16-DIRECT CITY MANAGER TO DEFINE AND CLARIFY CITY'S ASSOCIATION FROM THE HEALTH DEPARTMENT

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City practice of budgeting a flat dollar amount per employee for medical insurance that is independent of the insurance premium. Health Department mployee concerns about insurance coverage between retirement and age 65 could be easily addressed by the Health Board setting a policy that mirrors the City's policy on this issue. 2. Bookkeeping/Payroll-Proposals received by the Health Department from two local CPA firms indicate that these services can be provided for $10,200. This cost is higher than it should be because the proposers are concerned about possible unknown variables. With time these fees could conceivably be lower. Local bookkeeping firms (non-CPA firms) should be contacted to see if they would be less expensive. The Health Department should also consider doing this work in house since they have at least one person on staff who has done this type of work before. With only 14 employees and an average of 100 vendor checks per month, this work could be handled by an experienced person in addition to other duties. 3. Retirement-Health Department employees can keep their existing TMRS retirement accounts and continue to earn interest on those accounts. They could not make additional contributions to the accounts, but could retire under the TMRS plan when they meet the eligibility requirements. The Health Department could set up a 401K or a 457 plan for future retirement contributions as is practiced in the private sector. 4. Cash Flow-Any cash flow issues could be addressed by having the County and the City contribute their annual financial support at the start of the fiscal year. This should be more than sufficient funding to operate on until reimbursements for actual expenses could be received from the State. If there are still concerns about cash flow, pre-approved overdraft arrangements could be made with their bank. 5. Audit-Outside audit costs have been stated to be about $10,000, but I believe this is a high estimate due to it being a first time audit situation. Other independent auditors should be contacted for proposals. I would think $5,000 would be a realistic second year audit cost. Worst case scenario would see costs rise $30,515 half of which would be paid by the County. This necessary legal separation can be accomplished without endangering the continued operation of the Health Department or adversely affecting the current employees. The City will continue to financially support the Health Department, and the Health Department employees will all still have their jobs, medical insurance, and retirement. Other alternate scenarios would be for the County to provide these services or for PRMC to operate the department as one of their clinics. The recommended course of action is to direct the City Manager to achieve the City's legal separation from the Health Department using the abov guideline. ty Coulncil for agreement if seems prudent, such a document would be brought back to the City continues to treat the Health Department employees as if they were City employees (by providing retirement, insurance, and bookkeeping services) an inter-local agreement will not provide the City with the protection it needs. The Court would ignore the inter-local agreement wording if actual practice varied from that wording. The City should state clearly its intent to support of the Health Department financially in the future, but separation from the Health Department is in the best interest of the City. L, ~p