The Herald, Sharon, Pa.

Local News

October 5, 2012

Insurance, retiree costs hitting city hard

Highmark hikes rate 26 percent

By Courtney L. Saylor Herald Staff Writer

SHARON — Sharon city officials are grappling with an increase in health insurance and retirement costs one councilman said could “sink the city.”

A potential 26 percent hike in health care costs has “thrown a curve ball” in the 2013 budgeting process, City Manager Scott Andrejchak said.

He’d expected the price of insurance would go up by less than 10 percent, but they’re looking at paying $280,000 more for health care in 2013 unless they find a better deal.

Council Vice President Ed Palanski at a work session Thursday pointed out that amount equals 3.2 mills of property taxes.

“If we have to live with a 26 percent increase it’s going to be especially troublesome, not only for the city but for employees, too,” Andrejchak said.

The city this year budgeted about $1.1 million for health care for the 60 current employees and 80 retirees, who account for nearly 30 percent of that total, Andrejchak said. Those costs account for about 15 percent of the 2012 budget and were about a 7 percent increase over 2011’s rates.

Andrejchak said they’re in talks with their current provider, Highmark, and shopping around. City officials have also been seeking higher contributions from employees in the three unions and those without a bargaining unit, he said.

They’re attacking the problem with an “all-of-the-above strategy,” Andrejchak said.

City employees currently pay 10 percent of their insurance premium costs, Andrejchak said.

“I’m confident we’re going to find a solution. Clearly it has to come down. It’s just not sustainable,” Andrejchak said of continuing increases in insurance payments.

Andrejchak has until Oct. 31 to present council with a budget proposal for next year.

“We’re working towards that but need some more information,” Andrejchak said, mainly regarding the health care costs.

The 2013 spending plan is shaping up to be about $7.7 million again, roughly the same amount as the 2012 budget.

“There haven’t really been any unexpecteds this year,” he said.

Andrejchak said this year’s expenses seem to be on track to hit budgeted amounts, but there’s “still a lot of the year left.”

Palanski expressed concern about cash flow and also the city’s unfunded pension benefits, which he said may be as high as $8.8 million.

This year, the city put $360,000 toward retiree benefits and Palanski that cost could hit more than $700,000 a year.

“That would sink the city,” Palanski said.

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