November 20, 2017 11:25 PM
(ABC 6 News) -- The Austin city council Monday night approved the transfer of $500,000 from the city's building fund to cover losses within the health insurance fund, a move one council member likened to a Band-Aid fix.
The council voted unanimously to move the funds, which include $250,000 the city gained from selling 3.9 acres of land near the Northwest Park area, to cover what has so far in 2017 been a $377,830 net loss in the health insurance fund.
"Our health insurance fund is not having a very good year," Tom Dankert, the city's director of administrative services, said at the meeting.
According to a memo Dankert sent to the mayor and city council members dated November 3, the city had seen total revenue of $1,141,803 through October 31, along with $1,519,633 in expenses.
In 2016, the city transferred $650,000 into the health insurance account to cover losses and start this year with an approximately $500,000 surplus. A document presented at a work session following the council meeting outlined three years of record numbers of claims, and stated "massive changes" are needed in the near future.
"We insure ourselves, and some of the claims that have come in have been insurmountable," city administrator Craig Clark said.
The city is looking at a variety of changes to address the shortfall, including plan changes, eliminating some options, rate increases and an increase in city contributions, he said.
The building fund, from which the $500,000 will come, is normally used to fund city projects like library improvements and arena updates. Some of that money was designated for use on a planned Hy-Vee distribution center on the city's west side, which the company recently announced is on hold as they re-evaluate their needs. Since that project is no longer in the immediate future, those funds can be moved more easily, though it's still not ideal, officials said.
"The building fund is not necessarily the best place to take this from, but we have nothing else left," Dankert said. "The general fund is at the bottom line for what we feel comfortable with for fund reserves."
Even with significant changes, the city could still have to transfer another $250,000 into the insurance fund next year. 2018 insurance rates are expected to be discussed at the council's next meeting December 4.
But both Dankert and Clark stressed the city's overall financial picture is one of health.
"What we're really looking at long-term solvency for the city and making sure we're making good fiscal decision on behalf of the residents of the city," Clark said.
Created: November 20, 2017 11:25 PM
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