Finance Committee (Meets 4th Tuesday of each month at 4:30 p.m.)

FINANCE COMMITTEE Meeting Minutes August 8, 2024, Regular Meeting The meeting was called to order by Chair Sweeney at 4:30pm on August 8, 2024, in Government Center Room 204. 1 ROLLCALL PRESENT: Jack Sweeney, Tylor Elm, and Mike Herrick VIRTUAL: Nick Rhinehart (Finance Director), Vince Dodge (Nemadji Golf Course), SheAnne Hediger (Baker Tilly), Jenny Van Sickle (council alt) CITY STAFF PRESENT: Renee Hoff, and Karie Markon OTHERS PRESENT: Shelley Nelson, Katelyn Baumann, Suzanne Prochazka, Bob St. Arnold, Jen Champa, Garner Moffat, and John Ramos 2 APPROVAL OF MINUTES 2.1 Finance Committee (Meeting held July 11, 2024) Motion was made by Mike Herrick, seconded by Tyler Elm, and carried to approve the July11, 2024, Finance Committee meeting minutes. Chair Counselor Sweeney proposed to move 5.7, 5.1 and 4.1 to the beginning of the meeting. Motion was made by Tyler Elm, seconded by Mike Herrick, and carried to approve moving 5.7, 5.1, and 4.1 to the beginning of the meeting. 3 OLD BUSINESS 3.1 Health Insurance Plan Review Bob St. Arnold and Jen Champa from Marsh and McLennon presented counsel with the process and timeline they are currently following and what they were requesting from Insurance providers in the bids packages for the renewal of the City’s health insurance policy. A question and answer period ensued. 3.2 Accounting Policies and Procedures Manual Review. Chair Counselor Sweeney proposed that we hold in Committee and explore a Special meeting to review Accounting Policies and Procedures Manual. 4 NEW BUSINESS 4.1 2023 City of Superior Audited Financial Statements presented by Baker Tilly SheAnne Hediger from Baker Tilly presented the Audited financial statements for the City of Superior. A question and answer period ensued. Motion was made by Tyler Elm, seconded by Mike Herrick, to receive and file the 2023 City of Superior Audited Financial Statements.  4.2 Investment Summary 2nd Quarter 2024 Finance Director Nick Rhinehart spoke on how the city investments are holding steady and the investment strategies with these funds. Motion was made by Tyler Elm, seconded by Mike Herrick, to receive and file the Investment Summary 2nd Quarter 2024. 4.3 Moccasin Mike Landfill Closure and Long-Term Care Contribution Finance Director Nick Rhinehart spoke on what the city’s expected responsibilities are to close and cap off the landfill and the DNR requirements for the Long-Term Care maintenance of the land. A question-and-answer period ensued. Motion was made by Mike Herrick, seconded by Tyler Elm, and carried to hold in Committee the Moccasin Mike Landfill Closure and Long-Term Care Contribution. 5 RECURRING BUSINESS 5.1 Golf Course Report and Financials June 2024 Vince Dodge spoke on behalf of the Golf Course Financials, noting the month’s budgeted projections were lower due to the rainy weather in the beginning of the month, but still ahead for the year-to-date projections. A question-and-answer period ensued. 5.2 June 2024 Check Registers – 2024 Expenditure Motion was made by Tyler Elm, seconded by Mike Herrick, and carried to receive and file June Check Registers – 2024 Expenditures 5.3 General Fund Financial Statement – 2024 Expenditure vs Budget Analysis as of July 3, 2024 Finance Director Nick Rhinehart spoke on behalf of the General fund, citing everything is tracking well to date. Motion was made by Tyler Elm, seconded by Mike Herrick, and carried to receive and file the General Fund Financial Statement – 2024 Expenditure vs Budget Analysis as of July 3, 2024. 5.4 American Rescue Plan Act (ARPA) Fund Budget Review Finance Director Nick Rhinehart spoke on behalf of the ARPA fund’s expenditures and the awarded project’s budget tracking. A question and answer period ensued. Motion was made by Tylor Elm, seconded by Mike Herrick, and carried to receive and file the American Rescue Plan Act (ARPA) Fund Budget Review. 5.5 Insurance Update  Finance Director Nick Rhinehart informed council there were no new updates to report. 