1. Call Meeting to Order
Mayor Havens called the meeting to order at 7:00 p.m.
2. Roll Call
Town Council
Members Present: Mayor Edward Havens
Deputy Mayor John Pelkey
Councillor William Aman
Councillor Thomas Delnicki
Councillor Judith Paquin - 7:30 p.m. - 8:50 p.m.
Councillor Elizabeth Pendleton
Councillor Matthew Streeter
Councillor Roseann Williams - Arriv. 7:35 p.m.
Also Present: Town Manager Matthew B. Galligan
Absent: Councillor Deborah Fine
Town Attorney Barry Guliano
Board of Education
Members Present: Chairman Robert E. O'Connor
Kathleen Soucy Daugherty
Anthony J. Fornuto II
David S. Joy
James Katz
Janice A. Snyder
Keith Yagaloff
2. Roll Call (Continued)
Also Present: Superintendent of Schools Dr. Joseph Wood
Asst. Superintendent Dale Vannie
Business Manager Donald Neel
Absent: Board Member Victoria S. McCulloch
Board Member Thomas Reale
3. Public Participation - None
4. Communications - None
5. Town Manager's Report - None
6. Items for Discussion
Town Manager Matthew Galligan requested that Agenda Item 6. B. "Self Insurance Funds," be moved up to be addressed, first, this evening. His reason for this request was because there were visitors present representing Webster Insurance who were there to participate in the discussion regarding self-insurance,
B. Self-Insurance Funds
Mr. Galligan stated that for the last couple of years he and the Superintendent have, jointly, gone out to bid for health care costs. Together, he added, over 900 employees were represented; and the initial effort was to get a better quote on health care costs. There were times, according to the Town Manager, when he and the Superintendent felt that there may have been some "overcharge" in premiums-sometimes because of a "too high a reserve;" and sometimes because of it being a non-competitive commodity (very few other companies, besides Blue Cross/Blue Shield) bid on this insurance.
Mr. Galligan then distributed copies of an analysis of "Fully vs. Self Insured Proposal," prepared by Webster Insurance (a copy of which is retained in the Town Manager's Office). Mr. Galligan referred to this report on several occasions.
In general, Mr. Galligan explained that self-insurance was not a new concept. He said that, currently, the premiums being charged by BC/BS were "way too high;" and efforts to negotiate a lower premium with the company have been fruitless. He noted, via the report, that there were years when the Town had almost $1.2 million in extra premium over cost.
6. Items for Discussion (Continued)
The one exception, he said, was the year CIGNA came in with a very low bid to get the Town's business; however, the following year, wanted a 33% increase. That was the year, he said, the Town went back to Blue Cross/Blue Shield.
One very good reason to consider self insurance, according to the Town Manager, is that this year, a verbal quote was received from BC/BS Anthem which reflected a 19% increase in premium costs. Currently, he said, the Town and Board of Education premiums, together, totaled $8.7 million between the Town and the Board of Education. Adding 19% to that, he stated, would bring the premium total to about $10,465,000 cost in health insurance-or, about a $1.6 million increase in next year's Budget before you add in any other Budget items.
By self-insuring, Mr. Galligan continued using quotes from BC/BS Anthem, the Town and Board would be looking at a 4.6% increase in cost-or, somewhere between $400,000 and $500,000. Thus, he added, there could be a "cost avoidance" of $1.2 million.
According to the Town Manager, one of the important concerns is the handling of built-up reserves. He reminded Council that the Town of Manchester used their reserves to fund their Budget. Mr. Galligan explained that this is why the "rules" governing the proposed "self insurance" process should be regulated "by a local Ordinance." Also, he said, said Ordinance should be specific about the fact that "you can't touch the fund without a super majority vote" allowing it-and "the only time you can touch the fund is to dissolve it."
Speaking of "reserves," Mr. Galligan said that to arrive at the proper amount that should be held in reserve you would take the total premiums, divide it by 12 months, and times it by 2-1/2 -which, in this case, would be about $1.9 million.
