City of Kingston

Health Insurance and Overtime - Inroduction

Background

The City of Kingston (City) is located in Ulster County and, according to the most recent census, has a population of approximately 23,000. The responsibility for effective financial planning and management of the operations of the City rests with the Mayor, as chief executive officer, and the Common Council, which serves as the governing board.

The City’s budgeted appropriations for the fiscal year 2006 totaled approximately $32.3 million; including $7.8 million for the Police Department, $6.3 million for the Fire Department, and $7.1 million for the Public Works Department. As of November 10, 2006, there were 402 active City employees represented by three bargaining units and 121 retirees. The City provides health, dental, and optical insurance coverage to eligible employees and retirees. City and employee health insurance contributions are based on the collective bargaining agreements of the respective bargaining units. The City annually budgets and expends in excess of $500,000 for overtime costs.

Objective

The objective of our audit was to evaluate possible cost savings in the areas of payroll and employee benefits. Our audit addressed the following related questions:

• Can savings be achieved in the area of health insurance costs?¹
• Have cost saving alternatives been established as a means to efficiently manage overtime expenditures?

Scope and Methodology

During this audit we examined health insurance and overtime for the period January 1, 2005 to September 28, 2006.

We conducted our audit in accordance with generally accepted government auditing standards (GAGAS). More information on such standards and the methodology used in performing this audit are included in Appendix C of this report.

Comments of Local Officials and Corrective Action

The results of our audit and recommendations have been discussed with City officials and their comments, which appear in Appendix A, have been considered in preparing this report. Other than one point of clarification, City officials generally agreed with our findings and recommendations. Our comments concerning the City’s response can be found in Appendix B.

The Common Council has the responsibility to initiate corrective action. Pursuant to Section 35 of the General Municipal Law, the Common Council should prepare a plan of action that addresses the recommendations in this report and forward the plan to our office within 90 days. For guidance in preparing the plan of action, the Common Council may refer to applicable sections in the publication issued by the Office of the State Comptroller entitled Local Government Management Guide. We encourage the Common Council to make this plan available for public review in the City Clerk’s Office.