HomeMy WebLinkAboutAgenda Statement 1988/01/12 Item 15COUNCIL AGENDA STATEMENT
• Item 15
Meeting Date 1/12/88
ITEM TITLE: RESOLUTION ~,~y~~ Approving agreement between the City and
the Wyatt Company for benefit consulting services,
authorizing the Mayor to execute the agreement, and
appropriating funds therefor.
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SUBMITTED BY: DIRECTOR OF PERSONN~1~'~L
REVIEWED BY: CITY MANAGER'~~~~ (4/5ths Vote: Yes X No )
Last year, faced with substantial health plan premium increases and growing
complexity of state and federal laws related to benefit plans, the City
issued a R.F.P. (Request for Proposals) for a Broker of Record/Consultant
for its health, life and dental plans.
Thirteen proposals were received. Five proposals were rejected due to lack
of municipal experience, cost or unresponsiveness to the R.F.P. A selection
committee, consisting of representatives from management and the bargaining
units, interviewed and evaluated the remaining eight firms; staff performed
reference checks. On the basis of their findings, committee members and
~f recommend that the Wyatt Company be retained as the consultant for the
's health, life and dental plans.
RECOMMENDATION: Adopt resolution approving appointment and appropriating
funds.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION: The City provides health, life and dental insurance to
employees and their dependents. In September, one month before the
expiration of our health plan contract with the carrier, MONY (Mutual of New
York), staff learned that health plan premiums would need to be increased
66~ in order to fully fund the plan. This increase resulted from the City's
unexpectedly high claims experience coupled with medical inflation.
The City renewed with MONY for
and staff informed the
postponed until January,
renewal and explore other
Council that the Open Enrollment period would be
1988 so that a consultant could review MONY's
health plan options, if necessary.
a nine month term to expire on July 1, 1988
Representatives from the eight companies who submitted responsive proposals
were evaluated by a selection committee consisting of members of management
and the bargaining units. Criteria used in evaluating the firms included:
the technical skills, knowledge, education and experience of the principals
and their support staff, their oral and written communications ability and
their credibility. The selection committee narrowed the field of candidates
t two finalist firms. The Wyatt Company and Barney & Barney. Reference
ks were completed and a final cost comparison was made. After careful
c ideration, the selection committee's recommendation is to appoint the
Wyatt Company as Consultant for the City's health, life and dental plans.
Page 2, Item 15
Meeting Date 1,/12/88
The Wyatt Company is represented by Michael Baker, Project Manager, Brice
Dane, Actuary and Underwriter, and George Korean, Actuarial Consultant. The
firm is one of the largest benefits consulting firms in the U.S. with
experience in handling benefits for 28 governmental agencies, fourteen of
which are in California.
The scope of work to be performed by the Wyatt Company is outlined in
Section II of the attached agreement. In addition, the City may wish to
have the Consultant address other important health benefit issues as they
arise throughout the year. An example of such an issue might be pre-
funding a post retirement health plan for City employees and redesigning of
the City's flexible benefit plan.
FISCAL IMPACT: Brokerage commissions are currently factored into all
premiums except Kaiser and P.M.I. Dental Plan. The total of those
commissions is approximately $24,000 per year. Representatives of the Wyatt
Company estimate that the scope of work outlined in the attached agreement
will cost approximately $14,000. As a separate item, the cost to develop an
employee benefits handbook is estimated at $6,000. Accordingly, the
contract specifies that compensation, paid on an hourly basis, will not
eed $20,000. Since this amount is less than what is currently included
xisting premiums, there is a net savings to the City of $4,000. Plan
p miums will be revised during the Open Enrollment period so that
Consultant fees will be borne by all employees. The effect of this will be
a slight decrease in health plan premiums and a slight increase in life
insurance premiums. The Wyatt Company will bill the City quarterly. In the
event their time and expenses in any one quarter exceed what is collected as
a part of premiums, the difference can be taken from the health claims
reserve fund.
In order to accomplish this, it is necessary for Council to appropriate
$20,000 from the unappropriated reserve of the General Fund to the insurance
account 100-0700-5202 from which consultant fees will be paid. As stated
above, this amount will be recaptured by virtue of a reduction in the
premiums paid by the City.
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AGENDA.STM
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