This year's Audit Report, according to the Town Manager, should reflect whether the Town should be taking some of the Fund Balance to get the "reserve" started. He reminded Council, also, that in July of this year, when starting the self insurance program, there will be about 2-2-1/2 months of "run out" of claims that will come from the "full insured" program-thus providing a 2 to 2-1/2 months to accumulate reserves.
Of course, he stressed, it is well known that with self insurance "the risk is with the Town." However, 5-year projections indicate that BC/BS Anthem "is not taking a lot of risk here."
6. Items for Discussion (Continued)
Mr. Galligan said that he hoped the Board of Education will be able to move forward on this project-not only because it is another way to participate in "shared services;" but, also, because "it makes good fiscal sense to want to control your plan." There will be no difference in the receipt of reports, coverage, effect on employees-only the way the claims are handled.
The Town Manager then introduced Ms. Kim Quigley, of Webster Insurance; and Atty. Vaughn Finn, Shipman and Goodwin. Mr. Galligan asked if any of the Members of the Board or Town Council had any questions of him or either of these two visitors regarding policies, procedures, etc.
A lengthy period of questions and answers (and further discussion) followed.
Dr. Wood stressed that an important consideration when "drafting" an Ordinance to regulate this program were the "bargaining units" that would be involved. He pointed out that, although this is a program that the Town and The Board would be doing "jointly," there are two separate groups being insured. It was important, he added, that both the Town and the Board have the ability and capacity to meet the obligations stipulated under their various union contracts.
Consequently, according to Dr. Wood, both he and Mr. Galligan felt it was extremely important that any fund being set up be "solid" and capable of providing the kind of ongoing security that is required.
With regard to a proposed timeframe for adoption of this Ordinance, and funding of the reserve, Mr. Galligan felt it was safe to assume that, if approved by Council, the Ordinance would probably become effective July 1, 2005-depending upon whether or not the Town Council adopts it.. Again, Dr. Wood reminded Council that the Resolution and Ordinance must meet the obligations the Board of Education had to meet for its own employees.
Mayor Havens said that, before moving ahead on this proposal he was completely dependent on the opinion and findings of both the Town Manager and the Superintendent of Schools. He charged both Mr. Galligan and Dr. Wood to make certain the Council and the Board understood both the "benefits" and the "pitfalls" of such a program. The Mayor concluded his remarks by stating that if this proposal was "everything we've heard about it this evening," the Town should move ahead with it as quickly as possible.
6. Items for Discussion (Continued)
When asked by the Mayor what had to be done next to move this along, Mr. Galligan replied that there will be Resolutions and policies prepared by the Town Attorney and Shipman and Goodwin that he and Dr. Wood would be bringing forward to the Council in order to adopt this program.
When asked if changing to self insurance was a "negotiable item" for the bargaining units, Mr. Galligan replied that it was not a negotiable item as long as he did not plan on changing the benefits or the plan. He added that he could bid out to any carrier. However, once a new carrier was chosen, any change in benefits are negotiable items. Dr. Wood added that this has always been the case.
A. Shared Services
Dr. Wood initiated the discussion by informing those present that he and Mr. Galligan had met today with the "Steering Committee;" and had received the comments of the various subcommittees within that group.
Continuing, Dr. Wood said that three important results of these studies need to be conveyed to those present-(1) the human capital that is developing because of this interaction and relationship-building between Town and Board of Education employees getting to know each other, and what their duties were, etc., would serve the Town well for years to come.. (2) the Steering Committee will be on target for their March 21 final report; and (3) the report will be in two parts-one will provide recommendations that the Committee believes can be implemented immediately, or within the next year; and the another, recommendations they feel will be more complex to implement and, thus, will take longer.
The Superintendent then went on to describe the format the report is expected to follow. He said that he and Mr. Galligan are "very pleased" with what they have seen to date with regard to the way the Steering Committee worked together and the amount of effort they were expending on this entire project. He cautioned that there would be many discouraged employees if this final report and its recommendations were left to languish "on a shelf somewhere" following all this work.
