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HomeMy WebLinkAbout1728_001AP/ I* ROLL CALIJ MINUTES COMMITTEE OF THE WHOLE N MARCH 26, 1985 The meeting was called to order at 7:34 p.m. Present at th( meeting were: Mayor Carolyn Krause- Trustees Ralph Arthur Gerald Farley, Leo Floros, Norma Murauskis, George Van Geer and Theodore Wattenberg. Also present at the meeting were: B Village Manager Terrance urghard, Assistant to the Villag( Manager Michael Janoni's, Director of Community Developmeni Kenneth Fritz, Village Planner, Stephen Park, Director oj Public Works Herbert Weeks, Village Engineer Chuck Bencic, Cable TV Coordinator Karen Giet, Interns Lucia Rimaviciul and Michael Steklac and Jack Pettigrew, Trkla., Pettigrew, Allen and Payne. There was one person from the print medi'C', in attendance, There were also several representatives fro'o various tax -Ing districts in attendance, MINUTES IN" The Minutes of the Committee of the Whole meeting of March 12, 1985 were accepted and filed. 1IIe CITIZENS TO BE HEARD There being no citizens present at the meeting desiring t make any presentations before the Committee of the Whole the Mayor moved on to the next em of business. I IV. TAX INCREMENT FINANCING DISTRICT PROPOSAL Village staff, with the help of consultant Jack Pettigrew, of Trkla, Pettigrew, Allen and Payne, reviewed with the Committee of the Whole three taret area gs for TIF Districts w *thin the downtown business area, Director of Community Development Kenneth Fritz 'Indicated that the uses envisioned in the three target areas were consistent with the Mount Prospect Comprehensive Plan, Mr. Fritz indicated that the staff was looking for direction from the Committee of the Whole to proceed with a detailed assessment of a particular target area, do 40 9k A so W go Ak 4 Am Alk A6 OP "` It Mr. Pettigrew described target area number two as that property lying west of Emerson Street, north of Northwest Highway and south of Central Road, The estimated current equalized assessed value was approximately $3,365,000. Net project costs amounted to approximately $4,315,000, with the annual Tax Increment estimated at between $155,000 to $230,000. The proposed mix of uses I*ncluded a large service commercial development and multi -family dwelling unitsle Target area number three was described as a parcel of property south of Northwest Highway and east of Emerson at the approximate location of the Busse Car Wash on Prospect Avenue. Current equalized assessed value was estimated at $365,000. Net project cost was estimated at $5801,000 with annual Tax Increment totaling between $52,000 to $74,000. 0 0 Mr. Pettigrew indicated that target area number three wa probably too small to have any real beneficial 'impact o downtown redevelopment. ITe also indicated that target are number two was at this time less than desirable because an redevelopmen.t could not be phased and would require th purchase and demolition of current Public Works facL* i les, ;$ 0 Mr. Pett i0grew indicated that Distr ict #1 had a conf i'gura- tion that would permit phased development over a period of 0 time "in several different locations. He also indicated that total redevelopment was not necessary, Mr. Pettigrew also 'Indicated that time was a critical iderat*on 'in the Board's deliberations on which District cons I I to designate. lie indicated that after June 18, 1985, a new State multiplier would be i*n eff,ect and that could have a detrimental 'impact on the current equalized assessed values and subsequent projections for the project. Mr. Pettigrew also 'Indicated that the Board would have to adopt three Ordinances by the June 18 target date. Those Ordinances would include a designation of the redevelopment area, an Ordinance adopting Tax Increment Financing as the financing mechanism used 'in this area and an Ordinance detailing the overall land-use_plan for the District. M M Upon questions of the Committee members, Mr. Pettiprew indicated that minor changes in the land -use Oplan were Pob 'le -after June 18, ssi 0 Discussion among Committee members centered around whether there was adequate existing infrastructure to support redev - elopment and as to the particular configuration of development in the different target areas, The discussion among Board members resulted 'in the following direction to the staff. Board members felt that they needed more detailed information regarding particular uses within each District, It was also decided that TIF would become a regular Agenda 'Item until such time as the Board had made a determination as to its adoption. Committee members also indicated that the public should be made fully aware of the riechanics of TIF and that their views should be solicited. Staff was requested to supply information on a timely basis, 0 There was a general support for the concept of utilizing