Budget Worksession Minutes
May 11, 2009

The meeting was called to order at 7:00 p.m. Present were Mayor Calvo, Mayor Pro Tem (MPT) Lofgren, CMs Ahrens and Dennison. CM Gourley was absent. Also present were Town Administrator (TA) Murphy and Clerk Harper.

1. Mayor

Announcements: The City of College Park will dedicate a memorial plaque for its first black Mayor Dervey Lomax at Lake Artemesia on May 16. Will Dalson will serve as an intern in the Town office from May 19 – 29. The SWAT team legislation authored by Mayor Calvo will likely be signed by the Governor on May 19.  The Council is invited to attend the Prince George's County Historical Society reception on May 21 at Riversdale Mansion. May 21 is also the date of the Safe Streets Committee public hearing on the Committee's final recommendations.

2. Budget

Health Insurance Arrangement: TA Murphy provided updated information on health insurance costs for FY 2010. He said, if the Town were to remain in the current Care First Open Access Opt-Out plan, it would cost $174,000. This figure includes basic medical insurance for all employees, their families and domestic partners, as well as dental, vision and life insurance. Furthermore, it includes an additional 4.2% increase in insurance rates, effective July 1, 2009, above the increase announced for May 1, 2009. This represents a 33.3% increase in health insurance costs over FY 2009.

TA Murphy continued, if the Town switches to a Care First Health Insurance Arrangement (HRA), which has deductibles of $1,200 for individuals and $2,400 for families, the cost of basic medical insurance drops from $156,000 to $105,000. This figure does not include dental, vision and life insurance. The Town proposes to pay for the deductibles, yet would save $24,100 over the current health insurance plan, which can be added to surplus.

There ensued a discussion about the correct amount of savings achieved by switching to the HRA plan, and what is represented by the $105,000 figure for basic medical insurance expenditures under the HRA. TA Murphy informed that the number includes a “cushion” of $6,900, in the event that a single employee  is replaced by an employee with family. Additionally, the HRA budget allows for only 1 same sex domestic partnership and 2 opposite sex partnerships. Mayor Calvo said that he favors setting a high threshold to qualify for domestic partnership benefits so as to exclude the possibility of employees “gaming the system” and claiming persons as domestic partners who are not. In response to MPT Lofgren asking whether the domestic partner benefit will be advertised to employees, TA Murphy said he would handle it on a “don't ask, don't tell” basis. In the absence of any defined standards by the State of Maryland, the Council will take up domestic partnership standards at a later date.

TA Murphy further noted that there are a couple of disadvantages with the HRA. First, an employee has to pay a $250 deductible for each hospitalization. Second, the employee has to pay for the co-pay and 20% co-insurance for going to an out-of-network provider until a higher deductible of $1,800 for individuals and $3,600 for families is met.

At 8:10 p.m., the Council took a 10 minute break.

Mayor Calvo asked for comments or objections on switching to an HRA. He said he has no problem with imposing the higher deductibles applicable for using out-of network doctors because it saves money to have employees use in-network doctors. The Town needs to find ways to reduce costs because, up to this point, the Town has not passed cost increases on to employees. Similarly, he has no problem with a $250 deductible for hospitalization. It is an incentives for employees to do preventative care and avoid hospitalization, if possible. There were no objections to adopting the HRA from other Councilmembers.

Bulletin outsourcing: Mayor Calvo said that the Council at the last worksession voted against outsourcing the Bulletin at an annual cost of $6,000 because there was a possibility that health insurance rates would be raised by another 25%. However, this did not occur. Thus there now are sufficient funds to pursue outsourcing. The reason for removing Bulletin production from the Code Department still applies: it would give Code Director Solomon more time to devote to code matters. The Code Director would keep the stipend for Bulletin production, which came out of the Administration budget, as part of her salary, but not the additional pension benefits.

Mayor Calvo recommended transferring $6,000 from the surplus to the Administration Department for Bulletin production. At the same time, the Code Director would be allowed to keep the stipend, with salary and pension benefits adjusted so as to be equal to the compensation she currently receives. CM Ahrens so moved. MPT Lofgren seconded. In response to MPT Lofgren, TA Murphy said that he has 3 possible vendors to take on the Bulletin production. Mayor Calvo added that TA Murphy should be given a couple of months to plan for the switch. During that time, Ms. Solomon will continue to put together the Bulletin. CM Ahrens said that the change may provide the opportunity to digitize the entire Bulletin. Mayor Calvo thought that a better and cheaper way of producing the Bulletin could probably be found. The motion passed 4 to 0.

Parks & Recreation Special Events budget: CM Dennison said that she would like to revisit the decision to transfer spending authority for the Special Events line item to the Parks & Recreation Council. The Special Events appropriation for FY 2010 is $9,000, most of which will be spent on Berwyn Heights Day. She has no objection to the Recreation Council controlling funds for Berwyn Heights Day, plus several other seasonal events. However, she would like to pull back $1,500 of those funds for the Volunteer Appreciation Dinner, the PTA weekly reader donation and the holiday decorating contest.

Mayor Calvo suggested amending last week's motion designating the $9,000 Special Events appropriation as the Recreation Council appropriation, to reduce the FY 2010 Recreation Council appropriation to $7,500, to create a new $1,000 Volunteer Appreciation Dinner appropriation and to add $500 to the Miscellaneous appropriation. MPT Lofgren so moved. CM Dennison seconded. CM Dennison elaborated that the Recreation Council Department Head should retain some discretionary spending authority as unexpected expenditures tend to come up during the year. Last year, she had to finance a fence repair for Pop's Park and pay for larger posts for street markers. Furthermore, Town organizations that cannot come to the Recreation Council meetings, should be able to turn to her for representation as the Parks & Recreation Department Head is one of the voting board members on the Recreation Council.

Mayor Calvo said that the Council should also undertake updating the composition of the Recreation Council board, as provided by Ordinance No. 113. There are several new Town organizations that did not exist when this Ordinance was adopted but now play an important role. MPT Lofgren said that the Ordinance does not require that money be given to the Recreation Council to spend. Rather it provides for the Recreation Council to “recommend appropriations from the general revenues of the Town for the purchase of equipment and development of facilities and conduct of recreation programs.” The Recreation Council does have its own money in a separate checking account. The Special Events money should not be added to that. Mayor Calvo agreed. However, the Recreation Council, as the principal planner of special events, should be able to see how much money is available for events and have control over how to spend it. The motion passed 4 to 0.

Surplus: Mayor Calvo said that the surplus will be important over the next few years as real property tax revenues are set to decline. But there has been a discrepancy between his approach to the surplus and TA Murphy's. TA Murphy has prepared two budget summaries representing the different approaches. Version 1 represents TA Murphy's approach and is based on auditors' accounting practices, appears to double count 'transfers to reserves' in a surplus available section, which are already itemized in a reserve section. The surplus in version 1 comes to $510,756 but may be overstated by $106,347. In version 2, the 'transfers to reserves' line has been deleted and the surplus comes to only $404,409. TA Murphy explained the auditors approach. Mayor Calvo said that he plans to talk to the auditors to verify the amount of the surplus.

The meeting was adjourned at 9:55 p.m.

Signed: Kerstin Harper, Town Clerk

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