ANSONIA PUBLIC SCHOOLS BOARD OF EDUCATION

ANSONIA PUBLIC SCHOOLS BOARD OF EDUCATION MINUTES PLACE: ROBERT E. ZURAW, ADMIN. OFFICE BLDG., DTL DATE: 11 MAY 2016 TIME: 7:00 P.M. COMMITTEE: FINANCE MEETING CALLED TO ORDER BY: CHAIRPERSON William Nimons I. OPENING A. Pledge of Allegiance. B. Roll Call MEMBERS OF THE BOARD PRESENT ABSENT LATE (time) MR. WILLIAM NIMONS, Chairperson MR. CHRISTOPHER PHIPPS MR. CARMEN PITNEY MR. VINCENT SCARLATA TOTAL 3 1 0 Administrators Present: Dr. Carol Merlone, Superintendent Mr. Michael Wilson, Assistant Superintendent Mr. James Gaskins, Business Manager Board of Education Member Present: Ms. Fran DiGiorgi Mr. John Izzo Board of Aldermen: Randolph Carroll present Charles Stowe present Phillip Tripp present Lorie Vaccaro present Joseph Jeanette present Denice Hunt present Rich Kaslaitis present Ashley Rogers absent Anthony Cassetti present Joan Radin present Patrick Henri absent Matthew Edo absent David Blackwell, Jr. absent Frank DeLibero - present

II. Discussion re: Combined Self-Funded Insurance between City & Board of Education ATTACHMENT #1 Questions: DISCUSSION: A presentation was given by USI s senior vice president, Christine Zima. (refer to attachment) Mr. Nimons asked if we could team up with other Boards of Education. Ms. Zima said yes. Mr. Nimons questioned how everyone could have the same program when the contracts are different. Ms. Zima said you re not going to all have the same plan but you are going to have the same plan as you do today, depending on your union contract. Mr. Nimons said that the city does not have an approved budget yet. Mr. Vaccaro said the tax board has an approved budget; it has to go to BOA. Mr. Vaccaro asked about expected and max claims. Ms. Zima gave an example. Mr. Phipps, for clarification, said we were presented numbers of $4.9 million being the estimated cost. The numbers presented earlier were $5.5 million projected cost for the maximum. Where is the $6.4 million? You are saying it is $6.2 million. Ms. Zima said the $4.9 million is just the claims. The mature fees are an additional $1 million. USI s all in price is $5.9 million using mature fees and mature claims. Ms. Zima said she prefers to use mature claims. Mr. Phipps asked for an explanation between mature and immature claims. Ms. Zima gave an example. She added that if you want to go back to fully insured you have the reserve to pay the runoff claims. Attorney Dugas spoke about the analysis from Brown & Brown and the comparison of expected vs. maximum. Are you using the expected not the maximum? Ms. Zima said she is suggesting that you fund to a mature expectancy and telling you what to put in the reserve to get yourself to that maximum. Mr. Izzo asked how many municipalities USI represents and if they are all self-funded. Ms. Zima said we have 44 total towns and boards of which 25 are self-insured. Mr. Izzo asked about the success rate of the 25 self-insured. Ms. Zima said her clients who have a reserve collaborate with each other to run that reserve and have not had a double digit increase in many years. They have been successful. Mr. Izzo asked if the BOE is insuring BOE retirees. James Gaskins, business administrator, said it is a combination. If they are under 65 they are still on our insurance. Sonia Kaminsky, senior vice president of Brown & Brown, said yes, because of 10-183P you have to insure over 65 retirees that never paid into Medicare. Ms. Zima said if the over 65 retirees are in the paperwork that was provided then they are included. Mr. Izzo said he questions this because the elderly population, you would think, would have a higher risk. Do we know what that number is? Mr. Gaskins said he would have to check. Mr. Izzo said we have had two presentations from Brown & Brown and two presentations from USI and they are both on completely different sides of the aisle. He interpreted Brown & Brown s presentation as not recommending self-funding and USI is saying if you go self-funded be prepared to fully fund your reserve. Mr. Nimons said one way to full fund a reserve is to allocate out of a fund balance. Ms. Zima said if you fully fund your reserve account then you have nothing to worry about. Mr. Vaccaro asked if there is a way to do this without going into the city s fund balance. Ms. Zima referred to her outline on page 5. Mr. Izzo spoke about Naugatuck funding their reserve at $10 million vs. $13 million which was recommended. They had two high claims in one year and if they funded to the recommended reserve they would have had enough to cover those claims. He added that he has enough confidence in our brokers that they would not let that happen to us. Ms. Zima spoke about a calculation error she found on Brown & Brown s presentation (page 6). Mr. Nimons said that is a big difference and he feels that the city or the BOE is paying near those numbers. Ms. Zima said all of the numbers came off of Brown & Brown s spreadsheets. Something is calculated incorrectly; the numbers should not be this far off. Mr. Nimons asked, Rich Bshara, acting comptroller, what the average the city is currently paying. Mr. Bshara