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City: Self-funded benefits a success so far

By Staff | Sep 9, 2016

The city of Cape Coral’s self-funded insurance plan is going well and is anticipated to save the municipality hundreds of thousands of dollars as opposed to if the city had stayed fully insured.

That was the news given to the city council by Anna Maria Studley, senior benefits consultant for the Gehring Group, during Wednesday’s workshop meeting at the Nicholas Annex.

The city, which implemented the self-funding strategy with council approval on Jan. 1, is on track to save $616,407 in 2016 compared to the cost had the municipality stayed fully-insured. That would also have meant the city was looking at a 28.5 percent premium increase for 2017.

So far, the city has received $9,591,864 in premiums, while paying out $8,245,069, about 86 percent. That’s in line with the percentage last year.

The plan got off to a great start, running at a $551,605 surplus. However, the second quarter was tougher, with a $434,556 deficit.

Through July, which was when the latest numbers came through, came in nearly $200,000 in the black.

Of the city’s 1699 employees, 1,131 insure only themselves while the rest insure spouses, children or both. A little more than half use the HMO plan while the others use the high PPO (783) or low PPO (64), the latter of which is running at a deficit.

The largest claim has been $319,106, but overall it has been running with a claim reserve.

“It’s performing how we hoped it would. The first year we were leery to take that jump off, but it sounds like we’re doing everything we need to,” Councilmember Rana Erbrick said.

In other business, Dana Brunett discussed the EDO Incentive Fund he would like to implement to help bring more business to Cape Coral.

Currently, the plan is geared toward larger projects with higher employment and targeted categories like industrial and professional. The problem is, only two projects have qualified for incentives in the last two years.

The new plan would address the need to support development of smaller businesses and create a capital fund with smaller incentives with a committee to review and recommend those incentives.

Incentives of $25,000 or less could be approved by the committee, those between $25,000 and $50,000 would need to be approved by the city manager through a recommendation by the committee, and those of more than $50,000 would go through the city council.

Approval criteria would include investment, leverage, jobs created, average wage, new construction vs. renovation, local procurement and meeting the needs of the city.

Staff recommends the fund be established at $200,000 in year one, with the money coming from the existing Economic Development Incentive reserve fund established by City Council in 2015.

Councilmember Rick Williams liked the plan, but was concerned the system would benefit multinational companies like Starbucks.

“We need to be more aggressive on that. This is aimed at smaller businesses and that’s who we should be targeting,” Williams said. “We aren’t set to take in the large stuff.”

Erbrick said incentives could be a double-edged sword, but could also land companies which might not otherwise have come.

“Having come from a state that offered large incentives, some of those entities might need some extra pull to get here,” Erbrick said.

Assistant City Manager Michael Ilczyszyn talked about the Property Assessed Clean Energy program, designed by the state to reduce energy consumption.

Ilczyszyn said the program is not a tax or fee, but a voluntary assessment designed to improve the energy efficiency and wind resistance of businesses, governmental building and even residences.

The property owner must be up to date on their taxes and mortgage and the work cannot exceed 20 percent of the just value of the property. The assessment term cannot exceed the life of the improvement.

The interest rate would be higher than a private loan, but better than if purchased by credit card.

The question was whether the city would run the program itself (like in St. Lucie) or through third-party. Ilczyszyn and staff suggested going third-party.

Mayor Marni Retzer and council members John Carioscia and Marilyn Stout were absent from the meeting.