Council hears good and bad financial news
The first Town Council meeting of 2010 featured separate fi- nancial presentations that reached very different conclusions.
The first presentation was on Jamestown’s financial health, which an auditor praised as excellent. The second presentation was municipal health insurance costs, which are predicted to rise at an alarming rate.
Paul Dansereau, senior audit manager at Parmelee, Poirier & Associates, presented a summary of the town audit during a work session held just before the regular council meeting on Jan. 4. The best news from the audit is that Jamestown has $4.1 million in reserve funds.
That $4.1 million doesn’t refl ect the $918,000 that will be drawn out of the fund for debt pay-down and police station renovations. Nevertheless, Dansereau said the reserve fund balance puts Jamestown “in a very good position – especially if you’re forced to offset cuts in state aid.”
At the same time, the town has a liability of $1.8 million in health care costs for retired police department employees and that amount, Dansereau said, “is a good position for the town in comparison to other communities that are under-funded by as much as $25, $50 or $80 million.”
The post-employment health care liability for the School Department is much larger, at $13.1 million. Town Administrator Bruce Keiser said he doesn’t disagree with the statement that Jamestown is in comparatively good shape.
“However, it is still a very large expenditure that we’re facing down the road, and what it means is that, as people in the police and school departments reach retirement age, the amount of money we have to set aside for their health care benefits is going to increase our annual expenditure for insurance – and that is a real cost burden,” he said.
At the same time, Keiser said, the town and the schools both ended the last fiscal year with an operating surplus of just over $200,000 each.
“Given the substantial loss of revenues from the state, as well as our real estate fees and taxes, we are very happy to see that we ended in the black,” he said. “Four hundred thousand dollars is 2% of the overall budget and, given the difficult economic conditions, we are very pleased with that result.”
Consultant makes health
Consultant and local resident Amy Gallagher delivered the health insurance presentation on behalf of the Jamestown Taxpayers Association. Gallagher, who has worked for several major health insurance carriers, was tasked with preparing a comparison of private and public sector health insurance benefits.
With the council chamber packed to capacity for her presentation, Gallagher narrated more than 30 Powerpoint slides detailing, among other things, the dollar value of health insurance benefits for town and school employees in relation to national and regional averages. The analysis, she said, was intended to provide insights and “increased transparency” in support of efforts to “contain escalating health care costs so that taxpayers do not shoulder an unfair portion of these costs.”
The Kaiser Family Foundation, Gallagher said, is projecting a 10% annual increase in premiums paid by towns for family coverage – and “Jamestown premiums have already increased beyond the predicted increase for 2009,” she said.
Gallagher proposed many recommendations, several of which would require town employees to bear more of the costs for their premiums. For example, in a scenario where union employees paid 48% of their premiums, the town would save $245,000. Gallagher noted, however, that she has worked with unions and that this level of premium co-pays “may not be realistic.”
Gallagher’s other recommendations included:
• Bonuses paid to employees who are already covered under their own family plans should be adjusted to reflect only town expenditures to cover individual employees – not their entire families.
• The level of employee contributions to their insurance costs should be adjusted on a yearly basis – notwithstanding the three-year term of a union contract – because “costs are going up every year.”
• Town reimbursements for prescription co-pays for town and police department employees should be eliminated.
• Retiree coverage for all new hires should be eliminated and a flat dollar amount for existing retirees should be created.
Keiser said that the R.I. League of Cities and Towns, of which Jamestown is a member, has endorsed state legislation that would require all public sector employees to pay 25% of their premium costs.
“None of those bills was successful last year,” said Keiser, who supports the legislation, “but they will be re-introduced for the 2010 session.”
Council member Ellen Winsor said, “Jamestown employees’ health benefits start at a high level relative to those given other employees statewide, regionally and nationally, so reductions in benefi ts will not be at all draconian to our employees, but will bring us more in line with the norms – while still providing good health insurance. These are changes we must all accept at a time when we are facing the loss of $445,000 and other cuts in state aid. The Town Council is being squeezed financially in all directions.”
During the open forum – and despite the earlier warnings of financial problems of every kind – former council member Bill Kelly advised that it would be unwise to put off necessary capital expenditures going forward because “the only thing that will happen to the costs of capital improvements is that their costs will escalate.”
Kelly said that 2010 “will probably be the most challenging budget year in anyone’s memory.”
But there are various needs that should not be deferred, he said, adding that “the recreation department van is an accident waiting to happen.”
Acknowledging that capital expenditures would come at a time of belt-tightening, Kelly said, “There are some cuts that can be made in either the reduction and/or the elimination of some specific services that will have little or no impact on the vast majority of town residents or the administration’s ability to provide services to the community.”
Committee told to hold off
on Ft. Getty survey
The financial issues tackled during the meeting overshadowed the decision by council President Michael Schnack to put the brakes on a pending – and much-anticipated – survey of residents on the future of Ft. Getty. The issue arose when the council reached the point of granting its consent to accept the minutes of the Ft. Getty Master Plan Committee meeting of Nov. 19.
Schnack said he took issue with a committee reference to Ft. Getty as “a trailer park” when, he said, “It is a campground.”
More significantly, Schnack said that the charge to the committee had expired.
“They submitted the master plan in 2005, so I am not sure why this committee is meeting, and I would ask that they hold off on the survey,” he said.
Speaking from the audience, a member of the Master Plan Committee argued that the panel had been re-charged to continue its work, but Schnack insisted that the committee should hold up while the council determined if the panel should be reconstituted. That discussion will be held at the next council meeting.
In other business:
• An important communication accepted by the council was a letter from Jamestown School Superintendent Marcia Lukon, who had written to Keiser to say that her department would like to know if there is a longer-term solution to the problem of school bus parking than the temporary site at 44 Southwest Ave.
“We are preparing to go out to bid for a new bus contract,” Lukon wrote on Dec. 15. “Therefore, I need to ascertain whether or not there will be an on-island location to park five to 10 buses for the next three school years.”
Keiser told the council that he has since advised Lukon that, “While we are certainly willing to work with the School Committee on the matter of school bus parking, at the present time there is no free space in the town inventory. I have also spoken to Lisa Bryer, and we think there may be some opportunities on school grounds.”
• Regarding another possible site for a different purpose, Keiser said that he has been in communication with the R.I. Turnpike and Bridge Authority with respect to its “on-again” interest in building a wind turbine on state land near the Pell Bridge toll booth.
Keiser does not know whether the Turnpike Authority is planning to provide electricity to the toll booth, or whether it’s thinking about selling the electricity produced by the turbine to fund bridge repairs. But he will be sending a letter asking RITBA to “coordinate with Jamestown because we have also identified a wind turbine site in the area. I just don’t know where the geese would go.”
The council will hold its next meeting on Tuesday, Jan. 19. On Jan. 11, at 5 p.m., the council will hold its “goals setting” meeting.
Questions about the health insurance analysis should be directed to Taxpayer Association Chairman John Pagano at 423-1447 or to Gallagher at 423- 1690.