Mayor Anthony Staffieri pulled a rabbit out of his budget hat Tuesday, announcing that Derby will be pooling city and school employee health care costs to create a self-funded health care plan that officials said could save Derby up to $1 million.
The projected savings was used to restore two jobs that were slated to be cut from the city budget and most likely fund the purchase of new police cars.
It also transferred roughly $3 million in health care costs from the school district to the city.
The end result — the Derby Board of Apportionment and Taxation unanimously approved a 2011 – 2012 $35.7 million budget Tuesday that will increase the tax rate by 0.5 mills.
A Derby property owner with a house assessed at $170,000 — roughly the city’s average — will pay an additional $80 on his or her tax bill next year.
“We did good for the schools, we did good for the city,” tax board chairwoman Judy Szewczyk said.
The school budget approved by the tax board Tuesday totals $15,449,185.
That total comes after the city transferred roughly $3 million in health care costs from the school district to the city.
The Derby school board had been seeking an additional $1.2 million on top of its $17.7 million budget to operate the schools next year. $994,000 of the $1.2 million increase were considered non-discretionary items — such as $344,000 in increased school employee health benefit costs.
Derby tax board officials said Tuesday they increased total funding for the school district by $446,000 from this year’s allocation.
“There are no strings attached to that,” Szewcyk said. “That money that does not have to go to Anthem (Derby’s insurance provider) because we are picking up those costs for them. The money we gave them will now go a lot further for them.”
School officials were not prepared for Staffieri’s announcement Tuesday.
Superintendent Stephen Tracy said he learned about the plan 60 minutes before the tax board meeting. The school board is scheduled to meet June 7 to talk about how they’ll use the money allocated by the tax board.
Tracy said he had not even met Howard Campbell, a vice president with USI Connecticut, who consulted with Derby on ways to save money on health insurance.
Campbell was on hand at Tuesday’s tax board meeting to answer questions from the public and elected officials.
“I’ve received nothing in writing and I haven’t even had the chance to shake Mr. Campbell’s hand,” Tracy said.
Derby Corporation Counsel Joseph Coppola said switching from a fully-insured health care plan to a self-funded plan does not require the approvals of City Hall or school district unions.
Nothing changes for the individual employee, Coppola said. The city and school district will continue to use Anthem as the insurance carrier.
Staffieri’s administration has been consulting with Campbell’s USI Connecticut for several years.
In the last roughly three weeks, Staffieri, under mounting budget pressure, started pressing Campbell to find ways to save money on insurance.
Campbell said Anthem’s premiums are inflated and that Derby, with a relatively low number of claims, would save money by pooling with the school district and switching to a self-funded model.
Tax board member Mark Nichols asked Campbell if his services were similar to an insurance agent who works with companies to get a client a better deal on car insurance.
Campbell said his job is like that.
“We know what questions to ask, what rocks to overturn, where to look to find those savings,” he said.
The tax board meeting was interrupted several times Tuesday so members and city finance officials could crunch numbers.
Dan Foley, a Democrat hoping to unseat Staffieri in the November election, said the mayor’s “11th hour” insurance savings seemed rushed and disorganized.
“There have been budget meetings going on for months,” Foley said. “Now no one’s even had a chance to look over this proposal. This is totally unacceptable. If this was the plan, this should have been done weeks ago. It should not have been brought up at the last minute.”
After the tax board meeting, Staffieri said Derby was researching options until Tuesday night. When they found out how much money the city could save, they decided to jump at the chance instead of waiting.
“The motivation was to keep our mill rate down,” Staffieri said. “We’ve been talking about doing something with the insurance for the past few years, to combine the board of education and the city. The board of education kept saying they were going to do it, but they never did it. So finally, we took the initiative,” he said.
“This should have been done three years ago, but we kept waiting for the Board of Education,” Staffieri said. “I’m not going to raise the mill rate by a significant amount.”
During the meeting, Derby school board president Ken Marcucio, Sr. said that the school superintendent has been negotiating with a new insurance carrier in an attempt to find savings on the school district side of the budget.
Perhaps those negotiations could have saved even more money for the school district, Marcucio said.
When asked by the Valley Indy why the school superintendent wasn’t involved in Derby’s insurance talks, Staffieri said he had dropped hints to Marcucio. Derby didn’t learn of its potential savings until shortly before Tuesday’s meeting, the mayor said.
“I had mentioned to Mr. Marcucio that we were exploring a number of options. The bottom line is that the Board of Education is going to benefit from this. The Board of Education got more money than they were going to get,” Staffieri said.
The budget adopted Tuesday includes 4 percent raises for Derby city union members.
