HomeMy WebLinkAboutResolutions - 2015.05.21 - 21853MISCELLANEOUS RESOLUTION #15140 May 21, 2015
BY: Human Resources Committee, Michael Spisz, Chairperson
IN RE: HUMAN RESOURCES DEPARTMENT — RESOLUTION EXEMPTING OAKLAND COUNTY
GOVERNMENT FROM PA 162 OF 2011 FOR CALENDAR YEAR 2016
To the Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
WHEREAS PA 152 of 2011, the "Publically Funded Health Insurance Contribution Act" was enacted by
the State of Michigan and given immediate effect on September 27, 2011; and
WHEREAS PA 152 sets forth various options that public employers may follow when providing healthcare
benefits to their eligible employees; and
WHEREAS acting pursuant to specific provisions of Act 152, Oakland County government has exercised
its legal right to exempt itself from the Act through calendar year 2015; and
WHEREAS the County Executive recommends that Oakland County again formally exercise its legal right
to exempt itself from the Act for calendar year 2016; and
WHEREAS Oakland County has a long history of proactive budget practices that have resulted in
budgets that are balanced and fiscally sound, as demonstrated by decades of actual performance and a
AAA Bond rating; and
WHEREAS the residents and taxpayers of Oakland County have been well served by the County's
consistent utilization of its nationally recognized Triennial Budget process, a process that uses thoughtful,
detailed planning and employs incremental changes over time to yield significant results without serious
disruption in service delivery and in a manner that is fair to both taxpayers and employees; and
WHEREAS in keeping with the County's established, long-range budgeting practices that actively balance
the interest of taxpayers and County employees, Oakland County employees have been paying
contributions toward their health care coverage since 1997, contributing over $39 million toward their
health care costs; and
WHEREAS in addition to sharing the burden of health care costs by contributing over $39 million since
1997, Oakland County employees have made significant wage and salary concessions by accepting
salary reductions of 2.5% in FY2010, 1.5% in FY2011, and salary freezes in FY2012 & 2013, for a
combined total of $31.9 million in wage and salary savings; and
WHEREAS incremental changes have been made to the employee benefit package over the years that
have resulted in significant savings; and
WHEREAS the County Executive continues to explore opportunities regarding cost controlling measures,
such as raising prescription drug copays in 2013 and conducting a Dependent Eligibility Audit in 2014;
and
WHEREAS medical costs from 2011 through the present time reveal on average the County has
remained below the State designated Cap levels, thus meeting the spirit of the legislation; and
WHEREAS the County Executive Recommended Triennial Budget for Fiscal Years 2015 - 2017 is
balanced, maintains responsible general fund equity balances, and funds employee medical benefit plans
within existing Fringe Benefit Fund revenues.
NOW THEREFORE BE IT RESOLVED that pursuant to the authority granted a county under Section 8 of
Public Act 152 of 2011, the Oakland County Board of Commissioners hereby exempts Oakland County
from the requirements of PA 152 for calendar year 2016.
Chairperson, on behalf of the Human Resources Committee, I move the adoption of the foregoing
resolution.
HUMAN RESOURCES COMMITTEE VOTE:
Motion carried unanimously on a roll call vote,
!OAKLAND7
COUNTY MICHIGAN
HUMAN RESOURCES
OAKLAND COUNTY EXECUTIVE L. BROOKS PATTERSON
Jordie Kramer, Director
To: Human Resources Committee
From: Jordie Kramer, Director-Human Resources
Date: May 6, 2015
Re: 2016 Opt-Out of State of Michigan PA152 of 2011
Public Act 152 of 2011 provides for certain limitations on the amount a public employer may contribute
toward the annual costs of medical benefits, Each year since the act went into effect, Oakland County
has exercised its legal right to exempt itself from the act while remaining in compliance with the spirit of
the act. The decision to opt-out was due in large part to the poor wording of the act as it relates to
compliance by employers who are self-insured.
The Act was created, in part, to offer public employers an option to reduce employee medical expenses
to help balance budgets due to declining revenues during the recent period of recession. Fortunately,
due to proactive planning, Oakland County was already looking ahead and planning for decreased
revenues many years in advance of this legislation. A number of steps were taken such as a hiring
freeze, four years of pay decreases & freezes, position deletions, line item reductions, benefit plan
design changes and refinancing OPEB liabilities, just to name a few.