TaA a Increment Financing as a redevelopment tool, It was indi cated, however, that the use of TIF should be upon unaou., Board approval, GREATER WOODFIELD CONVENTION AND VISITORS BUREAU A representative from the Woodfield Convention Bureai presented%to the Board a request for $2,000 as the Village'� contribution to a comprehensive marketing plan to attract tour -ism and convention trade to the greater Woodfield area, of which Mount Prospect is a part, The Convention Bureal representative indicated that 'it was the goal of the Bureal to gather together 20 area communities in a massive market. ing program, covering a 350 mile radius, It was 'Indicate that the Bureau would be receiving matching State funds. I The marketinstrategy would center a g round promotions advert isements . SpOrting events and community events, I was also indicated that plans were being made to tak advantage of the 'increased tourism and convention activit that would be generated by the proposed 1992 World's Fair 3 - Chicago,, I Bureau representatives indicated that Mount Prospect woul be adequately promoted as part of the overall strategy Attractions such, as Randhurst • Shopping Center, Kensingto Genter and local restaurants would be promoted. Bus tour to these various areas were als,o contemplated, It was als 0 indicated that ,r would have the right to appoint Is representative to s 'it on the Bureau' s Financial Oversigh Committee with full participatory rights. M Board members expressed concern that the Village be ade quately represented 'in the Bureau's marketing plans. Ther was aiso concern raised as to the resulting increase 1 traffic congestion, the plan would cause* Representat ive from the Bureau indicated that t I ne Village of Mount Prospec would be adequately represented in the marketing strateg and that the Bureau had or was dealing with the potenti'a problem of traffic congestion, There was a general con sensus to appropriate the requested $2,000 for the Greate Woodfield Convention and Visitors Bureau. . . . .............. db All A* do 4v W do a 9 do 0 W go AW Alk 40 40 4W it OW dk 40 AMP AS OW Sk Ak 41k Am 0 0 00 - W W 40 Trustee Farley suggested that the Village adopt a Resolution reartirming* the Village's part iciopation in the Northwest Muni*c1pal Conference Consortium and also that they consider additional funding of approximately $600 for a municipally - run productiodicated that the funds for this expenditure would come from the Cable Franchise Fees, It was 'Indicated that action by the Board should betaken prior to There was a general consensus among the Board members to conti'nue part icipat 'ion 'in the Consortium and to consider further,, additional appropriat 'ions for the part ic ipat 'ion of to .0 v the Village in a municipal production studio, The appro- priate Resolution was to be placed on the next regular Board Agenda. By way of genei;al discuss ion, Committee members generally adopted the Development Code as presented to them by staff at an earl i er date. Comments by Committee members were favorable and members indicated that they deferred to the expertise of Village staff as to the technical aspects of the Code. Village Manager Terrance Burghard indicated that staff wanted to have an updated and modern Code on the books as the remaining development of the Village was undertaken. In this way, it would ensure that development of the Village would be in line with the latest technical and engineering standards. It was the consensus of the Board to adopt the Development Code, VIIIol-MANAGER'S REPORT Village Manager Terrance Burghard 'indicated to Board member that the Water Agency had recently sold the Bonds that woul finance the remaining cost of the project, and that al Committee members were invited to attend the Water Agenc meetings, I Assistant to the Village Manager Michael Janonis *Indicated that signals were favorable on the Village receiving Rpproval for plantings along the Chicago and North Western Railroad right-of-way. Mr. Burghard reported that the Executive Committee of Central Dispatch had met and decided that Central Dispatch staff would receive a 4% salary increase. However, Mr. Burghard indicated that the Manager and Assistant Managers of Computer -Aided Dispatch would not receive a full increase until the system was brought on line, lrvl�1001 oil - - ------- - - - There was no other business brought before the Committee of the Committee of the WholeO 0 fflw�, There being, no further business, the meeting was adjourned at 10:'08 p.ml, MMWectfully submitted, TERRANCE Lo BURGHARD Village Manager TLB/rcw M mill, illage of Mount Prospect MOUnt Prospect, Illinois "17 > INTEROFFICE MEMORANDUM TO: MAYOR CAROLYN He KRAUSE AND BOARD OF TRUSTEES FROM: ASSISTANT TO THE VILLAGE MANAGER DATE: APRIL 4, 1985 0 SUBJECT: VILLAGE OF MOUNT PROSPECT/ DISTRICT 214 HOUSE SALE Staff