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KERR COUNTY COMMISSIONERS COURT
Special Session
Wednesday, December 1, 2004
3:30 p.m.
Commissioners' Courtroom
Kerr County Courthouse
Kerrville, Texas


PRESENT: PAT TINLEY, Kerr County Judge
H.A. "BUSTER" BALDWIN, Commissioner Pct. 1
WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2
JONATHAN LETZ, Commissioner Pct. 3
DAVE NICHOLSON, Commissioner Pct. 4
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I N D E X
December 1, 2004
PAGE
1.1 Consider, discuss and approve plan design for
Employee Health Benefits Program, adoption of	
Employee Health Benefits Program, and acceptance	
and award of bid(s) for administration of such	
program	3
1.2 Consider and discuss extension of temporary Lease	
and Operating Agreement at Juvenile Detention	
Facility	66
1.3 Consider, discuss, and take appropriate action	
with respect to acquisition of Kerr County	
Juvenile Detention Facility	66
--- Adjourned	83
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On Wednesday, December 1, 2004, at 3:30 p.m., a special
meeting of the Kerr County Commissioners Court was held in the
Commissioners' Courtroom, Kerr County Courthouse, Kerrville,
Texas, and the following proceedings were had in open court:
P R O C E E D I N G S
JUDGE TINLEY: Okay. Let me call to order
the special Commissioners Court meeting scheduled for this
date and time, Wednesday, December lst, at 3:30 p.m. It's a
few minutes after that now. I appreciate all of you being
here. The first item on the agenda is consider, discuss,
and approve plan design for employee health benefits
program, adoption of the employee health benefits program,
and acceptance and award bids for administration of the
program. Mr. Looney, our insurance consultant, is here with
us today, and I'm going to turn it over to you, Mr. Looney.
MR. LOONEY: Thank you very much, Judge,
Commissioners. This has been -- it's been an interesting
day today. The bidders and the -- and people proposing on
the contracts, we were still on the phone with them as late
as about 12:30 this afternoon, so after what we call deep
negotiations, I guess is what we're dealing with, we had a
lot of numbers changed and crunched and had to get them back
into -- back into the system. One of the things that -- as
a consultant, one of the things that occurs quite often, you
get up in front of a large group like this, and those people
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that are proposing, or people that are interested in the
program are sitting behind you, so you never really get to
see the expressions on their face, or -- or you all reflect
what -- what you see them doing back there behind me. So,
as a consultant, quite often I stand on the side like this
just to look around and make sure that -- that what I'm
saying is either being approved or not approved.
Keeping that in mind, it's very difficult for
someone sitting in the audience also to listen to me tell
about their benefit plans and how great they are or how bad
they are. I have asked -- see there? I didn't -- but I
have asked the two gentlemen that are the final two
finalists in this, I've asked them if they would take five
minutes or less and just make a brief statement to the
Court. That way I won't feel like I'm putting too many
words in their mouths, and give you an opportunity to listen
to them make a -- a brief statement about their services and
capabilities. With that in mind, I'd like to ask
Mr. Wallace if he will make a statement. And you --
JUDGE TINLEY: Let me first inquire, if I
might, Mr. Looney, there were a total, I believe, of four
that were subject to final negotiation and --
MR. LOONEY: There were four.
JUDGE TINLEY: -- final and best offer, and
you indicated we have two here today?
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MR. LOONEY: We have two. The other two
recognize the fact that, after the best and final offer,
that their offer was not competitive, and -- and decided not
to present.
JUDGE TINLEY: They declined to be here
today?
MR. LOONEY: They declined to present.
JUDGE TINLEY: So, they were given the
opportunity, but chose not to --
MR. LOONEY: Yes, sir.
JUDGE TINLEY: -- avail themselves?
MR. LOONEY: That's correct.
JUDGE TINLEY: Okay. That's all I needed,
thank you.
MR. WALLACE: Good afternoon, gentlemen. My
name is Don Wallace. I'm with Wallace and Associates.
We've been in business for about 17 years. If you'll look
in the little folder I gave you, you'll see this little
brochure, bifold thing. It gives you some information about
Wallace and Associates, who we are, how long we've been in
business, gives you a list of the products that we offer on
the back over here. We're a full-service benefit agency,
and that's our only business is employee benefits. We -- we
do group health, group dental, we do 401(k)'s. We also do
the supplemental products, heart attack, stroke. We do
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everything that anybody would want far as employee benefits,
Section 125 plans. I don't know if you're familiar with
those, but we do those too.
The one thing that we do for our clients, if
you will take this right here out and look at it, for the
last two years, the clients that we have acquired in the
last two years, we give them a guarantee. We call it a
pledge of the services that we're going to give to you.
There's no doubt in your mind of what we're going to do for
you. We will make personal visits over here at least once a
month, or more often as necessary. There's a lot of agents
that just call you on the phone every now and then, they
come see you once a year or whatever. We guarantee you that
we will be here at least once a month, more if necessary.
We will return phone calls within 24 hours, usually the same
day, to your employees or staff. If they have a claim
problem, sometimes it takes a little longer; we will let
them know where we are on getting things settled within 48
hours.
Another
guarantee is one thing
that does. We'll give
services that we are s
provide 24-hour access
call our 800 number to
thing that we provide -- this
that I don't know of anybody else
you the guarantee that we'll do the
apposed to. You'll see there we will
to Wallace and Associates. You can
our office 24 hours a day, seven days
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a week, and you will get a number to page me. You can page
me; your employees can page me 24 hours a day. If you look
over here on the left, I guess it's your left side, you will
see some letters there, and I encourage you to read those
letters. Those are letters of recommendation. One of them
is Colorado Fayette Hospital in Weimar. We've had that
account for three years now. The next one is Austin County
and Bellville down by Houston. We have had that account for
over eight years. I think it's going on 10 years. And the
last letter in there is Wilson County. We've been their
agents for 16 years. And I think those letters will tell
you what kind of services that we -- we provide.
I have two ladies that do the service work
for me, Michelle and Minerva. Michelle's been with me seven
years. Minerva's been with me about seven months. Minerva
does speak Spanish, so if we need Spanish, we can take care
of that. Michelle has a degree in health care
administration, and she knows her business. And she's very
sweet; I have a lot of confidence on her. The last thing
I'm going to show you is what we do. If you'll just pass
those down to the next person, what I -- what these are,
what I call them is agent ID cards. If you look on the
back, we provide your employees -- every employee one of
these cards. On the back it will have Mutual of Omaha or
whoever. It'll have the group number, customer service
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number, all that information. What we do is tell your
employees to call these numbers on the back first, try to
get your problems taken care of. If you have to hold more
than 10 minutes, hang up, turn it over and call us, okay?
And if you'll look on the front of this card,
you'll see a pager number. You'll see my cell number,
Michelle's cell number. You'll see an 800 number to our
office. You can get ahold of us. There's an Internet where
you can get ahold of us by the Internet. There's all kinds
of ways to get ahold of us 24 hours a day, so -- and we put
that in writing in the guarantee. And when we enroll your
employees, we tell them don't bother the people here at the
County. We get paid to take care of your health insurance
problems. We want you to call us, and leave the County
people alone; they got other things to do. And we've been
doing this for about two years, and it's worked real, real
good. Employees love it. The people here at the County
will love it, and I think we'll give you excellent service.
I do need these cards back, 'cause they have group numbers
on them.
COMMISSIONER BALDWIN: Oh, come on, man.
MR. WALLACE: I don't think the County and
the hospital would like you having them permanently.
COMMISSIONER WILLIAMS: I was ready to use
mine.
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MR. WALLACE: But this is my own little idea
of driving up and down the roads doing health insurance, and
I think you'll find that we'll give you excellent service.
COMMISSIONER WILLIAMS: Is that the card an
employee would present to a doctor or the hospital?
MR. WALLACE: No, sir, they'll get their
regular medical ID card from Mutual of Omaha.
COMMISSIONER WILLIAMS: I see.
COMMISSIONER BALDWIN: Mr. Wallace, one of
the biggest issues to me is the convenience of enrollment.
How do you -- how do you handle that?
MR. WALLACE: We get with whoever here and we
let them help us schedule meetings. Mutual of Omaha has a
couple people. I have the two ladies in my office. There
will be anywhere from four to six people to come over here,
go up to different places -- you know, we can probably do it
in a two-day, maybe three day at the most. It just depends
on how we can schedule meetings. I know people are
scattered out in the county and the county barns. We go to
county barns; you know, we can enroll them on the front of a
pickup truck or, you know, any -- whatever you want us to do
as far as enrollment. We've been at county jails at
6 o'clock in the morning when they have shift changes. I
left a jail one night around midnight; I made a joke out of
it. Somebody said I got out of jail at midnight last night.
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But we're flexible, you know. We have to be flexible,
because you got people -- Sheriff's Department with flexible
hours, and, you know, we can enroll them in group meetings
or we can sit in the jail for half a day and they can come
in one at a time, whatever's convenient.
COMMISSIONER BALDWIN: We've been spoiled
around here with our local agent.
MR. WALLACE: Right.
COMMISSIONER BALDWIN: To just run up the
street and do it.
MR. WALLACE: Right, I understand.
COMMISSIONER BALDWIN: I think that's kind of
important. It's convenience for our employees.
MR. WALLACE: I understand. But hopefully
we've got some good numbers with Mutual of Omaha, and I
think you won't be disappointed with our service.
MS. NEMEC: Commissioner, may I ask a
question? You had a very good question about enrollment,
and I -- and I think we got the answer, as far as the
overall enrollment. My concern also is new employee
enrollments. Right now, our office does not take care of
any enrollments. New employees go strictly to our
representative's office, and they do all the enrollment
there, and they turn it over to our third-party
administrator, and then they just send us an enrollment
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sheet with all the fees, and that's all we input in the
computer. So, we are out of the enrollment business, and I
am concerned about how these agents are going to take care
of new employee enrollments also.
COMMISSIONER WILLIAMS: How about information
sessions that might be necessary for employee groups if
there are -- if there is a change in -- in the benefit
structure, all of which needs to be explained? How do we
handle that?
MR. WALLACE: We can --
MR. LOONEY: Excuse me for interrupting, but
it was not intended for these brief presentations to be
actual sales presentations.
COMMISSIONER WILLIAMS: Oh, okay.
MR. LOONEY: It was not -- hopefully, that
was not the intent. We really wanted to provide just basic
information, because a lot of the questions that Barbara
would have and that you have about these are -- are things
that I handle in negotiation with the insurance company and
the agent themselves, to make sure that the offering that
they've made includes these services that you're requesting.
COMMISSIONER WILLIAMS: So, at some point
you'll answer my question?
MR. LOONEY: Yes, sir.
COMMISSIONER WILLIAMS: Okay.
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COMMISSIONER BALDWIN: I hope it's not too
late.
MR. LOONEY: Yes, sir, I will. Mr. Finley?