said the Seymour union is at 7% on the HSA, the police union is at 8½ or 9%. Our contribution rate is about $300,000-$350,000. City Hall just converted to an HSA in February so now we are at a 7-7½ % rate. It should go down because we were at 12% last year. There should be a reduction with the BOE because of the teachers switching to an HSA also. Mr. Phipps said according to the numbers he has, the BOE pays $15,992 per employee for benefits and the city pays $22,768 per employee. Is it going to cost the BOE more? There is a huge gap here. Ms. Zima said the city was paying about $23,000 with public works and the public works people were driving a ton of those claims. The claim dollars coming out of the city vs. the BOE are about 11% higher. They are going to be charged on their plan design. Their plan is richer so their rates are going to be higher. It will be allocated out according to plan designs. Mr. Phipps mentioned that at this point Anthem said they would not be able to guarantee a full implementation of a self-funded plan for Ansonia for July 1, 2016. Ms. Zima said full implementation would incur, it is just an ID card thing. (MULTIPLE VOICES) and added that she has conferred with her contacts at Anthem and if you go self-insured you will not have your ID cards by July 1 st. Mr. Phipps asked Mrs. Kaminsky if she wished to respond to the figures being so far off. Mrs. Kaminsky said she will respond in writing after the presentation. They are wrong on a couple of things. Public works went to the Teamsters, and the retirees that were left in the city, only half went to the Teamsters. We looked at the two sets of claims and the claims that were left in the city s plan are the high plan. The 24% is a weighted average and has been checked over many times. Some folks pay 100% of the premium. Mrs. Kaminsky said she would detail it in writing and share it with

the BOE and USI. Ms. Zima said she has the city s plan and those people that moved had so many claims and high premiums. Those who moved helped to reduce the overall city cost for their employees. That s where the cost difference is. Mr. Vaccaro questioned the total net costs for all programs on page 8. The BOE cost is $3,538,211. The tax board approved the budget for $5 million and change. That is a substantial savings the first year. Ms. Zima said these numbers are medical, R, dental, vision and unemployment. Mr. Vaccaro said so the numbers are running at $1,200,000 savings, give or take. Ms. Zima said yes, based on the numbers she was provided by Brown & Brown. Mr. Gaskins explained that the employee benefit line item includes FICA, social security, unemployment, pension, dental R, medical and life insurance. Mr. Bshara asked about the total combined costs of $6,166,695. What numbers were used for the city and the BOE? Ms. Zima referred to page 9 for the city and page 10 for the BOE of the handout and explained the figures. Mr. Bshara said from a budgetary standpoint, he needs to make sure he includes other additional funds to cover the outside pieces of the puzzle. Mr. Nimons said on the city side there are a lot of legacy contracts, separate deals, with no premium shares and a lot of high cost, until they are deceased. Are those numbers in here? Ms. Zima said if they are on the Anthem plan then they are included. Mr. Nimons asked if they are included in the Brown & Brown totals. Mrs. Kaminsky said yes. Mr. Vaccaro read an email he sent to Mr. Gaskins on Monday with a cc going to Dr. Merlone and Mr. Nimons. In reviewing the Board of Education fiscal year 16-17 budget request, line item 200, employee benefits contains a request for $5,440,675. Would you be so kind as to provide me with a breakdown of the costs containing the request. Thank you for your cooperation. Mr. Vaccaro said he received a reply from Dr. Merlone but did not get a response from Mr. Gaskins who was out sick on Monday. The way Mr. Gaskins just rattled off what was in that line item, it seems as if it took about 10 seconds and again he did not get a response. Why? In the hopes of transparency Mr. Nimons said he must defend Mr. Gaskins. Everyone from the city is coming to Mr. Gaskins for numbers. He cannot do it all. He is only one person. Mr. Nimons said he has asked the city for a lot of stuff and he has not gotten any responses. Mr. Stowe asked if this was productive. Mr. Nimons thanked Mr. Stowe. Mat Hough, president of the teachers union, asked what the impact is if we don t have ID cards after July 1 st? Ms. Zima said the doctor would not be an issue; the pharmacy would. We will provide a phone number. Mrs. Nimons, principal of Mead School, asked about needing a certain prescription and not being able to preorder it. Ms. Zima said you will be covered. Without an ID card you would have to call the number provided to get your ID number to give to the pharmacy. Mr. Nimons said that he and Mr. Marini, the city s attorney, discussed that they would not be able to move on July 1 st. Mr. Marini said it is possible but it is also possible to move it a little later if we want to be more comfortable. September or October would