5.6 Other Financial Matters Finance Director Nick Rhinehart informed the council of the progress with the new ERP project, the updates with the awarded company and questionnaire that was sent out to city employees that are using the current system. 5.7 Superior Public Museums Update Katelyn Baumann from the Superior Public Museums council updated the committee that they needed more clarity on the timeline that was given to them by Mayor Paine at the July 11, 2024 meeting. Stated that the Superior Public Museums council were unable to vote at past meeting due to the confusion of the timeline. Garner Moffat from the Douglas County Historical Society stated that they had a meeting that evening and were still working to move forward on combining the two entities. 6. ADJOURNMENT The meeting was adjourned at 7:01 p.m. Minutes respectfully submitted by Karie Markon City of Superior RFP Process Review Bob St. Arnold, President-Northern MN and WI Sales Jen Champa, Sr. Client Executive August 8, 2024 A business of Marsh McLennan Agenda City of Superior RFP Process Review RFP Process and Timeline 2024 Q2 Claims Dashboard Review Health Management Performance Pre-Renewal Analysis Summary Marsh & McLennan Agency LLC 2 City of Superior 2025 RFP Process and Timeline RFP Timeline Dates Requests Forwarded to Carriers 6/27/2024 • Medica, WPS, Security Health, Prairie States, BPA Carrier RFP Submission Deadline 7/22/2024 – 8/9/2024 Expected Renewal from HealthPartners 8/12/2024** Review & Comparison Completed 8/14/2024** Review RFP/Renewal with City 8/15/2024-8/22/2024 Final Plan Selection 10/1/2024-10/15/2024 Notification of Plan Selection 10/18/2024 Implementation Paperwork 11/1/2024 Open Enrollment Completion Date 11/22/2024 Enrollment Information Submitted 12/1/2024 Marsh & McLennan Agency LLC 3  Item 3.2 Handout Presentation 2024 Q2 Claims Dashboard Prepared for City of Superior Claims Paid January 2024 to June 2024 2024 Calendar Year Claims Analysis Year-to-Date Executive Summary YTD Current Year vs. Prior Year Comparison Monthly Contracts by Coverage Tier 2023 YTD 2024 YTD 300 Jan - Jun Jan - Jun 250 Total Claims $2,280,344 $2,370,315 200 Stop Loss Reimbursements $0 ($126,808) 150 Net Claims $2,280,344 $2,243,507 100 Average Contracts 263 261 50 Average Members 618 596 0 Net Claims Expense PEPM $1,446.00 $1,430.81 Members Over 50% of Spec 4 5 Members Over Spec 0 2 EE Only EE + 1 EE + Family PEPM Plan Cost Breakdown vs. Funding Monthly Net Claims Expense $2,243.87 $700K $600K $282.73 $500K $1,711.89 $400K $281.09 $300K $376.03 $200K $1,961.15 $100K $0K $1,054.78 Medical Rx Fixed Costs ER Funding EE Funding Medical Rx MMA Expected Paid MarshContract TypeAgency & McLennan with $150,000 LLC Specific Deductible and 25% Aggregate Attachment  2024 Calendar Year Claims Analysis Medical Plan Cost Summary 2024 YTD 2024 Projected Jan - Jun Jan - Dec Employer Funding Employee Funding Total Funding: Total Funding PEPM $3,075,077 $443,317 $3,518,394 $2,243.87 $6,148,756 $886,433 $7,035,188 $2,240.51 76.3% Paid Medical and Rx Claims $2,370,315 $5,779,503 Specific Stop Loss Reimbursement ($150K Spec) ($126,808) ($126,808) Year-to-Date Total Net Claims Expense $2,243,507 $5,652,695 Net Claims Expense PEPM $1,430.81 $1,800.22 Cost to Funding Ratio Administrative Fees $10,546 $21,087 (Net Claims + Fixed Cost)/Total Funding Broker Fees $36,240 $72,480 Stop Loss Premiums $393,454 $786,730 All Other Fees/Expenses $502 $1,005 Total Fixed Costs $440,742 $881,302 Total Fixed Costs PEPM $281.09 $280.67 Carrier Expected Total Cost $3,153,931 $6,306,471 MMA Expected Total Cost $3,629,395 $7,479,144 Actual Total Cost $2,684,248 $6,533,997 Surplus/(Deficit) $834,146 $501,191 Paid Contract Type with $150,000 Specific Deductible and 25% Aggregate Attachment Marsh & McLennan Agency LLC 2024 Calendar Year Claims Analysis YTD Total Cost - Projections Versus Actual Year-to-Date Claims vs. Funding Evaluation $3,629,395 76.3% Total Cost to Funding Ratio $2,684,248 $3,153,931 The total actual plan cost, including all variable and fixed expenses as a percent of the budgeted funding rates. If the value is under Actual MMA Expected Cost Carrier Expected Cost 100%, then the current funding is greater than costs. 