The Virgin Islands government owes $25 million to Cigna Healthcare, senators learned during the Division of Personnel’s hearing Friday before the Senate Committee on Appropriations and Budget.
While reconciling data from two computer systems currently used by Personnel as part of their transition into the government’s EPR system – enterprise resource planning software that will connect all government departments and agencies on one system – it was discovered that many employees were not paying their fair share of the premiums. In most instances, an employee with family coverage was only paying the premium amount for single coverage. These errors were costing the government $266,000 monthly.
The initial report identified 7,000 discrepancies and Personnel has been working to correct and verify these discrepancies. To date, the records they have reconciled have brought in an additional $104,000 monthly in insurance premiums. Kenneth L. Hermon Jr., director of Personnel, told senators, “We continue to work on reconciling our records and will include our retiree population in the next segment of the project.”
Another contributing factor to the $25 million debt, according to Hermon, were instances in which government employees had been granted leave without pay but failed to contribute their individual premiums to the Health Insurance Fund as required by law. Personnel has issued bills to employees for outstanding premiums in the amount of $39,855 and billed four departments for a total of $83,228 for their portion of the premium obligations. Hermon said, “We are constantly working with HR officers so that they can understand the importance of timely notifying the Division as to when an employee is granted leave without pay or called to active duty by the military.”
The final contributing factor has been a delay in payments to Cigna, which in turn adds late charges to the premium fees, first in 2001 when the policy was switched from Blue Cross/Blue Shield and again in 2004 when the government was experiencing a financial crunch and asked for deferments. These delays have put payments approximately 90 days behind.
Personnel is currently negotiating with Cigna for the third year of a five year agreement and has brought a proposed premium increase of 15.4 percent down to 7.7 percent. Responding to a question posed by Sen. Patrick Simeon Sprauve regarding potential savings if premiums were paid in a timely manner, Maureen Venzen, chief of group health insurance, told senators that the cost could be reduced by 1 to 2 percent.
Another hot topic for senators were the number of exempt employees in government service, currently at 1,251. Hermon stated, “In my tenure, we have started to address temporary and exempt classifications. We have identified a number of exempt positions that do not qualify as exempt.” Personnel has been making changes in increments, working with small groups of employees at a time, changing their status from exempt to classified. Sen. Carlton “Ital” Dowe and Senate President Louis P. Hill both told Hermon that the situation with unclassified employees must stop immediately.
Sprauve asked Hermon for an update on promotional exams for police and fire personnel, as those exams are administered through Personnel. Hermon said the Fire Service exam was currently being revised after a breach in security. According to Hermon, the exam was administered to approximately 40 Fire employees but shortly afterwards, Fire Services Director Victor Browne informed him that the exam had been compromised, presenting Hermon with the document containing the exam’s answers.
The matter is currently being investigated by the Inspector General’s office. The new exam is scheduled to be administered on St. Croix Sept. 14.
Personnel’s current initiatives include streamlining the NOPA process, which has been brought down from 95 days to 32.62. With the transition to the new ERP system, electronic NOPAs will speed up the hiring process. Personnel information sheets have also been distributed to all government employees paid within the system to cross-check information before entering it into the ERP. Their goal is to have all employees in the new ERP system prior to Dec. 31, 2009.
Personnel also continues to work on the retiree retroactive salary adjustment project but suffered some setbacks due to their inability to access some of the necessary data in the system, namely “inactive” employees. “Inactive” employees are those who worked during the retroactive period but have since left government service. The department is manually collecting the data from GERS records.
The Division of Personnel’s recommended budget appropriation for fiscal year 2010 is $3,630,333, with $3,361,143 coming from the General Fund and $269,190 from the Indirect Cost Fund
Of the $3,361,143 from the General Fund, $1,918,880 is for personnel services, $747,972 for fringe benefits, $20,400 for supplies, $501,891 for other services and charges, and $172,000 for public utilities.
The governor has also included $27,542,290 for Personnel in the miscellaneous section of the 2010 budget. Of that amount, $19,580,00 is for health insurance for retirees, $7,500,000 for negotiated union contracts, $172,290 for implemented 1994 early retirement, $15,000 for municipal council pension, and $275,000 for andinistation expenses for the health insurance board.
The Office of Collective Bargaining, funded under the Division of Personnel for budgetary purposes, also testified before the committee regarding their recommended budget appropriation of $783,290. A small agency with only eight employees, they are responsible for negotiating all collective bargaining agreements of the executive branch, representing the executive branch in all labor relations proceedings, representing the government in civil cases pertaining to labor matters, and assisting the governor in formulating labor policies for collective bargaining.
Acting Chief Negotiator Dr. Valdemar A. Hill Jr., only in office since July of this year, has his work cut out for him with 12 expired labor contracts. Hill told senators, “Given the number of expired contracts, the adverse economic conditions and the projected government deficit for 2010, it is going to be an arduous and difficult task to satisfy the requirement to negotiate.” Senators expressed full confidence in Hill, given his years in government service, and urged him to take action immediately after Hill expressed his six-month goal of assessing the status of all expired contracts
Of their recommended $783,290 budget, $470,513 is for personnel services, $2,500 for capital outlays, $158,338 for fringe benefits, $19,000 for supplies, $118,146 for other services and charges, and $14,793 for utilities.
Present at Friday’s hearing were Sens. Craig W. Barshinger, Dowe, Hill, Wayne A.G. James, Terrence “Positive” Nelson, Usie R. Richards, and Sprauve.