has analyzed the available methods for the Village to dispose, of the property at Central and Stevenson upon the 1P com,pletion, of the homesite by 'District 214 students. The target date fir.completion of this,, project is late September. At this it,would be appropriate for, the Village Board to make a et rminat ion as 'to the method of sale, of this particular property so that staff can begin making the necessary arrange- ments. Based on staff analysis, the Village has four basic alter'native methods of sale. First, the Village could 'hire a broker who would list theproperty in a conventional manner and the sale would be handled again in the convent,i,ona,l manner. Second, the Village coluld, actempt to sell the 'property on Its own,* Th i r d, I'h , # S 10, n, which "chances" the ViLlage, could, u.,se a lottery -type mec, an1 " I ml are soy and a draving is held,. Fourth, the Village coul,d conduct a public auction and, finally, a, sealed bid process, could be used. Kee in in mind that this pro*ect, has met with, much support on the part of both the Village 'Board, and, the District 214 Board and a desire for a continung relationship has bee, expressed., the i sale of this house should be executed in a manner which, will bring as much positive publicity and media coverage as can be mustered. Attachedplease find a staff report analyzing the various methods of sale available to the Village Board. once the Board deter- mines the method of sale it wishes to utilize, it will require that an Ordinance be passed authorizing this method of sale and a subsequent Ordinance authorizing the actual sale of the property. MICHAE1, Ev J,iONIS MEJ/rcw Phard c: Village Manager Terrance L. Bur,,,, Director of Public Works Herbert Weeks Michael Janonis - Page 2 March 7. 1985 Sealed Bid The likelihood of getting the appraised value or higher for the property is reasonably good. Again, the Village Board may have the option of accepting or rejecting the high bid. Generally, the public visibility is higher than a negotiated sale but lower than a public auction or lottery. Although, this depends upon the Village's advertising efforts. Press coverage might be high on the day when the bids are submitted and opened, Public Auction Some of the advantages of a public auction over a negotiated sale, and a sealed bid to some extent, are outlined in a September 7, 1965 Wall Street Journal article: "Auctioneers say that the excitement created by an auction can whet buyer interest and sometimes bring higher prices than could be obtained in a negotiated sale. If there's a market, we will bring people together and put them through the pressure cooker. While a potential buyer in a negotiated sale might make an offer and let it stand, an auction makes him decide quickly just how badly he wants a piece of property. And, they add, the fact that someone is bidding against him is likely to make him raise his estimate of a property's worth." There is always a danger of getting high bid lower than the appraised value of the property. This may be remedied by setting an 11upset" price or minimum opening bid. The City of Rochester, New York tagged the minimum bid on auctioned properties at 75 percent of fair market value. (77 Journal of Housing 240) The results of their auctions were submitted to the City Council for approval. The Council reserved the right to accept or reject any bid. If the Council rejected the bid, the property would be offered to the next lowest bidder at the high bid price, A final advantage is the high public visibility that an auction enjoys. The auction of unclaimed property at the Public Works Garage usually has a high attendance and good Press coverage. Public real estate auctions are usually held to dispose of dilapidated or undesirable property. We may have to make some effort to overcome this image, Usually the auctioneer takes a percentage of the sale price. However, Mr. Bill Ballard, a certified auctioneer from Elgin, said that he waives the commission for not-for-profit organi- zations. (I would assume he uses it as a tax deduction.) He can provide references at our request, Michael Janonis - Page 3 March 7, 1985 Cattery A lottery of' -this type is covered, 'by Chapter 85 , Section 2301 'et eq.,, of' the Illinois R,evis,ed Statutes reg,ulating raffles. "The governing body, of any county or municipality within this State may establish a, system for the licens,ing of organizations to operate raffles, The statute also states that "licenses shall only be issued to bonafide religious, charitable, labor fraternal, educational or veterans' organizations that operate without profit to their members.... In discussions with the Illinois Attorney General's Office in Chicago they forsee no problems with the Village conducting a raffle even though the statute does not specifically authorize it., Raffle