Split council overrules Garner staff on insurance broker

kjahner@newsobserver.comNovember 22, 2013 

— In a split vote, own council members voted to work with local insurance broker Jones Insurance on Tuesday, a move that overruled town staff’s unanimous recommendation.

The town’s staff, led by Human Resources Director Mary Beth Manville, had received proposals and heard presentations from four firms and ranked the local firm last in a process that traditionally hasn’t required town council input. But Buck Kennedy, Gra Singleton and Mayor Pro Tem Jackie Johns overcame dissenting votes from Ken Marshburn and Kathy Behringer to do business with Jones instead of signing a contract with the company recommended by the town staff.

The issue arose at the Oct. 7 council meeting. Since then, staff and council members have met, but staff could not convince the three council members who supported giving the business to Jones to change their minds. Johns – whose position had been unknown – cast the deciding vote in the 3-2 outcome.

“I don’t see anything wrong with trying Jones. I’m going to vote no,” Johns simply said – eschewing lengthier explanations other council members provided.

Marshburn and Behringer each said they saw no reason to intervene against judgment of the professional staff, and no council member questioned the staff’s competence.

“I believe their expertise is proven, and as much as I wish it could be otherwise, conscience tells me that I have to go with the staff recommendation,” Behringer said. “I personally think it’s a bad direction for the council to move in.”

Mayor Ronnie Williams did not attend the meeting. The town does not allow the mayor a vote.

Though a relatively small contract in the range of $23,000-$36,000, the insurance broker negotiates with health insurance providers – currently Blue Cross Blue Shield of North Carolina – on a nearly $1 million budget contract to insure town employees. Negotiations can save the town six-figure sums annually.

Jones’ proponents included the caveat that if performance was subpar after one year, they would pick a new broker next year.

“I talked with Mr. (Jerry) Jones,” Singleton said. “They just want a year, and ‘if we’re that bad, we’ll quit and give us someone else.’ I’m inclined to do that.”

Reviewing options

Town staff – Manville, Town Manager Hardin Watkins, and and Assistant Town Manager Rodney Dickerson – called the proposal from Hill, Chesson & Woody more complete and professional than the rest, demonstrating expertise and an in-depth understanding of exactly what the town wanted. It included more of the requested detail and examples laid out in the town’s request for proposals. Manville also said various municipal governments HC&W represent provided glowing references on their experiences with the company.

They said Jones’ proposal was less professional and not as aligned with what the RFP asked; it also contained errors. The presentation was more scripted, too, and expertise in managing employee benefits was less apparent.

The company played up its connection to the town and the local causes it has supported in the past. Jones, they added, offers a variety of insurance services – the town secures liability and property insurance through Jones – whereas two other bidders (including HC&W) focus solely on employee benefits negotiations.

“In terms of staff, we feel some duty, some level of obligation to the town to treat all vendors fairly,” Watkins said at the council meeting. “Staff believes (HC&W) is the best option for our employees, and therefore the best option for our town.”

Council also rejected a proposal from Watkins – one Behringer and Marshburn supported – to restart the entire process and allow council members to sit in on all the presentations so that they could better understand the mechanisms involved.

Instead, council chose the business owned by Jones, which is well-known throughout Garner and among council members – many of whom are in the same Rotary club as Jones, and each of whom has received campaign contributions from him in the past.

No one questioned the integrity or competence of firms favored by staff, including second choice Independent Benefits Advisors, the town’s current broker, or third choice Pierce Group Benefits, which is also owned by a Garner native, Glenn Pierce.

Both HC&W and Jones bid higher than IBA’s offer of $16.65, but since IBA already knew the price going in, staff offered its favored proposal a chance to match. HC&W agreed.

Jones Insurance has served as the town’s health insurance broker in the past. For fiscal years 2008-09 and 2009-10, Jones negotiated renewal increases of 32.6 percent and 9 percent, according to staff data. Jones mitigated the cost to the town budget by cutting benefits to employees, but $132,000 in total annual cost increases to the town remained.

The next three years, IBA negotiated down much of the Blue Cross increases with two years of zero or near-zero increases and never cut employee benefits. Watkins said the negotiations saved the town about $475,000 over those years.

Kennedy said Jones learned from its shortcomings during the previous stint with the town, citing the company’s partnership with insurance giant Ebenconcepts – the details of which staff said remain unclear. Kennedy also said he’s not surprised that the interview had its flaws, but he believes the company’s reputation, and the high attention and stake in the contract justifies the town’s trust.

“I’ve known them a while. I know the process they went through this last time, and the improvements they made,” Kennedy said. “Bottom line, they asked me to support them. … And I think they are capable of providing a good service to the town.”

Jahner: 919-829-4822; Twitter: @garnercleveland

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