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JULY 8, 2004

ATTENDANCE: Bruce Kimmel, Chairman; Doug Hempstead, Ken Baker, Matthew Miklave, Carvin Hilliard, Mike Coffey

STAFF: Frederic Gilden, Comptroller; Ann Twomey, Director of Management & Budget;
Lisa Biagiarelli, Tax Collector; Ken Whitman, Tax Assessor

OTHERS: Dr. Corda, Superintendent of Schools; Tom Vetter, Stuart Opdahl, Joanne Ceegan, Ann Tomey, Bob Lynberg, Kevin Poruban, Bill Krummel

The Chairman called the meeting to order at 8:05 p.m.

** MR. KIMMEL MOVED TO SUSPEND THE RULES TO TAKE UP THE MATTER OF THE BOARD OF EDUCATION FINANCIAL ANALYSIS CONTRACT
** MOTION PASSED UNANIMOUSLY

Mr. Kimmel stated this would be a question and answer session only and there would be no recommendations tonight, because they were still waiting for statements from the Finance Director and the Finance Department.

It was noted that Mr. Hempstead wouldn’t participate in the discussion, due to a conflict of interest.

Mr. Kimmel said he had been involved in discussion in the last few weeks; so he opened up the topic for discussion and questions. No questions were forthcoming, so Mr. Kimmel began and said it seemed the process that led to the agreement, was at first intense and then nothing happened and ultimately there was an agreement. He asked for more background on the agreement.

Dr. Corda said that dating back to October 2003, upon the beginning of the negotiations with NFT in June 2004, they tried to get a consensus about their position on the self-funded insurance program and they were of the opinion if they could move to a self-funded program, they would be in the position to affect some savings, but the union wasn’t interested in pursuing that. He went on to say the Board of Education recognized 6.1% was not acceptable to try to reduce costs, so discussions continued from January through March, where there was a sense that they needed something for teachers relative to health insurance. The first series of points for discussions emerged in mid-March, accompanied by a multi-year extension, but the school administration made it clear they were not interested in that and they wanted something to impact the coming year. He said that during the first three or four times they met, it involved a multi-year contract, but they felt there were too many issues to address, and they thought it was better to move away from a self-funded program and beginning in April or May, they sensed a softening of the position due to the multi-year agreement that was still being presented.

Dr. Corda continued and said, so then Cigna was to come down to do a presentation to explain the plan, but a day or two before April 27, there was a request to postpone the meeting, so they agreed and met with them the beginning of May. They presented remarks but there weren’t any negotiations, and there were only points of discussion of eight or nine points that involved a multi-year agreement; so around the second week of May, they met again and put the proposal on the table that they thought was serious, but it didn’t involve a multi-year agreement. And on May 25, they met again and they had the proposal that they thought was up for consideration, but on May 25 when they met, they changed the requirement to a 1-year extension and they agreed to an interim process and had the opportunity to come to the board with a proposal that involved what the final document looked like with the 1-year extension and also a temporary move for a 6-month period with the guarantee they would move to Anthem Blue Cross.

Mr. Kimmel asked who introduced Anthem Blue Cross. Dr. Corda said the union wanted it from the beginning and what became clear, was that it would be a movement out of Cigna.

Dr. Corda said that on May 25, the school administration met with the Board of Estimate and reviewed the parameters to begin negotiations and the school administration shared with the Board of Estimate some issues they felt were important that went beyond the monetary.

Mr. Kimmel asked if the Board of Estimate was aware they were still involved with negotiations. Dr. Corda said yes, they knew they were talking with teachers since January, so they thought they were moving deliberately through negotiations, so what they knew after May 25 from the Board of Estimate was a financial parameter they thought was crucial. Then they met with the teachers to do a deal, which was moving from Cigna to Anthem Blue Cross and they began to put together a package. However, they knew the impact of the agreement would result in having to meet the financial parameters and the issue was subsequently raised to get someone from the Board of Estimate to be present at the negotiations, but it wasn’t done. The school administration had the deal in their hand and they knew it was less than what the parameter that had been established, so they made the agreement.

Mr. Kimmel asked what other parts of the agreement were. Dr. Corda said they had an HMO option that would provide a lesser amount of benefits, thus the cost was less and reduced the level of the payment for people who chose to do that. He thought this might be attractive to retirees and single young teachers, due to it being less of a financial drain. They also agreed to re-bid the prescription plan savings at a quarter of million dollars and when they negotiated the premiums being fixed, it made sense to give that option, but it would be a self-funded plan and there would be no reason to do that, so with the changes, it was estimated the savings would be substantial and for the 2005-2006 years, they negotiated the teachers salary increase would be 2.9%, where the average is 3%.