regulations are covered in Section 11 .2205 et seq. of the Village Code. Tf we were to conduct the house sale by raffle the ordinance would have to be amended. Presently, the maximum retail value -"of each prize awarded cannot exceed $25,000. In a lottery the sale of chances is not guaranteed. In a sale of this type hundreds, perhaps thousands, of chances would have to be sold. If sales fell short, the Village might take quite a 1�1 loss. Also a high amount of staff time might be devoted to the sale of chances,, Another disadvantage is that the Village Board will have no right to accept or reject the winner of the lottery. Also, a person who can afford a lottery ticket may or may not have the financial ability to continue to maintain the property, The only advantage of this sale option is the Press coverage that the drawing of the winner would receive. I., Recommendation Based on the analysis above, I would recommend the use of the public auction with a minimum opening bid and Board approval. Beyond that, in order of recommendation: 1 . sealed bid with Board approval; 2. negotiated sale with Board approval; 3. lottery 14J S : hF, Village of [Viount Prospect MOUnt Prospect, Illinois 77" INTEROFFICE MEMORANDUM TO: MOUNT PROSPECT FINANCE COMMISSION MEMBER� UROM: TRUSTEE RALPH We ARTHUR DATE: APRIL 5., 1985 SUBJECT: 19.85-1986 BUDGET ANALYSIS I wli'sh to, take this opportunity to commend you on your excellent anai-y'si,s of the, ,198,5-1986 Budget,, Through your studied analysis and recommendat:L,ons, it made my Job and I am sure the rest of the Board, much, easier., It is through dedicated volunteer citizens like you wh takeart of t busy lives to help the citizens P of the Village, that makes our Village such a fine place to live. Thank you again and I am looking forward to your further analysis of our finance conditions, 0 RALPH We ARTHUR RWA/ rcw C Mayor Carolyn He Krause Board of Trustees Villag,e Manager Terrance L. Burghard Village of FAciunt Prospect Mount Prospect, Illinois TO Finance Commission FROM41 David C. Jepson, Finance Director a DATE . April 5, 1985 SUBJECT: 1985/86 Budget Recommendat ions The Village Board will discuss the report and recommendations of the ' - Finance Commission, relative to the 1985/86 budget at a Committee of the Whole meeting on i April 9, 1985. The meeting will be held n the Public Safety Building, -112 E. Northwest Highway, second floor, at 7:30 P.M. I would like to encourage each one to attend and join in the discussion. Enclosed is an agenda for the meeting, along with the material provided to the Mayor and Trustees. MINUTES MOUNT PROSPECT FINANCE COMMISSION March 21, 1985 I Rol 1 Call The meeting was called to order at 7,:30 PX by Village Manager Terrance 0 ISM urghard. Commissioners present were Richard BachhUber and Ann Smilanic. Also present were. Village Manager Terrance Burghard, Assistant to the 0 Village Manager Michael Janonis, and Finance Director David Jepson, I 0 Commissioner Ann Smilanic presented a report which summarized the observa- tions and recommendations ofthe Finance Commissioners during the four previous review sessions, The report and the recommendations were reviewed and discussed, by Com*ss* I 1 loners Bachhuber and Smilanic and the V'Ilage Staff in attendance.. 1t vias the consensus that the report accurately summarized 0 0 W the observations, comments and recommendations of the Finance Commlssion and that the report should be given to the Mayor and Board. III Other Business T Village Manager Burghard expressed his appreciation to the F1*.nance Commission fior the effort and tme that had been devoted to the 1985/86budget review, He explained that there would be a formal public hear* ,ing on pri'l 16, 1985 and invited the Commission Members to attend. Mr. Burghard also informed the Commissioners h special meeting would be called within 60 days for the purpose of revl*ewtng a draft of a Village Cash Management and Investment Policy, IV Adjoyrnment There being no further business' the meeti*ng adjourned at 8:40 P,M* David C, Jepson Fi` nance Di rector 0 Attachment. Finance Commission Report -- Review of Proposed Budget The Mt, Prospect Finance Commission Report to the Mt. Prospect Board of Trustees on the Review of the Proposed Budget for Fiscal Year 1985--1986 The village of Mount Prospect budget for the fiscal year 1985-1986 was delivered to members of the Mount Prospect Finance Commission on January 15, 1985. The Commission met on January 16 and agreed to have four meetings to review the proposed budgets of the various departments. Each meeting was scheduled to be on the Wednesday preceding the regular Tuesday meeting of the Board of Trustees when those budgets would be presented by the department heads and reviewed by the Board live on cable television. The Commission meetings thus not only provided each department head