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Board updates reserve policies and adopts administrative and sustainability budgets
Summary
The board approved updates to IBNR, contingency and stabilization reserve policies to reflect potential self-funded HMOs and flex-funded products, and adopted the proposed administrative budget for FY2014–15 and a $2.05/member/month healthcare sustainability spending plan.
The Health Service Board approved a package of reserve-policy updates and two budget items that together set funding and governance priorities for the trust.
Actuarial staff recommended minor textual and date updates to the IBNR (incurred-but-not-reported) reserve policy and expanded the contingency and stabilization reserve policies to include potential self-funded HMOs (e.g., Kaiser) and Blue Shield flex-funded exposures. The board approved the three policy updates on motions moved and seconded during the meeting.
Deputy Director and CFO Pamela Levin presented the administrative budget for the 2014–15 fiscal cycle, describing staffing/FTE adjustments, limited-duration positions to prepare for eBenefits (PeopleSoft/eMerge upgrade), analytics work to build an internal data warehouse, phone and file-room modernization planning, and funding to strengthen fiscal controls. Levin proposed using forfeiture balances to meet mayoral reduction targets and to avoid direct premium impacts.
On sustainability funding (Prop C implementation), staff recommended continuing to use the $2.05/month per member charge to support open-enrollment operations ($806,000), database and analytics builds (estimated build costs and initial licensing), wellness expansions ($500,000), communications ($500,000), and a $300,000 contingency. The board adopted the administrative budget and the sustainability plan.
Next steps include submitting the administrative budget to the Mayor’s Office by the February 21 charter deadline and returning to the board with any changes made during mayoral consideration and negotiations.
