Selectmen Discuss Near $1 Million Revenue Shortfall in Town Employee Health Care Fund

There was standing room only at last night's Board of Selectmen meeting as many town employees packed the room for a discussion on town employee health care benefits.

There were two issues up for discussion. The first was on an approximately $1 million in revenue shortfalls in the trust fund for the town employee health care benefit from the end of 2011. The second was a proposal by representatives of two of the town's unions to have the town switch to a different way of negotiating contracts based on Massachusetts General Law 32B Section 19.

Town Collector/Treasurer explained that at the last audit of the town's benefit trust fund, made up by employee and town premiums and used to pay claims, had a revenue shortfall of $1,000,062. Town Administrator Robert Mercier said that two years ago the trust fund had nearly $2 million and that of December of last year the fund had roughly $240,000.

Curtin said the reason for the difference is that there was an uptick in claims, totaling roughly $700,000 in the last three months of 2011. On top of that, after the with lower premiums last year, there is less monthly employee input into the trust fund. Curtin explained that in 2011 a total of 55 employees left the higher-premium family plans for the lower-premium option, 18 dropped their family plans all together and a number of employees retired, creating a $923,160 deficit in the trust fund. So far this year, 28 additional members have switched to low-premium plans.

"When the economy is bad, many people opt for the lower-cost plans," Curtin said.

Considering that the town proposed the change of plans and through an understanding that employees would switch, Curtin said the loss of revenue to the trust fund was expected.

"We knew that there would be a revenue loss but we needed a year worth of claims before taking action, to see if the plans have done what they should do," he said.

Curtin stressed that though the trust has been depleted with less cash infusion and a high-level of last quarter claims in 2011, the town does have the funds to cover claims by town employees.

"The town does have the funds to handle claims, the town has been planning for claims correctly," he said. "And this is not the first time we've been in a situation like this, we saw the same thing back in the 90s when we had some very big claims on the town's health insurance."

Finally, Curtin suggested that the town consider a premium increase of 16.5 percent. He suggested the town, which pays the majority of the premiums in a 70/30 split with town employees, cover the initial increase with a potential to raise employee costs with negotiations. The specifics of the plan were not flushed out during the meeting and the Board of Selectmen voted to postpone a vote to a later date.

Edward McLean, president of the local Firefighters Union who along with Diana Marcus, president of the Burlington Educators Association, spoke on behalf of the town employee unions, said an increase in premiums would hurt town employees.

"I don’t think any of our employees, facing no raise as they apparently are, can face a premium increase next year," he said, to applause from many in the audience.

McLean and Marcus also presented a proposal for the town to switch to a different negotiation process for town unions when dealing with health insurance. Check back shortly with Burlington Patch for a complete story on that issue.