an opportunity to have a trial run on a presentation of the proposed budget but also gave Commission members an opportunity to ask questions or comment on items contained within that particular budget. Both the Commission members and the Village Manager and his staff believe this four part review of the budget to be a very advantageous and successful procedure. The Comm, iss i on found each department head to be cooperative in answering questions and providing additional information. At the four review meetings the following observations, comments and recommendations were made by the Commission members which are presented here as items of interest and consideration for the Board of Trustees. In presenting the revenue review, Finance Director David Japson noted that in the 1985--86 Budget the sales tax receipts for the first time will provide the largest source of revenues. Commission members asked about the business climate in Mt. Prospect because, at the time of last year's budget review, the forecast of such revenues was based on a continuing slow business recovery. Fortunately, sales tax revenues have continued to grow during fiscal year 1984-8. Inquiries were made regarding the Mt. Prospect Plaza shopping center, located at Central & Rand Road which seems to be plagued with empty stores. Satisfaction was expressed with the Village's efforts to work with the current owners in an attempt to revitalize the Plaza and thus maintain a strong sales tax base. There was additional discussion on the property tax rates and the re -allocation of the property tax revenues as proposed in the budget to different functions during the fiscal year. It was pointed out that these changes cannot exceed the approved level of property tax revenues. The proposed budget recommends one additional full-time employe in the Cable T.V. Program. The purpose, scope and expansion of this program was discussed by the Commission since cable T.V. apparently is not being used by as many residents as forecasted and there is uncertainties regarding the profitability of Cable T.V. franchises. Village Manager Burghard stated it is a new area and the Village is attempting to take advantage of this technology as a means of bringing information on the activities of local government to the residents of Mt. Prospect. A survey was to be made to evaluate how successful the budget hearings were on Cable T.V. . Jim Several Commission members agreed that it would be improper to tax citizens to make charitable contributions simply because the charitable organizations were worthwhile since the choice among the multitudes of charitable organizations would be made by the taxpayers individually or through other organizations such as community funds, etc. The budget for the Department of Public Works is about 45% of the total Village budget and this fiscal period includes the costs of the Solid Waste Disposal formerly a part of the Health Department and the costs of the Lake Michigan Water Acquisition. A number of questions were asked with emphasis, on the apparent discrepancy between the number of budgeted positions and dollars. It was explained that water --sewer and street departments use personnel somewhat interchangeably so that combined figures of these departments would be more understandable. The Commission requested that these combined figures be made available. The Administration did provide the members with this data but there still seemed to be some mismatch that should be addressed before the next proposed budget. There also was a discussion about switching funds between functions after budget approval. Two items that may have to be addressed by the Village in the near future were discussed by the members with the Administration - (1) IRS regulations covering personal use of village cars and (2) the possible discontinuance of free service (electricity) provided by Commonwealth Edison. The Commission expressed satisfaction that the Village would participate in the formation of a coordinating agency to address the waste disposal problems for the northwest suburban area. The Commission feels that the financial, -affairs are in excellent condition. The overall debt cost 'of the Village was 5.6% and the per capita debt was $57 compared to an average of $135 for all municipalities, In addition, the police pension program is funded at approximately 'fig% and the fire pension program is overfunded. The Members expressed approval of a new activity included in the Police Department's budget. The Village has entered into a Police Accreditation Program involving outside review by qualified persons. In the review of the Police Department budget the Commission had a discussion with the Village administration with respect to the vehicle parts captioned in the Budget as repair parts and discovered that the expenditures included therein