SR 05:167 - Laserfiche WebLink

particularly hospital and prescription costs, compounded by the lack of effectiveness of managed care to keep prices in check. For the sixth year in a row, the City's medical premiums will continue to climb faster than inflation in fiscal year 2005-06. The City's two health carders have informed the City that they will increase their premiums by approximately 18%, beginning July 1, 2005. The City also provides limited retiree medical insurance coverage. Only employees hired after April 1986 participate in Medicare, the date when the Federal govemment brought city employees into the system. Approximately 20% of the City's current workforce was hired before that date. Approximately 70% of current retirees were hired before that date and did not participate in Medicare. For those retirees who do qualify for Medicare Parts A & B, the City's benefit coordinates with it. There has been much information in the news lately about local agencies having difficulties funding retiree medical benefits. Besides increasing medical costs, many agencies provide full benefits to employees after only a few years of service. However, Pleasanton employees accrue the benefit at the rate of 4% per year. Therefore it takes a full 25 years of service to attain the highest level, which represents payment for the employee and spouse at Kaiser rates. In addition, employees must retire from the City to keep the benefits they have accrued. That means, for example, if an employee works for Pleasanton for ten years, then leaves the City to take a job elsewhere without actually retiring, they forfeit the benefit earned. Another issue facing government agencies is a change in accounting rules that will require that the cost of benefits be reflected as they are earned rather than when they are paid out later. Pleasanton, in accordance with its long-term financial policies and unlike most agencies, has been estimating this accrued cost and setting dollars aside in reserve to fund the future expenditures. A more detailed discussion on retiree medical accounting required by the Governmental Accounting Standards Board (GASB), use of actuarial studies to project long-term liabilities, and funding is contained in Appendix H. f. Workers' Compensation Despite the reform measures contained in SB899 passed by the legislature in the Fall of 2004 the City continues to sustain considerable costs associated with workers' compensation injuries. Spiraling medical treatment costs, and the salary continuation costs mandated by Labor Code 4850 are two of the primary reasons for increasing expense. The City is self-insured for workers' compensation expenses, and has a Workers' Compensation Fund to account for and fund the liability arising out of workplace injuries. From this Fund, the City makes payments on all recorded and approved claims. The City also participates in the Bay Cities Joint Powers Insurance Authority for excess insurance to cover significantly larger claims. b49