NORTH ADAMS -- As of July 1, the city's employees will receive their health insurance benefits through the Municipal Interlocal Insurance Association (MIAA) -- which will cost the city $500,000 less than its current self-insurance system.
The move comes as part of a settlement between the city and its eight unions, rectifying a $1.1 million shortfall in the city's payments to its health insurance trust fund over a two-year period.
The settlement, jointly announced Thursday afternoon by Mayor Richard J. Alcombright and members of the Public Employee Committee, includes a lower premium split for employees and a new low-cost insurance carrier. MIIA, which provides health insurance to 60,000 employees in 125 municipalities and public agencies around the state, is offering the city's employees the same health care plans at a price reduction of about 6 percent. MIAA will also take over the city's trust fund responsibilities until fiscal 2013 -- when new employee contracts go into effect.
The new insurance plan's cost saving for both union and non-union employees, combined with a reconfiguration of the split of health insurance premium costs between the city and its employees for a three-year period, comes out to be the equivalent of paying $800,000 into the trust fund, according to Alcombright.
"The employer-employee split will be changed from a 70 percent city cost and 30 percent employee cost to a split of 77 percent and 23 percent in fiscal 2011. It will become a 75 percent and 25 percent split in fiscal years 2012 and 2013," he said.
In return, the unions have agreed to drop any grievances and litigation against the city regarding the repayment of missing funds to the health insurance trust fund.
"This is the best possible outcome for both the taxpayers of North Adams and for our employees," the mayor said. "If we had fought this in court, we may have had to come up with millions of dollars to repay the fund, plus extensive legal costs. Instead, we have reached an amicable and mutually beneficial agreement with our employees and are extremely happy to put this issue behind us. We have bigger and better things in North Adams to move on to."
The settlement is the end result of an independent audit by Scanlon and Associates of South Deerfield, initiated by Alcombright, which identified a $1.1 million shortfall in the trust fund. The Scanlon report examined fiscal years 2008 and 2009 and showed the city did not pay its full 70 percent of premium costs into the trust fund -- an amount that has been an item of contention between the city and its unions for over a year.
North Adams Teachers Association President Susan Chilson said the unions were "thrilled with the settlement," which repays employees for past overcharges and protects the city's budget.
"It also helps to restore our faith in our local government, a faith that had been shaken in recent years," she said.
Police Association President Brian Kelly said the unions are "grateful to the mayor for treating us with dignity and respect and for bringing this to an amicable end."
"During the negotiations -- about 15 hours worth -- we felt everything was very transparent," he said. "We received all the information we requested, in a couple of days, which we weren't used to. We've put a very ugly situation in the past."
City Council President Ronald Boucher said he was happy to see the issue come to an end.
"I applaud this administration, which inherited this mess," he said. "You didn't point fingers, you just kept looking straight ahead."
Although the city will not pay any actual money into the trust fund as part of the settlement, it will must pay "run out" costs of the current trust fund.
"To get out of the business of self-funding insurance, we will need to pay the run out costs associated with our current plan," Alcombright said. "I want to stress, that if the plan had been properly funded in the past, those dollars would have been there. Because of the underfunding, we will have to infuse up to $800,000 to pay those costs."