March 11 Town Council Meeting

Council approved an agreement and bylaws to co-create a joint insurance fund (JIF) for healthcare coverage as well as a rate schedule for the town pool unchanged from last year at the March 11, 2014, council meeting.

The meeting agendas and related materials are here. The council meeting video, indexed to enable quickly finding specific issues, is here.

Two proposed ordinances were approved on first reading, one that would create a Director of Staff Operations position and the other to add a second Deputy Police Chief position. The conference agenda featured a discussion of PSE&G’s $3.9 billion “Energy Strong” infrastructure program by a proponent and opponent of the plan.

Council approved in December the administration’s proposal to create its own self-insured healthcare plan, which began in January, proposed as a less-expensive alternative to the previous coverage. The administration had said at the time that the self-insured plan was the first step in a process to create a JIF (also referred to as a joint health insurance und, or HIF) along with Parsippany and Bloomfield in April 2014.

Materials provided in December to the council from Fairview Insurance, the town’s insurance broker/consultant, estimated cost reductions of 13.8% to 14.9% -- savings of $78,000 to $84,000 per month and monthly costs of $481,000 to $487,560 -- with a self-insured plan compared with the existing coverage. Fairview estimated additional savings through the creation of the three-town JIF.

(I’ve been trying since December 6 to get an accounting of the payments the town is making for its self-insured plan. The town sent me a Fairview memo on January 30 showing monthly payments totaling $124,111, plus an “Aggregate Premium” line with the illegible number “2,11.20”. Although I’ve asked, the town has not provided information responsive to my request. John Gross, the town chief financial officer, said at the meeting that he expected to provide the information in the next few days. That hasn’t happened as of the posting of this blog.)

The planned JIF will include only West Orange and Bloomfield, according to Dan Roslokken, speaking to the council as an attorney for Insurance Design Administrators of Oakland, the company chosen to develop the JIF and to administer the plan for the JIF and for the town’s current self-insured healthcare plan. He said that Parsippany had recently reported a higher-than-expected experience with healthcare claims that made the town a poor candidate to join the JIF.

Mr. Roslokken said he didn’t know the financial impact of spreading operating costs between two towns instead of among three. He also said, at this stage of the JIF development process – pending state regulatory approval and the results of competitive bidding for a provider of stop-loss coverage if claims exceed expectations, which he described as a “significant expense” --the total cost of the JIF is unknown.

Mr. Roslokken also clarified that the two towns will be “jointly and severally liable” for each other’s healthcare claims that exceed expected limits. While this spreads the risk of excessive claims, it also adds risk exposure to each town. That exposure will remain high in the early years of the JIF – the JIF agreement requires the towns to stay for at least three years -- until other towns are added, as expected, and the JIF builds up reserves of unspent assessments. The JIF members will also be subject to special assessments if regular assessments fall short of meeting the JIF’s financial obligations.

The by-laws of the JIF cover operations, including the governing commissioners and executive committee from member towns, as well as officers, plans for risk management and producer arrangements (compensation to insurance brokers), contractors and financial reports. Mr. Roslokken and Mr. Gross said none of these issues are yet settled so that no information was available as to the people and contractors that would run the plan and their compensation.

The various reports under the by-laws are directed to each member town. I tried to amend the bylaws to specify that the information be provided to the member town governing bodies. Mr. Roslokken said no legal reason existed to prevent the language. My floor motions to add that language did not receive seconds and thus failed. Other councilmembers argued that amending the by-laws could cause a delay because Bloomfield would have to review and approve.

The timetable for implementing the JIF has slipped from the earlier April 1 target and will likely extend at least four months, Mr. Roslokken said.

Council voted unanimously for the resolution approving the agreement and by-laws. I voted for the proposal, despite my many concerns, because of a high-level of state regulation, especially in the JIF application, and also because the lack of information about the plan left me without factual justification to oppose the proposal.

Council approved 4-1 on second and final reading the administration’s annual update of the ordinance for the town’s Ginny Duenkel pool that maintains the existing fee structure and levels. Many residents over the last year have asked for an expanded daily pass program that would allow them to visit the pool without taking on the large expense of full- or half-season memberships. I voted against the ordinance because I believe, with stagnant revenue and declines in individual and family memberships, that we should look at potentially increasing attendance and revenue with more attractive daily passes.

I asked for pool revenue and membership data on March 6, receiving some of what I asked for after 4 p.m. March 11, the day of the council meeting. The data show that since 2009:

·          Individual and family memberships overall are down 3.5%

·          Senior memberships are up 33.6%

·          Total memberships are up 2.2%

In the same time period:

·          Annual total pool revenue is up 0.1% to $226,502

·          Membership revenue is down 0.9% to $179,295

·          Guest revenue is up 51.3% to $26,219

The data showed that between 2009 and 2010, membership and revenue increased 8.3% and 10.35, respectively. However, since then, membership revenue and total revenue have declined in each of the last three years. 2013 revenue fell $26,835, or 11.8%, short of the 2013 budget of $253,337, although it’s unclear what actual pool expenditures were.

I suggested we should further study data and consider setting up a pilot program with options that would include daily and weekend passes, providing more revenue and an incentive for residents who find the current fee structure not a good value to use the pool more often. Other council members argued that an expanded daily pass program would potentially cannibalize full memberships and reduce overall revenue, complicate staffing and delay marketing efforts for this season. Neither the town business administrator nor the head of the recreation department were present for the discussion.

Two other proposed ordinances were approved on first reading. The first ordinance would create a Director of Staff Operations position. During the statutory hearing on the 2014 budget on March 1, the administration said it wanted to consolidate management and planned to name Police Chief James Abbott to the position. Mr. Gross, who declined to discuss personnel specifics because of privacy concerns, said the legislation was needed so that the person in the position had management authority across departments. I pointed out the mayor and business administrator already had that authority, such that the person in this position could provide advice on efficiencies among departments without needing that authority. I’m concerned about adding more senior management costs absent a compelling cost-benefit analysis.

The other ordinance would add a Police Deputy Chief position, increasing the authorized number from 1 to 2. Earlier this month, Michael Corcoran was promoted from captain to become the only deputy chief (an annualized increase in pay of 5.4% to $139,269). He was replaced in his previous role of captain by the promotion of Lieutenant Robert Martin (an annualized increase in pay of 5.4% to $121,777). Both ordinances are expected to be on the agenda for the March 25 council meeting for second and final reading, including a public hearing.

Also, the Conference Agenda included a discussion of PSE&G’s $3.9 billion “Energy Strong” program now under regulatory review before the state Department of Public Utilities. The discussion featured a PSE&G executive as well as a representative of a coalition opposing the proposal. The council has tabled a resolution proposed by PSE&G supporting the company’s proposal multiple times

If you’d like to contact the council with your thoughts on any of these issues, please send an e-mail to council@westorange.org or call 973.325.4155 to leave a message.

I’m a West Orange Township councilman since 2010, reachable at jkrakoviak@westorange.org. I'm a business communications consultant in my spare time.