City gives raises in exchange for less costly health insurance

Talk about it

The Hudson City Council approved agreements Monday night that will give police officers and non-union city employees across-the-board wage and salary increases of 4 percent for 2009.

The two-year contracts with the patrol officers and police sergeants unions also give their members a 2-percent raise at the start of 2010, followed by a 1-percent increase on July 3, 2010.

While the increases may seem generous given the current economy, the city will actually reduce its personnel costs in 2009 because of health insurance changes that the employees agreed to.

The police officers and non-union city officials agreed to a switch from the state health insurance plan to a plan provided by the Preferred One network. In addition, the city employees will pay 5 percent of the premiums for their policies.

The city has long provided health insurance to its employees nearly free of cost.

Mayor Dean Knudson said the switch to the new health insurance plan will save the city around $250,000 in 2009.

Some of that was returned to employees in wage and salary increases, as well as contributions of up to $4,000 into Health Reimbursement Accounts for employees with family coverage. Employees with single coverage will have up to $2,000 put in their HRAs.

The amounts equal the deductibles under the new health insurance plan.

Employees will be allowed to keep any money left in their HRAs at the end of the year.

Knudson said he started off bargaining with police unions by saying, “Look, we together have a problem with health insurance.”

He said premiums for the already “extremely expensive” state plan were set to increase another 10 percent in 2009, pushing the city’s health insurance costs for the year to $1.4 million.

“I said to the employees, if we can work on this together instead of being adversarial about it, I think we can come up with something that saves money for the taxpayers, provides you with comparable or better health insurance coverage, and leaves some money left over,” Knudson said in a phone call Tuesday morning.

He also promised the city employees that if they were able to reduce health insurance costs “we are going to be generous with you.”

“So, essentially, what this came down to is, we were generous, but it’s a tradeoff,” the mayor said. “In exchange for getting a 4 percent raise, they’re also contributing 5 percent toward health insurance now.”

The result, Knudson said, is that even though police officers’ and city officials’ pay went up, the city’s overall personnel cost for 2009 will be less than it was in 2008.

The plan also provides monetary incentives for employees who pledge not to smoke, who join a health club or take an online health assessment.

“I think over the long-term we’re going to have a healthier group,” Knudson said, adding that future premiums will be based on city employees’ use of health care services.

He said health insurance consultants have told him the city’s new health insurance plan is one of the best they’ve seen.

“I’m pretty happy with it,” he said. “I think it’s fair. And at the same time, we’re saving a lot of money for the taxpayers.

Under their new labor contract, the pay range for the city’s 17 patrol officers in 2009 will be $20.82 per hour for a new officer to $26.24 per hour for an officer with five years of experience.

The pay for the police department’s four sergeants will range from $29.37 per hour to $31.75 per hour.

The 2009 salaries for city officials are as follows:

City Administrator Devin Willi, $102,861;

Police Chief Martin Jensen, $81,120;

Police Lieutenant Paul Larson, $75,657;

Community Development Director Dennis Darnold, $70,907;

Public Works Director Thomas Zeuli, $69,680;

Wastewater Utility Director James Schreiber, $68,640;

Finance Officer Betty Caruso, $66,509;

Building Inspector Michael Wallace, $61,260;

Assistant Building/Zoning Inspector David Gray, $55,526;

City Clerk Nancy Korson, $48,669.

Chuck Perlock was promoted to lead person in the Public Works Department and will get a 75-cent per hour raise.

The city is still in negotiations with the Teamsters Union locals representing Public Works Department and clerical over new labor agreements. The previous two-year contracts expired at the end of 2008.

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