Discussion and possible action on any and all matters regarding benefit trust fund reserves. (Jenny Torres, Assistant City Manager)

The Employee Benefit Trust Fund is composed of ongoing contributions (insurance premiums) made by the City and Employees to pay health-related claims.  Distributions from the Fund are made throughout the fiscal year to pay medical and dental claims.  Claims are not always the same.  There are years when claims are high, and most of the contributions are used.  There are other years when the claims are low, and all contributions are not used, thus building reserves in the Fund.  It is customary to maintain reserves of approximately six (6) months of the total annual contributions, which according to our annual claims, would be equivalent to approximately 1.9 million.  The Fund currently has 4 million in reserves. 

The cost of health insurance increases every year.  During the last three (3) years, the City of San Luis has not increased the employer or the employee premiums.  Due to a number of high claims this year, we anticipate that 3.9 million will be required to cover claims for FY 2024. Employer and employee contributions will not cover the estimated expenses. The City of San Luis highly recommends that the board considers staff's recommendation to use reserve funds from the Trust to cover FY 23-24 increase in premiums per projections presented by City's broker/consultant, Ms. Posada.