MR. FINLEY: Thank you very much, Judge,
Commissioners. We've only been in business 50 years. We've
been in the employee benefit business over 30 of those
years. And I believe that in our original bids -- and I
don't know, Gary, whether the Commissioners Court received
any of that information, but we presented our credentials to
the Commissioners Court through -- in our original bid
packets that give you our services, our time in this
community, the letters of recommendation from school
districts, Schreiner College, Sid Peterson Hospital, the
City of Kerrville and so on. We've handled the County's
employee benefit program for eight years now. We've been
providing medical insurance, Section 125 oversight. We've
literally, as Barbara mentioned a moment ago, taken the
County out of the insurance business, or the ad -- or the
insurance service business.
One of the things that I think is so
significant is the fact of our convenience here, and our
ability to be able to coordinate with your employees,
whether it's an original enrollment or whether it happens to
be the new employees that we see one-on-one in helping them
coordinate their benefits through their overall benefit
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package. Because, through the County, they have the ability
under the Section 125 plan to put money aside for the
flexible spending accounts. They have the opportunity to
put money aside for child care on a pre-tax basis. If they
are involved in -- in paying for day care, anything of that
nature, they have the ancillary benefits that are available
to them. And when we sit down with your employee, we make
absolutely certain that they understand the basic benefit
program that is available and provided by the County, and
that is the health insurance program, help them make the
selection that best fits their particular situation, and
then walk them through their involvement in the 125 plan and
in the acquisition of any other benefits that may be of
interest to them for their family's protection.
Now, we -- we have an office two blocks up
the street. We're open from 8:00 to 5:00 every day. We
have a staff of five people. We are bilingual, which
certainly has been of great assistance with a number of your
employees over the last several years. But we can meet them
early, before office hours begin, or we can meet them after
hours by appointment, if that's more convenient for them.
The thing I like about our staff is that they're very
service-oriented. And, you know, in 50 years in this
business, you learn that the key to a successful employee
benefit operation, particularly, is service. Instantaneous
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service. We get as many as two and three County employees
in our office in a single day sometimes. When you have new
employees, they're -- you get the data sheet on them; we
make an appointment with them, and the whole thrust of our
endeavor is to do that at a minimum of job interruption,
because we understand the importance of keeping people on
the job and yet getting them properly educated as far as
their benefits are concerned.
The -- the bids that we submitted are from
nearby T.P.A.'s. We have one that was submitted from
Boerne, one that was submitted from San Antonio. We can go
down and pound on their desk if we don't like the way things
are going. You know from past experience that we've had
very, very satisfactory claims handling from -- from the
existing T.P.A. We have a longtime working relationship
with that particular firm. The claims payment situation is
one that we can address in our office if people have
questions about how claims are paid. If they want to know
the answer to a specific problem, we get it for them right
away. I think one thing that -- that gives us a dual
interest is not only wanting to be of continued service to
you, but as an interested taxpayer in Kerr County, I am very
definitely interested in seeing that the time that our
employees spend on the job and the efforts that they put
forth is not interrupted any more than necessary, and that
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the actions of this Court are actions that will be expedient
and efficient in every manner as far as the employee benefit
program is concerned.
JUDGE TINLEY: Thank you.
MR. LOONEY: Thank you, gentlemen.
(Low-voice discussion off the record.)
MR. LOONEY: I'd like to go through the
report with you now, gentlemen, if I may. Did you have a
question? I'm sorry.
COMMISSIONER LETZ: We're just trying to
figure out a timing issue.
JUDGE TINLEY: We've got a timing issue on
another agenda item because of some pretty tight schedules
of some of the persons involved, and I don't know what the
other members of the Court may want, before we take up the
final action on this particular matter.
MR. LOONEY: I'm at your disposal if you need
to take the other item first, Judge.
JUDGE TINLEY: We've got -- we've got some
critical time constraints that I'm concerned about, and it
may run into a little bit of time. I hate to -- hate to
hang you on a hook and -- and put you on the wait, but I --
this other is a pretty critical item, too. If we might --
MR. LOONEY: I assume we're talking about the
lease on the juvenile --
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JUDGE TINLEY: We're talking about the
Juvenile Detention Facility.
MR. LOONEY: I've been here during that
session once before, Judge.
JUDGE TINLEY: You did not bring your supper
with you, did you?
MR. LOONEY: Been here once before.
COMMISSIONER BALDWIN: That's what I was
going to suggest. See which one of these groups want to buy
the pizza for us tonight.
MR. LOONEY: I -- I can make my presentation
briefer. It's --
JUDGE TINLEY: Well, I'm thinking that we may
want to spend as much time as we feel comfortable and
necessary with you, and it's for that reason -- I think
there may be some threshold issues in this other item, and
we either might get through real quick or not so quick, but
until we get there, I really don't know, Mr. Looney.
MR. LOONEY: Judge, I assume that because of
the time constraints on the others, you should take them
first.
JUDGE TINLEY: I appreciate that, Mr. Looney.
COMMISSIONER BALDWIN: Thank you.
JUDGE TINLEY: Let me call the next two items
together, if I might. Consider and discuss the extension of
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the temporary lease and operating agreement at the Juvenile
Detention Facility, and also the third item, consider,
discuss, and take appropriate action with respect to the
acquisition of Kerr County Juvenile Detention Facility.
That last item, of course, I have posted for executive
session if it's necessary to go there. Is there a
representative of the bondholders here present today?
MR. NEAL: Not in an official --
MR. CAWTHORN: There are two bondholders
here, but our -- our attorney's not represented, nor the
trustee.
COMMISSIONER BALDWIN: Should we go to
insurance?
JUDGE TINLEY: Were you expecting -- were you
expecting those individuals, either one of them, to be here
today?
MR. CAWTHORN: No, sir.
MR. NEAL: No, sir.
JUDGE TINLEY: Okay. Looks like we'll defer
on that and come back to insurance, then. Mr. Looney?
You're back up.
MR. LOONEY: I'm back.
JUDGE TINLEY: Excuse the interruption.
MR. LOONEY: Let me see if I can remember
where I was. It's been two minutes.
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COMMISSIONER WILLIAMS: We haven't started
yet.
MR. LOONEY: If it's been two minutes, I have
to be retrained. Let me go through the --
COMMISSIONER BALDWIN: What the hell just
happened?
SHERIFF HIERHOLZER: I think it's safer to
stay in here right now.
COMMISSIONER BALDWIN: Do you have your gun
with you?
SHERIFF HIERHOLZER: I'm staying in here.
MR. LOONEY: Not really positive what just
happened, but thank you, Judge. The reason I asked the two
gentlemen to make statements in front of the Court,
obviously, is because there's an incumbent agent that has
been servicing your account for some time, and I didn't want
anyone to assume that, as a consultant, that it was just
arbitrary and automatic that I come in and make changes and
anything, and just -- so I have to take a very empirical
view, though, of the bids and the information as it comes in
and relay that to you, and that's what I will do. We bid
the contract out, as y'all are aware. We bid it for
third-party administration services. We bid it for stop
loss insurance and underlying insurance coverage for the
specific and the aggregate stop loss coverage, and we looked
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at the group term life insurance products that are being
offered as part of your program.
The bids that we received, we had four
finalists that we looked at and asked for additional
information. Currently, under your current plan, under Tab
1, is kind of a summary of benefits under Tab 1, the way it
exists today. You have the three different plans that are
being offered; A, B, and C, variations in deductibles,
variations in out-of-pocket maximums, variations in the
percentage of -- of reimbursement provided by the insurance
company. Those plans are being offered with the County
providing 100 percent premium coverage for the more
expensive plan, which is Plan A, and the employees being
given the option to choose either Plans B or C and use
credits towards those premiums as a result of credits being
generated. Currently under Plan A, 63 percent of the
employees, 29 percent in Plan B, and 8 percent in Plan C.
And hopefully that adds up to 100 percent.
The current plan, as I stated, is Plan A.
There is 100 percent contribution for the employee by the
County. We had -- we bid that current plan, and we
requested information from the insuring companies and the
T.P.A.'s to quote on that plan with that benefit structure,
using the experience that had been generated by your plan
over the past two years, and even two and a half years. The
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bids that we received are shown on the spreadsheet under Tab
2, and under Tab 2 it indicates that -- I need my glasses on
to be able to read the numbers. Insurance -- in insurance,
you learn how to read upside down, and typically you learn
how to read very, very small print. But, in an attempt to
get it all on one page -- we put it all on one page.
The bids that you see here are based on a
contract that's somewhat different than the current stop
loss contract that you have in force. You currently have a
12/12 contract, as we discussed in our -- in our brief
training session. That means that claims incurred in a
12-month period then must be paid in a 12-month period to
fall under the reinsurance for the specific and for the
aggregate accumulation process. The bids that I have
requested and the bids that are priced here are based on a
15/12 contract, which means that claims incurred during the
last 90 days of the year will go forward and be used as a
credit against any specific or aggregate losses that are
incurred during the next 12 months following the end of this
plan year. On the 15/12 contracts, the bottom lines, you
can see down at the very bottom there's a maximum claim cost
including the fixed cost. The -- the categories are listed;
total fixed -- expected claims cost excluding fixed, maximum
claims cost excluding the fixed cost, and then expected
claims cost and maximum claims cost including fixed costs.
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The reason we categorized it in that manner
is that the insurance companies and the stop loss carriers
give us a factor. We multiply that factor times the number
of employees on a monthly basis, and then we take that to a
calendar year projection of what the maximum claim cost
would be for your plan under the plan design as presented.
And all that means is that the actuaries have looked at the
past histories. The stop loss carriers have looked at it,
and they say going forward into this next year, assuming
that you again have the 15/12 policy in force, that the
maximum claims liability is based on a population of 265
employees -- and that will change monthly based on
fluctuations in employment. But, based on that population,
then these are the projected numbers under the bid process.
COMMISSIONER LETZ: Mr. Looney, can you go
over, I mean --
MR. LOONEY: Would you like each category?
Each line?
COMMISSIONER LETZ: Well, I guess to make
sure I understand what I'm looking at, explain the total
fixed -- the total annual costs. I mean, what is the total
cost to the County?
MR. LOONEY: The total maximum liability is
the number that says maximum claim costs, including fixed
costs, which is the bottom --
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COMMISSIONER LETZ: The bottom number?
That's the maximum that it can cost the County?
MR. LOONEY: That's the maximum claim cost
for the County during that time frame. The maximum claim
cost, if you'll recall our meeting -- and I really don't
expect you to, so let me refresh your memory. When we
talked about the aggregate maximum, we talked about all of
those claims underneath the specific deductible that
accumulate during that time frame that we identified, and
the insurance industry, as part of their insurance process,
will typically insure for that maximum loss. Well, they're
not going to insure for the exact amount of the loss; they
insure for what their estimated loss is, plus a corridor.
Plus a certain percentage. And then they charge a premium
for that loss in excess. The maximum loss is based on,
again, the factor that they give us, and then times the
number of employees, population.
The expected claim cost is what the
actuaries, with their Kentucky windage, say this is what we
really think it's going to be, but we're not going to insure
you for that; we're going to insure you for a percentage
greater than that. Because if we insured you for the exact
amount, it wouldn't be insurance any more. So, there's got
to be a corridor in there, and you pay a premium for that --
that differential in expected and maximum costs. And,
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typically, the cost for that -- that aggregate insurance is
-- is relatively small. It's not typically a very big
number, because insurance companies really don't expect you
to get there. They expect you to be less than that. So,
when we do our rating structures, when we do our comparison,
we give you the expected, and we also give you the maximum,
and the expected is typically a percentage of the maximum.
