Health insurance continues adding to Kenai budget

The city of Kenai’s proposed fiscal 2019 budget includes no tax increases while it copes with rising employee health insurance costs and adds a human resources manager to, hopefully, better manage those costs. The budget, which would take effect July 1, also includes $200,000 for street repairs and about $133,000 for refurbishments to the Kenai recreation, senior and visitor centers.

The $28.13 million budget is $1.61 million more than last year’s fiscal 2018 budget, with some of that increase covered by a drawdown on the city’s fund balance moving toward the level approved by the council last year. The intent of the 2017 policy was to reduce the amount of money accumulating in municipal coffers.

Health care insurance

Payroll costs are up 8.67 percent for next year, according to City Manager Paul Ostrander’s budget memo. Salaries are budgeted to rise 0.2 percent, based on the Anchorage Consumer Price Index, adding just $23,308 in spending. It’s health insurance costs that are driving up the total.

The nationwide trend of health care inflation have made changes in health premiums a “recurring theme,” Finance Director Terry Eubank said. Kenai has used three different insurance providers in the past decade in an attempt to control the cost, which in some years dropped by much as 15 percent and in others rose by as much as 20 percent — but which nonetheless had a net 6 percent average annual increase during the past 10 years.

In 2014, Kenai switched providers from United Healthcare to Premera Blue Cross Blue Shield to avoid a 46 percent premium increase that would have cost an additional $616,523 a year, and ultimately saved $97,000 with the change. A half-mill increase in property tax that year was used in part to cover the higher health care expenses. In 2015, Premera quoted a 39.7 percent premium increase, which Eubank dropped to 20 percent by modifying the plan.

Since Kenai created a dedicated fund for health care costs in 2017, Eubank has been planning for a 10 percent annual premium increase.

“I don’t want to give anybody the impression that (10 percent increases are) … acceptable — that’s absolutely crazy,” Eubank said. “It’s just been the reality since I don’t know how long.”

The premium rose 12 percent that year.

This year. Premera told Eubank to expect a 14 percent increase in the city’s plan, though Eubank is proposing higher deductibles for out-of-network care and greater incentives to use generic drugs that would shrink the increase to 9.8 percent . This would bring the city’s share of insurance premiums for each full-time employee to about $20,000 a year. Employees also pay a portion.

Human resources position

Kenai pays for health insurance for about 100 city employees, Eubank said, and managing the increasingly complex and expensive policy is one reason for the budget proposal to dedicate $110,220 for the salary and benefits of a new human resources (HR) manager.

“I think we’re at a point now, particularly with some of the complexities in the HR world that didn’t exist five or ten years ago, that a true HR professional, a director for the city, is going to be very beneficial,” Ostrander said.

Human resources management is presently a part-time duty of the city manager’s assistant. Council Member Bob Molloy had unsuccessfully proposed creating a human resource position during Kenai’s 2017 budget deliberations.

Capital Spending

The $572,329 budget for capital spending includes $200,000 for street repairs; $93,000 for two new police cars; $45,670 for work on the Kenai Senior Center; $64,630 on the Kenai Recreation Center’s exterior paint, hot water system and bathroom tile; and $23,000 to refinish the exterior of the Kenai Visitor Center.

Council Member Jim Glendening asked Ostrander whether there were longer-term plans for the aging recreation center.

“At some point in time we’ll have a discussion about the useful life of that building?” Glendening asked Ostrander. “Or are we just going to go year to year and patch it together?”

Ostrander said he plans to include the recreation center is a future analysis of the capital needs of city buildings over the next five years.

Information technology

The budget includes funds to purchase new software: a $6,966 program the clerk’s office would use to manage cemetery reservations and a $12,206 court management program for the legal department.

Software support is consuming a growing amount of time, Eubank said. Kenai’s single computer professional — Information Technology (IT) Manager Dan Castimore — puts the city below the ratio of employees to tech-support workers at other Kenai Peninsula governments, according to Eubank. Departments that make heavy use of computers — such the police department and library — have “been having to do a lot of their IT functions internally, within their departments,” Eubank said.

“We push a lot of IT duties back to the library,” he said. “We’re pushing back to every department, because I’ve got one guy. That’s a concern.”

