Here is what I presented tonight. It is an EXAMPLE of how the layoff process works and the dynamics of the numbers. Accrued vacation, terminal pay and healthcare costs are killing this town. For both the Police and Fire, retirees get 5 days for every year of service as a lump sum. The Fire Department gets up to 240 days of accrued vacation and comp time in a lump sum. If they have more that 240, the retiring employee can still take it but as vacation, e.g., if they have 60 days over the limit, they take 3 months of vacation before officially retiring. The Police Department has similar benefits although they don't accrue comp time. Although it was possible to offer these benefits in the past, we can no longer afford this. Per the official 2008/09 budget, we have a $16.7MM liability20for accrued vacation and terminal leave.
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The town is self insured. That means we pay the healthcare provider an administration fee for each employee in the plan (and for some time last year, we had a few dead people listed). We also pay a transaction fee based on how many bills the provider has to manage. In the end, however, it's the town who pays the medical bills. Per the School Board meeting, medical expenses went up from 2007 to 2008 by 23%. The national average is more like 14% which is high enough. What this means is if the value of the benefit employees received was $10,000 per employee, now they have a plan that's worth $12,300 per employee. It's as if all employees got a baked in raise of $2,300. In the 2008/09 budget, it states $10.2MM for medical benefits. We have 542 full time employees or $19K per employee!! I understand the $10.2MM also covers retirees. Information on how many retirees we are covering was not available. By adding this number to the 542 and then dividing, we would get a lower number. It would be this number saved for each position eliminated.
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By offering a high deductible medical plan, employees would be eligible to own a health savings account. This is not to be confused with a healthcare reimbursement account. With a reimbursement account, what you don't use in a year you lose and you are not paid interest on it while it's in the account. With a health savings account, the money goes in tax free, grows tax free and comes out tax free. It would be a good thing for employees. Even those over the threshold for a ROTH would be eligible this and it works the same way.
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A High Deductible Medical plan would also dramatically reduce the administrative cost to the providers and premiums. Taxpayers should be liable for health insurance for our employees, not for their entire family at least not at the same rate. We should only offer high deductible plans and employees have to contribute to their monthly premiums. Here is the example of how the layoff process works in the Public Sector and it shows the impact of having these types of benefits. We won't really save much money for the first year since we would have to payout all of these accruals. So, buckle up everyone, we get to pay these extraordinary taxes for at least another year. They could even go up given that Corzine is cutting aid to municipalities. Hoboken Revolt doesn't want the town to pass the withdrawal of state aid onto the taxpayers but to find even more cuts. Let's get it done before we go into massive debt and people vote with their feet, leave and dessimate the town. Please sign the Union Demand Petition, so the taxpayer has a voice at the table. www.ipetitions.com/petition /unioncontractdemands/ Donna