MEMORANDUM

TO: Pete Sprague, Assembly President

Assembly Members, Kenai Peninsula Borough

THRU: Mayor Dale Bagley

FROM: Richard Campbell, General Services Director

DATE: May 21, 2003

SUBJECT: Resolution: 2003-067 A RESOLUTION APPROVING THE LETTER OF AGREEMENT BETWEEN THE KENAI PENINSULA BOROUGH AND THE ALASKA PUBLIC EMPLOYEES ASSOCIATION/AFT REGARDING THE BOROUGH'S HEALTH CARE PLAN

We recently became aware of a new health care option being offered to state employees which has the potential to increase our costs. This new option pays 20% (rather than 80%) of medical costs with the intent for the employees' spouses' plans to cover the other 80% as the co-payment. In order to protect our plan from this unreasonable cost shifting, the administration and our employees' association have agreed to the attached addition to our labor agreement and request the assembly's approval.