LIVINGSTON -- The city budget will get some much-needed relief starting July 1 because of a change to employee medical coverage that will save the city $192,000 to $285,000 a year.
The move will result in higher deductibles for city employees when they switch to the new provider, CSAC Excess Insurance Authority, but it hasn't been a concern, said interim City Manager Vickie Lewis.
Come July 1, coverage will call for all city employees to pay 20 percent of their deductibles, which had been fully paid by the city in recent years, she said. The city will start paying 80 percent of employee deductibles.
"As far as the benefits go, they mirror each other," Lewis said. "The plan is just as good as what they had."
Employees aren't bothered by the coming changes, considering the kind of financial troubles cities across the state are in, she said. "They've been more than willing to work with us," Lewis said, adding that several employees approached her and said the coverage is suitable, and -- most importantly -- they're happy to be employed.
The new contract is part of a joint power authority agreement with several other local governments, including the city of Merced and Merced County, said Councilman Gurpal Samra. "By joining a larger pool, we can get better rates," he said.
Samra learned in December that insurance costs to the city were expected to rise about $98,000 for the next fiscal year. The projected sharp increase prompted him to consider other options. "With the budgets being tight for the city, state and everyone else -- we have no idea what the state's going to do," Samra said. "This right here, the only one not making money is the insurance company."
The new agreement, approved by the council during a special meeting May 25, will save the city 17 percent to 26 percent on its health care costs, he said.
"It gives us a lot more flexibility," Samra said. "Our budget is going to be tight for next year -- we know that. But this gives us a little more breathing room. For a small city, that's a lot of money."
Doug Gorman, a business agent with the Operating Engineers Union, which represents Livingston office clerks and police employees, said the changes are reasonable and don't severely affect membership.
Although the city has avoided layoffs in recent years by leaving vacant positions unfilled, the savings from the coverage change is equivalent to about three jobs.
Reporter Mike North can be reached at (209) 385-2453 or mnorth@mercedsun-star.com.
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