Fort Walton Beach Council minutes — 05-20-08 special minutes — reading text

reduction. We believe that service levels in 2006 were no different than today and this was just two years ago! 2. Cost per associate has risen from about $ 42K 48K to $ since 2006. Reduce this amount by 5%. Areas to consider are changes to the benefit structure, increases in span of control for supervisors and combining management positions. This would save about $875K. 3. Continue the work to consolidate some services such as Fire, EMS and possibly vehicle maintenance. 4. Change from a defined benefit to a defined contribution retirement plan. 5. Require ALL Enterprise funds to have a balanced budget. 6. Take another hard look at the Management Advisory Group study and implement appropriate recommendations. Overall the recommendations made by the City Manager look productive, meaningful and are moving in the right direction. Now you are faced with the tough decisions and I know you are up to the task. Thanks for this opportunity to speak to you." Kabe Woods Jim Tucker, owner of The Boat Marina & Boat Yard at 36 Miracle Strip Parkway SW, stated it is very difficult to make a living in this town at this time; his business is off about 30- 50% than in 01/ 02. He commented Council is in a position now to do what needs to be done by cutting back. Mr. Minich moved to budget a 2% COLA for all employees (fire union excluded) effective October 1, 2008 pending funding availability. Mr. Reeves seconded motion. Discussion ensued with varying views expressed on providing a COLA which included the need to look at employee cuts but those left should have a COLA; when business is soft you do not get an increase; a COLA destroys incentive to work hard; that the step/ merit increase is the incentive; that the policy decision is to give guidance for budget preparation; that merit increases should be performance based; a merit increase should be for over and above and not satisfactory work to recognize employees doing outstanding work. There was consensus on the need for a workshop to discuss the step/ merit performance compensation structure. The Mayor called for the vote on the motion to budget a 20,{,COLA for all employees ( fire union excluded) effective October 1, 2008 pending funding availability and it carried by a vote of 4 to 2 with Holmes, Reeves, Hartwell, and Minich in favor and Garvie and Pullen opposed (Miller absent). 142 Special Council 5- 20- 08 BUDGET POLICY ISSUES cont. Strateaic Plan Goal: ComDensation Alternative Policy Decision: Should one week of vacation be offered to full-time employees in lieu of a percentage step/ merit anniversary adjustment? The presentation included information that employees are eligible for a step/ merit performance increase on theiranniversary date. General employees receive 3%, police officers 3. 5%, and firefighters 7. 0% contingent upon a satisfactory performance evaluation. Department directors, supervisors, and ~ professional staff are eligible for up to 3. 5% depending on their evaluation score; offering vacation hours r, I::~~~:~ I: : e~;~~~~~~~~~:;~ ~;~~~ f~~~~~:: ~~:: ~~~~~~~ 1:~~~ ~~~ 7:U~I~~~~. 6~~~ 08. There would be no payout of these hours in the event of separation from employment and any unused hours would be forfeited 9- 30- 09. Use of these hours must not result in overtime in the department. It was noted the fire union would be excluded because of contractual obligations. Staff recommendation is to endorse providing 40 hours of vacation in lieu of a percentage step/ merit adjustment ( fire union excluded) for FY 2008- 09. Mr. Minich moved to suspend all merit/step increases except contractual employees. Mr. Reeves seconded motion. Discussion ensued with an exchange of views with those in favor and those against providing 40 hours of vacation in lieu of a step/ merit adjustment. The Mayor called for the vote on the motion to suspend all merit/step increases except contractual employees and it carried by a vote of 4 to 3 with Reeves, Hartwell, Minich, and the Mayor in favor and Holmes, Garvie, and Pullen opposed ( Miller absent). Strateaic Plan Goal: Healthcare Benefits Policy Decision: Should the City contribution rates be modified for medical insurance? The presentation included information that the City pays 75% of employee and 75% of dependent medical coverage; of the City' s 230 medical insurance participants, 42% elect employee coverage and 58% elect dependent coverage; the current City portion is $ 3, 334 annually for employee coverage and $ 5, 779 annually for dependent coverage; and a recent survey of local jurisdictions revealed that almost all of the respondents ( 78%) pay 100% of the employee portion of the medical insurance premium. The remaining 12% of the respondents either pay 90% or 93% of the employee portion. The respondents to this survey, on average, pay 52% of the premium for dependent costs. Staff recommendation is to modify City contribution to 50% dependent over 3 years and modify City