66.2% Year to Date - Total Cost Breakdown Adminstrative Fees, 0.4% Broker Fees, 1.4% Eligible Claims to Aggregate Attachment Ratio Claims Cost, Fixed Costs Stop Loss 83.6% 16.4% Premiums, Total medical and prescription drug claims as a percent of the 14.7% carrier’s maximum claims expectation. If this ratio is below 100% then no reimbursement for the aggregate coverage is Other expected. Fees/Expenses, 0.0% Paid MarshClaims Data from & McLennan 1/1/2024 Agency LLC through 6/30/2024 $150,000 Specific Deductible  Year Over Year Analysis Historical Cost and Membership Summary 2021 YTD 2022 YTD 2023 YTD 2024 YTD Historical Claims - PEPM Jan - Jun Jan - Jun Jan - Jun Jan - Jun $3,000 Total Claims $2,522,080 $3,094,547 $2,280,344 $2,370,315 $2,500 Stop Loss ($107,597) ($77,223) $0 ($126,808) $2,000 2021 Reimbursements 2023 Net Claims $2,414,483 $3,017,324 $2,280,344 $2,243,507 $1,500 2024 $1,000 Average Contracts 269 270 263 261 $500 Average Members 649 653 618 596 2022 $0 Net Claims Expense $1,494.11 $1,861.40 $1,446.00 $1,430.81 Historical Enrollment PEPM Net Claims Trend 24.6% (22.3%) (1.1%) 280 275 270 2022 2021 265 (1.1%) Current Year-to-Date Net PEPM Claims Trend 260 255 250 2024 2023 245 Marsh & McLennan Agency LLC City of Superior 2025 Request for Proposal Process • CURRENT YTD CLAIMS COMPARISON: – Jan 2023-June 2023 YTD Claims: $2,280,344 – Jan 2024-June 2024 YTD Claims: $2,370,315 • FINANCIAL PERFORMANCE THROUGH Q2 2024: – 2024 Proposed Expected claims: $5,632,699 – 2024 MMA Expected claims: $5,652,695 • HEALTH MANAGEMENT PERFORMANCE 2024: – Employee wellness challenges: Hydration Challenge, DeClutter Challenge, Recipe Challenge, Movement Challenge – Employee wellness engagement: Financial Wellbeing Session, Health Coaching – Employee healthy eating/exercise: Salad bar, smoothie bar, healthy snack prep presentation, snack boxes – Work with intern to help support wellness initiatives Marsh & McLennan Agency LLC 9 2025 Pre-Renewal Analysis Prepared for City of Superior Executive Summary 2025 Renewal Analysis MMA Expected MMA Expected + 5% Margin Annual PEPM Annual PEPM Current Total Funding (Based on Employee Counts and Budgeted Premiums) $6,910,176 $2,181.24 $6,910,176 $2,181.24 Projected Annual Plan Costs $6,524,569 $2,059.52 $6,795,715 $2,145.11 Projected Dollar Impact -$385,608 -$121.72 -$114,461 -$36.13 Projected Percent Increase -5.6% -1.7% MMA Expected Claims Cost 0.0% Recommended Increase Using historical experience data, we project an expected claims cost for the upcoming plan year. For 2025, we are projecting $5,422,928 in claims which translates to a PEPM of $1,711.78. Typically, we recommend including an additional load for claims margin when setting rates to increase the likelihood of the budget being adequate despite various claims scenarios. With 5% claims margin included, the projected claims costs is $5,694,074 which translates to a PEPM of $1,797.37. Fixed Costs When stop-loss and administration services only (ASO) quotes are available, we utilize the proposed premium rates to derive a load for fixed costs. When quotes are unavailable, we utilize the current premium rates and include an assumed increase to each line item. For 2025, we are projecting $1,101,641 in fixed costs which translates to a PEPM of $347.74. Projected Annual Plan Costs To arrive at our recommended total funding for the upcoming plan year, we sum MMA’s expected claims costs and the assumed fixed costs. For 2025, we are projecting $6,524,569 in total plan costs which Marsh & McLennan Agency LLC translates to a PEPM of $2,059.52. Because this is less than the current funding level, we recommend leaving the current premium-equivalent rates as-is. This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affected if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change. d/b/a in California as Marsh & McLennan Insurance Agency LLC; CA Insurance Lic: 0H18131. MarshMMA.com A business of Marsh McLennan Copyright © 2024 Marsh & McLennan Agency LLC. All rights reserved.  