The Committee on Finance on Oct. 16 voted to refer a mayoral appropriation of $750,000 for health insurance purchase-of-services to the full City Council for adoption. The motion passed in committee 6–1.

Administration briefing: Finance staff and city health-plan administrators said the city in recent years changed its budgeting approach for health insurance from claims-paid estimates to a ‘working rates’ premium model tied to actual enrollments. Bob Ekstrom explained the shift was meant to provide more certainty but said a recent council budget cut would shift costs from the general fund to the city’s medical claims trust fund, reducing that reserve.

Reserve and legal context: Ekstrom told the committee the Department of Revenue recommends a medical claims trust balance equal to two months of expected expenditures (about 16.7 percent). He said DOR had flagged the city because the DOR calculation was close to 12.4 percent (and other calculations put it slightly higher, around 13 percent). Ekstrom warned that continued erosion of the trust fund increases the city’s exposure and could affect bond raters’ view of the city’s financial management.

What the supplemental does: Finance staff said the $750,000 would cover health insurance claims and avoid shifting costs to the claims trust fund. Ekstrom said “this $750,000 cut, it will get all the medical claims paid, but it'll take $750,000 out of the medical claims trust fund instead of the city,” in reference to the decision-making implications of prior council cuts.

Vote and next steps: Councilors voted 6–1 to refer the appropriation to the full City Council for adoption. Councilor Morad voted no. Committee members asked for quarterly medical-claims reporting and indicated they expect finance staff to provide first-quarter claims information soon.

Ending: The full City Council will consider the appropriation at its next meeting; the committee requested more regular claims reporting to monitor the medical claims trust fund balance.