How we believe a typical self-insured city might do business 

1.  First, a health insurance trust fund is established.

2.  Next, the premiums are set, presumably by estimating the claims for the year. Let's say this community sets the total premium at one million dollars.

3. Then, the city budgets for its 70% premium share – in this case $700,000. That money goes into the health insurance trust fund in some carefully managed way.

4. Next, the city determines the employee premium share – in this case $300,000 -- and sets the amount to be deducted from their paychecks. Those deductions go right into the trust fund.

5. When the actual health insurance bills come due, the accounts are reconciled. If the actual costs were higher than estimated, the city and employees might negotiate higher premiums for the next year. If the actual costs were lower than estimated, the two sides would negotiate a way to pay the employees back -- perhaps through rebate checks to employees, premium holidays, lower rates the next year, or some other mutually acceptable way.

While different communities may set up their trust funds differently, that, in general, is how the system should work.

But based on the information provided to us by the city of North Adams, that scenario does not appear to have been played out here. The city of North Adams does indeed estimate its insurance costs. And every year the city does collect 30% of those estimated costs from its employees.  So far so good. 

But when the actual costs are lower than the anticipated costs, it appears that the city neither returns that money to its employees nor uses that cash to reduce employees’ future costs. Instead, it appears that the city pays its insurance bill by first using every cent it has collected from its employees -- even when the employees have overpaid -- and then simply makes up the difference with its own money. And so over the past four years, it looks like there has not been a 70-30 split in North Adams. Our records suggest that over the past four years there has actually been a 67-33 health insurance split.  In dollars, that means we believe city employees overpaid by over $600,000.

For three out of the four years we researched – and who knows what we would find if we looked further – records suggest that the city overestimated and overcharged its city employees. The employees have taken a huge hit. The city's failure to seek a mutually acceptable way to reimburse its overcharged employees violates all the city contracts and must be addressed.

Again, we hope we are wrong. We hope that despite careful analysis, there is some aspect of the budget we have misunderstood. Many of us not only work here, we live here. This is our community.  We neither want to believe our city's funds were handled inappropriately, nor cause our city financial strain. But if we are correct, this problem must be rectified. And the system must be changed and made more open so that it never happens again.  

North Adams
( 100%)
(should be 70%)
(should be 30%)
This line represents the total premiums set for the city health insurance for 2005-08.  Employee deductions were based on these figures.
( 100%)
( 70%)

This line represents the actual health insurance costs that were billed, and what the city and its employees should have paid at a 70-30 split
( 100%)
( 70%)
The actual payments made according to the city's general ledger

(100.47% of actual costs)

( 67.3% of actual costs)

(33.17%  of actual costs)

This line represents the dollar amount over or underpaid by each party.

Amount City UNDERPAID (D3-D4)

& Employees OVERPAID (E3-E4)

according to our analysis of city docs


Amount  City Underpaid by failing to pay 70%


Amount Employees were Overcharged
Amount the Trust Fund was underfunded:
Employer's Share of the Working Rates minus Payments Actually Made (D2-D4)

no shortfall by employees -- we overpaid.
*This chart and all other health related charts on this website reflect our opinion of the subject, based on the documents we received from the city.

Trust Fund -- are Broken:
NATA believes city owes its employees over half a million dollars

We hope we are wrong. We do not want to believe that the city of North Adams has poorly managed its finances and shortchanged its own employees to this degree. But after months of collecting and analyzing data, after initiating an independent review, it looks to us like the city of North Adams owes its public employees over half a million dollars. (Click here to see some of the reports with updated 2009 information which was presented at the Nov. 4 grievance hearing.)
In addition, because of this apparent poor management, we believe that an estimated $1.7 million that could be sitting in the city coffers right now – in its health insurance trust fund – is not there. We do not suggest that this $1.7 million was badly spent -- just that it doesn't appear that it was spent on health insurance, as expected. The missing half a million, however, is a different story.

Page last updated: Nov.5, 09 -- Eileen Gloster
Click Here to get to the Links to a more detailed Analysis
neighborhoods, and fight fires have been overcharged just over $600,000 in health insurance costs. And that's looking back just four years. Who knows what city employees are really owed if we went back 10 or even 20 years.

We want this problem remedied in a manner that is acceptable to employees, and that ensures something like this never happens again. The first step, we believe, is increasing transparency in local government.

CLICK  to see How We Got our Numbers and to get to a link to the complete analysis
When it comes to health insurance, like many communities, the city of North Adams is self-insured. One benefit is that there can be some helpful flexibility.  But sometimes that flexibility can lead to problems. Here's a brief primer on how we believe a typical self-insured city might correctly operate. Let's say this city, like North Adams, has a 70-30 employer-employee insurance premium split.
Using the Public Records Request law in Massachusetts, the city unions have obtained city records covering the fiscal years 2005 to 2008. We are very disturbed to discover that in the course of those four years, it appears that the people who teach your children, maintain your parks and streets, protect your
Health Insurance Shocker
North Adams Public Employee Committee Update
From Brian Kelly, Chairman

Click here to see the full report from N.A. Police Association President Brian Kelly. It compares the city's health insurance costs with neighboring communities and shows the money you and the city could save by switching!  The chart shows that in 2010, our premium rates will be up to twice as much as rates in neighboring communities...We believe that we could keep the same Blue Cross plans and pay a lot less, if the City would cooperate with us!

Our Trust -- And the Health Insurance

Analysis up to FY08