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AUTHORIZE BUDGET AMENDMENTS TO SUBSIDIZE THE IMPACT OF 2026 HEALTH CARE PREMIUM INCREASES AND IMPLEMENT A RECRUITMENT AND RETENTION PLAN FOR FIRE PARAMEDICS
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RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Appropriate funds in the amount of $2,659,181 from the Health Internal Service Fund (ISF) Fund Balance to the FY2025/26 Health Insurance Operating Account.
2. Appropriate funds up to $600,000 from the FY2024/25 Fire Department salary savings to implement a recruitment and retention plan for paramedics in FY2025/26.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
On September 23, 2025, the City Council accepted the 2026 Health Benefits Report and adopted the 2026 Health Premium rates for the City’s Health Plan. There were significant increases in the 2026 Health Plan premiums. Council directed staff to propose recommendations to help alleviate increased costs to employees. The appropriation of funds from the Health ISF will be utilized to help offset 2026 health plan premium increases.
The Fire Department's Paramedic staffing levels have reached a critical point, and the City’s Advanced Life Saving (ALS) Services to the community are at risk of being reduced The appropriation of funding will be used to develop and implement a recruitment and retention plan to help ensure the continued delivery of ALS services.
DISCUSSION
Background
The employer contributions are dependent upon the provisions of the Memoranda of Understanding (MOU) with the various bargaining units and the Unrepresented Management/Confidential and Law Employees Compensation Plan (Unrepresented Compensation Plan), excluding the Stockton Police Officers Association MOU, which is dependent on the Measure A side letter.
The 2026 Annual Health Benefits Report, prepared by Alliant Insurance Services, the City’s insurance broker, provided a comprehensive review of the renewal for health benefit plans that are being offered to City employees and calculated the premium rates for the upcoming plan year. Premiums are trending upward nationally. The increase in costs is attributable to a combination of various factors impacting the market including inflation for goods and services, labor shortages, increased labor cost, increased demand for care, market trends and increased utilization.
Several current medical plans are seeing a significant increase in premiums for 2026. These rate increases reflect actual City of Stockton utilization reporting and usage as well as current market conditions.
• Kaiser Health Maintenance Organization (Kaiser HMO) +2.3%
• Kaiser High-Deductible Health Plan (Kaiser HDHP) +0.4%
• Kaiser Deductible HMO Plan (Kaiser DHMO) +0.4%
• Sutter Health Plus LG18 (Sutter HMO LG18) +34.94%
• Sutter High-Deductible Health Plan (Sutter HDHP HE08) +35.7%
• Sutter Health Plus Deductible HMO Plan LG24 (Sutter DHMO LG24) +34.82%
The Stockton Fire Department (SFD) has more than a 50-year history of providing ALS services to the City of Stockton and surrounding areas. The current service delivery model provides for a minimum of one paramedic on each apparatus, across all shifts. With current attrition rates, the SFD has reached a critical point, where it will soon be unable to support the required service delivery model, forcing a drastic reduction in service to the community.
Present Situation
Council directed staff to propose recommendations to help alleviate increased costs to employees. Staff have identified $2,659,181 available from the Health ISF Fund Balance to help mitigate the impact of healthcare premium increases on City employees. The allocated funding will enable the City Manager to increase the City’s contribution to 2026 healthcare premiums, thereby reducing the cost to the employee.
To address the immediate need to deliver critical life-saving services, the SFD has been mandating overtime to force coverage for paramedic staffing. Management recognizes that while this is an immediate and temporary solution, it is not a sustainable approach to continuing support for ALS services in the City. As such, the recommended budget appropriation will be used to develop and implement a recruitment and retention plan in support of ALS service.
FINANCIAL SUMMARY
With the appropriation of funds in the amount of $2,659,181 from the Health ISF to the FY2025/26 Health Insurance Operating Account, there will be sufficient funding to help offset the 2026 Health Plan Premiums.
Additionally, authorizing a carry-forward appropriation of up to $600,000 from the Fire Department’s FY2024-25 Salary Savings to the department’s FY2025-26 budget will allow the City Manager to work with the Fire Department to design and implement a meaningful recruitment and retention strategy, in support of paramedics and ALS services