Mr. Coffey asked about the consultants and if they were considered a consultancy or an agency. Mr. Lynberg said they compensated on a brokerage basis, based on the percentage or $55,000 annually.

Mr. Coffey asked if this was the standard fee for different carriers. Mr. Lynberg said the amount was well within the standard scale that has been applicable in Norwalk for years.

Mr. Coffey asked the approximate total amount paid. Mr. Lynberg said $35,000.

Mr. Coffey asked how many other providers were approached. Mr. Lynberg said it was not a competitive study and what came out of it, was the result of negotiations only.

Mr. Coffey asked about the prescription plan. Mr. Lynberg said the responses on that were due on Friday.

Mr. Coffey asked if a third party would administer a change for the claims. Mr. Lynberg said that would depend, but right now, the claims were paid for by Anthem Blue Cross or Cigna.

Mr. Coffey asked how they came up the $35,000. Dr. Corda explained.

Mr. Hilliard asked what rationale NFT had for not wanting the self-funded program. Dr. Corda said he was baffled by that too, because if it resulted in savings, he thought it should be in their self interest, so he suggested a judicature process, but this was objected to in case there was an appeal process, and there was a question of what the dispute was. He further explained there was a decision made 10 years ago to move to a self-funded plan and because the benefits didn’t change; it was taken to arbitration and when that was done, the arbitrator ruled in favor of the teachers and the reason was based on an emotional issue, that was due to a situation that happened in Texas where a company went to a self-funded program and there was an employee that had cancer, but payment of that person’s bills were denied and because it was not an insured program. It was deemed the contract was violated, so this deterred teachers from that type of program.

Mr. Hillard asked if there was any cost analysis done to demonstrate to the NFT, in comparison to other program. Dr. Corda said they didn’t give any other information the union did not want a self-funded plan.

Mr. Kimmel said when he read the material, he thought about the interpretation of savings and he found the difference not that great, but when they talk about savings, that question is of some magnitude, he asked if there was a different point of view on that. Dr. Corda said when Mr. Steve May, the City Insurance Consultant indicated a savings of $2.5 million, this consisted of two pieces and the margin was the amount set aside in the event claims exceed what they anticipated it would be, but if it’s not used, then it becomes savings, and if it is used, it’s not. And if they take out the margin from the discussion, it would amount to $1.5 million and if they look at the package savings it’s $1.3 million. They have made a budgetary provision for the margin, but they didn’t think it should be described as savings, because they don’t know it they have to use it.

Mr. Lynberg said the margin was generally something that should go in the operating budget and the thought it was prudent to budget a certain amount.

Dr. Corda said when they had discussion early on with the Mayor and Tom Hamilton, the issues were as follows:
· Was there sufficient reserve
· Was there a stop-loss for an individual and aggregate and the concern was they didn’t have a reserve

Mr. Opdahl commented that if they looked at the two prior years, the margin was used up.

Mr. Kimmel said then the Board of Education was in agreement with the city as far as the reserve and there was not a separate margin and the NFT was the stumbling block and that point. Dr. Corda said that was correct, and he further expressed the notion of savings from the self-funded program was very familiar to him due to past experience, but he said if you don’t have sufficient reserves, they can’t manage a self-funded program.

Mr. Kimmel said when he listened to the insurance consultants; there was a lot of time spent on item #1, he asked someone to summarize that discussion. Dr. Corda said it was asked how the run out would be handled, and with the obligation they had with expenses to Cigna and the debt was determined to be $2.56 million to be paid to Cigna, but this would be reduced by $400k, that would reduce the debt down to $2.1 million and would not generate dollars, but would be used through the new carrier and the amount would help pay off Cigna resulting in another $1 million reduction and another $400k to come out of the reserve that could be paid to Cigna. Mr. Opdahl clarified the other $400k goes to the reserve, resulting in $1.7 million.

Dr. Corda said it could go the reserve to pay off the balance and they would be left with $1 million, so they were comfortable that the $2.5 million owed could be covered.

Mr. Coffey asked if there was any difference in health benefits having to do with an exercise component. Mr. Lynberg said there was difference and it would be seen in the HMO, but the preferred plan relies on an individual’s provision, but it was negotiated in.

