City Council

CITY OF POCATELLO, IDAHO SPECIAL CITY COUNCIL MEETING BUDGET RESTRUCTURING SEPTEMBER 3, 2015 AGENDA ITEM NO. 1: The City Council Budget Restructuring meeting was called to ROLL CALL order at 9:03 a.m. by Mayor Brian Blad. Council members present were Steve Brown, Craig Cooper, Jim Johnston, Eva Johnson Nye and Michael L. Orr. Council member Gary Moore was excused. Rich Diehl, City Attorney, discussed the Police Union request to receive a wage increase to bring them more in-line with the Fire Union. Mr. Diehl explained the increase would take place over a couple of years. He noted an adjustment will need to be made in the City’s budget to accommodate the changes being proposed. Mr. Diehl clarified that he will follow-up on the process. REVIEW OF Joyce Stroschein, Chief Financial Officer/Treasurer, provided information FUNDING regarding Funding Reserve Policies for cities RESERVE POLICIES Ms. Stroschein reviewed the Government Finance Officers Association (GFOA) description of Reserves. “Reserves are the cornerstone of financial flexibility. They provide a government with options to respond to unexpected issues and afford a buffer against shocks and other forms of risk.” Ms. Stroschein announced the topics she will review are: 1) The importance of reserve policies; 2) Determining level of reserves; 3) Important elements of a reserve policy; 4) Review of the City’s reserves broken down by Tax Funds, Special Revenue Funds, Internal Service Funds, Capital Construction and Capital Reserve Funds; and 5) Future Reserve analysis and development of a Reserve Policy. Ms. Stroschein mentioned when normal dips and dives come, the City budget can handle these expenses. However, when big dips come such as the Charlotte fire in 2012, it would have been devastating to the budget without reserves. It was noted the City receives a better rate when it goes out to bond, if proper reserves are in place. She mentioned GFOA recommends cities have 16% of their budget or 3 months of reserves. The Council has chosen to use reserves to balance the Fiscal Year 2016 budget. It was noted that the Mayor and Council are responsible to monitor and approve spending the City’s reserves. General discussion was held and Ms. Stroschein gave an overview of the City’s tax fund reserves. She noted the City’s reserves were used to help balance the Fiscal Year 2016 budget. She feels this will allow time for the Council to make necessary changes before considering the Fiscal Year 2017 budget.  2 CITY COUNCIL SPECIAL MEETING- BUDGET RESTRUCTURING SEPTEMBER 3, 2015 It was noted that Finance staff will measure the reserves for each fiscal year. It was mentioned there is a need for Council to formalize a Reserve Policy. If adopted, a Reserve Policy will not prohibit Council from making an exception once the document in place. TAXES VS. FEES Joyce Stroschein, Chief Financial Officer/Treasurer, provided information –A REVIEW OF regarding how City Services are funded. HOW CITY SERVICES ARE FUNDED Ms. Stroschein gave an overview of how City services are funded by taxes and fees. She explained the goal of fees is to provide the maximum discretion in the use of taxes to meet the cost of services that provide a larger public benefit and to recover the full or partial costs of services that largely or solely benefit individuals. Ms. Stroschein announced the topics she will review are: 1) Cost Recovery; 2) Current Policy; 3) Tax Supported Funds; 4) General Fund Review for Fiscal Year 2016; 5) Recreation Fund Review; 6) Special Revenue Funds; 7) Internal Service Funds; 8) Capital Construction and Capital Reserves; and 9) Ranking of Property Tax Dollars by Service. She explained the Cost Recovery Revenue Policy needs to be consistent and the increase of a cost should be supported by fees. Ms. Stroschein feels this should be part of the decision to increase fees so tax payers are not burdened. She noted the City does not have a current policy regarding cost recovery and encouraged setting a policy to make sure fees are appropriate with the expense. Ms. Stroschein feels there needs to be more discussion regarding the actual costs to provide services. General discussion regarding administrative support processes and how support is paid followed. The structure needs to be more defined. Operation costs such as Finance and Legal administrative support and other expenses such as the general supply storage area and postage machine need to be taken into consideration. Mayor Blad called a recess at 10:25 a.m. Mayor Blad reconvened the meeting at 10:36 a.m. CITY EMPLOYEE Kim Bristow, Human Resources Consultant, and Kim Smith, Human – PROPOSED Resources Director; provided information on the previously proposed COMPENSATION Compensation System for City Employees. SYSTEM Ms. Smith explained the concept of a total rewards program. She explained compensation and benefits work together to make up the program. Ms. Smith noted the  3 CITY COUNCIL SPECIAL MEETING- BUDGET RESTRUCTURING SEPTEMBER 3, 2015 compensation program being proposed is to get away from an antiquated step and grade system and move forward with an improved program that considers employee performance. General discussion regarding pay for performance followed. It was mentioned that government agencies do not usually move toward pay for performance programs and the City needs a performance evaluation system that supports pay for performance. Mr. Orr feels people should take pride in their jobs. He does not feel pay for performance is the way to go. In response to questions from Council, Ms. Smith explained employee pay for longevity is the current pay method and does not feel this is the best program available. She prefers a pay for performance program. The City does not have a system in place at this time to adequately perform job evaluations. It is all narrative and some of the evaluations are duplicates from the previous year. When Human Resource staff surveyed Department Heads in a compensation meeting, they tended to lean more toward pay for performance. It was mentioned that effective performance reviews help keep people in check of where they are in carrying out their job. There is more communication between supervisor and managers throughout the year. The current process is more subjective than any new program would be. Ms. Bristow reviewed the pay for performance concept. She noted employees that are putting forth more