The number of mis-characterizations and inaccuracies present in Mr. Tandy's letter are appalling at best and are untrue at worst.

His Administrative Report begins by saying: Insurance costs are up $2.2 million this year, and it has become routine to have increases in the area of 20%. The latter part of this statement is an outright mis-statement. The City utilizes Buck Consultants for their Insurance figures. Buck produced a document for the City and Insurance Committee showing the trends from 2005 to 2008.

Blue Cross PPO for the City of Bakersfield: 8.6%, 10.0%, 8.0% and 20.2% 2005 to 2008 respectively.

Blue Cross HMO for the City of Bakersfield: 10.5%, 1.7%, 10.7% and 0.9% 2005 to 2008 respectively.

Kaiser HMO for the City of Bakersfield: 1.6%, 15.5%, 17.2% and 11.9% 2005 to 2008 respectively.

Even taking the poorest performing plan, Kaiser, it has averaged only an 11.55% increase annually.

Where, exactly is Mr. Tandy getting his "routine 20% increases????"

The only group of people being impacted like this is our retirees who were "unblended" to save the City money on the active employee rates. This year retiree Blue Cross PPO did not increase; however, the HMO increased 19.4% and 56.7% for retiree Kaiser under 65 and 44.6% for over 65.

GASB 45 is being used by Mr. Tandy to frighten the City Council and general public with a doomsday scenario, which does not exist. Here is direct information from: http://www.gasb.org/project...

4. What are the most common misconceptions about Statement 45?

Statement 45 establishes standards for accounting and financial reporting. How a government actually finances benefits is a policy decision made by government officials. The objective of Statement 45 is to more accurately reflect the financial effects of OPEB transactions, including the amounts paid or contributed by the government, whatever those amounts may be.

b. That it requires immediate reporting of a financial-statement liability for the entire unfunded actuarial accrued liability.

Governments may apply Statement 45 prospectively. At the beginning of the year of implementation, nearly all governments will start with zero financial-statement liability.

From that point forward, a government will accumulate a liability called the net OPEB obligation (not the same as the UAAL) will increase rapidly over time if, for example, a government’s OPEB financing policy is pay-as-you-go, and the amounts paid for current premiums are much less than the annual OPEB cost.

 Statement 45 does, however, also require the

Statement 45 does not require immediate recognition of the unfunded actuarial accrued liability (UAAL) as a financial-statement liability. The requirements regarding the reporting of an OPEB liability on the face of the financial statements work as follows: net OPEB obligation, if and to the extent its actual OPEB contributions are less than its annual OPEB cost, or expense. disclosure of information about the funded status of the plan, including the UAAL, in the notes to the financial statements—and the presentation of multi-year funding progress trend information as a required supplementary schedule.

The city is setting aside $4.8 million dollars to account for GASB 45. IT DOES NOT HAVE TO DO THIS. Even the state mediator who mediated Monday's meeting said so. GASB 45 requires government entities to "report costs and obligations," not fund them. It is misleading and incorrect to describe accrual accounting for OPEB as requiring the expensing of "future costs."

Beyond the GASB 45 point, Mr. Tandy indicates in his Administrative Report "The balance of the increase would be paid 80% by the City and 20% by the employees. In making this offer, the City effectively accepted 77% of the increase and only asked for plan changes to eliminate the remaining 23%." The problem with this is that all city employees have the same language in their MOUs. The medical insurance is paid 80% by the City, 20% by the employees- not 77%, 23%, nor any other calculation.

Additionally, each and every City employee has already "picked up" their full 20% as of the first payday of 2008. City employees’ checks were docked an additional $20 for Blue Cross to bring the deduction to $133 a pay period. This was fully accepted by City employees to pay their 20%.

The real tragedy is impacting our employees who have served the City and are retired either through a service retirement or through an industrial retirement. The City began "unblending" retirees from actives to cut costs a couple of years ago. This year's Kaiser unblended rate increase for retirees is: 56.7% for the under 65 years old retirees (about $500 a month for the family coverage), and 44.6% increase for the Senior Advantage plan.