Mr. Coffey asked if there was any analysis of the increase in co-pay on claims. Mr. Lynberg said he doubted the co-pay would reduce claims, but for prescriptions, he expects this would have an impact.

Mr. Hillard asked the number of employees that would be covered by the plan. Mr. Lynberg said (1,045) employees and retirees and (900) active members and the balance retirees.

Dr. Corda concluded by saying this was not an easy road to go down and it took a lot of give and take. The process and goal was to come to an agreement and there was no intention to play into the notion that the teachers had to give. And the outcome was not what the Mayor or the Board of Estimate was touting, but it got them to where they needed to be, in terms of savings and although they were moving to Anthem, they might not generate the same savings, but it will still be substantial. He added that other pieces would continue year after year and they worked very hard and he felt the program would serve everyone well.

Mr. Kimmel thanked everyone for their input and comments.

APPROVAL OF MINUTES – JUNE 10, 2004

Correction
Page 1; under NARRATIVE ON TAX COLLECTIONS DATED MAY 31, 2004, the 1st paragraph, 2nd line down, where it reads, 94.3% should read, 98.34%

** MR. KIMMEL MOVED TO APPROVE THE MINUTES
** MOTION PASSED WITH THREE VOTES IN FAVOR AND THREE ABSTENTIONS (MR. COFFEY, HEMPSTEAD AND MIKLAVE)

CLAIMS COMMITTEE: RECEIVE THE MONTHLY CLAIMS REPORT; REVIEW AND APPROVE CLAIMS AS REQUIRED FOR CLAIMS REPORT DATE: JULY 8, 2004

Mr. Kimmel observed there were no claims over $5,000.00, so there was no need for discussion.

NARRATIVE ON TAX COLLECTIONS DATED JUNE 30, 2004 – RECEIVE REPORT AND DISCUSS

Mr. Kimmel commented there were no comments or discussion.

MONTHLY TAX COLLECTOR’S REPORT DATED JUNE 30, 2004 – RECEIVE REPORT AND DISCUSS

Mr. Kimmel stated there were no comments or discussion.
Mr. Kimmel announced that the August agenda was usually light and he asked Ms. Biagiarelli is she thought there would be anything to report by then. Ms. Biagiarelli said probably not.

AUTHORIZE THE MAYOR TO ISSUE A PURCHASE ORDER TO LHS ASSOCIATES INC. FOR ACCUVOTE TABULATING SYSTEM FOR AN AMOUNT NOT TO EXCEED $6,995.00

Mr. Gilden said they were looking to create a purchase order for this item that would be for the Registrar of Voters.

** MR. MIKLAVE MOVED TO APPROVE TO AUTHORIZE THE MAYOR TO ISSUE A PURCHASE ORDER TO LHS ASSOCIATES INC. FOR ACCUVOTE TABULATING SYSTEM FOR AN AMOUNT NOT TO EXCEED $6,995.00
** MOTION PASSED UNANIMOUSLY

** MR. KIMMEL MOVED TO SUSPEND THE RULES TO TAKE UP APPROVAL FOR ITEM’S 6 AND 7 ON THE AGENDA
** MOTION PASSED UANIMOUSLY

APPROVE THE TERMINATION OF THE CONTRACT WITH LESHER GLENDINNING MUNICIPAL SERVIES, INC. FOR COMMERICAL PROPERTY APPRAISALS IN CONNECTION WITH THE 2003 REVALUATION PROGRAM

AUTHORIZE THE MAYOR, ALEX A. KNOPP, TO EXECUTE WITH KERIN COMMERICAL REAL ESTATE TO COMPLETE THE COMMERICAL PROPERTY APPRAISALS FOR THE 2003 REVALUATION PROGRAM FOR AN AMOUNT NOT TO EXCEED $70,000

It was stated there was essentially only a change to the wording; because the evaluating contract was done by an individual who worked for Lesher Glendinning who went out of business, but there was no change in the contract or the price, it was a name change only, toKerin Commercial Real Estate.

Mr. Miklave asked if they filed for bankruptcy. The answer was no, and it was noted that the owner was arrested for check fraud.

Mr. Miklave asked who the original contract was with. The response was Lesher Glendinning and it was noted that they waived any claims to the contract.
** MOTION PASSED UNANIMOUSLY

The meeting was adjourned at 9:10 p.m.
Respectfully submitted by, Diane Graham
Telesco Secretarial Services