Spiking health insurance costs concern Pittsfield officials

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PITTSFIELD — About a quarter of the city's budget goes to employee benefits and insurance, officials revealed during financial meetings last week.

School Superintendent Jason McCandless said it's more costly to insure employees in the Berkshires than anywhere else in the state, and Finance Director Matt Kerwood said he expects insurance costs for employees will rise by 11 percent, or about $2.7 million, in the next fiscal year.

The context of the discussion was a joint meeting of the City Council and the School Committee as budget season gets underway.

"Our overall cost of doing business in that realm is greater than other places in the state," McCandless said, adding he couldn't explain why but "the numbers do not lie."

The city expects to spend $24.5 million on health insurance in the current fiscal year, ending June 30. Kerwood said city officials are working with members of the city's Public Employee Committee to address the increases.

"We could move the needle on that number," he said, noting that spiking insurance costs is not an issue unique to Pittsfield and "there's no silver bullet."

"We have a shared responsibility, employee and employer, to really address this issue."

Still, Ward 6 Councilor John Krol said 11 percent feels like a "particularly hard hit" and he wanted to know why insurance costs are higher in the Berkshires.

Kerwood said he was unsure of the reasons why, but it likely has a lot to do with access. He said the lack of options means a lack of competition, which likely drives up rates.

To compensate for shrinking revenue sources and rising fixed costs, Mayor Linda Tyer's administration asked department heads to reduce spending by 2.5 percent — without cutting personnel — as they draft budgets for the upcoming year.

"Expenses are outpacing revenues," Kerwood said.

Projected revenues for the upcoming fiscal year are up by about $1.6 million, Kerwood said. Property values are up, Kerwood said, which is a step in the right direction.

"I'm not prepared to call it a trend, but that is good news," he said. "That is what needs to continue to happen."

Tom Scanlon of Scanlon & Associates told city officials on Tuesday the overall financial picture looks slightly better than last year. He said he was pleased to see less spending coming from free cash, which should be used primarily for reserves and one-time expenditures.

Still, Scanlon said he'd like to see the city have more money in reserves and would like to see the city increase its tax levy capacity.

"FY19 will continue to present us with serious challenges," Kerwood said, asserting the city must "control costs, foster growth and encourage participation."

"It's important that everybody be working off the same page, the same sheet of music."

Reach Amanda Drane at adrane@berkshireeagle.com, @amandadrane on Twitter or at 413-496-6296.


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