And that percentage in this case is 75 percent. Yes, sir?
COMMISSIONER LETZ: One more question. The
-- you said it was 265 employees? 263? What, 265?
MR. LOONEY: 265.
COMMISSIONER LETZ: Barbara, is that what we
-- is that the maximum? Is that if you're fully employed,
what our employee amount is?
MS. NEMEC: Yes, that's without the Adult
Probation. Adult Probation used to be on our census, but
they've gone with their own state insurance, so that is
with --
COMMISSIONER LETZ: So that number is based
on --
MS. NEMEC: -- everybody participating.
COMMISSIONER LETZ: -- everyone
participating, but everyone being 100 percent staffed? Or
is that based on what we currently have right now?
MS. NEMEC: That's currently.
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COMMISSIONER LETZ: What we currently have.
And if we also have a percentage, you know -- okay.
MR. LOONEY: Depending on how you do your
funding, Commissioner, whether you're funding toward
position or actual number of people insured.
MS. NEMEC: Number of people.
MR. LOONEY: Number of people insured.
COMMISSIONER LETZ: Right. I guess my point
is that if we ever got to the point of being 100 percent
filled, all the positions, the number -- or the cost is
going to go up to us, because this is based on something
less than that.
MR. LOONEY: Everything is based on that --
that population and the number of insured during the time,
and it's done on a monthly basis and then aggregated over a
year.
COMMISSIONER LETZ: Okay.
MR. LOONEY: So, it potentially could go up,
but we did take into consideration the Adult Detention being
moved out of the census information.
COMMISSIONER LETZ: Okay, thank you.
MR. LOONEY: Yes, sir.
COMMISSIONER WILLIAMS: Just a couple quick
questions. Under specific lifetime maximum reimbursement,
three of them, Columns 1, 2, and 3, are a million. Column 4
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is 960.
MR. LOONEY: The maximum -- or the specific
deductible is 40,000.
COMMISSIONER WILLIAMS: Okay.
MR. LOONEY: And that 40 is self-insured by
the County.
COMMISSIONER WILLIAMS: Okay.
MR. LOONEY: So the actual liability or
actual obligation under the plan is only 960,000 for the --
an individual that hits their maximum under the benefit plan
itself.
COMMISSIONER WILLIAMS: Okay. Under specific
contract, it looks like three of them are 12/12, as you
stated, and one seems to be a 12/15.
MR. LOONEY: They are -- the 12/15 contract
is essentially the same contract they gave us, 12/15 or
15/12. They're the same numbers, which were high.
COMMISSIONER WILLIAMS: Okay. Maximum
aggregate run-in. There's no entry for three -- Columns 1,
2, 3, but there is a $226,750 entry in Column 4.
MR. LOONEY: If you'll look up at the top, I
believe it says that the estimated run-out claim liability
is up in the -- the fourth entry in the column.
COMMISSIONER WILLIAMS: Mm-hmm.
MR. LOONEY: That maximum run-out claim
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liability, that includes claims paid that were incurred
during the last 90 days of the year, plus the admin expense
to pay those claims.
COMMISSIONER WILLIAMS: Mm-hmm.
MR. LOONEY: That $145,000 number is what we
estimated. The estimations by Mutual of Omaha as part of
their contract was to allow up to 200, I believe --
COMMISSIONER WILLIAMS: 260 -- 226.
MR. LOONEY: $226,000 to apply against the
aggregate reimbursement for the next plan year.
COMMISSIONER WILLIAMS: In the event there
were claims greater than anticipated?
MR. LOONEY: Those are the claims that would
be incurred prior to January 1st. And, as I said, our
estimation is approximately 145,000, and they allow
accumulated claims to apply against the aggregate for the
next year to a maximum of 226.
COMMISSIONER WILLIAMS: Thank you.
MR. LOONEY: The -- as you can see,
gentlemen, by the -- the bids that we received, the Mutual
of Omaha contract for their maximum out-of-pocket exposure
is at $1.673 million, and that is using the current plan of
benefits. The next closest bid is 2,073,000. So, at this
point, using that as a reference, then that would take care
of the first obligation under the bid specifications, which
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was to examine the current plan of benefits in relationship
to renewals, in relationship to additional bids that were
taken in. At that point, strictly on a cost basis, the
Mutual of Omaha cost is a better cost basis than the renewal
and the other bid information.
Now, the other thing that we did also, as
y'all know, is we looked at the health reimbursement
accounts. The health reimbursement account, as we discussed
in our meeting, is the change in the employee attitude and
change in the plan design, and a great deal of change that
takes place in instituting the HRA accounts. We also asked
for the individual bidders to give us quotations on the
factors necessary to add an HRA account, or to actually
change the entire plan of delivery from the current three
different plans to a new style of plans which has two
different plan designs. And, Mr. Williams, at this time
it's not a working copy; it's more of a sample, and that's
under Tab number 3. This is a plan design sample on the HRA
account.
The way the HRA account would be designed
initially is to closely mirror what the benefit plan is that
you have in effect today for Plan A. The difference is in
the methods of which the benefits are delivered to the
employee. Currently you have a $400 deductible. You have
co-payments that are made to physicians' offices for
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services, and then a list of benefits, as I showed you under
the Tab 2. Under the HRA account, what we do is we change
the deductible and we move the deductible to a much higher
deductible; in this case, $1,000. We move the deductible to
$1,000, and then we create an HRA, health reimbursement
arrangement, which allows the employee a $600 credit to be
used on their benefit plan during the calendar year. That
$600 credit can be used to offset deductible expenses, it
can be used to offset co-insurance expenses. So that, in
effect, by using that $600 benefit, they can then reduce
their deductible obligation back to where it is today, or
that $400 deductible level.
We included and still maintained in the plan
a co-payment to the doctor's office; however, we did
increase those. We looked at the plan design, and currently
you have a $300 supplemental accident benefit, which is a
relatively old benefit in a lot of plans, and we asked that
-- or in our demonstration, in the information we asked from
the proposers, we took that out. We removed that $300, 100
percent benefit. That doesn't mean that they can't receive
$300 of benefit in case of an accident. Actually, they can
receive up to $600 of benefits after an accident. It comes
out of that health reimbursement arrangement, as opposed to
being paid directly by the insurance plan itself. They
still can receive the benefit, even up to $600, but when
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they start using that benefit, it comes out of that $600
HAR -- HRA arrangement. I'll let Mr. Williams -- you
wrinkled your eye there. Did you follow that?
COMMISSIONER WILLIAMS: I'm still with you.
MR. LOONEY: Okay.
COMMISSIONER BALDWIN: I'm not.
MR. LOONEY: No, I --
COMMISSIONER BALDWIN: The -- where does
the -- that $600, where does it originate?
MR. LOONEY: $600 is an account -- an
arrangement, excuse me, as we say, that at the beginning of
the year, you give an employee a credit for that amount of
money. They have that $600 credit. Now, there's a number
of ways that that credit can be allowed. That credit can be
allowed $150 quarterly. It can be allowed based on
seniority. You can allow the credit to be based on years of
service, have the whole $600 up front for people that are
currently enrolled. There's a lot of different ways you can
allow that credit to be provided to the employee.
Typically, what we do in today's situation, when you're
making an immediate change, is we give the $600 credit
immediately to any employee, any dependent insured under the
plan, each dependent separately under the plan, so that
there is a $600 obligation per employee at that point that
can be used to offset medical expenses that they have as a
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result of co-insurance or deductible expenses. It does not
include reimbursements for co-payments for physician office
visits, nor does it include co-payments for prescription
drugs. It has to be an eligible benefit under the plan to
be reimbursed. That's -- it's what we call a linked
program. It means that first the adjudication of the claim
is made, and if there are expenses applied to the
deductible, then the employee actually can choose as to
whether or not they want to use that $600 credit that they
have against that payment.
COMMISSIONER WILLIAMS: Is that a use-it or
lose-it concept, or does it roll over?
MR. LOONEY: No, sir, it can roll over, and
the recommendation is that it rolls over to the point where
the maximum rollover is equal to the maximum out-of-pocket
expense that an employee might incur should they have a
catastrophic illness. The maximum out-of-pocket exposure is
the deductible plus the co-insurance activators that the
individual pays. The 10 percent of the bill that is not
paid by the insurance, that 10 percent co-insurance that's
paid by the employee. Once that number plus the deductible
reaches $3,000, then 100 percent of claims are paid for that
individual for the balance of that calendar year. So,
rolling the $600 over, we'd be able to roll over to the time
when it reached $6,000, which would take five years.
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COMMISSIONER LETZ: Mr. Looney, just to make
sure I under -- I'm understanding how that would work, is
that if you have a healthy employee who doesn't use any --
go to the doctor, doesn't use any of the policy, which is, I
think, a pretty high percentage of our employees, and we
rolled it over, from the second year on they could -- they
would have no -- I mean, they basically apply the full
credit to the first deductibles?
MR. LOONEY: They could.
COMMISSIONER LETZ: So, in Year 2, instead --
they wouldn't have any deductible. If they used it, you
know, got up to what it would have been, a $1,000
deductible.
MR. LOONEY: That's correct. But they only
have that $1,000 -- they have a $1,000 limit.
COMMISSIONER LETZ: Right. Then this next
year the limit goes down to only having 200 in their
account, so --
MR. LOONEY: Right. But, you know, there's a
number of ways to impact or affect that accumulation.
COMMISSIONER LETZ: And the -- and the reason
that this is attractive to us as the employer is because
we're raising the deductible, and since most employees don't
use the health insurance, that we're insuring -- you know, I
guess it's costing us a lot less to get this insurance?
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MR. LOONEY: It's costing us somewhat less.
But the way the plan design is right now, because we're
trying to keep this Plan A roughly equivalent to the new
plan going forward, there's not a lot of -- of savings
generated at this point. What happens is that, moving
forward in the future, you get a lot more flexibility in the
plan design utilizing the health reimbursement account, as
far as being able to adjust that on an annual basis and
being able to give credits going forward. Plus the fact
that an employee who is making a contribution toward the
plan that has no use of the plan currently, is not using it,
they feel like they're in a use-it or lose-it position,
because they're paying premiums and not really receiving any
benefit under the plan. Because they're not sick or
unhealthy or whatever, which is great, but their premiums
are then expended, and there's no credit given forward.
Using the HRA account, they feel like there is some
ownership in that account going forward, that they can --
which hopefully adds to consistency in employment, because
the employees, if they terminate, there is no ownership in
that account. It is not a vested account. So, an HRA
accumulation is strictly for an employee while they work
here at the County.
COMMISSIONER NICHOLSON: Mr. Looney, if we
implemented an HRA, and three years down the road we were
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looking back at our experience with it, what kind of things
would -- what kind of things would we say were the benefit
of having done that, and what kind of concerns or
reservations about it will we have?
