FY 2020 Budget

March 11, 2019

Staff

Certify final tax levy and budget to County and State Review and approve proposed utility rate increases

April / May 2019

Council

Budget Impact Issues Wages and benefits

The city’s only collective bargaining agreement went into effect July 1, 2017. The contract negotiated a cost of living adjustment for the fiscal years beginning July 1, 2017, 2018 and 2019. The amount of the cost of living adjustment was $1,350 each year. The Council also approved a salary matrix for non- collective bargaining employees in the amount of $1,350 for non-management positions and a 2.5% adjustment for management and supervisory positions. The proposed budget has been built with these wage adjustments included. In addition to employee step increases, the impact of the increase in wages to the overall budget is $208,658, which includes the addition of the new position in the Planning Department. Initially, the earliest drafts of the budget included a 10 percent increase in health insurance rates. The actual renewal came in at 6.1 percent. To achieve this renewal rate, the insurance trust that the city belongs to had to initiate a plan design change. The city belongs to the Iowa Governmental Health Care Plan (IGHCP) which is a trust consisting of over 30 cities, counties and school districts across the state of Iowa. The city has been a member since Fiscal Year 2008, and as a result of our participation in the trust has seen an average increase in cost of 4.48 percent per year. The change adopted by the IGHCP Board of Directors, increases the fully insured out of pocket maximums. This change reduced the overall plan renewal by five to six percent. The risk associated with this increase will be borne by the City’s partial self-fund and not passed on to employees. Even with the increase in potential liability, the city does not see a need to increase the annual contribution to the partial self-fund account. No other benefit changes are anticipated or proposed for the upcoming year. As mentioned previously, one new full-time positions is being added under this budget. Internal Charges & Services As part of the overall goal to identify the costs associated with providing services to the residents, the city began to departmentalize certain additional internal service charges in Fiscal Year 2019. Beginning with the Fiscal Year 2019 budget, the city now allocates group health insurance and workers compensation premiums on a departmental basis, similar to what had previously been done with FICA & IPERS contributions. This new practice allows the city to track total costs of providing these services and without the need to estimate the amount of premium for each function. Ideally, the city would also allocate property insurance expenses utilizing this same methodology, however the premium make up provided by our current insurance provider does not allow for a departmental breakdown of their expenses. The only way to break down insurance costs is based on insurance category (i.e., liability, property, vehicles, etc.). The Finance Department continues to monitor and make inquiries regarding the use of the Central Garage stock parts account and the increasing deficit in the fund. While the overall fund should carry a deficit

13