The "Meet and Confer" area of Mr. Tandy's Administrative Report is perhaps filled with the most troubling mis-information. Mr. Tandy indicated with his trademark raised voice, "The City met with the Insurance Committee ten times to negotiate. TEN TIMES!" His Administrative Report outlines the meetings he is referencing:

1. May 9, 2007- New HR Director Javier Lozano held a "meet and greet" with some of the Insurance Committee members in which Mr. Lozano specifically said, "I'm not here to negotiate, I just wanted to introduce myself." (This is negotiating????)

Note the 5-1/2 month dead space here............Repeated requests to the HR director were not returned, nor responded to.

2. October 26th, 2007 a letter was mailed to some of the Insurance Committee members homes from Mr. Lozano. The letter asks for an extension to the October 31st deadline. The letter also ends abruptly amid sentence, "This extension will give the City time to....." (This is counted by Mr. Tandy as a meeting...????)

3. October 31st, 2007 Personnel Committee meeting- Wait, this isn't an Insurance Committee meeting. This is a Personnel Committee meeting held by Vice Mayor Hanson, Councilpersons Couch and Weir, and City staff. Insurance Committee members were present as was a member of the Californian Staff. (This cannot be characterized as a negotiations platform- not the time, nor place and the Insurance Committee could not address, nor negotiate in this forum.)

4. November 14th, 2007- (This is the first true meeting) At the start the Insurance Committee made it known in a unanimous vote 8-0 to reject the City's request for an extension. HR Director Lozano said, "Are you going to walk out then?" We indicated that we would remain to hear Buck Consultants proposals and would stay for informational purposes only. This meeting was partially memoralized in digital recording at the request of the Insurance Committee. It was discovered at this meeting that Buck Consultants provided the City rate increase numbers as far back as February or March of 2007 and those numbers indicated a potential increase of 17% for insurance rates. Yet the City budgeted only 7.75% to cover the potential increases. Nearly 10% too little to cover the increased costs during the budgeting process.

5. November 21st, 2007 This meeting was also recorded and the exchange is accurately documented in the administrative report.

6. November 27th Another Personnel Committee meeting, not an Insuarnce Committee meeting.

7. December 11th City Staff came into the meeting and declined to meet if the Insurance Committee wished to digitally record the meeting or any further meetings.  (I wonder why....???)

8. December 18th City Staff entered and declared Impasse. They dropped the Municipal Code for impasse procedures on the table and then left.

9. December 19th Another Personnel Committe meeting, not an Insurance Committee meeting. (Please Mr. Tandy, you honestly don't believe that the public is so naive that it thinks that one committee meeting can count for another separate meeting. Ask your City Attorney-they'll help you out).

On Monday, January 14th a state mediator met with the Insurance Committee and City Staff. (I suppose this is the 10^th meeting). The Insurance Committee had indications that if the Insurance Committee would meet the City halfway that the City would agree to do the same.

The Insurance Committee came up with $261,000 in savings to the city through concessions of insurance benefits towards the City's under budgeting of the Insurance costs of $479,000 for this year. This is 54% of the gap and the only request the Committee had was to memorialize the Committee structure and timelines for future annual meetings to prevent this unfortunate series of mis-steps. (Mr. Tandy's response to that was- No).

Unfortunately Mr. Tandy seems to feel that he is not subject to laws, rules and regulations governing his employees. Just as unfortunate is the unnecessary punitive nature of this City's employer-employee relationship and the us and them mentality being perpetuated by the leadership in City Hall.

The City Manager serves at the pleasure of the City Council. If this situation is to their liking, then shame upon the City Council. If it is not, then they should provide guidance and direction to Mr. Tandy that building teamwork and partnering with the City's employees and this should be a City Council objective for 2008. We can accomplish great things by working together. As it stands now, perhaps the City should start shopping for a new City Manger.

As was stated before, the Insurance Committee identified $261,000 in savings above and beyond their 20% responsibility. Why would Mr. Tandy off handedly reject this offer? Why?