contribution for new hires 10- 1- 08 to 75%/ 50%. Discussion ensued on the compensation rates with clarification given that there are no freezes on vacant positions, that there are positions that will not be filled, and there is about one turn over every week of existing positions. Mr. Hartwell moved to amend the City' s Personnel Rules and Regulations to reflect that the City will contribute 750lc. of the premium for employee medical insurance coverage and 50% of the premium for the dependent portion of family medical insurance for all new hires effective October 1, 2008. Mr. Holmes seconded motion. U During brief discussion there was reluctance to change health benefits for existing employees. The Mayor called for the vote on the motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent). Special Council 5- 20- 08 143 BUDGET POLICY ISSUES cont. Strateaic Plan Goal: Defined Contribution Plan Policy Decision: Should the City offer a defined contribution plan to new General Employees in lieu of a defined benefit plan? The presentation included information that the Defined Benefit Plan pension benefit is calculated based on years of service, themultiplier, and final average compensation; the Defined Contribution Plan pension benefit is a result of investment performance rather than a calculated dollar amount; the General employees contribute 5% of wages, the City is budgeted to contribute 140A>> of general employees wages in FY 2007- 08; the City expense to the existing plan could be reduced by increasing employee contributions or decreasing the benefit multiplier; and the Police and Fire Pension Plans receive State contributions and cannot have different benefits for new hires. Staff recommendation is to authorize staff to explore the possibility of a General Employees Defined Contribution Plan. During some discussion it was noted there would be the need for an actuary to do a study to help with calculations and will take several months to complete so it may be a mid- year adjustment for the 2008- 09 budget year. Staff will provide an estimate on the cost of a study for Council approval. Kabe Woods, 240 Brooks Street, voiced support of a Defined Contribution Plan and mentioned one of the benefits to the employees is the ability to move their retirement plan as they move through jobs. Mr. Garvie moved to authorize staff to explore the possibility of a General Employees Defined Contribution Plan and how much it would cost to move forward. Mr. Minich seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent). RECESS The meeting,-cecessed at 7: 27 p. m. RECONVENE The meeting' reconvened at 7: 40 p. m. BUDGET POLICY ISSUES cont. Other Issue: SeDaration Incentives Policy Decision: Should the City offer incentives to encourage employees to voluntarily separate? The presentation included information that in light of property tax reform and declining revenues, it is necessary to reduce personnel costs which account for 53% of total expenses and 74% of General Fund expenses; payroll savings would be derived from a reduction of the salary and associated payroll taxes for a new hire versus the existing employee, reclassification of the position once vacated, or elimination of the position altogether; the early retirement incentive would vary from $ 15K - $ 30K depending on years of service; and the voluntary separation incentive would be 1 week pay for the first year of service and 2 weeks pay for each year thereafter, up to 16 weeks max. Staff recommendation is to authorize an Early Retirement Incentive Program, and authorize a Voluntary Separation Incentive Program. The City Manager mentioned that the City would have complete discretion on who is allowed to go and when they leave and added that they have not targeted any specific employee. She said if this is approved tonight staff will begin the process, and will not bring it back to Council. Mr. Minich moved to authorize an Early Retirement Incentive Program and to authorize a Voluntary Separation Incentive Program. Mr. Garvie seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent). 144 Special Council 5- 20- 08 BUDGET POLICY ISSUES cont. Other Issue: Utility Tax CaD Policy Decision: Should the monthly caps and exemptions for the utility tax be removed? The presentation included information that per Chapter 4. 05 of the City' s Code of Ordinances, a utility tax is levied at a rate of 10% against electric, gas, and water purchases; the tax is limited to currently 20/ month for residential consumers and $ 50/ month for non- residential consumers; the tax is not levied on the first 50 kilowatt hours per month of residential use; the Attorney General has issued several ~ opinions stating that caps and limitations on the dollar amount taxed under Florida Statute 166.231 " Public ! er; and staff estimates additional revenue of $379K ifthe public service tax ( ea~:~:~~~ utility t: Staff recommendation is to remove the residential and commercial utility tax caps and residential usage exemption. The City