be feasible. Ms. Zima said she is not saying it is not feasible; we could also stagger enrollment. These are items to be discussed. (MULTIPLE VOICES) Mr. Scarlata asked what kind of personnel staffing we are looking at to actually create a self-funded program. Ms. Zima said you wouldn t need more people. You would have a weekly draw for your claims. Anthem would take out the claims on a weekly basis. No one actually has to physically do anything. Mr. Nimons asked Mr. Bshara if he agreed with that. Mr. Bshara said we are currently self-funded for the (INAUDIBLE) and for dental. We are talking about much larger volumes here and we probably will have to have increased staff. Mr. Nimons asked Ms. Zima how much her program is. Mr. Zima said about (INAUDIBLE). Mr. Izzo said there will be no change to bargaining unit contracts. We are not changing anyone s coverage. Ms. Zima said no. The first year savings for self-funded will be $486,000. Mr. Henri asked if we start for July 1 st, the money that we would be saving for next year s budget, if we wait one, two or three months, does that amount go down? Ms. Zima said it would depend on if we do a 10 or 12 month renewal. Mr. Jeanette asked what we will save in the first year. Ms. Zima said for a self-insured $486,000. Mr. Jeannette said I thought it was $1.8 million. Mr. Bshara asked if the $486,000 was a budgetary number. Ms. Zima said yes. Mr. Bshara then asked if that would be offset by the $200,000 he gave to ConnectiCare? Ms. Zima said she would have to add it because right now it is not in there. Mr. Phipps asked about the maximum risk exposure. Ms. Zima said it would be covered by mature claims and the fact that you say there is a fund balance. So the $486,000 is still left. Mr. Gaskins said he has an issue on page 5 with the reserve recommendation going to self-funded. The HSA migration savings with the teachers switching to HSA has nothing to do with going to self-funded but it is counted as a savings going into the reserve. For us, that was a budget reduction; a cost savings. We couldn t cut it out of our budget and also pay it out to the city. Ms. Zima said you wouldn t be paying it out to the city; you would be paying into your fund. Mr. Gaskins asked Ms. Zima, you said it was a total of $486,000, correct? Minus the $250,000 you are only talking $230,000. Ms. Zima responded, if $486,000 is the savings for self-insured and if you were to have additional savings for the HSA and want to use that to offset your budget instead of putting it into the reserve it would be a $250,000 savings plus the $486,000. Mr. Wilson said you incorporated it all under one. Ms. Zima said she is allocating to a reserve account. Mr. Wilson added, but it s not there, because it is a savings. You are counting it twice. If you don t double count it, it is only a $230,000. Ms. Zima said if you use the $250,000 savings to offset your budget you would add that to (INAUDIBLE). Mr. Nimons explained that the teacher s union moving to an HSA is reducing our insurance cost for the BOE. Mr. Gaskins explained that the savings with switching to an HSA has nothing to do with going self-funded. Mr. Wilson added that they are totally separate. Attorney Dugas said it is independent.

Mr. Bshara asked about year two of a self insured plan. Does the budget go up or down in the second year? Ms. Zima said it depends on the reserve. Mr. Bshara asked what it looks like with a year of claims. Ms. Zima explained that it depends on the claims and the amount you have in your reserve. Steve May from Miliman gave an overview as a third party. He said identified here is the 2016-2017 budget. He asked Ms. Zima when you approved the $6,166,695 recorded on your presentation, did that account for the HSA savings? If that number has the HSA savings then you cannot show it as you did. It is already taken out. (MULTIPLE VOICES) It is independent. The $486,471 is the savings going to self-insured and getting rid of taxes and such. There was a discussion on USI s presentation and how they arrived at their figures. Mr. Nimons said that it has been reported that the city is going to save $1.4-$1.8 million a year. Out of all the presentations that he has heard he hasn t seen any of these numbers. How did anyone ever arrive at those numbers? How did anyone from the city arrive at those numbers? Ms. Zima replied, in the past she did not have all the information and was going off of gross costs only. The gross costs only were about $700,000. Adding in employee contributions and other items covered, taking everything into consideration $700,000 becomes $500,000. As far as where the $1 million came from she said she cannot answer that. Mrs. Radin read the minutes from the BOA Finance Committee meeting dated April 12, 2016: Mr. Vaccaro, finance committee chair, stated that it would give the taxpayers a savings of well over $1 million per year and the insurances would not change. Coverage would be the same. Pretty much it is combining insurances under an umbrella. The bottom line is the taxpayers would save a substantial amount, again at least $1million and possibly $1.8 