MR. LOONEY: The HRA account, from a concerns
standpoint -- from a budget standpoint, is that when you
have those accumulations moving forward into the employee's
account, you have to be aware of a low liability that exists
for those employees, because currently you don't have
anything being carried forward. That carry-forward
exposure, though, is really only up to the maximum of what
the maximum out-of-pocket exposure is for the employee under
the health plan, because the insurance program underlying
that is going to pay 100 percent of maximum out-of-pocket
expenses at some point. So, your maximum liability during
any one given calendar year is going to be up to what the
employee maximum out-of-pocket exposure is under the plan
itself. So, that's one concern that employers have, is that
cumulative effect going forward.
The -- the negative side of the program, you
know, we have not had, really, a whole lot of experience
under health reimbursement arrangements. They've been
around for 18 months to 24 months now. Most of the reaction
-- negative reaction has been from the employees not
understanding how the plans work. That they -- quite often,
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when the HRA account is presented, they have a $1,000
deductible, and it's a reimbursement, so they are requested
to make a contribution or payment up front, where in the
past they may not have. Now they have to make a payment up
to that $1,000 and then be reimbursed for that. Now, one of
the things that the insurance industry has done to offset
that is they've created a debit card that can be, you know,
provided to employees which, in a sense, is a credit card
with a limit of $600. And that can be provided to employees
so that they don't have that out-of-pocket cost up front.
And when that card is swiped, it's automatically -- goes
into the claim function, and then is deducted and shown as a
deduction against that deductible. And it also shows that
deductible.
COMMISSIONER LETZ: Another question -- when
you said that, something else came into my mind. So, am I
looking at this wrong, that if you give the credit, they can
use the $600 credit first and then use -- get a $400
deductible?
MR. LOONEY: That's correct.
COMMISSIONER LETZ: So, really, the employees
are a lot better off.
MR. LOONEY: They're better off, because they
have more first-dollar coverages if they want to use it in
that manner.
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COMMISSIONER LETZ: Both of the people that
-- or whatever you call -- the agents, whatever, offer a
debit card?
MR. LOONEY: Yes.
COMMISSIONER LETZ: I didn't -- not sure
that's what I'm looking for.
COMMISSIONER WILLIAMS: If an employee used
that $600 judiciously throughout the course of a plan year,
he really wouldn't feel the impact.
MR. LOONEY: They'd have very little.
COMMISSIONER WILLIAMS: It would be minimal.
MR. LOONEY: Be very minimal. Remember, now,
it doesn't apply to co-payments.
COMMISSIONER WILLIAMS: I understand.
MR. LOONEY: Or to prescription drug
payments, so those payments would still be out-of-pocket
expenses for the employee. And we did increase the
physician office co-payment under this sample plan that we
have. The -- the health reimbursement account, if it's not
done this -- oops, excuse me -- if it's not done this year,
most likely it will be done next year or the year after,
because these are -- these are the way -- this is the way
that health care is going to be delivered in the future.
There's going to be more responsibility on the consumer to
actually identify what the cost is and what the cost of the
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plan is. And, by seeing this deduction occur, this
reimbursement occur, that's an educational process in itself
for the employee.
COMMISSIONER NICHOLSON: I would expect,
regardless of what a good job we did of educating people
about this, that first year, we'd probably have a pretty
small number of participants. 10 percent, 20 percent,
maybe?
MR. LOONEY: That would participate? No,
sir. It's recommended that this plan be the primary plan
that the County offers to employees. This is not a health
savings account. This is --
COMMISSIONER NICHOLSON: I understand the
difference. So, you're saying that you think a large
percentage of our employees would enroll?
MR. LOONEY: This would be the primary policy
offered to employees by the County, paid for by the County.
COMMISSIONER LETZ: This would be --
COMMISSIONER NICHOLSON: This would be --
COMMISSIONER LETZ: This is the plan?
MR. LOONEY: That would be the plan. It is
an option.
COMMISSIONER NICHOLSON: That solves a lot of
problems.
MR. LOONEY: It is an option to the -- to the
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point where there is a second plan that is being offered,
which is a buy-down plan, which is similar to the buy-down
circumstance that you have currently, B and C. The Plans B
and C really have not much differential in their benefits
currently, and you can -- you know, you can see that. So,
they do, though -- there are some employees that wish to
have maybe a different plan, different style of plan, and
this plan under Tab 5 would be that second plan. It's --
it's an 80/60 plan; it's got a higher deductible.
One of the things that I failed to mention a
while ago that -- that is not going to be carried forward --
or under my sample, anyway, would not be carried forward, is
the deductible that is credited during the last 90 days of
the year. It's called the deductible carry-forward. The
deductible carry-forward has a lot of different definitions,
but typically, if you satisfied a percentage of your
deductible, but not the entire amount of the deductible, and
that percentage is satisfied in the last 90 days of the
year, then that's carried forward to satisfy the deductible
going forward. With the $600 HRA account, that's not
really -- combining those two together really wouldn't be
functional, so we prefer to have the HRA account be that
carry-forward against that deductible.
Same thing under the second plan, is that
they've eliminated some of those benefits. We've kept in
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the plan, though, wellness benefits, kept in the plan
accident -- emergency care benefits, and have also put into
the plan document an out-of-network benefit program. If you
have an employee that lives outside the area and is not able
to access a P.P.O. network that's provided for you in this
area, and there's none in the area that they live in, then
there's a benefit plan design for them in case there's --
those situations occur. We've also looked at the
prescription drug program. We've made some -- some minor
changes in that area as far as co-payments are concerned.
Also, looking at a more restricted formulary. And I can
tell you about that in just a second.
COMMISSIONER LETZ: Mr. Looney?
MR. LOONEY: Yes, sir?
COMMISSIONER LETZ: I think maybe you said
this, and I was trying to read ahead and didn't hear what
you said. On the Tab 5, where the deductible goes to -- up
to 1,500 --
MR. LOONEY: Yes, sir?
COMMISSIONER LETZ: Does the credit go up or
credit stay the same at 600?
MR. LOONEY: There's no health reimbursement
account under that plan.
COMMISSIONER LETZ: Oh, okay. See? I didn't
pay attention.
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MR. LOONEY: That's all right.
MS. NEMEC: I have a question, Mr. Looney.
In our present plan, they have A, B, or C. If they take B
or C, then the County --
MR. LOONEY: Gives a credit.
MS. NEMEC: -- gives them a credit towards
their AFLAC or Flex One account. Is that not going to -- no
longer be an option if we change to this benefit?
MR. LOONEY: It would still be an option,
because the benefit plan that would be provided by the
County would be of a greater expense than the benefit plan
under the optional plan, so there would be a credit
generated for that, but it would just be the -- the credit
based on that plan design. And that's one of the things
that -- that we need to determine, is what that cost shift
is going to be in relationship to the overall cost to the
County. As I understand it, I've got the numbers now as to
what the employees are currently paying for those other
plans. And if -- if a change were to be made, you know, we
would adjust the funding -- my recommendation, which was --
didn't make the final copy today, but my recommendation was
going to be to increase the employee contribution level by
anywhere between 4 and 5 percent, somewhere in that 4 to
5 percent range on the employee contributions for their --
for their plan. That -- again, that's a number that, late
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this afternoon, we were working with, and so I don't have it
under -- it states that I've got it under Tab 4 here, but I
don't have that distribution of the premium as far as the
individual premium cost. I do have a gross cost, but not
the individual premium cost. In relationship to the bids,
then, under Tab 2, the second page under Tab 2, we went
through the --
JUDGE TINLEY: Let me -- before you get
there, Mr. Looney, the basic life -- that's the add-on
there -- is under Tab 6; is that correct?
MR. LOONEY: Yes, sir.
JUDGE TINLEY: And --
MR. LOONEY: If you'd like to go over that --
I can go over that real quickly, if you like, Judge.
JUDGE TINLEY: That's part of the fixed plan,
though, isn't it? That portion of it is part of the fixed
plan that's --
MR. LOONEY: Yes.
JUDGE TINLEY: -- been presented?
MR. LOONEY: Right. Under the -- under the
life insurance that was bid also, I can go over that pretty
quickly, if you'd like. Let me go back, though, and finish
the -- under Tab 2.
JUDGE TINLEY: Okay.
COMMISSIONER WILLIAMS: Tab 2?
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MR. LOONEY: Tab 2. The first page is the
spreadsheet on the current plan of benefits. Page 2, the
second page, is the spreadsheet assuming using a health
reimbursement arrangement. The health reimbursement
arrangement, again, the two final finalists are your current
incumbent carrier, and then Mutual of Omaha, based on their
information. The differential in cost is shown here. The
total maximum claim cost, including fixed costs, for Mutual
of Omaha is 1.632, and the maximum E.B.A. cost is 1.944.
Again, that is a maximum exposure expense. The other two
bidders that -- that offered bids were substantially higher
than those two numbers.
The costs -- to go through the costs, the
specific stop loss premium as presented by E.B.A. is
$216,000, whereas the Mutual of Omaha is 139,220 for the
$40,000 specific on a 15/12 basis. The aggregate stop loss
premium is 17,000. American United Life was the reinsurer
that was offered by E.B.A., and that number is also included
there, 17,744, and the 13,706 from Mutual of Omaha. E.B.A.
offered a number of different varieties of -- of plan
options, plan designs, including aggregating specific
contracts, including other distributions of 12/12, a lot of
different options under that. These two options compare
apples to apples, as far as the two options are concerned.
This is the option that I would recommend --
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that I recommend going forward, which is the 15/12 contract,
using set specific and aggregate attachment points. The
numbers where it says -- right above aggregate factors,
where it says total per employee, those are the admin costs.
The $17.75 factor by E.B.A. does not include the disease
management offering that they have made under Option 1, so
that dollar that's shown up there is not included in that
17.75. Under the Mutual of Omaha accumulations, as you can
see, down at the bottom where it says total annual costs,
there's a comparison between the disease management cost of
the two organizations and the U.R., P.P.O., COBRA, and those
numbers. Based on empirical numbers, based on the
distribution of the costs as presented by the insurance
company, Mutual of Omaha has the better bid, as far as the
specific aggregate and the administration charges overall.
Some of the things that Mutual offers, they
do offer online web assistance as part of their package, so
that individual employees who want to track the amount
that's in their reimbursement account can do so. It's
included in that. E.B.A. has it as an option, but it was
not included in their fixed costs. So, the second part of
it was the life insurance portion of it. Currently, the
insurance -- life insurance is $10,000 per employee -- per
active employee. Those numbers, as -- the face amount of
that insurance policy is reduced, based on the age under the
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A.D.A. regulations, and under Tab 6, you'll see the life
insurance proposals as being made from the different
companies.
Based on the information received under group
term life, the current rate is 25 cents per employee, plus 4
cents for accidental death and dismemberment, for $10,000 of
life insurance coverage. The proposal from Mutual of Omaha,
again, is the lowest number on the life insurance proposal.
