O.C. Officials Seek Audit of Union’s Fund

Calls for an independent audit of a health-care fund administered by the Orange County deputy sheriffs union increased Thursday after the union released rate information showing that in the coming year it will collect about $200,000 more a month in payments than it pays in premiums.

Knowing how much money is in the fund, which the union has managed for 16 years, and how contributions will be spent is essential for public accountability, said county Auditor-Controller David E. Sundstrom. That cannot be done without an audit, he said.

“There are so many complexities in this that it begs for a review, for the benefit of the deputies and the taxpayer,” he said Thursday.

Last week, the Board of Supervisors voted to boost the county’s contribution to the union health-care fund to nearly $13.4 million a year. The county agreed to pay $620 a month per employee, currently 1,805, according to figures provided by the Assn. of Orange County Deputy Sheriffs.

The two supervisors who opposed the contract, Chuck Smith and Chris Norby, complained that they couldn’t evaluate its health-care provisions because detailed financial information wasn’t available.

The new contract calls for the union to provide the county with annual rate information, a summary of expenditures remaining to be paid, and the beginning and ending cash balance of the fund.

A rate sheet provided by the union this week showed that its premium costs, based on 2003 enrollment levels among three plans, averaged $622 per employee, for rates effective in January. The union collects an additional $200,000 a month from employees for their share of the premium cost.

The union so far has declined to provide a more detailed accounting of the fund and its expenses. Union officials contend that the county’s health-care payment is a product of labor negotiations, which concluded last week with the new one-year contract.

The Orange County Fire Authority is another public agency that contracts with its union, the Orange County Professional Firefighters Assn., to administer an employee health-care fund. But the contract for managing the $5.7-million fund requires a public audit once a year and caps administrative expenses at $28,500 a year, among other provisions.

Supervisor Bill Campbell, who supported the union contract with deputies last week, said he wanted future contracts to include the same provisions as the Fire Authority contract.

But he and Supervisors Tom Wilson and Jim Silva said they supported the contract this year because adding an audit requirement would have jeopardized union negotiations.

“I think the union still has some explaining to do to the deputies and the taxpayers,” Smith said Thursday.

The continuing dispute over the union health-care fund signals what could be an abrupt end to a relatively calm period in relations between the Board of Supervisors and its employee unions. Union leaders including Robert MacLeod, general manager of the deputies union, have praised board members for working with the county’s dozen bargaining units instead of fighting them over contracts.

Last week’s contract, for example, was negotiated after deputies agreed to forgo a pay raise, citing the county’s tough financial times.

Several private insurance administrators said they couldn’t evaluate whether the money to be collected by the union is needed without examining information that hasn’t yet been made public, including how much, if any, reserves are held in the fund. Such health-care funds should have some reserves -- up to several months’ worth of premiums -- because carriers will offer better rates if they view the funds as financially stable to withstand spikes in claims.

But annual audits are standard practice and should be made available for public review, they said.

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Paying the premiums

Payments made by Orange County and its sheriff’s deputies for health insurance exceed the cost of the insurance premiums by nearly $200,000 a month.

*--* Monthly Union Monthly premium plans contributions cost Excess County Employee Blue Cross Plus $623,720 $131,140 $720,446 $34,414 California Care $284,580 $ 35,472 $238,200 $81,852 Kaiser $210,800 $ 36,774 $164,576 $82,998 Total $1,119,100 +$203,386 -$1,123,222 =$199,264

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Note: The union expects a 15% to 18% increase in premiums in July 2004. The county contribution rate runs through October 2004.

Source: Assn. of Orange County Deputy Sheriffs