By Columbia (SC) Mayor Steve Benjamin
June 4, 2012

They say the three most important words in real estate are "location, location, location." In today’s economy, the three most important words in city government might be "funding, funding, funding."

Finding adequate funding for the myriad projects and programs our communities deserve, from core services like public safety and economic development to innovative quality of life projects, is always a struggle. That’s never been more evident than over the past few years as a sluggish economy has driven down revenues while driving up significant costs. Today, although property tax receipts have rebounded slightly for many municipalities, they generally lag real estate assessments from one to several years. As a result, while the economy continues to improve, a change in our revenue fortunes is not yet in sight and among the most difficult areas to manage in these austere times are employee health benefits.

As you may be aware, the cost of providing family health care coverage to our employees has doubled in the past decade increasing nine percent over the previous year in 2011 alone.1 Furthermore, the current environment’s increased public scrutiny of all government spending only adds to the challenge. So it should come as no surprise that city governments are looking for options to control and even reduce benefit costs.

The good news is that proven cost-containment strategies are readily available and can be implemented at no direct cost to your city. And with effective benefits communication and enrollment support from a qualified business partner, you can achieve your cost containment objectives without sacrificing employee satisfaction and morale.

Dollars and sense: top cost-control strategies

A recent report by Colonial Life & Accident Insurance Company,2 based on research from a number of sources including a government financial officers organization, found five strategies that government employers can easily implement to control their benefit costs:

1) Implementing wellness initiatives.

2) Establishing Section 125 plans and maximizing employees’ participation in pre-tax benefits programs.

3) Outsourcing benefits communication and education and enrollment support.

4) Moving non-core benefits to employee-paid voluntary benefits.

5) Conducting dependent verification.

Government employers that applied these strategies have reported significant savings in their employee health care benefits. In fact, more than half (55 percent) of the government financial officers study participants reported saving at least 6 percent while 40 percent of participants reported savings greater than 10 percent.3

While intriguing to me and my colleagues, in Columbia, these cost savings are much more than an academic exercise. They represent real dollars and, although we haven’t implemented all of these cost-control strategies, those in place have generated significant savings for us. This experience has convinced me that finding new and creative ways to address employee benefits holds the key not only to healthier budgets, but to healthier employees and a healthier city.

Our challenge in Columbia was straightforward. We are South Carolina’s largest city with about 2,324 benefits-eligible employees who serve 129,272 citizens and a metropolitan workforce of 369,531. Unfortunately, like many state capitals, our ability to generate tax revenue is significantly limited as roughly two-thirds of the real property in our city is tax-exempt.

That being said, we are not without resources, and among our greatest is Colonial Life, a nationally leading benefits provider born and bred in our hometown. For several years we have partnered with Colonial Life to great effect, and they recently launched a partnership with the Conference of Mayors to bring benefits cost solutions to cities nationwide. Living in each other’s backyards, it was a natural fit for us to take advantage of these options. So last year we embarked on a new joint initiative aimed at finding new ways of improving our benefits program and reducing our overall cost.

We began by strengthening our benefits communication and enrollment plan (see #3 above) by encouraging every employee to meet individually with a Colonial Life benefits counselor to ensure our employees were fully aware of the valuable benefits we provide them.

As a result, the number of employees who participated in one-to-one benefits enrollment sessions more than doubled, from 707 in 2010 to 1,495 in 2011. During that same time period, participation in our flexible spending account program increased to 25 percent of employees resulting in an annual tax savings of about $100,000 and employee savings of approximately $400,000 (check off #2 above).

The stronger benefits communication not only helped our employees better understand and appreciate their benefits, but it also helped our bottom line. Over the past year, the city has saved more than $177,000 simply by implementing Colonial Life’s products and services, and we see additional cost savings opportunities on the horizon.

For instance, the city is conducting dependent audits to ensure that our plan is covering only those eligible. While we are currently contracted with an independent vendor for these services, we have learned that a dependent verification service can be available to us at no charge as part of the enrollment support provided by Colonial Life (that’s #5 above). We also may be able to take greater advantage of the company’s voluntary insurance benefits as we look at changes to our health care plan in the future (#4 above).

Of course, not every strategy will work for every city. But it’s obvious from our own experience that government employers can save money and preserve the value of their benefits packages by carefully selecting the most effective combination of strategies for their situations and needs, including enlisting the often-free support of qualified benefits providers. By considering factors such as the city’s size, political environment, cost management goals, impact on employee health and access to care, cities can select from a range of options with the potential to significantly impact their health benefits costs. Focusing on the cost-saving measures most appropriate for your city can help you continue to offer a stable benefits package in a more financially sustainable way.

Now, with four of the five strategies in place, we are preparing to tackle the number one cost-control strategy: Implementing wellness initiatives.

Our plan is to implement a new City Employee Wellness Initiative before year’s end that goes far beyond a public information campaign that makes a headline or two and then fades away into the background. Instead, it provides new health insurance discounts that put real dollars back in the employee’s pocket if he or she quits smoking and commits to regular physicals.

We aren’t simply providing flu shots and blood pressure readings. We are creating a new city health clinic where our employees and their families can receive first-class care while reducing their out-of-pocket costs.

Let me be clear: we’re not just talking about just treating illness. We’re promoting comprehensive wellness, providing access to gym memberships, physical trainers and dietary consultants.

We are very excited about this new initiative not just because every one dollar spent on wellness saves four dollars in healthcare costs or because that 400 percent return eases our budget strain and significantly reduces our annual GASB 45 liability. We’re excited because this program gives our employees the means and opportunity to completely change their lives.

We see this initiative as the next step in a citywide "Let’s Move! Columbia" wellness program that, modeled after First Lady Michelle Obama’s national "Let’s Move!" initiative, seeks to eliminate childhood obesity within a generation and promote healthy nutrition and active lifestyles throughout our community.

The city is seeking to empower its citizens with information and knowledge to make sure our city maintains a healthy lifestyle, not just for our youth, but for everyone.

Other exciting programs our office is promoting in the community include:

One Columbia — We invited nearly 200 region residents, each experts or leaders in his or her field, to provide suggestions to help Columbia achieve its considerable potential over the coming four years. Areas covered included arts and historic preservation, economic development, education and community development, environment and sustainability, government operations and efficiency, public health, public safety, regionalism and intergovernmental relations. Their input will be invaluable as our community moves forward.

Columbia Youth Commission — This program for local high school students encourages active youth involvement in the community, enhances leadership skills and gives a voice to the policy ideas and concerns of our city’s youth. We want to provide opportunities for greater civic participation and involvement in the community while promoting positive activities and opportunities for youth in Columbia.

Community Gardens – Last year, our effort to start reclaiming otherwise vacant city property by planting Community Gardens all across our city succeeded beyond our wildest expectations. We provided the soil, compost and water while our residents did the rest leasing all of our 70 plots in a matter of days. Today, as community interest continues to grow, we are expanding this remarkable program by doubling the number of plots available to our citizens.

A solid fiscal foundation, aided in no small part by a sustainable employee benefits program, is essential to supporting these key initiatives and the countless others that are helping ensure the growth, success and quality of life in our community, now and for years to come.