A message from the Mayor

Mayor Bill White

Dear employees and retirees:

One of my many responsibilities is to ensure the security of and your confidence in the City’s employee benefits plans. It is important to me that you and the City both continue to afford top-quality medical programs. Meeting this crucial goal is a delicate balancing act that takes hard work and money from both sides — yours and the City’s.

The cost of health benefits in the U.S. has increased by the lowest amount since 1973. However, it continues to rise on a pace higher than the rate of inflation. This continues to be a problem for us all - employees, retirees, payers and providers. We must all persist in obtaining the best health care value by being efficient and frugal in the way we spend our health care dollars. Last year, the City negotiated a contract with BlueCross BlueShield of Texas, guaranteeing no more than a 9.5% renewal increase in HMO premium costs for May 2007. And, even though that’s a single digit increase, it still means an additional $25 million out of our collective pockets. The total cost of medical insurance is expected to reach $251 million in FY08, up from $226 million in FY07.

To keep the medical plans affordable for the future, the City’s contribution to the plans will change from 77% to 74% on May 1, 2007. Overall, contributions will increase 28%, with employees’ increases lower than 28%, and some retirees’ increases being greater than 28%. The new contribution calculation is described in this Guide. In light of that change, there will be no benefits changes to the health plans in May 2007. I feel confident that most of you will still pay less for medical coverage than your neighbors do, especially if you are in the HMO.

I recognize that you work hard for your money and that you are very careful about every cent you spend. When the City re-issued its contract with our current providers, it was because they offered the greatest savings and value compared to the numerous other competitors. Your dental and supplemental insurance rates are locked in for the next two years, so you will not experience any cost increases or benefit changes at least through April 30, 2009.

Specific information about your benefits and new rates is included in this enrollment guide. If you have questions or need additional information, please attend one of the open enrollment meetings. See the meeting schedule.

It takes a close working partnership between the City and its employees to balance the needs of 67,000 very diverse people, on a limited budget. We are all aware that health care costs are increasing, and my team and I will continue to fight to provide you with affordable, accessible, quality benefits.

Every step we take now is with the intent of securing the affordability of these precious benefits for the future. Thank you for using your health care benefits wisely.

Respectfully,

Mayor