6. A. (Continued)
Mr. Galligan said he was surprised by the "volume" of information returned by the Steering Committee. He said he has asked them to condense the final report down to, perhaps an "executive summary" and leave the "detail aspect" to those who will be implementing the recommendations. He, too, said he was pleased with today's meeting; and, reiterated Dr. Wood's observation that "people are starting to understand each other's processes," and becoming increasingly creative because of this interaction with each other.
When asked what he was anticipating with regard to the effect of these findings on the upcoming budget, Mr. Galligan said that what he had noted, was "productivity and cost avoidance" where as many as 156 hours (in one case) would be freed up to help in another area. Conversely, he continued, there are instances where he anticipated cost avoidances when certain activities were combined; and, as it happens, quite the opposite was true-it turned out to be more costly to combine activities.
Mr. Galligan, referring to combining activities that cannot be implemented until sometime in the future, predicted that those activities may require sweeping changes in the way the Town "budgets"-i.e., facilities-would there be one facility budget for 13 buildings; or would the Town continue to have 5 and 8? Another example he gave was with regard to the self-insurance fund (were it to be approved)-would the Town Council appropriate money for this fund directly into the fund; or would it require that the Board of Education put it into their budget, and then move it over?
In spite of this, according to Mr. Galligan, 80% to 90% of the Budget is probably "fixed" and there is very little discretionary spending; however, it was worth examining the possibility of cost avoidance, etc.
Dr. Wood predicted that the Board and the Council will be impressed with is the "degree to which both staffs worked together to try to improve quality of services; and doing it in a way that will assure the public with regard to its big concern about "duplication of effort."
Dr. Wood reported that the Steering Committee,; itself, has recommended that it be designated a "Standing Committee." Their review of recommendations and possibilities, etc., he said, should be ongoing. He added that it was not necessary that the same people "be drafted for life" to serve on it; however, he felt that the Steering Committee's oversight should be ongoing.
6. A. (Continued)
When asked if there would be an "implementation timetable," Mr. Galligan responded that the report will reflect suggested timetables-for instance, "these things can be done right away;" and "these things may take 9 months, and we're going to work on the implementation."
Referring to the March 21 timetable for the submission of its final report to the Board and Council, it was generally agreed that the March 21 meeting, at which the report is presented, be a "Joint Meeting" of the Board of Education and the Town Council so that both agencies can receive the information at the same time, and benefit from the questions asked and recommendations made.
C. Upcoming 2005/2006 Fiscal Year Budget
Prior to initiating the formal discussion regarding this item, Councillor Pendleton asked that she be allowed to read a note received from Councillor Deborah Fine, who was not present because of illness.
In her note, Councillor Fine reminded Council that "some time ago" she had brought up the following fact:
"If all the neighborhoods within one mile of a school had sidewalks to that school, we could significantly cut down on our bus expenses by having students within that area walk to school. At that time, we were told we could save considerable money, even allowing for the cost of installing those sidewalks. Has this idea been pursued? If it has not, let's do it now. I would like to see the ramifications, in writing, of following through on this idea-i.e., cost of sidewalks, cost savings, and cost saved. Should we hire "crossing guards" and anything else pertinent to this concept. Thanks for listening!
Deb"
Town Manager Matthew Galligan commenced his remarks by stating that his concerns regarding the upcoming Budget are---(1) there are some very serious Capital items coming up. Deputy Mayor Pelkey, he added, has been working on that, trying to fit those programs in the Town's new Capital Plan. Mr. Galligan said it was very important to "keep that Capital Plan in tact."
6. C. (Continued)
Of particular concern, Mr. Galligan said, and one he had shared with Dr. Wood, arose as a result of his attendance at a meeting hosted by "COST" (Council of Small Towns), an organization in which South Windsor was a participating Member. At this meeting, he continued, the Chairman of the Education Committee (a State Senator) revealed that there is a Bill about to be introduced into the Legislature which suggests that 10% of all school districts' budgets be used for "capital maintenance and operational costs to maintain their buildings.
