Since 2008, the city of Ravenna's general fund has lost more than $4.9 million in potential revenue, a figure Mayor Joseph Bica calls "just staggering."
Despite deep budget cuts over the last few years, including personnel changes and initiatives, such as the city's dispatch center, designed to bring more funds into the city coffers, the city tends to finish each year by dipping into its reserve funds to make ends meet.
But now, the city is planning big changes to its health care plan, and for the first time, the city's three labor unions are being asked to participate in the measures.
If the unions don't agree to the changes, Finance Director Kim Cecora said the city might have to consider "something more draconian" -- namely, layoffs.
"We cannot cut any more without cutting bodies at this point," Bica recently told Ravenna City Council. "Operationally we cannot cut any more without significant changes to services."
Other measures, including some form of consolidation of the city's health department with Portage County, could ultimately whittle the shortfall in the general fund to around $106,000 by the end of 2014, Cecora said.
"That's sure better than $929,000," he said.
Cecora said 2007 was "probably the last decent year we had." Interest income "fell off the table" in 2008, and only now is starting to approach 2007 levels. But local government fund cuts and falling estate taxes put deep dents in the city's general fund.
The city started cutting spending, slashing $4.2 million from the budget over four years. But since the city lost $4.9 million in potential revenue, the shortfall in the general fund tends to approach nearly $1 million annually.
The city is looking for help in something that has already been its salvation in recent years -- health care.
A healthy savings
For Ravenna, health care has proven to be both a significant expense and a source of savings.
The city is self-funded, meaning that it must budget for its "maximum exposure." But in recent years, the amount spent on health care claims has dropped, allowing the city to add about $200,000 per year back into its budget and reducing the year-end shortfall.
Ravenna also looked to cut expenditures by implementing "spousal language" to its plan. The clause required spouses of city employees to take their employer's insurance if it is available. But the language applied only to non-union employees. Those covered by the labor unions didn't agree to the language and were exempt.
In January, Bica plans to ask unions to accept the spousal language, plus other changes to the plan. They include "employee contributions," or premiums, something Ravenna workers would pay for the first time.
Traditionally, city employees have paid no premiums for their health care, though they did pay co-pays and for prescriptions. That's something the city has been looking at for years, but officials were previously told that any changes to the plan would make the city subject to the Affordable Care Act.
Instituting premiums will have another added benefit -- allowing people who really don't need the insurance to opt out of the plan. Previously, because employees paid no premiums, they were not able to decline the coverage.
But now, opting out will not only be allowed but possibly encouraged. Bica noted that the city might institute some sort of incentive to encourage people who have insurance elsewhere to opt out of the city's plan.
"The cost savings is bodies off the plan," Bica said.
Those savings, Cecora said, could add up to $332,000 annually -- more than the city would save if it implemented major staffing reductions.
When added to the potential $200,000 in savings from reduced claims and other administrative payroll changes, that would slash the city's general-fund shortfall to $273,468 in 2013.
In 2014, the city is projecting an even brighter picture, partly due to changes in its health department.
Eyeing a merger
In recent years, the city of Ravenna has been considering some sort of consolidation of its health department with the Portage County Health Department. Kent, which has its own health department, was once part of the talks but is not interested at this time, Service Director Kelly Engelhart said.
The city is using an $82,000 grant from the Local Government Innovation Fund from the Ohio Department of Development to study consolidation. The city is applying for more grant money that would go to Kent State University to further study the consolidation.
Engelhart said the city spends $105,000 per year on its health department. If the city were to contract with the county, it would still have to pay $50,000 per year for the contract, resulting in a savings of about $50,000 in 2014.
That's also the year the city's debt for improvements to the dispatch center will be paid off, resulting in $100,000 in income to the city's general fund. That brings the city's general fund shortfall down to $106,000.
Engelhart said the two full-time and one part-time employees in the city health department would not lose their jobs, as they would be necessary to provide the contractual services.
"They would probably become employees of the county," she said. "We need more public health workers in this county, not less."
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