2018 City of Shakopee Budget

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Budget Impact Issues

Wages and benefits

All three union contracts went into effect on January 1, 2017. All contracts negotiated three percent cost of living adjustments for 2017, 2018 and 2019. The draft budget has been built with a 3 percent increase in all wages. The General Fund impact of a 3 percent COLA is approximately $411,000. After initially budgeting for a 15 percent increase in health insurance rates. Actual renewal rates came in at 29 percent. Staff took proactive steps to reduce this increase to something more manageable by first requesting new proposals even though the city is still under contract with our current provider. Unfortunately, with limited number of carriers in the market, the city did not receive any new proposals. The next action step in reducing the health insurance costs was reviewing plan options. Administration began surveying and meeting with employees to better understand their needs and what health care changes would be viable, knowing that the employee and employer share of premiums would be increasing. As a result of these meetings and surveys, new Accountable Care Organization (ACO) plans were approved by the City Council on November 7. ACO plans limit in-network coverage to specific providers such as Park Nicollet and Ridgeview. Implementing these ACO plan options reduces the city’s insurance contribution from 29 percent to about 19 percent. A 19 percent increase in health insurance amounts to approximately $240,000. The city’s health insurance premiums have been on a rollercoaster for the past several years. Even though the city is experiencing a large increase for 2018, the city’s premiums have only moderately increased from 2014 through 2017, with an average increase of 2.7 percent. Administration undertook a class and compensation study earlier this year that was anticipated to have a financial impact of approximately $100,000. The actual impact amounted to about $35,000. The preliminary budget included $100,000 as a placeholder until actual results were received. The draft budget reflects the actual costs. As mentioned earlier, six full-time staff positions are being requested for 2018 along with additional part-time staffing. The Fire Department is requesting an assistant fire chief, the Police Department is requesting two police officers and a code compliance officer, and lastly Planning and Development is requesting a junior planner and an economic development specialist. The economic development specialist will be funded 75 percent through the EDA and 25 percent through the Planning and Development Department. Recreation is requesting an additional $133,200 for part-time salaries related specifically to staffing needs at the community center pool. Below is breakdown of the 2018 budget impact for new full-time position requests. No other benefit changes are anticipated or legislated for the upcoming year.