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Council members raise alarm about group health fund deficit; consultant engagement planned
Summary
Council members said the city’s Group Health Fund shows persistent deficits and a projected need to balance the account; they approved hiring an outside consultant (Bailey Group) to review plan design and recommend changes to reduce annual shortfalls.
Council members and staff used the July 15 Finance Committee to flag long-standing deficits in the city’s Group Health Fund and to outline plans for consultant assistance to evaluate plan design.
Why it matters: The group health plan’s deficits affect the city’s operating budget and could drive repeated use of general fund dollars or reserves if not addressed. Council members said current trends show annual pressures and urged prompt, systemic solutions.
What was said
Councilmember Ron Salem described the fund’s history and figures: the group health reserve has fallen from as high as about $40 million several years ago to a deficit position (cited as about negative $4 million at the time of discussion). Auditors said books close quarterly and the committee will receive third-quarter numbers at the end of July; the account must be at zero by fiscal year-end (Sept. 30).
Salem and other members said the city has been absorbing roughly $20 million in annual health-plan shortfalls and that prior plan tweaks have not sufficiently reduced costs. Council members proposed engaging an external consultant to produce recommendations. Salem said he had identified funding for a consultant engagement (the Bailey Group) from a previously appropriated contract (Michael Hugues contract) so that the city would not have to dip into reserves for the consultant work.
Committee concerns and next steps
Councilmembers said administration is responsible for making plan design changes but added that past changes have been incremental. Several members urged the council and administration to prioritize “cash preservation” and to treat the group health fund as an item of high budgetary concern during the 2025–26 budget. Salem said work with the Bailey Group (a consultant familiar with public sector plan design) will proceed and that the consultant will discuss recommendations with administration and council during the 2526 budget cycle.
Ending
Committee members asked for tracking and a formal set of recommendations to be shared publicly with finance staff and council, and several members said they will press for more substantive administration action on plan redesign.
