City council 9 17-13 discussion of contingency fund

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City council 9 17-13 discussion of contingency fund

  1. 1. Discussion of $812,953 Contingency Fund September 17, 2013
  2. 2. At the August 27, 2013 City Council meeting, staff was directed to develop a pay plan to utilize the $812,953 contingency fund identified in the proposed FY 2013/14 budget.
  3. 3. Parameters for Pay Plan Council also identified specific changes to include in the usage of these funds: • Eliminate the 5 lowest grades and increase the starting fulltime pay to $20,000. • Upgrade specific jobs due to recruitment/retention difficulty (i.e. Deputy Court Clerks, Dispatchers, etc.). • Make necessary changes as a result of dropping the 5 lowest grades. • Increase salaries to the new minimums, based upon percentage used to increase ranges (funding vacancies & increasing those who fell below the minimum).
  4. 4. August 27, 2013 Further Council discussion instructed staff to calculate a pay increase for employees who either meet or exceed expectations. • For those who earn less than $45,000/yr, the pay increase should be a percentage of salary. • For those who earn more than $45,000/yr, the pay increase should be a flat dollar amount.
  5. 5. August 27, 2013 Additionally Council approved the step table design for the Fire Department, at a cost of $125,000. Utilizing the new step table: • For those fire employees who earn less than $45,000, the pay increase should be a percentage of salary. • For those fire employees who earn more than $45,000, the pay increase should be a flat dollar amount.
  6. 6. Another Consideration Generally in November each year, HR comes before Council with projected premiums and costs for health insurance. It is too early in the calendar year to accurately predict what will be necessary to fund health insurance in 2014, but preliminary estimates indicate climbing expenditures and a likely shortfall of $340,480 for the general fund ($448,000 for all funds). This should be kept in mind while we review the various pay scenarios that will be presented today.
  7. 7. Pay Increase Scenarios This process began with the creation of 10 different pay increase scenarios in varying percentages. In the end, only 3 scenarios fulfilled all of the criteria within the $812,953 amount.
  8. 8. Pay Increase Scenarios Scenario 1 $812,953 Accomplish all Council requests at 2.5% level -$348,474 Give 2.5% pay increases to all Fire & non-civil service under $45K -$359,760 Give $490 pay increases to all Fire & non-civil service over $45K -$104,664 Balance in Contingency $ 55
  9. 9. Pay Increase Scenarios Scenario 2 $812,953 Accomplish all Council requests at 1.5% level -$323,895 Give 1.5% pay increases to all Fire & non-civil service under $45K -$215,513 Give $0 pay increases to all Fire & non-civil service over $45K -$ 0 Balance in Contingency $273,545
  10. 10. Pay Increase Scenarios Scenario 3 $812,953 Accomplish all Council requests at 1.5% level -$323,895 Give 1.5% pay increases to all Fire & non-civil service under $45K -$215,513 Give $490 pay increases to all Fire & non-civil service over $45K -$104,664 Balance in Contingency $168,881
  11. 11. Impact of Adding $340,480 Insurance to the Pay Scenarios Under Scenario 1 City takes on $340,480 (from general fund, self-insurance fund, etc.) Use entire “Rainy Day” fund to offset: $340,480 - $185,341 = $155,139. Increase split between City and Employees/Retirees = 3.4% increase for everyone. Increase split between City and Employee/Retirees with no “rainy day” funds = 7.5% increase for everyone.
  12. 12. Impact of Adding $340,480 Insurance to the Pay Scenarios Under Scenario 2 City takes on $340,480 (from general fund, self-insurance fund, etc.). $273,545 stays in general fund balance. Use $273,545 to offset: $340,480 - $273,545 = $66,935. • $66,935 from “rainy day”, leaves $118,406 in “rainy day”. • Increase paid by Employees/Retirees = 5.8% increase over current. • With no “rainy day” funds City increase by $53,548 (from self- insurance fund), Employee/Retirees = 1.5% increase over current.
  13. 13. Impact of Adding $340,480 Insurance to the Pay Scenarios Under Scenario 3 City takes on $340,480 (from general fund, self-insurance fund, etc.). $168,881 stays in general fund balance. Use $168,881 to offset: $340,480 - $168,881 = $171,599. • $171,599 from “rainy day”, leaves $13,742 in “rainy day”. • Increase paid by Employees/Retirees = 18.75% increase over current. • With no “rainy day” funds City increase by $137,279 (from self- insurance fund), Employee/Retirees = 4% increase over current.
  14. 14. Conclusion Insurance decisions do not need to be made today, and shouldn’t since a closer look should be taken closer to the end of this calendar year. Council should decide if philosophically they want to use a portion of the $812,953 contingency to offset insurance increases in calendar year 2014, or find other means later this calendar year. Unless Council approves pay increases to be completed retroactively to 10/1/13, the pay increase decisions do need to be made today in order to make the first payroll of the new fiscal year.

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