Continuing, Mr. Galligan said he had suggested, at this meeting, that those communities that do maintain their buildings, instead of receiving a 40% reimbursement, receive 30%. That, he added, was only one item going on at the Education Committee of the Legislature that could adversely affect each municipality's upcoming budget.
The Town Manager also mentioned the proposed changes, by the State, in the Probate Court System. This, he added, could cost the Town of South Windsor $70,000 more in its budget. He suggested that, in this year's budget "we have to be a little bit smarter; maybe the Council and the Board could "do a little lobbying" by talking to our State Representatives about keeping these items down.
Speaking of expected revenues that could help the Budget, he mentioned a 2% increase on assessments; a constant effort on the part of economic development people to bring in new businesses; etc. Savings via shared services; savings experienced because of self insurance.
Speaking in behalf of "education," Dr. Wood said that he felt that in the State of Connecticut it was a "race between disaster and substantive property tax relief. The most pernicious tax to most people, he ventured, is the property tax; and, he felt, that's what this State consistently goes after when it has to balance its Budget.
The Superintendent said that you can see the slow steady derogation of quality level in service because the municipality cannot get the finances necessary to accomplish what it needs to-it consistently puts the pressure on the property tax. He pointed out that the City of Hartford has been talking about property tax relief since his "arrival in the State of Connecticut" in 1986; and all that has happened is that the situation has worsened.
6. C. (Continued)
Dr. Wood pointed out that they have taken Educational Cost Sharing formula and "rolled in the cost of Special Education," so that you now get reimbursement from one source. Then, he continued, they "cap" ECS. He said he had sought the permission of the Board of Education to present a Budget, this year, that identifies the issues that are related to the constant derogation of quality as a result of not getting the kind of funds that we should get."
Now, according to the Superintendent, they are talking about capping Special Education-or, "catastrophic costs." Again, he stressed. He said that the State balances its Budget, consistently, by going after "property taxes." He felt that "people have had it."
The question arose as to what does a Town do to get help from its State Legislators in the face of growing cuts and caps in State reimbursements, and increases in costs such as a $2 million raise in health insurance premiums, if we don't self insure. It was generally felt that this was a "global" problem; and there were no easy answers.
There were questions regarding additional income expected because of Evergreen Walk. There were also comments that "the Town cannot do business as usual this year." However, the Town Manager pointed out that South Windsor is one of approximately 20- municipalities that provides a "full service community." And this, he said, comes at a cost, and Council must determine "where we're going to hold the line." He used the example that, in 1989, the Town had 12 Public Works employees laid off; only 7 have been added back-yet, the Town has doubled the size of the: roads, leaf collection, everything!
It was pointed out that a recent study of South Windsor showed that South Windsor will not benefit from property tax relief" because we're too wealthy as a community-the amount of money we are going to pay out to support "poor" communities will essentially equal any additional revenue that we would get for our Town.
Mr. Galligan felt that the Town Council and the Board of Education should be embarking upon a "marketing strategy or program to educate the homeowners in Town" about South Windsor's level of services, education, the things you enjoy-and this is what it costs!"
6. C. (Continued)
More discussion ensued regarding anticipated increases in the cost of services; and the resultant effect upon taxes. Also there was concern about discussions this evening alluding not only to "holding the line on spending," but also "holding the line on quality" by cutting budgets. Also of concern were those employee positions that were to be "temporarily" cut at one time but which to date, have never been recovered.
The final point was made that it took many factors to "make a quality community." Good schools, clean roads that are well cared for; trash that is picked up; etc.
7. Motion to Adjourn
A Motion to adjourn was made at 9:25 p.m.; was duly seconded; and approved, unanimously.
Respectfully submitted,
Patricia R. Brown
Clerk of the Council
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