City of Saginaw’s Unfunded Liability Presented to City Council By Dennis Jordan SPHR, Director of...

City of Saginaw’sUnfunded Liability

Presented to City CouncilBy

Dennis Jordan SPHR, Director of Human Resources

February 3, 2014

Fund Balance

Beginning F/Y Balance % of Budget

2014 - $ 268,881 0.8%

2013 - $1,248,058 3.9%

2012 - $3,970,352 11.6%

2011 - $3,771,779 11.0%

2010 - $1,544,461 4.9%

2009 - $1,455,258 4.4%

Unfunded Liability(s)

% Funded

OPEB - $220,255,745 1.6%

Police/Fire Pension- $ 69,116,726 62%

MERS Pension - $ 76,562,229 47%

TOTAL = $365,934,700

Annual Required Contributions

Police and Fire PensionFY Beginning

2013 - $6,046,388

2012 - $5,845,642

2011 - $5,685,858

2010 - $4,469,001

2009 - $4,453,364

Average Annual Increase = 7.1%

Annual Required Contribution

MERSFY Beginning

2013 - $9,059,568

2012 - $7,576,236

2011 - $6,720,804

2010 - $5,856,972

2009 - $5,104,320

Average Annual Increase = 15.5%

5 Year Projected Pension Contributions

Police and Fire MERS

FY Beginning

2014 $6,475,681 $ 9,979,000

2015 $6,935,455 $11,975,000

2016 $7,427,872 $12,514,000

2017 $7,955,251 $10,631,000

2018 $8,520,074 $ 9,034,000

Possible Pension Solutions

Note: Both Pension Systems Closed to New Hires in 2000Note: Both Pension Systems Closed to New Hires in 2000

•Freeze current participants benefit and change benefit to a hybrid (both DB and DC) or only a Defined Contribution Plan.

•Negotiate changes to current employees in the system to comply with State EVIP Compensation Plan ( Multiplier and/or Adders).

•Move the Police and Fire Pension System to MERS.

Healthcare Strategy

Three Draw Downs on the Healthcare system

Active Employees Future Employees/Retirees

• Active Retirees

Changes to Healthcare

ACTIVEPre 2009 No Deductibles; Co-pays; Contributions

2009 - Negotiated -

– $250/$500 Deductibles

– $1000/$1500 Co-Pays

– $20 per pay contribution

Performed audit of dependent status on active employees (estimated savings of $250,000 annually)

Changes to Healthcare

New Hires

• New Hires (2009) no longer eligible for Retiree Healthcare. Healthcare Savings Plan (HSP) provided for New Hires @ $125 per month.

More Changes to Healthcare

2010 - Initiated annual open enrollment process for Active and Retiree Health Care Participants.

2011/2012 - Negotiated All Actives - – $500/$1000 Deductibles

– $2000/$3000 Co-Pays

– $20/$30/$50 per pay contribution (indexed annually)

– Three Tier Drug plan (7/35/70)

– Created New PT Contract with SEIU – No HealthCare

Retiree Health Care Contributions

Annual Required Contribution

2013 - $16,188,521

2012 - $17,615,866

2011 - $17,836,256

2010 - $20,635,286

2009 - $20,070,947

Actual Contribution

2013 - $8,282,847

2012 - $9,791,130

2011 - $9,515,047

2010 - $8,945,764

2009 - $7,888,799

*726 Retirees

What have we done so far with the Retirees?

July 1, 2013 – Efforts made to move retirees to one plan ( same as current active employees).

•Retirees appealed – Court ordered and injunction. Litigation in process.

•Retiree Association has met with the City on several occasions. Alternative plan offered by City-No agreement at this time.

PPO3 vs PPO4

Current PPO 3 With $10/$40 RX

Proposed PPO 4 With

$7/$35/$70 RX Explanation of Differences

PPO 3 PPO 4$250 $500 $250 vs $500; Diff of $250/yr$500 $1,000 $500 vs $1,000; Diff of $500/yr20% 20% No Difference

$1,000 $1,500 20% up to $1000 vs 20% up to $1500; Diff of $500/yr$2,000 $3,000 20% up to $2000 vs 20% up to $3000; Diff of $1000/yr$1,250 $2,000 Deduct + 20%; Difference of $750 per year$2,500 $4,000 Deduct + 20%; Difference of $1500 per year

$20 $20 No Difference$20 $20 No Difference24 24 No Difference$75 $75 No Difference

Unlimited Unlimited No Difference$10/$40 $7/$35/$70 $3 less for generic, $5 less for preferred brands/$30 more

for non preferred brands$10/$40 $14/$70/$140 $4 more for generic, $30 more for preferred brands/$100

more for non preferred brands Pharmacy Benefit

Up To 90 Day Supply

Pharmacy Benefit Up To 30 Day Supply

Physician Offi ce VisitChiropractic Offi ce Visit

# of Chiro Visits Per YearEmergency Room

Preventive Care Dollar Maximum

Family OOP (Ded Plus % Copay Max)

City of Saginaw Plan Comparison - PPO3 vs PPO4

Actives

Medical Plan Comparison

Single DeductibleFamily Deductible

% CopaySingle % Copay MaxFamily % Copay Max

Single OOP (Ded Plus % Copay Max)

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