County waiting on tax digest for FY ’19 numbers
Increases in insurance. Pay raises for employees. Making sure there’s still money in the bank at the end of the year.
All of this and more is of great concern and the top priority for Polk County commissioners, who skipped voting on the 2019 fiscal year budget that was supposed to be in place for the beginning of July.
Instead, commissioners are holding out and waiting to see what the tax digest numbers for the year will look like and see what actual revenues are expected to be received from local taxes before making a decision on budget numbers.
Commissioner Jennifer Hulsey said that “we take it very seriously” when it comes to determining where the county’s budget will stand for the coming year, and what priorities can be funded and what can’t.
“We don’t have to move at a fast pace, but we definitely want to get it accomplished soon,” Hulsey said.
Postponing the budget decision for the year is being done in part so the Commission could have much longer discussions about spending increases included in this year’s $22,038,830 list of revenues and expenditures proposed by county administrators.
Those include a significant increase in the annual group insurance costs, much of that being built into the overall total they are expected to pay Blue Cross Blue Shield for health care for the year.
Back at the end of June, commissioners gathered to discuss those costs in a more than two hour meeting, trying to understand what was driving increases for the upcoming year.
At the moment, health insurance coverage for the county is expected to cost $3,805,377 — after negotiating down from $3,843,815 — with an 8.6 percent increase from the FY 2018 price the county paid for coverage.
That compares to a $3.65 million cost for Blue Cross Blue Shield’s ase plan, and only slightly lower numbers for Humana and Cigna, both giving bids around $3.5 million each when the county negotiated their rates. Because the county gets a non-standard plan from Blue Cross Blue Shield, they spend around $154,000 more if they’d renewed on July 1.
Polk is part of an insurance pool when it comes to insurance coverage within the Association of County Commissions of Georgia, or the ACCG. The county also has auto insurance through ACCG, and usually gets a dividend on money not used by the pool back each year to add to their revenues.
More than 100 counties take part in the pool, and thus reduce the cost overall to the whole group in using insurance coverage through Blue Cross Blue Shield via ACCG and ShawHankins.
ShawHankins acts essentially on behalf of the county and ACCG to negotiate rates, hence why there was a slight decrease between the cost proposed by Blue Cross Blue Shield, and what the county was finally quoted.
With a lot of questions about what is driving costs upward over the past years, ShawHankins sent along Scott Hankins to explain what was going on.
Over the past five years the insurance rates have gone up — presented versus negotiated costs included — on average some 6 percent since 2014, the highest increase coming for the 2018 negotiated cost at 8.6 percent, and as low as the 2015 negotiated cost of 2.5 percent
Essentially, the county’s health insurance premiums have been going up as employees continue to use services, and their health risks go up compared to the rest of the industry’s rate.
A mean commercial benchmark is a 1 for the health risk, based in incurred and paid claims. Polk County’s overall group insurance is currently pegged at a 1.92, and prior to that was a 1.97.
That’s right now 92 percent higher than the benchmark and is based on several things such as age and sex, different factors in individual and group health, and how that compares to what the national landscape looks like.
Then there’s the individual claim numbers overall. Some 48 percent of the county’s claims — nearly half, the others being spouses and dependents — make up 72 percent of the payouts from Blue Cross Blue Shield to doctors, hospitals and pharmacies for medical services. Those costs are being driven for a variety of reasons, but the top two are based on health services related to the musculoskeletal system and the circulatory system (169 claims and 117 claims, respectively.) Just in cost alone, the claims paid out for musculoskeletal issues with county employees totaled up to $366,347, or 18 percent of the overall medical costs.
Another 10 percent was spent in circulatory system problems totaling up to $200,097 of the budget, or 10 percent of the cost overall. Additionally, ShawHankins believes that in their review of where the county stands on health care costs, employees also could have avoided 123 emergency room visits that would have saved some $151,603 overall in, and in previous years would have saved $114,809 and $150,777 in costs.
Especially since many visits to the emergency room should be handled instead at a doctor’s office or urgent care facility. The top 5 reasons why employees were at the emergency room were back pain, joint disorder, headaches, upper respiratory infections and muscle injuries or upper arm issues overall. Those five diagnoses overall represented some 27.4 percent of the avoidable ER visits by county employees.
Also driving up costs is employee lifestyle choices. ShawHankins report figures that more than $600,000 in direct and indirect expenses are being driven by employees who are overweight or obese, another nearly $540,000 are driven by lack of physical activity, and poor nutrition adding another nearly $290,000 to health care costs.
Tobacco use by itself also costs the county and employees paying premiums out of their paycheck either directly or indirectly nearly $550,000 as well.
