City of Stockton
Legislation Text
File #: 21-0930, Version: 1
MOTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH ALLIANT INSURANCE SERVICES, INC. FOR BENEFITS CONSULTING SERVICES
RECOMMENDATION
It is recommended that the City Council authorize by motion the City Manager to execute an Agreement (Attachment A) with Alliant Insurance Services, Inc. for benefits consulting services. It is further recommended that this motion authorize the City Manager to take appropriate action to carry out the purpose and intent of this agreement.
SUMMARY
The City currently contracts with Gallagher Benefit Services to provide benefit consultant and actuary services. The agreement with Gallagher will expire on January 31, 2022. Pursuant to Stockton Municipal Code (SMC) 3.68.070, the Human Resources Department issued a Request for Proposals (RFP) on July 12, 2021, to solicit proposals for Benefit Consulting Services for the City of Stockton (City) employee benefits program. On October 29, 2021, the RFP Evaluation Committee (Committee) interviewed proposers and unanimously chose Alliant Insurance Services, Inc. (Alliant). If approved, the agreement with Alliant will commence on February 1, 2022, and continue for an initial three years until January 31, 2025, with an option to extend for two additional one-year option periods.
Alliant will bill the City for services rendered based on a flat fee as noted in the contract; however, annual fees shall not exceed $150,000 or $450,000 for the initial three-year term for providing comprehensive benefit consulting as required by the City. The billing structure is similar and consistent with the current benefits consultant contract.
It is recommended that Council approve a motion to approve findings pursuant to Stockton Municipal Code section 3.68.070 (SMC) and authorize the City Manager to execute a Professional Services Agreement with Alliant.
DISCUSSION
Background
The City provides a comprehensive benefits program, including a variety of health and voluntary benefits, to its active employees and their eligible dependents. For medical, the City offers five fully insured plan options through Kaiser Permanente; the Point-of-Service Plan since July 1, 2021, which is a three-tier plan consisting of a Health Maintenance Organization (HMO) Tier, Participating Provider Tier, and Non-Participating Provider Tier; Traditional HMO since 2011 and an HSA-Qualified High Deductible Health Plan HMO since 2016. In addition, the City also added the Sutter Health Plus plan in 2016. The City also offers two dental plan options through Delta Dental and one vision plan option through Vision Service Plan. Other City-provided benefits include a section 125 plan for health City of Stockton Page 1 of 4 Printed on 5/6/2022
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option through Vision Service Plan. Other City-provided benefits include a section 125 plan for health care, dependent care expenses, limited flexible spending account, and commuter benefits, life insurance, long-term disability, employee assistance services, and voluntary benefit plans such as supplemental life insurance, short term disability, accident, critical illness, and hospital indemnity.
In the past several years, the City has seen significant benefit-related changes affecting active employees and retirees. It is critical that the City have the assistance of industry experts to help manage insurance vendor relationships, including negotiating premium rates, ensuring continued compliance with legislative requirements such as the Affordable Care Act; and conducting required actuarial services. The City’s benefit consultant is also directly involved in working with staff on designing benefit plans that meet the specific needs of plan participants, helping to improve healthcare delivery, and developing cost containment measures that maintain and reduce program costs, all while providing the best possible level of customer service and competitive benefits to all employees.
Present Situation
Gallagher has been the City’s benefits consultant and provider of actuarial services since October 2017. Gallagher’s contract has been amended on two occasions to adjust the scope of services and associated costs as conditions have required. Although the current agreement automatically renewed on October 1, 2021, the City will amend the contract to set a termination date for January 31, 2022.
On July 12, 2021, the City Manager approved and authorized Human Resources staff to conduct the RFP process.
The RFP for Benefit Consulting Services was issued on September 9, 2021. The City received seven (7) proposals. These proposals were approved for the interview phase of the RFP, including Keenan & Associates (Oakland, CA), Alliant Insurance Services, Inc. (San Francisco, CA), Bolton an IMA Company (Pasadena, CA), Gallagher Benefit Services (Walnut Creek, CA), Burnham Benefits Insurance Services (Roseville, CA), Bohannon Insurance Group (Modesto, CA), and Segal (Glendale, CA).
