The Feb. 17 Board of Finance meeting included discussions of projected deficits, increases in health insurance, and the United Illuminating project.

Health Care Increase

Board member Michael Hallahan was concerned that more was not being done to seek a cheaper health insurance provider after a projected 27 percent increase in Anthem Blue Cross Blue Shield insurance coverage for town employees.

“I’m not sure how much longer we can wait,” Hallahan said. “In a month, we have to finalize the budget to put before town. Time is sort of running out here.”

“Right now you are painting us into a corner,” Hallahan added to First Selectman and board member Michael Freda. “You are a fan of grading. Well, right now for controlling healthcare costs in town, I would give you an ‘F’. We’re talking about over a 20 percent increase in town. I’ll be a nice guy – you can have an incomplete, but you have 30 days to come up with something.”

Freda said that the projected 27 percent increase was due to the town’s recent claims history, which was driven up, he added, by the town’s flip-flop from Anthem to ConnectiCare and back during the last two years.

Before the town can seek other insurance providers, Freda said, it must perform a claims history analysis to determine whether the projected 27 percent can be lowered. Freda added that the town has brought in two additional health insurance brokers, Charter Oak and GBAC, to augment current broker Ovation in the claims history analysis.

“The brokers involved have said that unless the claims history analysis is cleaned up, we do not have any other options [other than Anthem],” Freda said. “Nobody else will touch us, because North Haven is considered a risk right now.

“The most important thing is to clean up the claims history analysis in order to shop North Haven,” Freda added. “If you do it in reverse, you are still going to be getting the same results, that North Haven is a risk.”

Freda suggested that some of the town’s past claims might have been erroneous. “That’s why we have three brokers right now,” he said, “to sort through the fact and the fiction.”

Freda added that utilizing three brokers would increase the town’s leverage with Anthem.

The Board of Education is projecting a 17 percent increase in its Anthem health insurance. Monico explained that the difference in projections was because the Board of Education backed out of the employee contribution part of their insurance.

Freda said that Anthem representatives would be brought into the March 4 Board of Selectman meeting to discuss the increases. Freda said that he would meet with Anthem himself on Feb. 25.

“Depending on what happens on March 4 and the projected increase, we will make a decision about what to do,” Freda said, “whether to go out to bid or do self insurance. We will look at every single option available.”

Hallahan hoped that Freda would expedite the process. “After March, it’s very difficult to go get another provider on board,” he said.

Board chairman Richard Monico believed that the claims history analysis was the only major hurdle. “In my experience, once the claims history is clarified, it does not take long to get a bid from people, he said, “a week, maybe two weeks.”

Freda said that he hoped to have the claims history analysis completed by March 4.

Hallahan suggested CIGNA and Oxford as two possible health insurance carrier candidates.

During public comment, resident Gary Amato asked whether the increase from one health insurance broker to three would represent an additional cost to town.

Monico responded that the brokers’ commissions are paid by the health insurance company, and that the commission is a fixed amount. Therefore, Monico explained, the same fixed commission will be charged to the health insurance company as in past years, only now there are three brokers splitting the same fixed commission, rather than it all going to just one broker, representing no additional cost to the town.

United Illuminating

Hallahan asked why the town had to cover half of the $108,000 capital charge of implementing United Illuminating’s cost saving improvements in town school buildings, considering the schools are already saving money.

“I think the charge should be eliminated from the projected deficit,” Hallahan said. “And the 50/50 split should be rescinded. The schools should accept the full cost of the implementation.”

“I don’t know why the town has to pay for the school system to be saving money,” Hallahan added.

Freda responded that he had recently spoken with the Board of Education on the topic. “For this fiscal year, we have already agreed to split the $108,000, but I explained that as we are going forward, they will be expected to bear the full cost,” he said. “I’m not inclined to remove it [from the projected deficit] because I still see it as a hard cost.”

At last month’s selectman meeting, second selectman Steve Fontana demonstrated the cost-saving benefits of the UI program. The town is paying for the program at zero percent financing over a several year period.

“I had UI in and am in the process of taking it one step farther with the savings,” Freda said. “I will be extending the three-year [payment] contract to a four-year contract, saving the town another $25,000 a year.”

“I will bring UI back in to have them make a presentation to us,” Freda continued. “I’d like the program extended to the town side as soon as possible.”

Projected Deficits

First Selectman and finance board member Michael Freda said that his previously projected $1.4 million deficit in the current budget had been reduced to approximately $460,000. “That includes the anticipated rebate from the insurance company,” he said. “I will be meeting with department heads next week to see what other savings we can squeeze out.”

During public comment, Amato was worried how swiftly Freda’s projected $1.4 million deficit was pared to $460,000. “Is it possible that you fabricated the numbers or jumped the gun?” Amato said.

“I didn’t jump the gun,” Freda responded. “I’m giving information on a real time basis.

 “North Haven will know from Mike Freda exactly everything that is going on at every step of the way,” Freda continued. “I will not shy away from giving bad news.”

Amato suggested that since Freda was new to the top town position, he had underestimated how much money was going to be coming back to town, and forecast the deficit too greatly. “It seems like the deficit is just blowing away,” Amato said.

Board member Dyann Vissicchio said it was more prudent to forecast a higher deficit and report its lowering as potential extra funds materialize, rather than forecast a lower budget with the potential extra funds already included in the forecast, and risk backlash and financial complications should the extra funds not materialize. “It’s about transparency in numbers,” she said.

Amato queried the basis of the numbers in Freda’s projected $6.5 million deficit for the upcoming financial year. Freda responded that $5.5 million was represented by one-time revenues utilized in the present budget that would not be available for the new budget: $1 million from UpJohn, $2.5 million from the fund balance, and $2 million from the CRRA. The final projected $1 million, Freda added, was due to the drop in the town’s grand list.

Public Comment

Amato asked if the engineer-two position, which had been cut from the present budget, would be in the new budget. Monico said that it would not. The removal of the position, which was filled by former town employee Bob Burns, precipitated Burns to bring legal action against the town. At the meeting, Freda said “there has been another legal development unfolding” in the Burns case, but declined to comment further.