It has a three-year rate guarantee. They have conversion
privilege, accelerated death benefit, disability premium
waiver, not -- travel assistance program was not in the
presentation itself, and it does -- it's not a portable
benefit. But, based on the Mutual of Omaha presentation,
if, in fact, the County wanted to increase the employee
coverage from $10,000 to $20,000 -- $10,000 is really a
number that most insurance companies don't even offer any
more. If we were to ask for a new -- a new company for
$10,000 of life insurance, they wouldn't even offer it to
us. $20,000 is a -- is still almost a bare minimum.
Because of the rate change, increasing from 10,000 to
20,000, we'd have a net premium effect of only about $4,000
per year on the total cost of the plan.
COMMISSIONER LETZ: What is standard -- more
standard, say, $20,000, low end?
MR. LOONEY: More standard is -- actually, is
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one times annual salary, to a maximum of $50,000. That's
typically standard. And that's the result of the I.R.S.
regulations that allow an employer to take full tax
deductions for any premium that's paid on behalf of an
employee up to $50,000. And then anything in excess of
that, the employee would have to be charged a certain income
tax as a result of a benefit provided by an employer. So,
most employers will provide one times salary up to $50,000
amount.
COMMISSIONER WILLIAMS: What would the rate
be for that?
MR. LOONEY: I can find out. I didn't have
all the salary information on all the employees. It's a
fairly -- relatively easy calculation once we know what the
volume of coverage would be, and I'll be glad to get that
for you.
MS. NEMEC: I'd like to remind the Court that
we do have that benefit through our retirement system that
was just adopted last year, where they have a death benefit
that if they do pass away, they get their retirement
benefits plus a one-time deposit to their beneficiary that
equals their annual premium.
MR. LOONEY: Do you know if that's -- if it's
insured, or is it just an equivalent of the total
accumulation?
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MS. NEMEC: I'm not sure. All I know is
that, you know, if somebody makes $20,000, then the
retirement system gives them their benefits plus an
additional $20,000. It's whatever their annual salary is.
MR. LOONEY: If it's a straight reimbursement
based on the total accumulation account, it doesn't fall
under the -- the restriction of the $50,000, but if it's a
fully-insured amount that's provided by an employer, then it
would fall under that $50,000 limitation. That's something
that we can find out.
MS. NEMEC: Okay.
MR. LOONEY: For sure. So, based on the --
on the information that we have -- that I have, based on the
bids that have been presented -- Mr. Williams, you had asked
the question about enrollment, and one of the things that we
have discussed with Mutual of Omaha is the ability for them
to provide additional assistance during an initial
enrollment, as to whether they would have a sufficient
number of individuals -- should a change be made, would they
have a sufficient number of staff to be able to access all
employees in the county on the short term, because we have
between now and the end of the year to complete an
enrollment. Actually, probably about a two-week period,
starting as early as next Monday. Mutual of Omaha produces
information and can produce information to be provided to
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employees concerning their HRA accounts and how they're
accumulated and how they work. Regardless of whether you
change or not, that educational process is going to have to
take place. The employees -- if you change to the health
reimbursement account, there needs to be an educational
process for the employees.
COMMISSIONER LETZ: Seems that -- I mean,
first thing we need to decide is if we're -- I mean -- well,
I don't know if it's first, but I, personally, would like --
I like the HRA accounts. I like going that direction.
JUDGE TINLEY: That's where the industry's
going.
COMMISSIONER LETZ: I think it's good for the
employees. I mean, the benefit to the employees is -- I
think is better than the current plan. I like the debit
card feature; I think if they start getting very used to,
you know, at least the feeling of paying for their health
care, I think that's good.
COMMISSIONER BALDWIN: I'd like to ask
Barbara a question. She's -- she's the one that has had the
hands-on communication with all the employees. How do you
think that the employees will react to this? It's kind of a
change here.
MS. NEMEC: I was going to say, they don't
like change. You know, I can tell you that.
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COMMISSIONER BALDWIN: Well, neither do I.
MS. NEMEC: They get used to it being a
certain way and they get comfortable with that. So, you
know, I -- I haven't spoken to anybody about this, because I
really didn't know what was going to be proposed, so I
really don't know.
COMMISSIONER BALDWIN: How long will it take
to -- to educate?
MR. LOONEY: Depending on -- on the
availability of the employee -- it can be done, you know,
very quickly if they're available.
COMMISSIONER LETZ: I think --
MR. LOONEY: Really depends on availability.
COMMISSIONER LETZ: I think my feeling is
that it's going to be more a commitment to train as you go.
I mean, I think that doing training in the month of December
and January really is somewhat meaningless until people
start using it during the year. I'd say, like, in the first
quarter, the second quarter, third quarter -- each quarter,
you have to have training, 'cause people -- you know, I
mean, I don't know how -- I mean, until you use it, you just
don't know how it really works. So I think it's an ongoing
thing for the year. There has to be a commitment by the
companies.
COMMISSIONER WILLIAMS: That's kind of what
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-- that's kind of what I'm curious about. With Mutual of
Omaha, who -- who's going to come in here and do that? Is
there an agent that's going to be involved in that?
MR. LOONEY: Mr. Wallace is responsible for
making sure that that communication is in place.
COMMISSIONER WILLIAMS: That is Mr. Wallace,
okay.
MS. NEMEC: How about new employees? I still
haven't gotten that question answered.
MR. LOONEY: The new employees are -- are
enrolled when they come in now. The recommendation would be
that you establish a time frame, either once every two weeks
or whatever, and have those employees -- then Mr. Wallace's
organization would be available, or Mr. Finley's
organization would be available on a regular basis, but the
timing with an individual being enrolled in the plan, the
salary deduction period, you need to identify when that
salary deduction needs to be done for new employees and set
up a time for the interviews, and Mr. Wallace has assured us
that he would be available. And you know already about
Mr. Finley's access. So, the --
MS. NEMEC: I know last -- in the last two to
three months, we've had more than 20 new employees, and so,
you know, those have all just run two blocks down. So,
that's my -- that is my main concern.
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MR. LOONEY: Well, part of the --
MS. NEMEC: And that's more than 20 new
information that was provided had to do with the flexible
spendable accounts, child care accounts, and Section 125
administration. None of those accounts have been suggested
to make any change in any of those accounts. Assuming that
the AFLAC organization would still be in place, and that as
a result of that, the agents that are responsible for that
enrollment would still maintain that responsibility for that
enrollment.
MS. NEMEC: I'm confused on how the
enrollment is going to -- if we go with a different carrier,
and Mr. Finley's office is the one that administers the
AFLAC account, and earlier you said that the employees were
still going to have an option to take -- if they went on a
different plan rather than Plan A, they were still going to
have the option to take the difference in the premiums and
use that premium to buy AFLAC insurance. If we have two
different reps, how are they going to work together to offer
that?
MR. LOONEY: Premiums are administered by the
payroll function, so the payroll function would set the
deductions for the premium. The premium would be --
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MS. NEMEC: Right, but the insurance --
MR. LOONEY: -- either to AFLAC or to some
other location.
MS. NEMEC: No, no, no that's not my
question. How are the employees going to be able to -- how
are you going to be able to offer AFLAC and -- and enroll
them in Plan B or C and then tell them, okay, you have this
amount -- you have $103 in difference to buy AFLAC products?
So, if -- if we have a different agent, then -- then this
agent's going to enroll them in whatever plan; then they're
going to tell them, okay, now you go to your AFLAC rep and
tell him you've got $103 to buy AFLAC products with? Is
that --
MR. LOONEY: That -- yeah.
MS. NEMEC: Right now it's the same person
doing the same enrollment, selling the AFLAC insurance,
selling Flex One, and they do it all in one office. And so
I'm real concerned on how it's going to work if we have
different agents handling it.
COMMISSIONER NICHOLSON: Barbara, there are
lots of employers in Kerr County who are -- whose insurance
carrier is in New York or Salt Lake City or somewhere, and
Walmart or Penney's or whoever have people in their
organization that handle enrollments, and that kind of
mundane administration, we can -- we can do that.
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MS. NEMEC: I don't have the staff to do
that. I don't sell insurance. I'm not going to sell AFLAC
products to our employees; that's not my job. I don't get
commission on those sales.
COMMISSIONER BALDWIN: Wait a minute.
Commission? Commission?
MS. NEMEC: That's right.
COMMISSIONER WILLIAMS: What AFLAC products
are we pushing here?
MS. NEMEC: We're talk
insurance, accidental insurance. Mr.
about it, because that's his product.
commission on that. I'm not going to
our employees. That's something that
about.
ing about cancer
Finley knows more
He sells it. He gets
sell those products to
needs to be thought
MS. MITCHELL: Excuse me. And I can speak on
that, because I take Plan B with the AFLAC, because I have
two kids. We don't have a dental plan. I use that money
for my kids, because I don't have them insured; I can't
afford to have them insured. So, that extra money goes to
medical benefits towards my kids.
JUDGE TINLEY: You just direct, as part of
your payroll direction, where it goes.
MR. LOONEY: That's part of the --
MS. NEMEC: The agent gives me that
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information.
MR. LOONEY: It's a payroll function. And,
you know, not -- not sitting down and explaining the AFLAC
product to a new employee, I can -- I don't have any -- that
probably -- that wouldn't be your job anyway.
MS. NEMEC: No, it's not. That's why I'm
saying, who's going to do that? How are the employees going
to coordinate --
MR. LOONEY: Whichever insurance agent
represents the company that's receiving the commissions
would make that representation. That's their
responsibility.
MS. NEMEC: Okay. As long as everybody
understands that, that I -- I can't do that.
MR. LOONEY: That's -- it is not your
responsibility to sell voluntary products.
COMMISSIONER WILLIAMS: Well, let's go back
to the question again. What would change with respect to
AFLAC and whatever products they offer for an employee like
Kathy? The way she has it set up right now, what would
change under our new situation? How would it change?
MR. LOONEY: The one thing that needs to be
determined is what that credit is that she's receiving
toward that additional insurance program now. And that
number, then -- as I suggested, the -- the contribution by
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the employee would increase by 5 percent, so that increase
would be an increase by 5 percent. That increase would show
up as a result of the differential between what the County
is using as their factor toward an employee cost. That
would then be reduced from the Option B, which is just one
option under the medical plan at this point, and then Option
B then would create that credit that could be used for
the -- for those other purchases.
COMMISSIONER WILLIAMS: Okay.
MS. NEMEC: And when an employee enrolls
right now -- new employee comes and enrolls, they go to
Mr. Finley's office, and the reps there say, Okay, these are
your plans -- different plans, A, B, and C. If you go with
B and C, then you have so much money to buy other insurance.
What best fits your situation? The employee's not going to
have that benefit if it's not the same provider doing it, is
what I'm trying to tell y'all.
COMMISSIONER LETZ: Why not?
MS. NEMEC: Because when they go to enroll
with the regular insurance, the county insurance, the
insurance that the County is giving them, all they're going
to be able to tell them is this is A and this is B. You
know, if you go with A or B, there's other products that you
can purchase through AFLAC, so you might want to do that.
At that time, they're not going to know what those other
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products are.
COMMISSIONER LETZ: Why can't you say, Here's
our base plan. If you want additional insurance, see Finley
and Associates?
