Agenda Date: 01/07/2025
Subject:
Title
Ordinance 32-2024: An ordinance on second reading amending Ordinance 24, Series 2023, appropriating funds for the 2024 annual budget for all municipal purposes of the City of Littleton, counties of Arapahoe, Douglas, and Jefferson, State of Colorado, for the fiscal year beginning January 1, 2024 and ending December 31, 2024
Body
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From: |
James L. Becklenberg, City Manager |
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Prepared by: |
Tiffany Hooten, Finance Director |
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Presentations: |
N/A |
PURPOSE:
Does council support amending the 2024 budget for additional insurance related costs in 2024?
LONG-TERM OUTCOME(S) SERVED:
High-Quality Governance
DISCUSSION:
The city prepares an annual budget that may require amendments throughout the year for projects or costs that were unplanned or needs that might arise. It is a common practice to amend the budget during the year. These funds are requested to be amended.
Employee Insurance Fund $ 850,000
Property and Liability Fund $ 125,000
Total $ 975,000
BACKGROUND:
It may be necessary to amend the budget periodically throughout the year or with a “clean-up” appropriation at the end of the year. The following is detailed information on each requested budget amendment item for 2024.
Employee Insurance Fund - $850,000
Health Insurance is included in the Employee Insurance Fund and claims can vary from year to year. The city utilizes CIGNA for health claims and is self-funded with an Individual Stop Loss (ISL) limit of $150,000. Health related claims have been higher than anticipated in 2024 and clinic costs, specifically prescription costs, are much higher than estimates provided at the time of the preparation of the 2024 budget. It is anticipated that an additional $850,000 appropriation is needed for the health insurance fund for 2024. This represents am increase of 12.5% over the original budget for 2024.
Staff has reviewed the five-year financial plan for the Employee Health Insurance fund. In 2024, the fund is anticipated to receive additional revenues to help offset this increase in expenditures and the remaining difference will be funded from fund balance. With this increase in expenditures in 2024, the estimated ending fund balance will be approx. $380,000 which is much lower than projected in 2024. In 2025, understanding the continuous increases in health costs and responding to requests for alternative lower cost plan options for participants, the city provided an additional plan option which is anticipated to help reduce overall health costs. This increase in 2024 further supports evaluation of health insurance options to be considered for the 2026 budget. Staff will continue to closely monitor health insurance expenditures in 2025.
Property and Liability Insurance Fund - $125,000
Property and liability claims vary from year to year. While claims are trending to be below the 2024 budget amount, due to timing of premium renewals - we receive the information in October of each year -- and the development of the budget, Property & Liability premiums were higher than the 2024 estimate. The increase in premium costs represents an increase of approximately 22% over the amount estimates in the budget for 2024.
Staff will continue to monitor claims through the end of the year and in 2025 and adjust funding in future years as needed. With this additional appropriation, the 2025 estimated ending fund balance will be approx. $900,000.
Prior Actions or Discussions
This ordinance passed on first reading on December 17, 2024.
FISCAL IMPACTS:
A supplemental budget appropriation is requested for $975,000 for the 2024 annual budget for health and property & liability insurances. There is adequate fund balance in the 2024 budget for this supplemental appropriation based on the current estimates. Staff will be evaluating health insurance as a result of this unanticipated additional expenditures and will be providing options for consideration in the 2026 budget.
STAFF RECOMMENDATION:
Staff recommends the amendment to the Health Insurance Fund and the Property and Liability fund for 2024.
ALTERNATIVES:
• Approve amending the 2024 budget amendment appropriation to align the expenditures with the budget.
• Do not approve the amendment and provide additional appropriation for these two funds, which would result in over-expenditure of the budgets for 2024.
PROPOSED MOTION:
Proposed Motion
I move to approve Ordinance 32-2024 on second reading amending Ordinance 24, Series 2023, appropriating funds for the 2024 annual budget for all municipal purposes of the City of Littleton, counties of Arapahoe, Douglas, and Jefferson, State of Colorado, for the fiscal year beginning January 1, 2024 and ending December 31, 2024.