Price City Council Special Meeting
City Hall: Price, Utah
March 20, 2006, 7:00 a.m.
Mayor Joe L. Piccolo Joanne Lessar, City Recorder
Councilmembers: Pat Larsen, Finance Director
Richard Tatton Gary Sonntag, Public Works Director/City Engineer
Jeanne McEvoy Nick Tatton, Community Director
Kathy Hanna-Smith John Daniels, Human Resource Director
Jeff Nielson Bret Cammans, Customer Services Director
Rick Davis Aleck Shilaos, Chief of Police
Paul Bedont, Chief of Police
1. BUDGET WORKSHOP - Personnel
John Daniels presented the following handouts:
Estimate of Employee Earnings for 2006-2007
Estimate of Employee Costs (FICA, Workers Compensation, Retirement, Medical
Insurance) for 2006-07
Comparison of budgeted personnel costs for 2005-2006 and 2006-2007
John stated that personnel costs continue to rise. Some costs can be controlled but other costs, such as retirement, are very difficult to control without a reduction in staffing levels. Full time employees receive 40% to 70% in benefits. Department Supervisors are recommending the hiring of five new employees; City Engineer, Building/Fire Inspector, Facility Technician, Laborer and Groundskeeper. The proposed budget includes a cost of living adjustment of 4%, an anniversary increase of 1-2% and promotions totaling $14,300. The proposed budget also includes a 6.6% increase in overtime. John recommended freezing overtime levels to the actual 2005 overtime hours. This would be an estimated savings of $2,340. The proposed budget has 2,465 of overtime hours. The overtime for last year was budgeted at 2,313. The actual overtime hours was 2,366. According to John=s market studies, the wages recommended for the Building/Fire Inspector are over budgeted by $9,600.
John stated that he did not have a firm number on the health insurance increase. It could be between 15% and 18%. This would mean an increase of $100,000, which includes the 5 new positions. He placed a 17% increase in the budget for health and dental costs.
State Retirement for the Police Department increased 3.04% to a total of 22.38%, and 2.23% for the Fire Department to a total of 10.84%. There was no increase for other public employees which remained at 11.59%. The minimum actual amount being placed in retirement accounts for full time Price City employees is 14.81%. Non-public safety employees have 11.59% of compensation placed in the Utah State Retirement and the balance into the 401K program. Since the percentage required by State Retirement for the Police Department is over 14.81%, they do not have any funds going towards the 401K program. There is a possibility to fund only the State Retirement portion, however, the savings potential has not been calculated. The question has come up if it is legal and fair to treat the three classes of employees differently, such as the police, fire and other public employees. It is legal, but the perception of fairness is a separate issue. John
March 20, 2006
recommended leaving the issue as it is. There was no increase in the EAP benefit.
The Medicare Supplement=s basic cost is $95 and the enhanced version is $295. It was previously $265. John recommended a cap of $300. Twenty four retirees are on this plan at a cost of $57,000.
There is an expected increase of 12% for Workers Compensation if payroll remains the same. However, as Price City=s experience modifier has decreased 14% in the past year, John felt we will not see any increase.
There are several ways to reduce personnel related costs, such as wage cuts, benefit cuts, or lay off employees. However, each of these has an extremely detrimental effect on employees. Price City has pursued less but more effective cost reduction efforts such as restructuring the Cemetery, Parks, Pool and Building Service departments to enhance efficiency and effectiveness. Total estimated savings from that restructuring is $96,000 per year. Another effort was eliminating benefits for future part time employees which saved approximately $55,000. Improved safety reduced Workers Compensation premiums by $34,000 per year. There could be a cost savings of $43,000 with the retirement of the City Recorder and a Secretary. Employees are full time partners in cutting costs, as they have found ways to eliminate a full time pool manager, a seasonal meter reader and seasonal employees in the Parks and Cemetery.
John recommended that the administration of the Cafeteria Plan be changed to PEHP instead of PCF. This would decrease costs approximately $1,800/year. The change will also add a flex spending card. Increasing the participation rate in flex spending will reduce payroll taxes paid by the City and employees. There were 1,000 days of unscheduled absences in 2005 due to sick and bereavement. This did not include comp or vacation time. Unemployment costs for last year was $7,000 - $10,000. John also recommended looking at our vehicle policy. Cost reductions will continue to result from win-win employment initiatives, such as improvement in wellness, health benefit education, safety improvements and employee participation in cost reduction and problem solving.
Pat Larsen stated that the budget is out of balance by $2.5 million. Total revenue is $16 million. Prior to the budget retreat, she will go back to the supervisors to see what can be cut back. She will prepare a budget report for the Council by the March 22nd Council meeting.
Meeting adjourned at 9:05 a.m.
ATTEST: Joe L. Piccolo, Mayor
Joanne Lessar, City Recorder