JUDGE TINLEY: Or anybody.
COMMISSIONER LETZ: Or anybody else. I mean,
I wouldn't -- you know, I mean, I think anybody -- I have a
question, then. We're asking a real payroll issue, as to
whether we're having too many different people, so I think
it kind of ought to be one company. It's currently Finley
and Associates.
SHERIFF HIERHOLZER: Buster, when you asked a
while ago about the employees and the change, I think it's
pretty obvious, the main thing you're going to hear from the
employees that I hear from is not whether or not the County
changes insurance. One's going to be -- be the coverage the
insurance provides, and number two is how much is their
premium's going to change and how much is their co-pay and
the prescription cards going to change? Is it going to go
up? Down? That's where you're going to get -- if it goes
down a little bit, stays real close to the same, you won't
hear much from the employees. If it goes up and their
co-pay all of a sudden jumps up, you know, 10 percent or
whatever -- I don't know what the premium amounts are --
that's when you're going to really start hearing it from the
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employees on change. It's not going to be on what the
company is; it's going to be on what kind of coverage it is,
how well does it pay off, and the main thing is how much
more out-of-pocket that employee's going to be.
COMMISSIONER WILLIAMS: Is there a
spreadsheet, Gary, that gives us that basic information of
what the employee's cost is going to be for insuring his or
her family? Is that in here?
MR. LOONEY: No, it's not in here. That was
the number that we were still getting phone calls on this
afternoon at 1 o'clock. I have -- as a matter of fact, I
have my disk with me, which won't take long to calculate
those numbers. But the intent was to -- with the plan
design is to keep the employee cost at no greater than a
5 percent increase over and above where they are today, and
to allow that credit to still go forward to reduce the
benefits that they're currently enrolled in. But it is
unusual, gentlemen, for the County to provide excess funds
for an individual to purchase a voluntary benefit plan. In
the sense -- in essence, that's what you're doing by giving
credit, as long as they use that credit against purchasing
one or the other volunteer insurance programs. If they were
using the credit to reduce premiums under the other plans,
that would be more, I guess, in tune with what other
employers would do. But to give a credit to be used for the
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purchase of voluntary plans is unusual.
COMMISSIONER LETZ: I mean, I think the --
you know, part of the -- one of the things that employees
need to understand, the difference in these two in this, the
HRA, is $300,000. I mean, they're not going to get the
benefits if we don't -- they may have to have a little bit
more work on their side and do a little bit more work, but
if we don't -- if they don't do that, the other option is to
get less benefits. I mean, I have to look at this as, as
long as the service is good, I mean, cost has to be the
primary consideration, as long as we're getting the same
benefits.
COMMISSIONER WILLIAMS: The number on
Spreadsheet 2, under Mutual of Omaha, that the Commissioner
is referring to, 1632, that's with the HRA, and that is
our -- currently our Plan A, as it exists today?
MR. LOONEY: No, that's the HRA sample under
2, which has the $600 --
COMMISSIONER WILLIAMS: Okay.
MR. LOONEY: -- HRA accumulation.
COMMISSIONER WILLIAMS: All right. Okay, I
MR. LOONEY: There are some other changes,
Commissioner, that -- the other changes were the reduction
in the accident benefit, the $300 accident benefit that's
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there currently.
COMMISSIONER WILLIAMS: Right.
MR. LOONEY: The maximum out-of-pocket
expenditure currently under Plan A is $2,400, and with the
new plan it would be $3,000. But, again that $3,000, less
the $600 health reimbursement arrangement, is the $2,400.
The physician's office co-payment was increased to 30; I
believe it's 20 now.
COMMISSIONER LETZ: The red are the changes,
correct?
MR. LOONEY: Pretty much. There are some
things that are not in red that were not included in the
previous plan.
COMMISSIONER WILLIAMS: It's under Tab 3?
MR. LOONEY: Under Tab 3.
SHERIFF HIERHOLZER: And, Jonathan, something
the insurance carriers, whoever they are, may take into
consideration, the biggest complaint I hear from all of my
94 employees -- 95 I have now --
COMMISSIONER LETZ: Are they all complaining?
SHERIFF HIERHOLZER: In insurance? Yes. On
insurance, yes. Okay. But the biggest thing -- and this
isn't a comparison, but it's something that, when they
change, if their premiums are going to go up, somebody needs
to be able to explain to them, because the biggest complaint
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I have is, Why is the County's insurance so much more
expensive than the City's?
COMMISSIONER LETZ: Than what?
SHERIFF HIERHOLZER: Than the City's. Why
does it cost us employees so much more than it costs that
City employee? Now, it may be -- City may put in more on
their side, you know, or the deductibles may be different.
But when you're looking at changing, and if it's going to go
up, I would encourage whoever the carrier is going to be to
try the best they can to explain that to the employee, so
they've got a good --
COMMISSIONER WILLIAMS: You've got to know
what the City plan is. You've got to know what the City
involvement is.
SHERIFF HIERHOLZER: That's the problem. I
don't have any idea what it is, but that's the major
complaints I hear.
COMMISSIONER WILLIAMS: And then, as the
Judge added, then we -- do we care what the City does?
That's the other part of the equation.
SHERIFF HIERHOLZER: Well, you should care,
just to the point that that is what does concern your
employees.
COMMISSIONER LETZ: One of the things I think
is pretty important is what the P.P.O. is, because I know a
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lot of people go to San Antonio for, you know --
MR. LOONEY: Right.
COMMISSIONER LETZ: -- various procedures or
care, maybe all their stuff, and some local. What is the --
MR. LOONEY: One of the things that was --
was proposed by your current carrier was to incorporate
Texas True Choice P.P.O. network into their plan going
forward, as well as -- and that was also the recommendation
of the Mutual of Omaha, was to use their underlying Texas
True Choice product with the overlay of the Mutual of Omaha
network, which is a pretty substantial network. We did a
very extensive analysis for the City of San Antonio. We
examined -- I think we had nine different P.P.O. network
providers, including all of the major insurance companies.
We did a very in-depth analysis of those costs, and found
that Texas True Choice and Blue Cross were very comparable
in their discounts, and that all the others were marginal
steps, as far as being less beneficial to the employer.
COMMISSIONER LETZ: And that option's under
both --
MR. LOONEY: Under both plans.
COMMISSIONER LETZ: -- both plans? And
the -- but, I mean, from the -- the sample with the -- with
the HRA, it's -- it is basically just the same coverage?
MR. LOONEY: Very close.
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COMMISSIONER LETZ: I mean, the co-pay for
office visits is slightly higher, and the -- and the
prescription is slightly higher?
MR. LOONEY: Yes.
COMMISSIONER LETZ: What's the difference on
the prescription?
MR. LOONEY: I think we -- currently, we're
at $10 on generic medications, and we went to $5 on generic.
We actually reduced that because of the formulary that
Mutual of Omaha has available on generics. We're actually
encouraging more generic utilization, so we reduce the --
the co-payment. And then it was $35 for single-source
brand, and that stayed the same. And it increased to $50
for multiple-source brand. And then for a 100-day supply,
it was -- for the generic, it was three times for a 100-day
supply on a mail-order, or a -- now you don't have to
mail-order; you can actually get your medications on a
100-day supply -- if you get it approved by the insurance
company, you can actually get it at the pharmacy. But we
changed that to two times for 100 days, which is
approximately three months, and so it's two times rather
than one time for each purchase. The formulary is a little
different. We have a little bit -- we get a discount -- or
Mutual of Omaha offers a discount to their premiums as a
result of the rebate program that's generated through their
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company. All the pharmacists in the area pretty much match
up with the current pharmacy utilization.
SHERIFF HIERHOLZER: How about doctor visits?
Did you say there's no change in the doctor visits?
MR. LOONEY: Change in the doctor visit
co-payment. The current co-payment for Plan A is 20, and it
would go to 30. Go up by $10.
COMMISSIONER WILLIAMS: Current is 20 and
generic is 5, I think, right now.
SHERIFF HIERHOLZER: Right.
MR. LOONEY: Say again?
COMMISSIONER WILLIAMS: I think generic right
now is 5, and the co-pay right now on brand name is 20.
SHERIFF HIERHOLZER: Generic's 10 now. It
would go down under that.
COMMISSIONER WILLIAMS: Not in my pharmacy,
it's not.
SHERIFF HIERHOLZER: I need to look at your
pharmacy.
(Discussion off the record.)
COMMISSIONER NICHOLSON: It's my sense
that --
MR. LOONEY: Plan A prescription drug is $5,
$20, and $35.
COMMISSIONER NICHOLSON: It's my sense that
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we should accept our consultant's recommendation to adopt a
health reimbursement arrangement, increase life -- life and
A.D. & D. to $20,000, and that we select Mutual of Omaha as
the carrier, so I'll make that motion.
COMMISSIONER LETZ: Second.
JUDGE TINLEY: Motion made and seconded for
award of the benefit plan to Mutual of Omaha under their
proposal, health reimbursement arrangement, with an increase
in the life insurance benefit to 20,000.
COMMISSIONER NICHOLSON: And select Mutual of
Omaha as the carrier.
JUDGE TINLEY: Right. Right, in accordance
with their proposal as outlined herewith. Okay.
COMMISSIONER LETZ: And with Mutual of
Omaha -- Mutual of Omaha comes Mr. Wallace, correct?
COMMISSIONER WILLIAMS: Say it again?
COMMISSIONER LETZ: With Mutual of Omaha
comes Mr. Wallace. I mean, Mr. -- I mean --
JUDGE TINLEY: He's the proposing agent, yes.
Wallace and Associates and Mutual of Omaha; it's a package.
MS. NEMEC: Are you the agent and the
third-party administrator?
MR. WALLACE: No, Mutual of Omaha is the
third-party administrator.
MS. NEMEC: They are third-party
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administrator.
JUDGE TINLEY: Any question or discussion on
the motion?
COMMISSIONER LETZ: Yes. Just, I mean, a
comment. And it's really more -- I mean, in my opinion,
I've had limited experience with Finley and Associates and
E.B.A. I think they've done an outstanding job. I've never
had any problems at all. And the challenge is really to
Mr. Wallace, that that continue. I mean, I'm -- you're an
unknown, in my mind. My decision and second is based on the
$300,000 less in price. If the service is not equal or
better than what we were getting, that is going to be a real
big consideration after our first year. So, it's a
challenge for you to maintain the quality that we've had up
till now.
COMMISSIONER BALDWIN: I ditto my good friend
from the eastern part of the county. My only regret is that
our employees didn't get to see the -- the three-hour
presentation the other day. I just -- I'd give anything in
the world if they could see it before we actually take this
vote. But you're not going to find the Commissioners
sitting through another three-hour presentation. So --
JUDGE TINLEY: Any other questions or
comments? All in favor --
COMMISSIONER WILLIAMS: I --
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JUDGE TINLEY: I'm sorry.
COMMISSIONER WILLIAMS: I was just going to
echo that I think, from the County's perspective, as an
employer, to provide the maximum health insurance we can
afford, this is an opportunity that we should probably
accept.
