2.B, 2011 Preliminary Budget Discussion

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Memo 2009 Budget Memo 2 • Salaries and Benefits. The Council did a market study and updated our pay scales in December of 2007. We did not have a COLA increase in 2010 for non-union employees. The union contract expires on December 31, 2010. The union employees did have a COLA increase of 3% for 2010. Would the Council like staff to run various alternatives during the budget process this year? What research would Council like staff to re are? p P • 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 pool went out for bids and rates last year and we received only a 1% in crease overall. We did go out for various bids with other firms last year and we did not experience favorable rates. Staff recommends staying with the current insurance provider at this time. Until we get the actual numbers, a 15% increase will be used. The current City contribution towards health and dental is $680.21 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. In 2008, the Council approved budgeting for 50% of the increase,but also added an additional plan with a deductible at a lower cost (HSA). 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. Additionally, only those who took the new HSA plan are receiving the full City contribution if there is any remaining after health insurance premiums, this provided an incentive to employees to convert to the new plan. Would this be an appropriate formula to continue to use for budget purposes? • Update the five year CIP. The Council reviewed this in January and we will be discussing this at the worksession on Monday evening. • 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(if one is done) 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 2011, 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 would appreciate input from the Council on this matter. RECOMMENDED ACTION: Staff is seeking direction from the Council as it continues with the 2010 n Bud eti process. Budgeting