Fiscal Year 2019 Budget

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Budget Impact Issues Wages and benefits

The city’s only collective bargaining agreement went into effect July 1, 2017. The contract negotiated a cost of living adjustment for the fiscal years beginning July 1, 2017, 2018 and 2019. The amount of the cost of living adjustment was $1,350 each year. The Council also approved a salary matrix for non- collective bargaining employees in the amount of $1,350 for non-management positions and a 2.5% adjustment for management and supervisory positions. The proposed budget has been built with these wage adjustments included. In addition to employee step increases, the impact of the increase in wages to the overall budget is $126,243. Initially, the earliest drafts of the budget included a 10 percent increase in health insurance rates. The actual renewal came in at 3.45 percent. To achieve this renewal rate, the insurance trust that the city belongs to had to initiate some plan design changes. The city belongs to the Iowa Governmental Health Care Plan (IGHCP) which is a trust consisting of over 30 cities, counties and school districts across the state of Iowa. The city has been a member since Fiscal Year 2008, and as a result of our participation in the trust has seen an average increase in cost of 4.64 percent per year. The changes adopted by the IGHCP Board of Directors, includes a change in the provider network offered by Wellmark, who remains the overall service provider. The change of network has little service disruption to the employees on the plan. The main cause of disruption that will be experienced by employees will be the chiropractors that participate in the new network, however Wellmark is working to get more chiropractors to participate. No other benefit changes are anticipated or proposed for the upcoming year. As mentioned previously, no new full-time positions are being added under this budget. Internal Charges & Services As part of the overall goal to identify the costs associated with providing services to the residents, the city will begin to departmentalize certain additional internal service charges. Previously, all group insurance costs and workers compensation premiums were lumped together and paid out as a general governmental expense. Beginning with the Fiscal Year 2019 budget, the city will allocate group health insurance and workers compensation premiums on a departmental basis, similar to what had previously been done with FICA & IPERS contributions. This new practice will allow the city to track total costs of providing these services and not have to estimate the amount of premium that is needed for each function. Ideally, the city would also allocate property insurance expenses utilizing this same methodology, however the premium make up provided by our current insurance provider does not allow for a departmental breakdown of their expenses. The only way to break down insurance costs is based on insurance category (i.e., liability, property, vehicles, etc.). The Finance Department continues to monitor and make inquiries regarding the use of the Central Garage stock parts account and the increasing deficit in the fund. While the overall fund should carry a deficit balance based on the fact that stock parts have been purchased but not utilized, the increasing amount of unused stock being purchased is of concern.