Oak Harbor mayor moves forward with employee raises, benefit cuts

Oak Harbor Mayor Scott Dudley is moving forward with a plan to increase salaries for some city employees while eliminating a system of cash payments for insurance “opt outs.”

All contrary to the wishes of the council.

The mayor was visibly upset with council members who were resistant to his proposal during a workshop Wednesday. He pointed out that the plan was an assumption incorporated into the budget the council adopted last year.

“They are your employees, the city’s employees, who have not had a cost of living adjustment in more then two years,” Dudley said.

The change is supposed to happen July 1. Council members said they wanted to wait until they have a better understanding of how it might affect the budget and employees.

It remains unclear if abandoning the opt-out policy would save or cost the city more money, they said.

After the meeting, Dudley said the council can’t make any decisions during a workshop, so he’s moving forward with making the change.

“If the council wants to put the brakes on this, they need to do more than just not nod their heads at a workshop,” he said.

Dudley said he became aware of the opt-out policy after coming into office last year.

Under the policy, employees who choose not to have spouses or children covered by the city’s medical insurance plan receive a monthly payment based on the number of dependents who opt-out.

The policy was conceived years ago as a cost-saving measure. The idea was that the city would save premiums costs by encouraging employees not to sign up dependents who have other insurance options.

For each employee or dependent who opts out, the employee receives 25 percent of the premiums the city would have to pay if the dependent was on the employee’s health plan.

Total cost to the city is $262,000 a year. Individual employees receive anywhere from less than $100 to more than $600 a month.

Cheryl Lawler, the city’s human resources manager, told the council that a city employee married to other city employee can claim their spouses have opted out, even though they are all both on the medical plan. She said there are a number of couples who do this.

Dudley said he told council members about the policy during a retreat last year; he claims they knew nothing about it.

Council members agreed during last year’s budget process to get rid of the opt-out policy for non-represented employees, but to give all non-represented employees a cost-of-living wage increase of 2 percent.

The city’s firefighters agreed to the same deal in their contract.

City Administrator Larry Cort sent out a memo to employees this past November, telling them about the plan.

The plan would save the city about $1,500 a year. But City Finance Director Doug Merriman said greater savings would come in the future as health insurance premiums continue to skyrocket while salaries increase much less dramatically.

During the workshop this week, Cort updated the council on the issue and said it will be implemented as long as everyone nods their heads in agreement.

But nobody nodded their heads.

Several council members said they worry about whether cutting the opt-out benefit will really save the city money.

“Has there been any consideration given to the fact that people may opt in, as far as adding spouses back to the plan, and what that might cost the city?” Councilman Joel Servatius asked.

Cort said there is no definitive answer to that, but he pointed out that employees pay 25 percent of spouses’ premiums. He said that would be a disincentive for employees to sign up dependents who don’t need insurance.

Councilman Rick Almberg said he wants the finance director to look at the impacts to the budget and employees and come back with a more sophisticated plan.

“For me, we’re not there,” he said.

“I don’t see the plan.”

Councilwoman Tara Hizon said she doesn’t believe the change saves the city money, so there’s no harm in delaying it.

Lawler pointed out that delaying the cost-of-living adjustment would impact some employees.

Not all non-unionized employees enjoy the opt-out payments, but they all would receive the 2 percent raise, he said.

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