were not only parts but also services and other items necessary for the general maintenance of vehicles. It was recommended by the commission that the administration review this category to determine a more meaningful description or to create further sub -accounts to properly record such costs. The Commission reviewed the procedures used in acquiring police vehicles r learned r • Villageintended .. « i purchase only Chevrolets i policecars.r concern .. i... r there soughtwould not be competitive bidding but were assured that bids were being ! iseveral Chevrolet responseIn i of . Commissionb' total,clarified that budget approval by the Board of Trustees from the standpoint of legal authority to spend is for the departmental budget in department's budget i items within r can betechnically madewithoutBr • approval aslong as • total approved ``` amountexceeded, r . .. r pointed out r ` Board` reports expenditures Department and • ` addition annual budget reviews r * . required show several years expenditures • item, administration . ample information provided ithe • so that they are aware of the pattern of expenditures in detail as compared budgeted amounts presented them. The observed ` number personnel Police Department w a essentially unchanged ` ` past although " ` r less youth` population Village committed r disproportionate N` ri of thetotal committed. The response to that observation was that the Policy Department was shifting its service from activities involved in higher crime incidents to providing ` sources service. In discussion of •Fire Department's• i .. Commissioners previouslyhad similar recommendations regarding the vehicle parts expenditures as `iin the PolicyDepartment's It was that there appeared to be a higher percentage i ' ncrease in the Central Dispatch area than in the personal services for all other department's budget. Concern was expressed that the Central Dispatch employees might be receiving addi�ional increments in pay and benefits than was being proposed to Mt. Prospect's Village's employes, The administration stated that they were following up on this and would try to prevent this from occurring. .. recommendations .r 1 theFinanceCommissionaresummarized below, 1 Evaluate the expansion of the Cable T. V. activities during the next year 2. Investigate medical insurance plans and consider modification to the present plan 3. Modify the block grant program to recover funds if property is sold within a specifie,,? period 4 4Q, Set explicit guidelines for contributions of Village funds to worthy organizations 5# Modify the recording of expenditur- . - 6 Provide some documentation wIth the, next fiscal. Year's, proposed budget that would Provide, information relati,ng to Shifting of monies that occurred in the prevIous yea,r's budget 7. Consider alternative sources of revenue for Possible revenue losses resulting from discontinuation of revenue-sharing and block grant funds The Finance Commission would like to express their appreciation for the cooperation by the administrative staff and for the excellent Presentation by the department heads during this budget review, Village of Mount Prospect Mount Prospect, Illinois INTEROFFICE MEMORANDUM TO Terrance L. Burghard, Village Manager FROM: David C. Jepson, Finance Director DATE: April 5, 1985 SUBJECT: Medical Insurande Plan Alternatives I One of the extraordinary increases in the 1985/86 budget is the cost of insurance, specifically medical insurance. Medical insurance costs are included in the 1985/86 budget at $617,000 compared to $484,000 in the 1984/85 budget for an increase of $133, 000 or 27.5%. When the increase from 1983/84 to 1984/85 of approximately 29% is also taken into conside- ration, it points out the reason for serious concern. This concern was mentioned in the budget message, and one of the recommendations of the Finance Commission is that the Village consider modifications to our current plan that are more in keeping with private sector plans, During the past three months, Mike Janonils and I have been meeting with representatives of medical insurance providers to determine the alterna- tives that are available to the current medical insurance plan of the Village. Specifically, we have talked to: Duncan and Associates. Mike Duncan is an insurance broker specializing in medical insurance programs and is the broker who put together our current plan. He represents Fort Dearborn, Blue Cross, Prudential, MONY, and other major insurance companies. In addition to Mount Prospect,, he has Skokie, Niles, Morton Grove and Evanston as clients. 2. A. J. Gallagher and Company. A. J. Gallagher is the broker that we are using for ' our workers compensation, liability and property insurance. They have access to a broad insurance market, including Lloyds of London, and use Gallagher Bassett Insurance Services as the plan adminis- trator. They provide medical 'insurance plans for a number of Chicago -area municipalities. 