effort will be rewarded. Ms. Smith explained customer service, professionalism, etc. would be looked at and training will need to be provided. She feels the proposed pay for performance plan will reward achievers and encourage others to increase their performance. General discussion of how the evaluation process will take place continued. It was suggested that supervisors receive training and have a test period utilizing the proposed plan. It was mentioned that problem employees may cause good employees to leave employment because they are carrying the load. It might be good to have an opportunity to offer a bonus for those that have done exceptionally well. Funding and costs for the proposed plan would need to be determined. Council asked Human Resources staff to continue with researching the Compensation Program as proposed and bring their findings to Council in one of the December Budget Restructuring meetings. They were asked to address the following topics: 1) performance evaluation guidelines currently used; 2) proposed pay scale structure; and 3) costs to implement the proposed compensation program.  4 CITY COUNCIL SPECIAL MEETING- BUDGET RESTRUCTURING SEPTEMBER 3, 2015 CITY EMPLOYEE Nicole Harms, Human Resources Consultant, and Kim Smith, Human -HEALTH Resources Director; provided information on Health Benefits for City BENEFITS Employees. SYSTEM Ms. Smith gave an overview of the large 20.7% increase in Health benefit premiums and the history of changes to the health care costs for the City. She explained the health/wellness education that was introduced and the process of increasing the deductible while establishing the VEBA program, and Wellness program for employees. This is part of the strategic plan established in 2008 for the City to move toward a more consumer based health plan. The City cannot control the medical claims received or the rising costs of health care. High cost of claims has driven up the costs for health plans. Earlier this year, Human Resource staff presented an alternate health plan that would have increased the out-of-pocket expenses for some employees and decreased it for others and at a lower costs to the City. Health benefits costs for Fiscal Year 2016 are: (amounts do not include employee’s portion) Medical through Blue Cross - City’s portion $6,119,021.40; Dental through Delta Dental $325,335.36; VSP (vision) no cost to City; EAP $14,300.00; Life insurance through Life Map $14,236.00; Health Advocates $5,400.00; VEBA $1,044,000.00; Employee Wellness Program $69,000.00; and Mercer Consulting contract $20,000.00. Ms. Smith gave a brief overview of the private exchange that was previously presented to Council. She noted the proposed plan was a consumer based, defined benefit plan for employees. The City’s current plan is a benefit rich plan. Ms. Smith mentioned staff will continue to research the private exchange plan. Mr. Orr did not feel the cost difference between the private exchange and the current health benefit justified changing plans. He felt proposals should be obtained from other insurance carriers to compare costs. It was clarified other insurance carriers may be available to provide benefits to the City. However, Blue Cross is one of three carriers that local doctors in southeast Idaho have agreed to participate as in-network providers. Staff shared their concerns with other carriers that are not able to include local doctors for coverage. Employees will be forced to travel to other areas within the state or out of state for medical needs. There is a concern employees will be required to pay out-of-network costs to see a provider that is located in or closer to Pocatello. Council discussion followed regarding the issues of sustainability related to increased costs for health benefits. It was noted that options may be limited. Options of benefits and costs for employees as well as the City were reviewed.  5 CITY COUNCIL SPECIAL MEETING- BUDGET RESTRUCTURING SEPTEMBER 3, 2015 Human Resource staff gave an overview of the annual process of obtaining medical benefits for the City and concern with level of service provided by current carrier. The process is very complicated and as mentioned earlier, options are limited. Staff will present clarification of the private exchange concept and health benefit plans to Council in one of the Budget Restructuring meetings scheduled for November. Mayor Blad called for a recess at 12:25 p.m. Mayor Blad reconvened the meeting at 1:15 p.m. CITY DEPARTMENT PRESENTATIONS- Mayor Blad announced that Department presentations would be given at this time. Presentations will include the following: 1. Employees; 2. Total Budget; 3. Activity or service the department provides; 4. Percentage of city services supported by taxes and percentage that are supported by user fees; 5. Ideas to increase city revenues; and 6. Future needs. -INFORMATION Chris Sorensen, Chief Information Officer, provided information regarding TECHNOLOGY the Information Technology (IT) Department. DEPARTMENT Mr. Sorensen gave an overview of IT Department staff and noted 45.8% of his budget is from tax funds and 54.2% is from fees. He reviewed his department’s activities, goals and projects; as well as, future requirements and revenue generation potential. Mr. Sorenson noted the department’s goals are to improve cybersecurity; advance social media across the departments; improve network infrastructure/fiber access; and modernize key systems. His suggestion for revenue generation was the City offer fiber/broadband as a utility. The initial costs for infrastructure would need to be put in place. -MARSHALL Eric Suess, Library Director, and Trina Bonman, Associate Director, PUBLIC LIBRARY provided information regarding the Marshall Public Library. Mr. Suess gave an overview of Marshall Library staff and noted 97.9% of his budget is from tax funds and 2.1% is from fines/misc. He reviewed his department’s activities, goals and projects; as well as, future requirements and revenue generation potential. Mr. Suess’ suggestion for revenue generation was charging a fee for meeting room use; cost savings through reorganization; and increasing the cap on past due fines. There being no further business, Mayor Blad adjourned the meeting at 3:12 p.m. APPROVED BY:  6 CITY COUNCIL SPECIAL MEETING- BUDGET RESTRUCTURING SEPTEMBER 3, 2015 BRIAN C. BLAD, MAYOR ATTEST AND PREPARED BY: RUTH E. WHITWORTH, CITY CLERK