move would save about $95,000 the first year and $135,000 annually after that. Some who spoke at that meeting and Monday's City Council meeting say it's an unnecessary cost shift – asking that group to help cover increasing health care costs.
“There's no economic, technical, legal rationale. We see no compelling reason for this sudden cost shifting,” retired fire captain Henry Carner said, adding that this group of retirees sees a pension reduction when they go on Social Security. “Such a needless slight is not in the best interest of the city in the long run. These employees are proud of their service and supportive of the city. It boils down to honor and respect and the city's good name.”
Former police union president Bob Sorensen, one of the last to retire under the plan with the 83/17 split, said he remembers having to convince former city manager Robert Heacock not to make the same change several years ago.
“I never thought I'd ever have to see this come up again,” he said. “Listen, do what's right by the employees.”
Sorensen said he knew exactly what his regular income would be when he retired, and being one of the youngest people possibly affected, he knows he's better off than many other retirees.
“It's not fair to tell an employee that you're going to change something on a group that has no input,” he said.
“We cannot afford to pay the same as active employees, and we will not receive an additional care,” retired fire captain John Welcher said, adding that he estimates the annual premium cost for his family will be an additional $400. “We are being discriminated against, being taken advantage of, and we are insulted.”
Sorensen and Welcher noted that the city's cost for that health care program should be decreasing annually simply through attrition.
“That plan is getting cheaper by the day because they're dying,” Sorensen said. “You're losing people who are in that plan all the time.”
Welcher said there are 476 retirees potentially affected by the change. Going by their average age versus average life expectancy, that number could fall by about 40 or so every year, which he estimated would save the city an additional $176,000 each year.
“Let us live in peace,” he said. “Do the decent thing; it's a just and reasonable request.”
Another citizen speaker, Dennis Dandorf, said health care has gotten more expensive while people are living longer than generations ago. He said one point nobody had made was the city's pension plan, which he considered quite fair.
“Does anybody who retired from the city make $16,000 or less? Probably not,” he said. “Does anybody who retired after 30 years get less than $24,000
“I'd be happy to have what they're complaining about.”
At the budget town hall, Walker said he felt the proposed split increase was necessary to help stem the city's health insurance expenses, which are about 8 percent ($7 million) of the $76 million general fund.
“This isn't popular,” he said. “I don't like doing this, and I could've kicked the can down the road another year or whatever. I'm choosing to try to leave (the city's financial situation) better than we found it.
“We've had a lot of discussion on this item. At the end of the day, we found some cities like Springfield, Missouri, that dropped the guillotine and said, 'It was good but now it's over; this program is done.' This did not appeal to me.”
Walker had also met with Carner, Sorensen and Welcher prior to Monday's meeting, during which they made many of the same points.
“There was a lot of good information shared,” Walker said at the end of Monday's meeting, “and we'll continue to contemplate that, and the Council will, as well, as they deliberate the final budget.”
Regarding retiree health insurance for future city employee hires, the council directed Walker to convene a committee and study ways to develop a retiree health insurance savings program for future hires.