Item 4.1 Handout Presentation City of Superior 2023 financial highlights Prepared for the August 8, 2024 Finance Committee Meeting Client service team Sheanne Hediger, CPA, Principal sheanne.hediger@bakertilly.com 612.876.4599 Kaite Sam, CPA, Manager Matt Weltzien, CPA, Senior Associate © 2023 Baker Tilly US, LLP  City of Superior General fund results 2022 2023 General fund - fund balance by category $10,442,634 Total $11,951,771 $9,808,073 Unassigned $10,111,149 $634,561 Nonspendable $1,840,622 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000$10,000,000$12,000,000$14,000,000 Summarized income statement Actual Final budget Variance Revenues and other financing sources $ 32,175,210 $ 33,605,168 $ (1,429,958) Expenditures and other financing uses 30,666,073 33,615,024 2,948,951 Net change in fund balance $ 1,509,137 $ (9,856) $ 1,518,993 Fund balance category definitions Nonspendable - amounts cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained in tact. Restricted - amounts that can be spent only for the specific purposes stipulated by an external source. Committed - amounts constrained for specific purposes that are internally imposed through formal action of the governing body. Assigned - spendable amounts that are intended to be used for specific purposes that are not considered restricted or committed. Unassigned - residual amounts that have not been classified within other categories above. © 2023 Baker Tilly US, LLP Source: current and prior year financial statement information and other benchmark information as noted. Page 1  City of Superior General fund - fund balance trends Fund balance policy: Target to maintain a minimum of 32% of the total annual City budget. General Fund Actual Policy minimum Refence - Median Unrestricted general fund - fund balance as a percentage of expenditures 55% 48.8% 50% 42.6% 45% 41.8% 41.3% 39.8% 41.0% 40% 43.1% 34.7% 34.4% 35% 30% 25% 20% 15% 10% 2019 2020 2021 2022 2023 Other reference values GFOA recommends a minimum of no less than 2 months (16.7%) of general fund expenditures. Median reference value generated from 2018 - 2022 Baker Tilly municipal client data for population range of 17,500 - 30,000. © 2023 Baker Tilly US, LLP Source: current and prior year financial statement information and other benchmark information as noted. Page 2  City of Superior General obligation debt Debt management policy: The City follows Wisconsin Statutes whereas the total general obligation indebtedness of the City may not exceed 5 percent of the equalized value of the taxable property within the City's jurisdiction. Actual percentage of debt limit at 12/31/23: 24% Total G.O. debt outstanding G.O. debt limit General obligation debt capacity $160,000,000 $134,654,210 $140,000,000 $117,014,775 $120,000,000 $102,693,475 $93,823,945 $100,000,000 $88,459,410 $80,000,000 $60,000,000 $40,000,000 $36,309,975 $20,000,000 $36,436,311 $31,470,479 $31,906,797 $34,805,032 $- 2019 2020 2021 2022 2023 Total debt outstanding by type at 12/31/2023 General obligation Revenue debt Premiums Total City $ 31,906,797 $ - $ 810,122 $ 32,716,919 Enterprise - 8,341,147 - 8,341,147 Total $ 31,906,797 $ 8,341,147 $ 810,122 $ 41,058,066 Comparative metrics available online through the Wisconsin Policy Forum. https://wispolicyforum.org/research/municipal-datatool-examining-and-comparing-wisconsin-cities-and- villages/ Select "Debt" -- options for custom comparisons or comparisons by county General obligation debt per capita as of 12/31/2022 (latest information available) ranks the City of Superior as 313 out of 602 cities and villages in Wisconsin. © 2023 Baker Tilly US, LLP Source: current and prior year financial statement information and other benchmark information as noted. Page 3  City of Superior Governmental funds - debt service City of Superior Reference - Median Debt service to non-capital expenditures 35.00% 30.00% 29.9% 25.00% 24.1% 23.5% 20.00% 19.2% 15.00% 12.5% 12.6% 12.4% 11.5% 10.00% 7.1% 5.00% 0.00% 2019 2020 2021 2022 2023 Current and prior year data 2023 2022 Principal retirement $ 2,721,336 $ 3,913,101 Interest and