JUDGE TINLEY: I think Commissioner Letz has
properly stated that it -- if the motion passes, it's a
challenge to Mr. Wallace to show us that he can perform as
he stated that he could, and I'm hopeful that he can. And I
think there is -- there's going to be a few bumps in the
road trying to change, but even making any change to an HRA
is going to cause additional bumps in the road, so we're
going to have that anyway.
COMMISSIONER WILLIAMS: I do have one
other -- just one other comment, Judge. And I sincerely
hope that by changing underwriters -- not necessarily the
agent, but the underwriter -- and going with Mutual of Omaha
with this particular plan, I really hope this is not just a
hook that lasts for one year, and then next year we're
standing up here looking at major, major increases. I
sincerely hope that doesn't happen.
COMMISSIONER NICHOLSON: I'll just make one
other comment. I really appreciate Mr. Looney taking us by
the hand and leading us through this decision-making
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process. I think we probably made a better decision than we
would have otherwise.
JUDGE TINLEY: I don't think there's any
question about that. I feel more comfortable.
COMMISSIONER WILLIAMS: I appreciate
Gary's --
JUDGE TINLEY: I don't think there's any
question whatsoever. Any other questions? Comments?
COMMISSIONER BALDWIN: We're -- just to
follow up on that, if it weren't -- if he weren't here, next
July we'd still be arguing over what a P.P.O. was, so --
that's the way it's been for years here. Glad he's here.
MR. LOONEY: I'm not intending to disappear
by any means, because, you know, Mr. Wallace is not only
going to be responsible to the Court; he's going to be
responsible to the consultant that is up here presenting
this program. So, there's an obligation that he has a lot
more ways than we -- and if it were possible, from an
empirical standpoint -- if it were possible to continue with
the current provider, I would recommend it also. I have
heard no complaints at all about any of the services offered
by Mr. Finley, and have the greatest deal of respect for he
and his organization. Mr. Rothwell has been very
forthcoming in information during this process, and I
appreciate their -- I know it's not what they want to hear,
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but I appreciate their work in the past.
JUDGE TINLEY: Thank you. All in favor of
the motion, signify by raising your right hand.
(The motion carried by unanimous vote.)
JUDGE TINLEY: All opposed, same sign.
(No response.)
JUDGE TINLEY: That motion does carry. Thank
you very much, Mr. Looney.
MR. LOONEY: Thank you.
COMMISSIONER BALDWIN: So, that ends our day,
huh?
JUDGE TINLEY: I'm not sure. I'm not sure.
No, in fact, it doesn't, because in the interim, I received
two participation forms with respect to the remaining agenda
item, so we will return to the second and third agenda items
previously called, and is Mr. Neal present in court?
MR. CAWTHORN: Mr. Neal is out of the room,
Judge, but I'm Sid Cawthorn.
JUDGE TINLEY: Okay, Mr. Cawthorn. You filed
a participation form. Please feel free to come forward and
tell us what's on your mind.
MR. CAWTHORN: Thank you, Judge, I appreciate
it. And members of the Commission, I appreciate -- members
of the Court, I appreciate the opportunity to visit with
y'all today. As y'all probably can tell, when we moved from
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-- went through the process earlier where we changed from
the -- the insurance agenda item and we addressed ours, and
Larry and I went running out of the room, we were under the
impression that the Court was going to make a decision today
about whether to extend the moratorium, or at least advance
the deadline for us to respond to -- to your offer last week
of a million, 750. And, as you know, being that it was
Thanksgiving holiday and there are more than 15 banks
represented, not to mention the bond trustee and bond
trustee's counsel, it's been very difficult over the course
of the last few days to get everybody together to actually
act on your decision without having a lot of information at
this point about the valuation of the facility, exploring
other alternatives as far as getting -- getting it sold.
So, one point I need to make here at the outset is that I'm
speaking for the Bank and Trust. I am in no position today
to represent the bondholders in any way, and certainly don't
-- don't intend to do that as part of this discussion. But
I would like to ask the Court to consider the prospect of --
of granting us another couple of weeks to -- to
appropriately address this issue so we can give you a
response that you feel like would be appropriate, and -- and
timely. And, quite frankly, at the end of the day, we want
the Court -- the County to get out of this as cleanly as it
possibly can. Obviously, I, as a banker, want to be paid.
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We don't want this to be a contentious relationship in any
way, and we would just express -- I would express my
opinion, as one bondholder in this situation, to -- for you
to give us a little bit more time to consider this matter.
And I know Larry has some other comments he'd like to make,
and I'll -- I'd be happy to answer any questions that y'all
may have.
JUDGE TINLEY: Mr. Larry Neal from Security
State Bank in Pearsall, I believe?
MR. NEAL: Yes, sir.
JUDGE TINLEY: Thank you, Mr. Neal.
MR. NEAL: Judge and Commissioners, thank you
once again for allowing us to have the opportunity to come
before you. I concur with everything that Sid Cawthorn
said. It's been a very -- we just haven't had an
opportunity to get all of the bondholders together.
We've -- we have had about 90 percent representation. So,
none of us -- and I want to again express what Mr. Cawthorn
expressed. I'm only here expressing our position on the
bonds. I'm one of 15. And Security State Bank's position
would -- would ask the Court to consider extending the
moratorium for 15 days, if possible, to give us an
opportunity to all get together and to come to a consensus
to where we can respond to the offer that the Court has made
to us. We have not had 100 percent, as the Court has asked,
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in representation, and we need that in order to respond.
Again, I am quite surprised -- I was hopeful, as I was
driving up to Kerrville today, that I would only be a
spectator and not a person who addressed the Court. And we
were both surprised when this issue came up and there was no
one here to represent us in this matter. But we would ask
the Court to consider extending it 15 days, to where we
could come together as the bondholders and respond in a 100
percent manner to the offer that y'all have provided. Thank
you very much.
JUDGE TINLEY: Thank you, Mr. Neal. Let me
make a comment, if I might, with regard to their request. I
understand their concern. We had some intervening holidays,
and I realize you need to get 100 percent participation.
The concern I have is that we're under -- we are under a
30-day notice provision with respect to extending the
moratorium, and if -- if we are to extend into January, we
need to -- to take that action today. However, time is of
the essence, and I think the only way I would have an
interest in permitting you, up through, say, the 15th day of
December, would be in the event the trustee would be willing
to amend the existing agreement to reduce our period of time
for extending the moratorium to 15 days, rather than 30.
That kind of leaves us all kind of where we are right now,
but it gives you the additional 15 days that you say you
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need in order to properly review your alternatives and
properly respond to us. I realize that the trustee's not
here; is apparently not available. Frankly, I expected the
trustee's representative to be here. Possibly y'all did,
too; I don't know, but -- but that's -- that's the basis
upon which I think we can all still kind of hold our
position where we are today.
MR. HENDERSON: May I address the Court?
JUDGE TINLEY: Mr. Henderson is --
MR. HENDERSON: Having a fit over here.
Excuse me, Judge. The trustee's counsel is not here. First
thing I want to say is, I'm not a lawyer. I am a
mouthpiece, okay? I have been in communication with Tom
Spurgeon, the County's bond attorney, who in turn has been
in communication with Mike Malone, trustee's counsel. They
do both apologize for not being here, and they both
apologize for the confusion that the Court is suffering with
this -- this afternoon at their hands. Mr. Malone has
conveyed the message to Mr. Spurgeon, who has conveyed it to
me, who has asked me to convey it to the Court, that that is
exactly, Judge, what they would like to propose. That
they -- that they would request -- or not request, rather,
the Commissioners Court extend the lease itself beyond the
existing 31-day date, but that the Court authorize you,
Judge, to execute an amendment to the existing lease
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reducing the notice provision from 30 days down to 15 days.
And Mr. Malone assures the Court, via Mr. Spurgeon, via me,
that the trustee's counsel will execute that -- that
amendment.
COMMISSIONER LETZ: Judge, my question is
really to Ms. Harris. What is the minimum amount of time
you need to shut down, for lack of another way to phrase it?
MS. HARRIS: Here's the problem. Harris
County is going to be taking out about six of their girls,
probably in the next couple of weeks. If I don't know
what's going to happen, I would hesitate to lay off
employees when those six girls leave. If we're going to
stay open, I need to hang on to them, 'cause I'm going to
get more kids in. If those six -- when those six girls
leave, I will have the opportunity to lay off some of my
staff if I know that the 31st of December is going to be the
last day. I cannot get those kids out of there any sooner
than two weeks, 'cause you have to notify probation
officers, who have to notify judges in order to set hearing
dates -- modification dates for those kids. Most judges
start taking a Christmas vacation around the 20th or 21st of
December. Then we're looking at Christmas holidays. We get
a half a day off on the 23rd, all of the 24th, the 27th, and
we get New Year's Eve, December 31st. That leaves us three
days. If we're not going to know what's going to happen,
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that leaves me three days to try to get the kids out, get
files loaded up. You need to understand, I can't leave
those files in the facility. Those files are -- every file
is going to have to be boxed up, labeled, and they're going
to have to be archived somewhere in the county. Food is
going to have to be taken out of our kitchen. I would
imagine Rusty's going to get a windfall on groceries, except
for the commodities. The commodities that we get from the
N.S.L.P. program is going to have to go to another entity
that's in the N.S.L.P. program; school district. We're
going to have to get food out of there, files out of there,
kids out of there, and lay staff off. So, if we're not
going to have a decision until the 15th of December, that's
leaving me, gentlemen, very little time. And I want to be
honest with you; my staff are hanging on by their
fingernails.
COMMISSIONER LETZ: If we went to our next
Commissioners Court meeting, I believe the 13th --
COMMISSIONER WILLIAMS: Riqht.
COMMISSIONER LETZ: If we went to the 13th,
that would give you that week plus three days. I mean, is
it doable?
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SHERIFF HIERHOLZER: I think one of our
hardest problems, Jonathan, is going to be with your judges
and your courts, because to move the kids out, they actually
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have to have another court hearing to actually place them by
a court order somewhere else. And, as we all know, even in
this county, you start talking anywhere starting about the
15th of December, your judges and them are gone from -- till
New Year's. Well --
JUDGE TINLEY: I take offense to that,
Sheriff.
SHERIFF HIERHOLZER: You aren't, Judge
Tinley, but I will promise you, most of them over the last
25 years that I've seen, you're not going to find them from
the middle of December until after the first of the year.
COMMISSIONER LETZ: If we went to our next
Commissioners Court meeting, the 13th, that would be the
four days that week, and that's about it. You know, then
it's during the Christmas holiday period.
MS. HARRIS: That's right.
COMMISSIONER WILLIAMS: That's what I was
going to suggest, the 13th.
COMMISSIONER
the 13th. That's absolute,
MS. HARRIS:
COMMISSIONER
option is to go to -- go to
MS. HARRIS:
help.
12-1-09
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LETZ: I can't see going beyond
to me.
My staff can't --
LETZ: And the -- the other
one week from today, to the 8th.
If you could do that, that would
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JUDGE TINLEY: Or the 10th.
COMMISSIONER LETZ: Or Friday, the 10th --
that just gives a week; that really doesn't help Ms. Harris.
