GARNER — A contentious discussion during the Oct. 7 town council meeting followed when elected officials questioned town staff’s choice of an insurance broker. Council members favored a larger, marginally more expensive Garner-based broker owned by a prominent businessman known to donate to Garner and charitable causes – as well as local political campaigns.
After the exchange raised questions regarding the appropriateness of the timing and of the council involving itself in a decision typically made by staff, the issue was tabled until the Oct. 22 meeting.
Councilman Buck Kennedy added the item to the agenda the night before the meeting, and advocated for Jones Insurance, a large brokerage owned by Jerry Jones. Nearly the entire council endorsed the idea. Mayor Ronnie Williams acknowledged that Jones Insurance President Buddy Gupton had contacted the town Oct. 4 after being informed of staff’s decision Oct. 3.
Staff had chosen to switch from Independent Benefits Advisers to Hill, Chesson & Woody. HC&W agreed to come down to the price offered by IBA: $16.65 per employee per month. Jones offered $20 per employee per month, a difference that comes out in the range of about $7,000 annually.
Insurance brokers negotiate with insurance providers (in the town’s current case, Blue Cross Blue Shield) for the lowest rate. The stakes can be far larger than the broker’s fees; last year alone, BCBS increased rates for the town 13.1 percent. IBA negotiated that down to a 0.7 percent increase, saving $160,899. That’s more than four times the estimated HC&W broker fee.
Human Resources Director Mary Beth Manville told the council the staff made its decision after hearing detailed presentations from each of four firms. The staff discounted the cheapest (Pierce Group Benefits at $7 per employee) because it lacked key elements to guarantee the service level of the others.
“Negotiating is everything,” Manville said. “Not just accepting renewals ... it’s important they fight on your behalf.”
Staff preferred HC&W over IBA once HC&W agreed to match its price, leaving the high cost to the local Jones Insurance, which is the largest broker in the state through a partnership with Eben Concepts.
Elected officials pounced, with Kennedy leading off. He had backup.
“Local businesses serve Garner; we should respect that. I strongly encourage us to keep it local,” Gra Singleton said
“How can we expect other people to do business with local people if the town won’t?” Williams added.
After hearing Kennedy, Singleton and councilwoman Kathy Behringer also criticize the decision not to hire Jones, Manville defended her loyalty to Garner, and Watkins pointed out that Jones had been the town’s broker in the past, with results that fell short of IBA’s performance.
Watkins read off numbers for fiscal years 2008-09 and 2009-10: Jones accepted renewal increases of 32.6 percent and 9 percent from BCBS. Jones mitigated the cost to the town by cutting benefits to employees, but $132,000 in annual cost increases to the town remained.
Watkins also pointed to a 32.4 percent increase from BCBS negotiated by IBA down to 21.3 in 2010-11, zero increases in 2011-12, and this year’s near elimination of a 13.1 percent bump, none of which came with benefit reduction.
“I think a track record of $475,000 (saved for the town) speaks loudly,” Watkins said of the town’s 2010 switch to IBA.
He later pointed out that the staff regularly executes similar service contracts without council input. He also suggested legal problems could result from going against the results of a formal competitive process, and with choosing a vendor based solely on vendor residence.
Town attorney Bill Anderson said he did not know of any laws that would prevent the council from opposing the moves.
“I think it then becomes a judgment call by the (town) manager as to whether he wants to execute a contract that his council opposes,” Anderson said.
Councilman Ken Marshburn, who acknowledged a friendship with Jones (who attended the meeting along with Gupton), nevertheless pumped the brakes. He defended the staff against what he saw as implications of in-objectivity, and criticized the late addition to the agenda and apparent momentum toward making a decision as a council.
“I must say, Mr. Mayor; I am a little concerned,” Marshburn said. “I’m not so happy with the way we’ve gone about it. I think we could have done this better, and wish we would have.”
A Garner fixture
Jerry Jones is a prominent figure in Garner. He has donated money to a variety of causes – as well as political campaigns.
Williams noted Jones’ contributions, citing Broadway Voices, Relay for Life, and the All-America City effort, among others.
Jones Insurance’s proposal for the contract listed Rotary International, Civitan, The Garner Chamber of Commerce, Wake County SPCA, Garner Education Foundation, Wake Enterprises, and Garner Revitalization as causes it has supported. It says “We have never said ‘no’” in a section referring to local charity. It also touted the company’s Garner ties alongside its size and experience.
“We’ve always had a core belief here that if the town needs to buy a product or service from a qualified business at a competitive price they should support a local business,” Jones said after the meeting.
Jones, who said delaying the decision was the right thing to do, has also donated to the campaign of everyone on the council at some point.
Kennedy received $250 from Jones and another $250 from Jones’ wife, Brenda, during his 2011 re-election bid, as well as $100 from Gupton. Each of the other council members and Mayor Pro Tem Jackie Johns received at least $200 from the Jones household in their most recent election. Williams received $250 from Jones in 2005 and has run unopposed his last two elections.
Jones declined to address his political donations, responding instead: “I think it’s probably best to leave these questions in their very capable hands.”
“Typically this group of business people, they give money to everybody,” Williams sad. “I never thought about giving them anything in return.”
Kennedy said he was glad to have had it on the agenda so that others could hear the information and have time to consider it publicly. He said he did not suggest it be added to the agenda to take action that day; he just wanted the matter publicly and openly discussed, he said.
He was asked about perceptions of businessmen getting a favor for his friendships and contributions.
“Definitely, people can draw any number of conclusions and that’s one of them,” Kennedy said, admitting that not taking staff recommendation would leave questions. “I don’t take any pride going against staff recommendation.”
Williams compared the situation to one in 2009 when it chose local All Star Waste Services over a lower bidder for garbage and recycling. He noted the service has been high-quality. He also said concerns had been raised about the other bidder in that case, pointing out none have arisen about the two favored insurance brokers.
Kennedy defended the process, suggesting Jones was like any constituent the council had to listen to and decide whether to bring an issue to a public forum. He also said he believed Jones would do a good job.
“To me this is classic local government. (Constituents) can get access to the decision makers,” Kennedy said. “It’s not always the easiest thing to do. People put you on a hot seat, and that’s OK, that’s what we’re here to ultimately determine, what’s in the best interest of the town.”
Jahner: 919-829-4822; Twitter: @garnercleveland