3. Northwest Financial Group. Jack Wayne, C.L.U. of Northwest Finaftcial, is a Mount Prospect insurance broker and represents a variety of insurance companies and plan administrators. 4. Washington National Insurance Company. Washington National provides conventional medical insurance as well as self- insured coverage for groups of our size. Terrance L. Burghard Page 3 Medical Insurance Plan Alternatives Numerous articles have recently been written in insurance, business, and finance publications recommending medical plans wi�h cost-containment and cost-sharing features. A recent news release from the President of Blue Cross and Blue Shield stated that ' their subscribers saved $6 billion in 1984 from cost-containment and cost-sharing features. Additionally, the recommend at i ons are consistent with findings in a survey titled "Health Care Cost Containment" provided by William Holloway of the Finance Commission. That survey, representing 169L corporations with approximately 4,000,000 employees, indicated that 93% of the respondent companies are currently engaged in health care cost containment programs and 86% in cost sharing programs. Based upon our discussions thus far, it appears that we can realize signi- ficant savings by modifying our current medical plane Estimates of potential savings of pald claims are listed below: I Mandatory second opinions and out-patient surgery, 2,5% or $12,000. 0 2. Hospital Utilization Review, 5% or $24,000. 3. Cost -Sharing with $100 deductibler: a. 80/ 20* - with $ 500 -maximum,, 8% or - $3 9 000 be 80/20* with $1,000 maximum, 20% or $95,000. C, 90/10 with $500 maximum, 5.6% or $27,000. - do 90/10 with $1,000 maximum, 13.7% or $65,000., (BCS/2O represents the ratio of Village and participant shared costs) From the alternatives presented, the potential savings range from 2-1/2% to 27-1/2% or from $12,000 to $131,000. The above amounts are estimates, but from the people we have talked to they appear to be obtainable. We will need to ask for formal proposals based upon specific features before the amounts can be vered, At the present time, Mike and I are still waiting for a study from A. S. Hansen, Inc. regarding the impact of future medical costs of retirees. Also, we need to evaluate the effects of any proposed changes on current collective bargaining agreements. After we have obtained this information we plan to review our findings with an independent insurance consultant prior to making a formal recommendation. It is our hope to complete this work by April 30, 1985 so that any change can be implemented when our current coverage expires on June 30, 1985. 1 Terrance L. Burghard Page 2 Medical Insurance Plan Alternatives During our discussions, we have asked the above individuals to evaluate our present plan as well as to make recommendations regarding changes that should be made to existing benefits. Without exception, the evaluation of our present plan is that it does not contain any incentives for cost containment I and should be changed to include both "cost-containment" and "cost-sharing" features. Following is a brief explanation of these two concepts: Cost Containment describes the attempts to keep medical costs from getting out of control by making the plan participant a more knowledgeable medical consumer. Some of the features are 1 Mandatory second. op, linion f or specif ic surgical procedures. A second opinion that "is different than the original diagnosis does not disqualify the individual from insurance benefits, but it does help, him or her make a more intelli- gent medical decilsion. I 2. Hospitalization Utilization Review is a procedure in which any non -emergency in-patient hospital use must be pre - approved by the 'insurance administrator. I. Audits of hospital billings. No weekend'hospital admissions. I 5 Encouragement of out-patient surgical procedures and testing. 6,,, Provisions for nursing home and hospice care. Cost -Sharing is the term for transferring part of the cost to the employee. This is in keeping with the idea that insurance coverage should protect a person from catastrophic losses and not necessarily provide for first dollar coverage. Some of the cost-sharing recommendations include: I 1. Deductibles, where the plan participant is responsible for the first $100 to $250 of annual medical costs. 2. Co -Insurance where the participant pays a stated percentage of costs; i.e. , 10%, 15% or 20% of all costs up to a maximum of $500 - $1,000 per year. This approach is different than our present plan where the only costs subject to co-insuranc are costs which are shifted to a major-medical provision. I Employee contributions toward insurance costs. Current employee contributions average about 12% of total costs.