million on an annual basis, allowing us to give the BOE more funds for their budget. Ms. Zima asked if they were comparing it to the current fiscal budget to a budget that was higher than this current budget was because this budget has been worked on. Mrs. Radin said her understanding from listening to the two presentations is that there is no savings on anything for the first couple of years because you have to put money in the reserve. Mrs. Radin explained that she is a pharmacist and has a bottle of 30 pills that cost her $2,300. The insurance companies are going to have to pay those bills and they are going to go higher. They are not going down. Mr. Stowe questioned the stop loss aggregate gap. With your terms, are we going to be covered with that? Ms. Zima said yes. Mr. Stowe asked what the gap would be. Ms. Zima said the gap would be the $1.4 million. Mr. Stowe asked what the cost would be if we were to have a catastrophic event and went over? Ms. Zima gave an example and stated that you have to fund to the maximum. Mr. Stowe asked Mr. Nimons if that kind of security is going to be adequate for the BOE. Mr. Nimons said no we would be looking for 150%. Mr. Izzo asked what number Ms. Zima is recommending. Ms. Zima said she is recommending 125%. Mr. Stowe said at the last meeting Mr. May recommended 125% and then said 130% would be extra conservative. Mr. May said he did not recommend that. He was speaking about a client he had who was being extra conservative. Stop loss terms do not change. Mr. May said at the last meeting he said being at the maximum level and having an IB&R is like wearing a belt and suspenders. You need to understand what your risk protection is. Do you need to be over 110%? That is your maximum coverage; your worst case scenario, you re covered. If you set it over 125% you will definitely have more costs than if you are totally insured. It will be more expensive no matter whom you hire; 125% will cost you more money than your fully insured arrangement. Mr. Vaccaro said back in February we started talking about this. We sent a letter to the BOE requesting information. To this date we have not received the information we were looking for. If line item 200 in the budget that was approved by BOAT was for employee benefits and we asked what else was involved in that line item, if it was only health insurance like Ms. Zima said, then we are looking at a $1.2 million savings, is that right? Ms. Zima said that is correct. Mr. Vaccaro said we are here to save taxpayers money and to give the BOE more than what is already allocated in our budget this year, more than 2½ %. Mr. Tripp stated that we are here to provide responsible savings to the citizens of the city of Ansonia. We also need to find a budget entirely manageable to the people of the city of Ansonia and that is why we should (INAUDIBLE) health insurance. Mr. Vaccaro said he agreed and made a motion that the BOE and the city collaborate and land a plan. Motion was seconded by Mr. Henri. All said yes. Motion carried. Pursuant to that, Mr. Tripp made a motion that immediately after the joint meeting between the BOA and the BOE, that the BOA have a meeting, hopefully by the end of next week, to finish and conclude a budget for the people of the city of Ansonia. Motion was seconded by Mr. Kaslaitis. All said yes. Motion carried. Mr. Nimons said that the BOE will meet next week and discuss this entire process. Mr. Nimons asked Ms. Zima if she has worked with other municipalities who have been on different sides. Ms. Zima said yes, she has. Mr. Gaskins asked Ms. Zima about the $1 million savings, you said your original presentation didn t include cost shares. Ms. Zima said her original presentation included gross costs for medical and R only. It did not include dental or life. Mr. Gaskins then asked, in the gross costs there are no employee cost shares, you have 44 municipal clients, do any of those municipalities have no employee contributions? Ms. Zima said she has the data on those municipalities. I didn t have the data for Ansonia. Mr. Gaskins said all the contracts are on file at city hall. He said he made that clear to Mr. Vaccaro in the Aldermanic Chambers one day. He said he was sorry Ms. Zima did not get that information. Ms. Zima said nowhere in Brown & Brown s presentation did they list employee contributions. Mr. Gaskins said he feels that is a big piece when the BOE is

paying an average of 24%. You would want to present something that would include that. Mr. Nimons said every BOE contract is on file at city clerk s office. All someone had to do is go over there and look. Ms. Zima said that would be highly unusual. Mr. Nimons said but it is doable. The city has a finance department and they know where to find the contracts. III. IV. Schedule meetings to continue discussions on Self-Funded Insurance with Board of Aldermen ADJOURNMENT MOTION: To adjourn the meeting at 8:41 p.m. MOTION YES NO ABSTAIN MR. WILLIAM NIMONS, Chairperson 1 MR. CHRISTOPHER PHIPPS 2 MR. CARMEN PITNEY MR. VINCENT SCARLATA TOTAL 3 0 0 Respectfully submitted, Fran Perrotti Recording Secretary May 18, 2016