Title
AN ORDINANCE APPROVING AMENDMENT NO. 1 TO THE BUDGET FOR THE FISCAL YEAR ENDING JUNE 30, 2018, AS ADOPTED BY ORDINANCE NO. 8162, BY REVISING THE AUTHORIZED BUDGET EXPENDITURES OF THE CITY OF LEE’S SUMMIT, MISSOURI WITH FUNDS TO BE BUDGETED FOR AND PAYMENT TO BE ISSUED IN FY2018 FROM THE GENERAL FUND RESERVE BALANCE. (F&BC 7-10-17)
Body
Issue/Request:
AN ORDINANCE APPROVING AMENDMENT NO. 1 TO THE BUDGET FOR THE FISCAL YEAR ENDING JUNE 30, 2018, AS ADOPTED BY ORDINANCE NO. 8162, BY REVISING THE AUTHORIZED BUDGET EXPENDITURES OF THE CITY OF LEE’S SUMMIT, MISSOURI WITH FUNDS TO BE BUDGETED FOR AND PAYMENT TO BE ISSUED IN FY2018 FROM THE GENERAL FUND RESERVE BALANCE.
Key Issues:
The proposed amendment will authorize a $1,410,378 transfer from the General Fund Reserve Balance to the Health Insurance Reserve Fund for the purpose of funding health insurance liabilities.
The need for this transfer was caused by two items.
1. Calendar year 2016 claims increased 19% per capita over the prior year. This unexpected utilization increase, driven heavily by catastrophic large claims, yielded a $501,600 deficit versus City funding and did not allow for an intended additional accrual of $342,654 in reserve for the Health Insurance Fund.
2. The calendar year 2017 contract renewal with Blue Cross and Blue Shield contained a math error which artificially reduced the 2017 maximum and expected health insurance claim liability. The claim liability increase of 1.5% forecast for the City actually calculated to 9.9%. The miscalculation yields a shortfall of $566,124 in 2017 calendar year funding. As a result, the City has had to pay the difference from the Health Insurance Reserve Fund. At maximum 2017 calendar year liability, a deficit beyond Fund Balance could occur projected at $163,132.
The direct result of the preceding factors is the erosion of the Health Insurance Reserve Fund. The City is now without necessary funding to cover the contractually obligated terminal li...
Click here for full text