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Last October, the Council adopted a Policy outlining the calculation used to determine future COLA’s 34 for non-union employees. That Policy stated that the COLA will be based primarily on the following: 35 36 U.S. Bureau of Labor Statistics CPI-U for the Minneapolis/St. Paul statistical area. 37 38 In addition, the Council also agreed for purposes of discussion to consider the following index: 39 40 U.S. Bureau of Labor Statistics Employment Cost Index (ECI) - State and Local workers 41 ** Note: the BLS does not publish a local or regional statistic for this index. They also use a different calendar 42 measurement year than they do for the CPI. 43 44 The most recent 12-month calculations are as follows: 45 46 1.44% CPI-U – (July 1, 2013 - June 30, 2014) 47 ECI-state and local government – 1.20% (April 1, 2013 – March 31, 2014) 48 49 The Council is reminded that the CPI and ECI measure two completely different things. The CPI 50 measures the change in prices consumers pay for a specific basket of goods and services. It is 51 commonly used for purposes of COLA as an indicator of what the employee needs to get paid in order 52 to keep their purchasing power the same over time – i.e. to avoid an effective wage cut due to 53 inflationary impacts. 54 55 In contrast, the ECI measures the aggregate changes in the costs of labor including wages and 56 benefits. It includes full-time, part-time, and temporary/seasonal workers. It is not a measure of the 57 raises workers received during the measurement period. This index can be influenced by layoffs, 58 reductions in work hours and overtime, and increased utilization of PT/temporary/seasonal workers. 59 60 Staff is unaware of any cities that use the ECI for purposes of determining an employee COLA. In 61 contrast, the CPI is widely used. 62 63 2015 Tax Levy Impacts 64 The 2015 City Manager Recommended Budget calls for a property tax increase of $890,829. This is 65 detailed in the chart below. 66 2015 Tax Levy Impacts 67 68 2015 Budget Impact Item Description / Comments Amount Employer PERA Contribution Mandated contribution increase for Employees $ 67,000 ** Employee COLA Based on 2% cost-of-living-adjustment (COLA) 245,000 Employee wage step increases Eligible employees under the Compensation Plan 129,000 Fire Department Reorganization Net cost of hiring additional FT firefighters 69,000 EAB Removal Add’l monies for program 25,000 Capital replacements – New Based on Staff recommendations (per memo) 55,000 General inflation - Capital Inflation on scheduled capital replacements 5,000 General inflation - Operations Inflation on supplies, professional services, etc. 150,829 Eliminate Use of Reserves General Fund reserves used to balance the budget 346,000 Eliminate Use of Reserves Recreation Fund reserves used to balance the budget 30,000 Reduction - Debt Service City Hall Bond Refunding Savings (annual) (60,000) Reduction - Debt Service Street Bond #25 Paid Off (160,000) Reduction - Fire Relief Contribution Projected decrease per revised actuarial study (11,000) Total Impact $ 890,829 Page 2 of 3