Fort Walton Beach Council agenda — 06-12-2007 regular agenda — reading text

affect the expenses expenses Citywide for all funds and' expenses of the general citywide such as the cost- of-living wage adjustment, the performance evaluation, health insurance, pension contributions, operations & maintenance, capital outlay and capital improvements; the fund balance in the general fund with 36. 5% in reserves; the benchmarks to ascertain how the service levels of the assessed value and millage rate. compare with similar municipalities; and a local comparison 278 5- 15- 07 Special Council BUDGET POLICY ISSUES cont The City Manager recalled specific issues were discussed at the Strategic Planning meeting held in January. She pointed out the strategic plan goals that Council wanted to focus on or explore were: the compensation program & service levels, general fund reserve level, the cost-of-living adjustment, structure, the h~ althcare benefits, the general employee' s pension, and vacation/ sick leave. She pointed out other issues that have come up that merit additional consideration includes: the communications services tax, fire assessment fee, golf fund rates, and outside agency funding. Proaram and Service Levels The City Manager went over the Program & Service levels and the funding allocations of 39% for Public Safety, 9% for Parks & Recreation, 5% for Culture, 17% for Public Works, 4% for Community Development, 17% for General Government, 5% for Capital, and 4% for Debt Service. She wished to know if there are any programs or services that should not be considered for budget cuts, and requested o Council provide general guidance on whether the current funding allocations reflect City Council's current priorities for the General Fund programs and services. It was remarked that the data reflects one point in time and a request was made for information reflecting the trend, data that It\tOuld show whether some of the areas have grown or have stayed the same over the years. The City Manager said staff can provide trend data and noted they are looking at a one point in time at this time, and mentioned the overall full time positions have remained relatively flat with no large growth in positions with the exception of adding six new fire fighters for the Advanced Life Support the budget, she program. She said she is not asking Council at this point to say where they want to cut is just asking for general guidance, and staff will return to Council and propose certain program eliminations and downsizing. She said she would like Council to let her know if there is anything that is high priority, if something should not be eliminated, or should be eliminated; just general guidance along those lines. In response to uncertainty on what guidance should be given, the City Manager recalled last year during the budget workshop Council tasked her with developing different revenue scenarios for the General Fund for ad valorem taxes, and in so doing she produced different revenue scenarios that identified what she chose to cut out of the budget in order to achieve their revenue goal. She said perhaps the approach Council could take, rather than focusing on program delivery at this time, would be to give her direction on what they would like to see at the budget meetings It was commented that the CRA budget has increased and should pay their fair share toward the General Fund, especially for public safety. The City Manager stated they try to charge as many things that are directly attributable to the CRA to the General Fund, and there are certain limitations on what can be paid for public safety personnel out of the CRA and there are certain things that cannot be charged out of the CRA that that is dictated by the State Statute. It was commented there are a lot of services provided by Parks & Recreation and it was suggested that perhaps Council should look at increasing the fees so they are self-sustaining, and have a study done on consolidation of the fire department. The City Manager mentioned that staff is looking at ways to enhance the revenues and Municipal Service Delivery will be brought before Council at the next meeting for consideration of a cost of service study. Mike Holmes arrived at 6: 45 p. m. General Fund Reserve Level The City Manager next wished to know if there was any direction from Council on the General Fund Reserve balance for staff to return with an official policy direction. It was expressed that the current reserve level is necessary in the event of a catastrophic event.  Special Council 219 5- 15- 07 RECESS The meeting recessed at 6: 55 p. m. RECONVENE The meeting reconvened at 7: 00 p. m. BUDGET POLICY ISSUES cont The City Manager mentioned that staff recommendation is to maintain the unreserved- undesignated General Fund reserves at 30% of annual operating expenditures. Cost-of-livinQ Adiustment The City Manager asked Council for direction on whether there should be an annual cost-of- living adjustment for next year. She expressed her belief with what is expected to hear from the State on property tax reform, the City will have to reduce the size of government in some form or fashion, whether it is programs, services, or both, but also personnel. She urged Council to take into consideration the employees that remain still need to be compensated, rewarded for performance, and a certain level of benefits be provided to maintain the good workers the City currently has. She went over the previous years cost-of-living adjustments for the police, fire, and general employees. Staff recommendation is a 1.4% cost-of-living adjustment for all employees effective October 1, 2007. During some discussion on a cost of living adjustment, the need to look at all compensation factors, and the need to remain competitive, the City Manager explained the where the grade/ step plan generC3},' employees receive a 3% performance increase and police/ fire employees receive a 3. 5% performance increase on their anniversary date. The City Manager expressed her understanding on the need to loo'~; carefully at the cost of living and to look carefully at the total compensation for the employees and make sure it is competitive with the cost of living. Compensation Structure! The City Manager briefly went over the background that led up to the compensation structure with the grade/ step system currently in place. She went over the staff recommendation to the compensation system effective October 1, 2007, as follows: that the police and fire personnel continue to use the current grade/ step system with 3. 5% step increases; that the rank and file employees continue to use the current grade/ step system with 3% step increases; and that the Department Directors, Division Directors, Managers, Supervisors, and professional staff convert to a performance based merit system for annual increases, with a range of 1 % to 3. 5%. During some discussion on the performance system, the City Manager explained it can be implemented in- house but the details have not been worked out, and further explained there is a special merit program where an employee can earn up to an additional 3% for exceptional performance. Healthcare Benefits The City Manager went over the City' s contribution rates for single and family coverage. She requested guidance from Council on whether the City contribution rates should be modified for medical insurance. J During some discussion concern was expressed on the impact to the lower tiered employees, the impact on recruitment and retention, and the desire to protect the fringe benefits. Pension Plan The City Manager went over the background and the current employee/ employer contributions. She mentioned staff is making procedural changes affecting the timing offunding contributions to improve investment returns, getting a second opinion from a different actuary to see if there is a way to reduce costs, and the General Employees Pension Advisory Board is in the process of recommending the City Council replace one of its investment managers in order to maximize investment returns. She said staff recommendation is not to make any changes to the benefit and continue to fund the plan for the employees. 280 5- 15- 07 Special Council Vacation/ Sick Leave The City Manager went over the current policies regarding accrual and payout of vacation leave and sick leave, with vacation leave accrued to a maximum of 320 hours and is paid 100% upon separation of employment, and sick leave is accrued to a maximum of 800 hours with payout based on years of service of 5% per year up to 100% for employees hired prior to 1997, and 2. 5% per year of service up to a maximum of 50% for employees hired after 1997; the conversion of excess sick leave hours to vacation leave at a ratio of 2: 1; and payout for vacation accruals after six months of service. Staff ~ recommendation is to eliminate conversion of excess sick leave to vacation leave, to increase months of service for payout of unused vacation accrual from 6 months to 12 months, to require employees who do not provide a 2- week notice (4- week notice for Department Directors) upon separation of employment to use available vacation leave to fund the notice period; and permit new hires after October 1, 2007 to accrue a maximum of 600 hours of sick leave. Communication Services Tax The City Manager mentioned the City will receive about $800- 900, 000 less in communication services taxes as they move forward into next year and expenditures will be reduced to compensate. She said the