05-21-07 Item 2B, 2008 Prelim Budget Discussion

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Memo 2008 Budget Memo 2 · In talking with the fmancial advisors, staff, and looking at the current asset and equipment list, one ofthe areas which we need to address is setting up reserves for equipment replacement. Weare currently setting aside reserves for public safety equipment, but none has been set aside for public works equipment replacement, technology - such as computers, etc. Staff would recommend that we set up some sort of reserve for equipment replacement and major building repairs. · Another area where staff sees a need is in park funding. Park dedication fees are generally limited to capital improvements not general repair and maintenance items and they are not a steady stream of income. In looking at the financial plan, staff sees a need to set up a reserve for park improvements. This fund would then be a funding source for items which are included in the CIP. · Overall budget increases - preferences/limits? · Salaries and Benefits. Last year, the Council authorized a 2.75% increase for steps/COLA increases. This was also the rate increase agreed by the labor union for 2006 and 2007. The labor agreement expires on December 31, 2007. A new agreement needs to be negotiated. For several years, the Council budgeted a 3% increase for COLA. Staff has sent out a survey to gather information on what other cities have used over the last three years. The average increase for cities on the survey were 3% - 2007, 2.9% - 2006, and 2.85% - 2005. This information is attached for your review. The current compensation study will show us the market rates; future COLA increases will determine if we stay current with the market or fall behind. · Increase in employee benefits costs (health and dental). We do not yet have preliminary numbers for these costs yet, but will be getting these in the next few months. Our insurance broker is going out to market to price rates and get quotes. We will compare this information to our current coverage and discuss with council at a future date. Until we get the actual numbers, a 15% increase will be used. The current City contribution towards health and dental is $615 per month. Over the past few years, the Council had approved budgeting for 50% of the increase in premium. In other words, the City equally shared the rate increase with the employees. Last year the Council approved budgeting for 50% of the increase, but also added an additional plan with a deductible at a lower cost. This plan was available to employees with the same City contribution as the co-pay plan, as they were taking on more of the risk, but participation in the plan would reduce city overall costs. One employee has taken advantage of the plan to date, but it is a new plan and further education to employees on how the plan works is planned. Would this be an appropriate formula to continue to use for budget purposes? . Update the five year CIP. · As a step in creating a quality budget document, performance measures/service indicators need to be established for each department. Some of these may come about as a result of the community survey as areas that the Council would like to improve. Goals and objectives also need to be established for each department. These would need to be established in 2008, then in subsequent years actual performance can be tracked to show progress against these goals. This would provide Council and the public another tool to evaluate city services. Staff has attached examples of performance measures/service indicators and objectives/goals for departments. Staff would appreciate input from the Council on this matter.