Geoff Fruin, City Manager
Jennifer Schwickerath, First Assistant City Attorney
A savings of $1.25 million is expected to be shared between employees and City budgetary funds
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This resolution authorizes a one-month health insurance premium holiday for all employees, consistent with language that was included in the AFSCME collective bargaining agreement and subsequently agreed upon with the Fire and Police labor unions. The premium holiday will take place in December 2026. During that month no premium contributions will be collected from employees or transferred to the Health Insurance Reserve Fund from other budgetary funds. The intended outcome is to reduce the unassigned balance in the Health Insurance Reserve Fund, while providing savings to employees and the City's contributing budgetary funds.
The City and employees share in the costs of health care coverage as outlined in collective bargaining agreements and employment manuals. As the steward of the health insurance benefit, the City maintains appropriate health insurance reserves. Each year the City sets annual premium amounts based on actuarial assessments of our health plan, utilization trends, and overall industry trends. Contributed funds from both employees and the City pay direct claims, plan administration fees, and create a reserve to give stability to the benefit. The Health Insurance Reserve Fund unassigned balance as a percentage of expenditures has grown from 93% in FY 2024 to 126% in FY 2025 and is expected to continue to increase to 137% in FY 2026.
The AFSCME collective bargaining agreement contains language that allows the City Manager to seek City Council approval of a health insurance premium holiday in FY 2027 and FY 2028, and similar agreements have been reached with the Fire and Police unions. A health insurance premium holiday is a month in which no premium contributions are collected from employees or transferred to the Health Insurance Reserve Fund from other budgetary funds. The intent of the premium holiday is to lower the unassigned balance in the Health Insurance Reserve Fund without artificially reducing premium amounts that are calculated based on actuarial analyses. This approach saves employees money and reduces expenditures from City budgetary funds.