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191696

Emergency Ordinance

*Amend City Employee Benefits Program to reflect plan design changes as recommended and administratively required by the Bureau of Human Resources for plan offerings from July 1, 2024 through June 30, 2025

Passed
Amended by Council

The City of Portland ordains:

Section 1.  The Council finds:

  1. The Bureau of Human Resources is responsible for the administration of employee health and welfare benefit plans.
     
  2. Due to a variety of reasons including inflation, the City’s health insurance costs are facing significant increases. These cost increases are valued at 18.4% for the Portland Police Association (PPA) health fund and 11.6% for the Labor Management Benefits Committee (LMBC). 
     
  3. As required by collective bargaining agreements, the Bureau of Human Resources worked with the LMBC on plan design recommendations for the City’s self-insured and insured plans. The Bureau of Human Resources recommended to the LMBC that the City pay 8% of the increase in costs and suggested plan design changes for the remaining 3.6%. The LMBC approved recommendations to change the maximum plan allowance for out-of-network medical services and a change to the self-funded dental plan network, valued at 1.5%. The LMBC did not move forward any other recommendations. 
     
  4. As required by the PPA collective bargaining agreement, the Bureau of Human Resources worked with PPA on plan design recommendations for the City’s self-insured plan. The Bureau of Human Resources recommended to PPA that the City pay 8% of the increase in costs and suggested plan design, formulary, and network changes for the remaining 10.4%. The PPA did not move forward any recommendations. 
     
  5. The Bureau of Human Resources recommends the changes approved by the LMBC, as well as a package for the LMBC’s self-funded plan which increases the member cost of in-network deductibles, out-of-pocket maximums, and the pharmacy maximum copay cost for prescriptions. For the LMBC’s Kaiser fully insured plan, the Bureau of Human Resources recommends Kaiser’s package changes which include increases for member copays, specialty scans, ambulance, emergency room, hospital inpatient, pharmacy, deductibles, and out-of-pocket maximums.  These recommended changes total 3.6% and the Bureau of Human Resources recommends that Council budget for the remaining 8%. 
     
  6. Union members of the LMBC and City of Portland Professional Workers (CPPW) proposed a surcharge paid by employees in pre-tax dollars to supplement the employee portion of the health insurance premium as an alternative to the terms reflected in paragraph 5 above. The surcharge proposed by the LMBC unions and CPPW is in the amount of $25 per month per employee for the 2024-2025 FY. All union members of the LMBC must enter into a letter of agreement to provide for this proposal. 
     
  7. The Bureau of Human Resources recommends a package for PPA which uses self-funded excess reserves, increases self-funded stop loss levels, changing the self-funded dental plan network, changing the maximum plan allowance for out-of-network medical services, implementing the Advanced Utilization Management Program within the pharmacy plan, change to the Synergy network, and a pharmacy formulary change. These recommended changes total 10.4% and the Bureau of Human Resources recommends that Council budget for the remaining 8%. 
     
  8. The PPA proposed an agreement to use self-funded excess reserves, increases self-funded stop loss levels, changing the self-funded dental plan network, changing the maximum plan allowance for out-of-network medical services, implementing the Advanced Utilization Management Program within the pharmacy plan, and the pharmacy formulary change for FY 2024-2025, with a value of 1.9% of the increased costs, along with other agreement terms unrelated to the health plan costs.  
     
  9. The Bureau of Human Resources is recommending Council approve additional changes to the benefits plan design to meet City budgetary constraints as modified within the City of Portland Employee Benefits Program (Exhibit A).
     
  10. The Health Fund Budgets for FY 2024-25 and the Payroll Clearing Fund include appropriations in support of the plan design reflected within the City of Portland Employee Benefits Program as identified above.  

NOW THEREFORE, the Council directs:

  1. Council hereby authorizes the Bureau of Human Resources, in consultation with the City Attorney’s Office, to enter into a letter of agreement with the LMBC union members and CPPW that includes but is not limited toa surcharge of $25 per month per employee in pre-tax dollars to supplement the health insurance premiums for the 2024-2025 FY. If, by the end of day on April 30, 2024, the LMBC member unions and CPPW enter into such agreement, then Council hereby adopts the terms of the letter of agreement and the LMBC approved recommendations to change the maximum plan allowance for out-of-network medical services and a change to the self-funded dental plan network, valued at 1.5%. Council further adopts and amends and restates the City of Portland Employee Benefits Program, effective July 1, 2024, in a form substantially similar to the attached Exhibit A. The Mayor or the Chief Human Resource Officer are hereby authorized to execute the plan document and any amendments during the plan year as required by law.
  2. Council hereby authorizes the Bureau of Human Resources, in consultation with the City Attorney’s Office, to enter into a letter of agreement with the PPA for the 2024-2025 FY that includes, along with other terms, an agreement use self-funded excess reserves, increases self-funded stop loss levels, changing the self-funded dental plan network, changing the maximum plan allowance for out-of-network medical services, implementing the Advanced Utilization Management Program within the pharmacy plan, and the pharmacy formulary change. If, by the end of day on April 30, 2024, the PPA enters into such agreement, then Council hereby adopts the terms of the letter of agreement for the PPA health plan. Council further adopts and amends and restates the City of Portland Employee Benefits Program, effective July 1, 2024, in a form substantially similar to the attached Exhibit A. The Mayor or the Chief Human Resource Officer are hereby authorized to execute the plan document and any amendments during the plan year as required by law.
  3. If the LMBC member unions and CPPW do not enter the letter of agreement in paragraph A, and if the PPA does not enter the letter of agreement in paragraph B, then as of May 1, 2024, the Council hereby adopts the recommendations of the Bureau of Human Resources and the LMBC as stated in paragraphs 3, 5, and 7 of the findings above, while declining other changes, and amends and restates the City of Portland Employee Benefits Program, effective July 1, 2024, in a form substantially similar to the attached Exhibit A. The Mayor or the Chief Human Resource Officer are hereby authorized to execute the plan document and any amendments during the plan year as required by law.

Section 2.  The Council declares that an emergency exists to avoid undue and costly delay in providing benefits to plan participants; therefore, this Ordinance shall be in full force and effect from and after its passage by the Council.

An ordinance when passed by the Council shall be signed by the Auditor. It shall be carefully filed and preserved in the custody of the Auditor (City Charter Chapter 2 Article 1 Section 2-122)

Passed as amended by Council

Auditor of the City of Portland
Simone Rede

Impact Statement

Purpose of Proposed Legislation and Background Information

The purpose of this legislation is to request authorization to amend the City’s Employee Benefits Program to reflect necessary plan design changes as recommended by the Labor Management Benefits Committee (LMBC) and as administratively required by BHR for the City’s plan offerings beginning July 1, 2024 to June 30, 2025.

The amendments shown in Exhibit A allows the City to continue provisions of employee health and welfare administration. 

Financial and Budgetary Impacts

The Health Fund Budgets for FY 2024-25 and the Payroll Clearing Fund include appropriations in support of the plan design reflected within the City of Portland Employee Benefits Program as shown in Exhibit A. 

Community Impacts and Community Involvement

This action is largely internal to City government processes.

100% Renewable Goal

Not applicable. 

Budget Office Financial Impact Analysis

This ordinance amends the City of Portland Employee Benefits Program to reflect design changes as administratively required by the Bureau of Human Resources for the City’s plan offerings beginning July 1, 2024 to June 30, 2025. These include a recommendation for the City’s for health insurance in connection with the Labor Management Benefits Committee in which the City will pay 8% of increases in costs and suggested design changes cover the remaining 3.6%. For the Portland Police Association health fund, the City will pay 8% of the increase in cost with plan design, formulary, and network changes for the remaining 10.4%. 

The City’s compensation set-aside for FY 2024-25 includes an assumption of a 5% increase in the City’s cost of health benefits. As amended, the proposed health benefit increases, including the $25 per employee per month surcharge on premiums, would represent an additional cost to the City of $5,333,663. The General Fund portion of that cost would be $2,176,144 while non-General Fund bureaus would bear $3,157,519 in cost. The health reserve fund, which has had excess reserves in prior years, does not have available excess reserves to offset the first year of these costs. CBO recommends that bureaus request compensation set-aside in FY 2024-25 to cover additional health benefit increases if they do not have offsetting personnel savings. CBO recommends that if City Council approves this ordinance, the FY 2024-25 budget should include an additional $2,176,144 for health benefits to account for the increased costs of the proposal in FY 2024-25. 

Agenda Items

336 Regular Agenda in April 24-25, 2024 Council Agenda

Passed As Amended

Motion to amend Directive A to add “as stated in paragraphs 3, 5, and 7 of the findings above,” after the phrase, “The Council hereby adopts the recommendations of the Bureau of Human Resources and the LMBC.”: Moved by Rubio and seconded by Mapps. (Y-5)

Motion to add new Findings 6 and 8, amend the existing directive and add two new directives: Moved by Rubio and seconded by Ryan. (Y-5)

Motion to amend the second motion to add “and if the PPA does not enter the letter of agreement in paragraph B,” in Directive C: Moved by Rubio and seconded by Ryan. (Y-4; Gonzalez absent)
  • Commissioner Dan Ryan Yea
  • Commissioner Rene Gonzalez Yea
  • Commissioner Mingus Mapps Yea
  • Commissioner Carmen Rubio Yea
  • Mayor Ted Wheeler Yea

Introduced by

Requested Agenda Type

Regular

Date and Time Information

Requested Council Date
Time Requested
30 minutes (1 of 2)