I mean, that's the weekend; might as well do it on Monday if
you don't do it --
MS. HARRIS: If you could do it on the 8th,
that would be better.
COMMISSIONER LETZ: I mean, I don't -- I
understand that -- I mean, the dilemma the bondholders --
you all are in. I think y'all understand our dilemma. I
cannot understand why it would take -- a week wouldn't be
sufficient.
COMMISSIONER NICHOLSON: What
MR. CAWTHORN: May I ask a question? Would
it be appropriate if we set a date for the 13th, and promise
to bust our hump to get something to you by the 8th?
COMMISSIONER NICHOLSON: What are the
barriers to reentry if we made a decision now to stick with
our end-of-the-year shutdown and we shut it down, and
sometime -- sometime in the future we acquired that -- that
facility? Can it be started back up?
COMMISSIONER LETZ: Possibly.
here, do you?
MS. HARRIS: Can I comment on that?
JUDGE TINLEY: You don't want her to sit up
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MR. HENDERSON: Keep her at arm's length.
MS. HARRIS: Here's going to be your dilemma
if you try to do that. It's going to depend on timing. If
you try to open it back up -- if you shut it down
December 31st, you try to open it back up within a month,
you got a good chance, because what I can do is I can convey
to my staff, "Hold on, we're going to open back up in 30
days. Just go have a long vacation." And I can probably
get the majority of them back. You wait much longer than 30
days to try to start it back up, and I'm afraid,
Commissioner, you won't be able to do it very successfully.
COMMISSIONER LETZ: What about the option of
us doing nothing today, and asking Ms. Harris not to do
anything until the 8th? In which case, the clock is
running, but in reality, no amendment is needed. I mean,
we're not extending it -- Mr. Henderson?
JUDGE TINLEY: No. No. Then, if -- well,
that's true, but we still got to have the -- the time frame
reduced to 15 days if -- if we want to have our options open
to make a decision to carry on over the -- if we strike some
sort of a bargain. I think an amendment -- at a minimum, we
need to get that implemented, the amendment to the existing
moratorium to reduce the notice period to 15 days. If you
want to give these gentlemen an additional, say, week or
till the 8th or the 10th or whatever, that -- that -- that's
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independent of the other.
COMMISSIONER LETZ: I guess, you know, my
biggest problem with leaving it in any kind of an extension
is that, in a perfect world, it would be nice if something
comes back to us and we shake hands and agree, but that's --
you know --
COMMISSIONER NICHOLSON: We don't know
whether it's going to happen.
COMMISSIONER LETZ: With a lot of details,
that may not happen. And I can -- you know, the timeline
that we're up against, if you all come back in, the
bondholders -- the trustee comes back in with -- with a
counter, and then we say no, and y'all come up with a
different counter, we don't have time for that. I mean, you
know, it's -- it's going to be a yes/no -- from today on, in
my opinion, it's a yes/no. Whatever y'all say, it's either
going to be yes or no, and if it's no, it's shut down.
MR. NEAL: Commissioner, that's -- you're
having the same problem we're having on the other side,
because you've got 16 bankers on the other side to come to a
consensus. It's difficult. We've got to work through that,
but that's going to take time.
COMMISSIONER WILLIAMS: Are all the
bondholders -- as we meet and speak today, are they all
aware of the tender offer that's in front of the -- of you
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and the others?
MR. NEAL: It's my impression they are, but I
could not assure the Court that everyone -- I know the ones
that are represented here are aware of it, but I cannot
speak for everyone.
COMMISSIONER LETZ: Only the trustee can
answer that.
MR. WATTS: What's magic about the end of the
year? It's not the County's fiscal year, is it?
COMMISSIONER WILLIAMS: What's magic about
it?
MR. WATTS: In other words, you meet every
two weeks, right?
COMMISSIONER WILLIAMS: The judicial needs
and requirements; that's where the magic comes in, and
staffing. It's not mystical, it's just pretty real. The
lady has problems with staffing, and she has judicial
requirements that have to be met.
MR. WATTS: What I meant, sir, y'all meet
every two weeks, right?
COMMISSIONER WILLIAMS: We can meet every two
days if we have to.
MR. WATTS: So if you don't take any action
today, and a week from now you take action, the 30 days,
that runs through the first week of January, correct?
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COMMISSIONER WILLIAMS: The operating
agreement extends through the 31st of December. Is that
correct, Judge?
JUDGE TINLEY: That's right.
MR. WATTS: It's not 30 days, then.
JUDGE TINLEY: No.
MR. WATTS: Okay.
COMMISSIONER WILLIAMS: Pardon me?
COMMISSIONER LETZ: We're operating --
JUDGE TINLEY: Under current -- under the
current scenario, unless there's affirmative action taken to
extend it, it automatically shuts down December 31st at
midnight.
COMMISSIONER WILLIAMS: The object is to try
to find an agreement before then, but leaving enough time
for Ms. Harris to do what she has to do by requirements of
law in the event we're unable to fashion an agreement.
MR. CAWTHORN: Judge, I would tell you that
tomorrow, I believe at 9:30, we have a meeting of the bond
-- conference call of the bondholders scheduled. Now,
whether we'll have 100 percent in attendance or 90 percent
in attendance, I -- I can't tell you, but I can tell you
that we're scheduled tomorrow to discuss the results of your
meeting -- of the Court's meeting today, so we're in a
position where we can actually effectuate a move. We just
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need some help to do that.
COMMISSIONER WILLIAMS: Ms. Harris, does two
days -- does it make a significant difference to you to go
from, say, the 8th to the 10th?
MS. HARRIS: No, sir.
COMMISSIONER WILLIAMS: The 10th is a fish or
cut bait date.
MS. HARRIS: That's fine. That's fine.
COMMISSIONER WILLIAMS: I recommend the 10th.
That's a Friday. That gives you between nine days to get
the answer we need, or to get us to a position where some
serious bargaining could take place, if necessary.
COMMISSIONER LETZ: I don't see why we don't
-- why go to Friday? Nothing's going to happen over the
weekend.
COMMISSIONER WILLIAMS: Pardon?
COMMISSIONER LETZ: Nothing's going to happen
that weekend. Why not just wait till Monday? The banks --
COMMISSIONER WILLIAMS: Well, she has work to
do.
JUDGE TINLEY: Yeah, she could -- there are
things that she could be doing over the weekend.
COMMISSIONER WILLIAMS: I understand your
point, Jonathan.
COMMISSIONER LETZ: I mean, if it's a benefit
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to Ms. Harris, I don't have a problem with doing it on the
10th.
MS. HARRIS: It's a benefit for the 8th for
me, but I know that it's not for everybody else. But the
8th is a much -- a much more -- it's better for me. It's
better for us to be able to make phone calls if we have to.
COMMISSIONER LETZ: What's the proper
verbiage to what we're trying to do? What are we extending?
The moratorium?
JUDGE TINLEY: Well, there's two items.
There's an addendum to the -- to the existing moratorium
agreement to reduce the notice provision for extending the
lease/operating agreement period from 30 days down to 15
days on the one hand. The other is to extend the time for
the bondholders to respond to the offer until a given date
and time.
COMMISSIONER LETZ: I make a motion that we
extend the time to the bondholders to make an offer to
December 8th, and that we authorize the County Judge to
execute an addendum to the moratorium to shorten the notice
period from 30 to 15 days.
COMMISSIONER WILLIAMS: I second it.
JUDGE TINLEY: Okay. When you stay the 8th,
you're talking about close of business the 8th? Midnight
the 8th?
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COMMISSIONER LETZ: At whatever date we --
whatever time we set that meeting at. You know, whenever we
want to meet. 3 o'clock is fine with me.
COMMISSIONER WILLIAMS: Let's just set the
time right now so we know what we're doing.
COMMISSIONER LETZ: 3 o'clock on the 8th.
COMMISSIONER WILLIAMS: Is that working,
Judge?
JUDGE TINLEY: Yeah, sure is. Okay. Motion
made and seconded. Any questions or comments? All in --
COMMISSIONER NICHOLSON: No, I'm -- I've got
a comment .
JUDGE TINLEY: Excuse me.
COMMISSIONER NICHOLSON: I'm sympathetic with
the predicament that the bondholders are in, and much more
sympathetic with the predicament Mrs. Harris and her staff
is -- are in. It's very unfortunate. I didn't vote for
the -- the offer that we made, and so for that reason, I'm
not going to vote for an extension. I have -- nothing's
changed since then. Doesn't look any better now than it did
a few days ago.
COMMISSIONER WILLIAMS: We're not voting on
an extension.
COMMISSIONER NICHOLSON: Extension of the
offer.
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COMMISSIONER WILLIAMS: Oh.
JUDGE TINLEY: Any other questions or
comment?
COMMISSIONER BALDWIN: Are we going to handle
the -- posting a meeting on Wednesday in a separate way?
Or -- do you want to kind of give me a hint of what time of
the day?
JUDGE TINLEY: My intention is to post a
meeting for 3 o'clock on Wednesday, the 8th.
COMMISSIONER BALDWIN: 3 o'clock.
JUDGE TINLEY: And we'll need the offer -- or
response in-hand by that time.
MR. NEAL: We will pass that on.
JUDGE TINLEY: Okay. Any other questions or
comments? All in favor of the motion, signify by raising
your right hand.
(Commissioners Baldwin, Williams, and Letz
voted in favor of the motion.)
JUDGE TINLEY: All opposed?
(Commissioner Nicholson voted against the
motion.)
JUDGE TINLEY: Motion does carry.
MR. CAWTHORN: Thank you, gentlemen.
MR. NEAL: Thank y'all very much.
JUDGE TINLEY: Okay. I think that takes care
of the other agenda item that we had. Any other business
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under the agenda items, gentlemen? We will stand adjourned.
(Commissioners Court adjourned at 5:22 p.m.)
STATE OF TEXAS ~
COUNTY OF KERR ~
The above and foregoing is a true and complete
transcription of my stenotype notes taken in my capacity as
County Clerk of the Commissioners Court of Kerr County,
Texas, at the time and place heretofore set forth.
DATED at Kerrville, Texas, this 7th day of December,
2004.
JANNETT PIEPER, Kerr County Clerk
B Y : ___ ____ ~Q/nt~_ _____ _
Kathy Ba k, Deputy County Clerk
Certified Shorthand Reporter
12-1-04
ORDER N0.28927
EMPLOYEE HEALTH BENEFITS PROGRAM AND AWARD OF BID.
Came to be heard this the 1st day of December 2004 with a motion made by
Commissioner Nicholson seconded by Commissioner Letz. The Court unanimously
approved by vote of 4-0-0 to award the employee health benefits program to Mutual of
Omaha in accordance with their proposal.
I

ORDER N0.28928
EXTENSION AND ACQUISITION OF THE NVENILE FACILILTY.
Came to be heard this the 1st day of December 2004 with a motion made by
Commissioner Letz seconded by Commissioner Williams. The Court approved by a vote
of 3-1-0 to extend the time to the bondholders to make an offer until a December 8, 2004
at 3:00 P.M. And reduce the notice provision for extending the lease/operating agreement
period from 30 days down to 15 days.