The Committee was established to evaluate the proposals submitted and select the best available consulting company. The Committee was comprised of the Director of Human Resources, Deputy Director of Human Resources, Risk Manager/Safety Officer, Budget Officer, and a Human Resources Analyst I.
On October 29, 2021, the Committee interviewed the seven (7) proposers and asked vendor specific questions based on the responses to the RFP, as well as questions based on the following evaluation criteria:
1. Budgeting and reserve levels, rate development
2. Employee surveys
3. Compliance with federal and state law
After interviewing the seven (7) proposers and evaluating their responses, the Committee selected Alliant to provide benefits consulting services. The Committee unanimously ranked Alliant as their lead choice due to Alliant’s understanding of the City’s needs, which includes transitioning to Tyler Munis and mental health and wellness for public safety. The Committee also recognized Alliant’s understanding of the City’s unique needs through their work with many California public entities such City of Stockton Page 2 of 4 Printed on 5/6/2022
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File #: 21-0930, Version: 1
understanding of the City’s unique needs through their work with many California public entities such as California Association of Highway Patrolmen, East Bay Municipal Utility District (EBMUD), City of Pleasanton, and City of San Jose.
Alliant has public entity expertise with over 1,000 public entity clients, including many cities, counties, special districts, community college districts, and K-12 public schools. Alliant’s experience will help the City to manage its health and welfare spend, reduce risk, improve employee benefits literacy, and have a meaningful and impactful wellness program. Alliant’s knowledge of the healthcare marketplace in conjunction with their expertise in working with clients of similar size positions them to deliver highly customized account level service to the City.
Alliant has an understanding of the needs of public employers in a collectively bargained environment and has been successful at finding cost savings without compromising employee benefit coverage.
Alliant works at the cutting edge of cost management strategies for employers and looks at approaches that can make an impact in lowering trends over a multi-year period. The above services were deemed superior by the review panel members as compared to the other proposals.
Findings
SMC section 3.68.070 provides an exception to the competitive bidding process in cases where the City Council has approved findings to support and justify this action.
Findings to justify an exception to the competitive bidding process are as follows:
1. The RFP process was utilized as an exception to the competitive bidding process, as selection based on cost alone does not necessarily guarantee the most appropriate vendor choice for specialty services such as benefits consulting. A strict competitive basis for selection would likely lower the quality of the services provided.
2. Selection based on cost alone does not take into account public sector experience or the ability to provide consistent quality actuarial services.
3. These types of services, such as review of employee benefit pricing and levels of coverage within the public sector, understanding state, and federal regulations and how they affect the City of Stockton, and actuarial reports to set the City’s future liabilities, require experienced professionals who have handled such services for other public entities and can work closely with City staff, which is in the public interest.
4. The RFP process allows the vendors to specify what services they can provide to the City rather than the City bidding specific services.
5. It is necessary for the City to hire outside professionals to handle these services as City staff does not have the full expertise or capacity to perform these services.
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File #: 21-0930, Version: 1
FINANCIAL SUMMARY
The annual cost for benefit consultant services with Alliant will be $150,000 per year for years 1 through 3. Cost for the optional years will be determined and agreed upon at a later time. The threeyear cost with Alliant will be $450,000, compared to Gallagher’s consulting fee of $360,000 paid in the last three years. This cost includes the Employee Navigator benefits administration platform, which will be used during the transition period until the Tyler Munis system is fully implemented in April/May 2022. These costs are based on an initial three (3) year agreement, with an option to extend for two (2) additional years. While Alliant’s fee is 25% higher, the depth and expertise of Alliant’s firm provides the City of Stockton with a consultant who will support us in our continued growth.
Funding for the benefits consulting services agreement is budgeted in the Health Benefits Internal Service Fund, account number 2510-000-630006-540-000-00-25-000-000 based on the anticipated scope of work. The FY 2021-22 appropriation is sufficient for the anticipated services.
Attachment A - Alliant Insurance Services, Inc. Agreement City of Stockton Page 4 of 4 Printed on 5/6/2022
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