Page 31 - Hurst FY19 Approved Budget

Identify areas of financial risk that may impact the budget.
Healthcare: One of the primary financial risks continues to be escalating employee
and retiree health care costs. The city is self-insured and pays actual claims as well
as fees to a third party administrator (CIGNA) that manages the program. Costs
have outpaced they city’s health care budget over the past several years due to
increasing medical costs and increasing claims activity and the city has been able
to manage these costs through cost containment strategies, wellness efforts, and
operating budget adjustments. This year the city made a substantial change by
introducing and incentivizing a healthcare plan providing coverage for only in-
network providers. Staff utilizes consulting services to review its plan and participant
charges each year. The city continues to use CIGNA given their competitive fixed
fee structure and their offering of greater medical discounts within its network
of physicians and other services. It is also important to note that the city carries
“stop-loss” coverage that transfers claims costs to CIGNA once the city’s share of a
participant’s claims reaches $100,000 per incident. The city also has an aggregate
stop-loss amount at $5.8 million and carries a $1.5 million emergency reserve in
the Loss Reserve Fund. The city maintains the emergency reserve and aggregate
stop-loss in the event actual claims exceed the expected claims of $4.6 million for
FY 2018-2019. Information regarding the city’s Self-Insurance Loss Reserve Fund is
located in the Other Funds section of this document.

Retirements: City of Hurst staff are loyal to the organization, and often enjoy long-
term careers with the city. This means a substantial portion of the city’s employees
are eligible for retirement. Financial exposure associated with retirements includes
the payment of accrued but unused sick and vacation benefits, hiring and training
costs, and associated reorganizations. The city caps the amount of sick and
vacation time that is eligible for payment to retirees. To ensure operations continue
smoothly in the face of increasing retirements, the city has successfully utilized
leadership development programs and the “right fit” new hire process that matches
candidates with the organization’s Code of Ideals. The city has successfully filled
several management-level positions with both internal and external candidates
using this process. The city has earmarked reserves in its Special Projects Fund to
fund expenditures associated with retirements. The city does participate in the
Texas Municipal Retirement Fund (TMRS www.tmrs.com). TMRS is well managed
and is free from some of the key issues facing many municipal pension programs
throughout the nation.

Public Safety Wages: The City of Hurst provides excellent public safety services
to its citizens and is widely recognized for its quality of service and care. The city
is able to attract and keep great team members in these departments due in
part to leading the local municipal market in starting salaries for Police Officers
and Firefighters/Paramedics. The compensation model is unique to Hurst and is

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