BRIDGEPORT — Health-care costs for municipal employees would be paid out of a fund created solely to handle such expenses under a plan presented to the City Council on Wednesday.

The city would create an internal service fund that would receive contributions from the Board of Education and city government, as well as co-payments and retiree contributions.

The fund would make disbursements to covered employees.

Though some localities make payments out of their general revenue funds — as Bridgeport currently does — such funds "are by far the predominant usage in Connecticut when it comes to self-insurance," said Gerald Peradis, a partner with Scully & Wolf LLP of Glastonbury, which was hired by the city to audit last year's school district expenses.

City Budget Director Thomas Sherwood is pushing the council to establish such a fund as part of the new municipal budget. The council is scheduled to vote on Mayor John M. Fabrizi's $459 million recommended city budget at a special meeting scheduled for 7:30 p.m. Monday.

At its best, officials say a separate fund for health-care costs could provide more predictability for school and municipal officials.

Under the plan, the contributions would be set by estimates based on actuarial or historical data, and both sides would have to allocate appropriate sums once each year.

There would be no need to find an emergency allocation to shore up contributions at the end of the year if costs exceed revenue.

The plan could operate at a surplus, building up reserves for unexpected shortfalls. If it operated at a deficit, budgets could be adjusted over the next few years to plug up the holes.

The city could even consider taking out its own insurance policy in case of catastrophic expenses.

But council member Robert S. Walsh, D-132, an accountant, said he saw potential for danger.

Walsh said he is concerned the city could underbudget the fund, and that an actuary wouldn't discover the problem until after next year's municipal elections.

He also said he is concerned the school board could be left without sufficient funds for health costs in the future, unless a city ordinance required proper funding for health benefits.

The school district's business director, Richard Huot, said it is also important to make sure the reserve fund couldn't be tapped for other city expenses and that the schools do not bear a disproportionate share of contributions.