Memorandum

To: Pete Sprague, Assembly President

Members, Kenai Peninsula Borough Assembly

Thru: Dale Bagley, Mayor

From: Scott Holt, Finance Director

Craig Chapman, Controller

Date: May 20, 2004

Re: Ordinance 2003-19-54, Increase in Health Insurance Claims

During the months of July through April in fiscal year 2004, the Borough's health insurance claims came in at a rate 25 percent higher than the budgeted amount. The impact to the Borough General Fund is estimated to be approximately $340,000. The impact to the Service Areas and other funds is estimated to be approximately $330,000.

The majority of this projected increase can be absorbed within each department; however, there are some departments that do not have resources available within their budgets to cover the estimated increase, and a supplemental appropriation will be needed.

The attached ordinance would appropriate funds for those departments that do not have the resources available to cover the estimated increase. Without this appropriation some departments would expend 100 percent of their budget prior to year-end. KPB 5.08.030 restricts the borough to only "make expenditures within the limits of the budget." The proposed increases will not result in payments to the school district in excess of the cap on local contributions.

Shortened hearing is requested on the ordinance in order to appropriate the funds prior to the fiscal year end.