Hiring more permanent tech support is not proposed, though creation of an eight-week summer IT internship is in the budget. The internship is open to students or recent graduates of information technology degree programs.

Land manager

In addition to the HR manager and IT intern, the new budget would create a third position — also temporary — a land management technician to complete a plan for Kenai’s 5,057 acres of municipal land, which Ostrander proposed in a package of land reform measures in December 2016. Those reforms call for a plan to assess the best use of each parcel, determine which are useful for the city, and sell those that aren’t.

The land plan will be a subject of future city council discussion and voting, but Ostrander said technical work needs to be finished first.

“We needed this technician to basically do the work of looking at each of these parcels,” Ostrander said. “It’s going to be expensive, it’s going to take all their time to get this done. But that’s a critical component before we put anything together that we can bring to council.”

Ostrander’s proposal budgets $24,343 for the temporary job.

Reach Ben Boettger at

More in News

Soldotna Montessori Charter School Principal John DeVolld explains Montessori materials in a classroom at Soldotna Montessori Charter School on Tuesday, Sept. 20, 2022, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
‘Critical needs’: Soldotna Montessori maxes out

The relocation of Soldotna Montessori is included in a bond package on the Oct. 4 municipal election ballot

Engineer Lake Cabin can be seen in the Kenai National Wildlife Refuge on Nov. 21, 2021. The United States Department of Agriculture’s Forest Service announced Friday, Sept. 23, 2022, that $14.4 million of a larger $37 million package will be used to build cabins in the Chugach and Tongass National Forests. (Photo by Erin Thompson/Peninsula Clarion)
Millions designated for cabins in Tongass, Chugach

$18 million is allocated to the construction and maintenance of cabins and historic buildings — of which $14.4 million is destined for Alaska

Puffin sits by a scratching tower in front of his main pad of buttons on Friday, Sept. 23, 2022, in Nikiski, Alaska. Owner Geri Litzen says Puffin can communicate by pressing different buttons on the pad to form sentences. (Jake Dye/Peninsula Clarion)
Puffin with the buttons

Verbose Nikiski cat earns TikTok followers

CCFR officials and residents gathered at the section of Gastineau Avenue that sustained damage from the landslide on on Monday, Sept. 26, in Juneau, Alaska. At the time of 8:30 a.m. on Tuesday officials said they were still trying to assess the damage and no cleanup efforts had started yet. (Clarise Larson / Juneau Empire)
Juneau set to begin cleanup after landslide

Three homes were damaged; at least a dozen people displaced

Members of the community attend the first part of the Challenger Learning Center of Alaska’s Food Security and Sustainability Series in August 2022. (Photo courtesy Challenger Learning Center of Alaska)
Challenger Learning Center workshop focuses on food sustainability

Gathering, growing and preserving food in the form of plants, fish and other animals will be discussed

Examples of contemporary books that have been banned or challenged in recent years are displayed on Saturday, Sept. 24, 2022, at the Soldotna Public Library in Soldotna, Alaska. (Jake Dye/Peninsula Clarion)
Soldotna library hosts Banned Book Club

Books have been challenged or banned for their content nationwide.

Nikiski Middle/High School Principal Shane Bostic stands near a track and field long jump sand pit on Monday, Sept. 19, 2022, in Nikiski, Alaska. The track is one of several projects in a bond package Kenai Peninsula voters will consider during the Oct. 4 municipal election next month. (Ashlyn O’Hara/Peninsula Clarion)
‘Critical needs’: Nikiski athletes await upgrade

Funding for long-delayed school projects on Oct. 4 ballot

Lars Arneson runs to victory and a new event record in the Kenai River Marathon on Sunday, Sept. 25, 2022, in Kenai, Alaska. (Photo by Jeff Helminiak/Peninsula Clarion)
A speech, a smartphone and a bike

Circumstances lead Arneson to Kenai River Marathon record

Trees with fall colors populate the Shqui Tsatnu Creek gully as seen from Fourth Avenue on Friday, Sept. 23, 2022, in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Kenai to use $770k in grants to remove hazard trees along Shqui Tsatnu Creek

The money will be used to mitigate hazards caused by dead and dying spruce trees over more than 100 acres of city land

Most Read