Prescription costs don’t help either. Just ten prescription drugs cost the county nearly $350,000 annually, and of those five are either insulin or used to control Type 2 diabetes. Just those five drugs cost the county $103,597 alone. Additional Top 10 costs are related to autoimmune disease drugs, with one costing alone some $77,135 for 26 prescriptions over a year’s time, and a plaque psoriasis drug additionally cost $77,103 as well.
The county spent another $442,000 is spent on all other prescription drugs for county employees, ranging from high blood pressure medication to antibiotics when they get an infection.
All of these cost drivers means that when it comes time to negotiate for annual renewal costs on group insurance, other companies become reluctant to provide bids and Blue Cross Blue Shield can charge more as more claims are being paid out.
It’s a problem Commission Vice Chair Hal Floyd is all too familiar with during his past executive experience at TipTop Poultry.
This Tuesday after press time, he’s asked commissioners to come listen to potential solutions on how the county might handle getting the insurance coverage costs under control.
Floyd wants to look at all options for how the county covers employee health care in the future, including the option of the local government paying for health coverage costs on its own, and paying an internal administrator to handle claims. The idea is that with a large portion of the county’s health insurance costs being paid out in claims, the additional money is being used for administrative purposes and can be cut by handling claims in-house.
However, he’s open to all options so long as those costs come down.
Especially since the county is facing a variety of increases across the board.
They’ve been looking at how they might handle those in a variety of ways, from changing how the county handles retirement options for employees to uses of individual fees and fines in several areas where they are either too low currently, or no fees are charged at all for
services provided by the county. Ongoing discussions about those plans took place before the County Commission’s July session, and continue this week.
Among those is an additional want from Floyd: saving money for future generations to avoid future landfill headaches.
Right now, the county receives around $1.7 million annually for its part of landfill revenue from Waste Industries, not including the cost of renting the transfer station, along with money provided to Keep Polk Beautiful as part of the contract.
Floyd wants to start setting aside some of that money for the future.
“My idea is to set aside around $75,000 a month from the annual payments to the landfill to be
invested in a trust that when we get 26 years down the road, we will have options for our children and grandchildren instead of being put in the same situation,” he said.
The rest of the annual payment would be split between the general fund to the tune of $900,000, with whatever is left to be placed in a surplus emergency fund for any general issues that come up.
It will ultimately come down to what commissioners as a group want to prioritize in their spending for the year.
For now, budget numbers remain the same until decisions are made where to go, and additionally how much money is available to the county in revenues from property taxes.
The budget does still include the slight millage rate increase needed to cover employee raises approved previously, but it isn’t set in stone.
During the commission’s March session when proposals were put
forth to give employees a raise, Marshelle Thaxton’s motion of a 75 cent an hour bump across the board ended up winning a 3-2 vote.
In that motion, Thaxton said he wanted to “proceed with the Carlin Vincent pay study, raise the starting patrolman salaries to the same as a starting deputy at $14.63 is the number I remember everyone was throwing around, and in addition to that I would like to propose that we add 75 cent an hour to every employee’s pay and I would expect this to begin on the first pay check in April, whenever that is.”
Tillery seconded that motion, and it passed with a 3-2 vote to get onto the agenda for the March meeting. Later on the raise passed with a 3-2 ovote as well.
Thaxton said it would cost $470,000 during that meeting for a full year, and from the start in April of the plan, and that he had originally figured it at $1 during
that meeting and that in June the commission would have to find money in the budget for it, ostensibly from a millage rate increase.
“The reason I lowered it from $1 to 75 cents, when I got to figuring it (the raise) would have come out to over $600,000, and .65 millage rate is pretty high. .47 is pretty high too, but it’s not as high as .65,” Thaxton said during that meeting.
When coming up with budget numbers, county administrators included that millage rate increase into the FY 2019 revenue in order to balance out the increase based on Thaxton’s mention of how much it would costs in mills to give salary increases of 75 cents and hour on top of the annual 1.25 percent increase employees receive.
Now technically this is where the confusion comes in. Denton said that the increase didn’t specifically require “a millage rate increase, only that the raises given in March were equivalent
to a mill value of approximately .45 depending on the 2018 Digest Value.”
In a follow-up email, he then added that the “increase for all employees did create an additional need for funding beyond our current funding capacity. The Board will need to determine how to fund the increase.”
Hulsey had questioned that millage rate increase during a late May budget work session, where she said that Denton had not notified the board of the additional need.
She followed up in saying that she didn’t recall commissioners specifically citing a need for a millage rate increase during the March meeting, but did agree that Thaxton’s proposal for the 75 cent and hour raise did need funding.
“Just because he says that does not mean that everyone is in agreement of a millage rate increase,” she said.