Although Oakland County has exercised its legal right to opt-out of PA152 each year, the County
continues to closely monitor the medical expenses and compare them to the Cap amounts set forth in
the act. The annual State Cap amounts for 2015 are set at $5,992.30 for single coverage, $12,531.75
for two-person coverage, and $16,342.66 for family coverage, As Oakland County is self-insured for
the majority of our medical plans, in order to make an accurate assessment, the County looks back at
actual expenses incurred to see where they fall in relationship to the intent of the act.
Self-insured plan costs can vary greatly from year to year, depending upon utilization and cash flow
fluctuations for timing of actual payments to providers. Up until the time period of April 2014 through
March of 2015 (the most recent period of available medical claim costs) the County had remained
under the State Cap. During this most recent period, the County is over the Cap; however, the County
remains under the Cap if we use a smoothing process that looks at the time period from inception to the
current day, as outlined on the next page.
Page 1 of 2
2100 Pontiac Lake Road County Executive Building 41W Waterford, MI 0328 I DakGov.com
7-.M---ti-- -,._„._ :=,_ _ —
417--- -_,..;,, ,
--;-„,,-- ... .- ,....- _ ., April 2011 - March 201-2 (694,887.00) Under Cap
April 2012 - March 2013 $ (602,535.00) Under Cap
April 2013 - March 2014 $ (3,067,342.00) Under Cap
April 2014 - March 2015 $ 2,900,517.00 Over Cap
Average $ (366,061.75) Average is under CAP
In addition to the average cost being below the Cap, the medical plan expenditures have remained
under budgeted amounts during the following fiscal year time periods.
--g, ! -tat
0 nes-Incurred PlOriiikt; GiOr
FY2011 29,500,000 28,758,181
FY2012 34,406,700 32 817,108
FY2013 37,100,000 28,920,526
FY2014 39,084,000 37,418,604
FY2015 38,921,454 37,500,000 (projected)
The State of Michigan adjusts the Cap amounts each year for inflation; however the State increases
have been less than some of the other medical trend indicators as shown below:
— _ 2.0w —2Q1 — IAA ,
State of Michigan Cap increase 3.5% 2.9% 2.3%
Mid-Michigan Survey, McGraw Wentworth 8.0% 7.0%
Medical CPI, Bureau Labor Statistics 2.5% 2.4% 2.4%*
Mercer National Survey 6.0% 2.0%
*January through March 2015 CPI
It should also be noted that the cost of State and Federal taxes on employer medical plans was
$934,305 last year, which we are required to include within the Cap. This represents 2.2% of the
County's net medical costs and accounts for 32.2% of the amount over Cap.
In order to continue to offer a competitive benefit package that will attract and retain a quality workforce,
the County Executive is recommending to once again opt out of PA152 and keep employee benefit
contribution rates at current levels. The County will continue to review and analyze our benefit
programs, costs and efficiencies, and make recommendations to the Board of Commissioners. The
decision to opt out of PA152 must be made each year and be brought to the Board of Commissioners
for review on an annual basis.
cc: file
Page 2 of 2
2100 Pontiac Lake Road I County Executive Building 41W I Waterford, MI 48328 I Fax (248) 452-9172 I OakGov.com
5-12,e/t )
Resolution #15140 May 21, 2015
Moved by Spisz supported by Jackson the resolutions (with fiscal notes attached) on the amended
Consent Agenda be adopted (with accompanying reports being accepted).
AYES: Dwyer, Fleming, Gingell, Gosselin, Hoffman, Jackson, KowaII, Long. Matis, McGillivray,
Middleton, Quarles, Scott, Spisz, Taub, Weipert, Woodward, Zack, Crawford. (19)
NAYS: None. (0)
A sufficient majority having voted in favor, the resolutions (with fiscal notes attached) on the amended
Consent Agenda were adopted (with accompanying reports being accepted).
I HEREBY APPROVE THIS RESOLUTION
CHIEF DEPUTY COUNTY EXECUTIVE
ACTING PURSUANT TO MCL 46.559A (7)
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and
accurate copy of a resolution adopted by the Oakland County Board of Commissioners on May 21, 2015,
with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at
Pontiac, Michigan this 21 st day of May 2015.
Lisa Brown, Oakland County