August 30, 2012
The City of Memphis and Shelby County require their active employees to pay 30% of the health care costs with you the taxpayer paying 70%. Does this sound complicated?
Well since both the City and the County are self insured, they have to estimate their annual costs. The annual health care costs will vary from year to year. However it seems to me that they could take the annual cost from the year before, add in an inflation factor and bill their employees 30% of the guesstimate for the next year. If they underestimate the costs, then they make it up in the following years premiums for the employees until they come back to a 70%/30% split.
Instead what we get from the City Administration and especially the City Council is a reluctance to split the bill 70/30. This cost us $3 million dollars last year and it may be more next year. This is the kind of leadership we get from the City of Memphis and the City Council.
I have attached the stated policy of the City of Memphis from their personnel policy manual. It clearly shows 70%/30% split for active employees and a higher rate for retirees depending on years of service. HOWEVER, the retiree rate only applies to employees hired after January 1, 2010. Again they were afraid to apply these changes to those existing retirees as the county has done. Hence their OPEB $1.33 billion dollar unfunded liability.