fiscal charges 907,841 1,032,062 Issuance costs - - Total $ 3,629,177 $ 4,945,163 Non-capital expenditures $ 51,284,312 $ 39,993,004 Other reference values Median reference value generated from 2018 - 2022 Baker Tilly municipal client data for population range of 17,500 - 30,000. © 2023 Baker Tilly US, LLP Source: current and prior year financial statement information and other benchmark information as noted. Page 4 City of Superior Other governmental funds 2023 2022 Fund balance - other governmental funds Major Funds: ARPA Grant Special Revenue Fund $ 487,657 $ 318,368 Assigned for public health and safety PDIP Grant Fund $ (3,291,256) $ - Unassigned (deficit) HAP Grant Fund $ 870,269 $ - Restricted for HAP grant fund Capital Improvement Program Fund $ 7,928,235 $ 8,904,943 Restricted for capital projects Debt Service $ 1,565,531 $ 1,511,471 Restricted for debt service Nonmajor Funds: Loan Special Revenue Fund $ 349,881 $ 323,877 Library Special Revenue Fund 496,175 363,989 HUD CDBG Special Revenue Fund 362,514 428,761 Affordable Housing Special Revenue Fund 1,915,912 1,344,824 Economic Development Special Revenue Fund 1,659,398 1,682,568 Tourism Commission Special Revenue Fund 750,359 505,160 Revolving Grant 2020 678,024 579,901 Other Special Revenue Funds 1,513,573 1,579,359 Tax Incremental District No. 9 Capital Projects Fund 326,327 326,327 Tax Incremental District No. 13 Capital Projects Fund (414,521) (330,706) Tax Incremental District No. 17 Capital Projects Fund (883,331) (35,627) Redevelopment Authority 709,141 741,610 Other Capital Project Funds (392,613) 133,841 Total fund balance - nonmajor funds $ 7,070,839 $ 7,643,884 Net position - internal service funds $ 4,273,054 $ 2,747,393 © 2023 Baker Tilly US, LLP Source: current and prior year financial statement information and other benchmark information as noted. Page 5  City of Superior - Sewerage System Audit Results - December 31, 2023 0 Operating results $9,000,000 7,984,355 $8,000,000 7,228,428 7,276,845 7,254,316 6,861,478 $7,000,000 $7,300,132 $6,000,000 $6,640,165 $6,667,767 $6,618,390 $6,404,428 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- 2019 2020 2021 2022 2023 Operating revenues Operating expenses Unrestricted Reserves 2019 2020 2021 2022 2023 Year end balance $ 4,441,554 $ 5,680,370 $ 6,831,826 $ 6,210,226 $ 5,298,613 Months on hand 7.77 9.43 11.27 10.27 7.96 Debt Coverage 2019 2020 2021 2022 2023 Actual 3.51 4.00 3.60 2.46 3.24 Required 1.10 1.10 1.10 1.10 1.10 Investment in Capital Equity, 79% Debt, 21% © 2023 Baker Tilly US, LLP Source: current and prior year financial statement information and other benchmark information as noted. Page 6  City of Superior - Stormwater Audit Results - December 31, 2023 0 Operating results $3,000,000 2,542,789 2,557,295 2,560,106 2,406,007 2,470,822 $2,500,000 $2,000,000 $2,030,744 $1,891,459 $1,500,000 $1,812,966 $1,792,045 $1,726,554 $1,000,000 $500,000 $- 2019 2020 2021 2022 2023 Operating revenues Operating expenses Unrestricted Reserves 2019 2020 2021 2022 2023 Year end balance $ 1,782,509 $ 2,245,426 $ 2,302,748 $ 2,265,204 $ 2,913,250 Months on hand 8.89 10.60 10.81 11.00 13.66 Debt Coverage 2019 2020 2021 2022 2023 Actual 4.43 4.00 4.95 2.30 4.73 Required 1.10 1.10 1.10 1.10 1.10 Investment in Capital Equity, 90% Debt, 10% © 2023 Baker Tilly US, LLP Source: current and prior year financial statement information and other benchmark information as noted. Page 7  City of Superior - Landfill Audit Results - December 31, 2023 Operating $ Revenues 724,216 $7,400,000 $7,200,000 1% $7,000,000 $6,800,000 $6,600,000 2% 2% $6,400,000 1% $6,200,000 92% 2% $6,000,000 100% 107% $5,800,000 93% 95% $5,600,000 $5,400,000 2019 2020 2021 2022 2023 Operating revenues Recycling grants Operating Expenses $9,000,000 $8,000,000 $7,000,000 19% 10% $6,000,000 18% 23% $5,000,000 24% $4,000,000 $3,000,000 79% 90% 81% 0 $2,000,000 75% 76% $1,000,000 $- 2019 2020 2021 2022 2023 Operating and maintenance expenses Depreciation Unrestricted Reserves 2019 2020 2021 2022 2023 Year end balance $ 1,940,219 $ 1,519,923 $ 1,142,082 $ 1,567,499 $ 3,635,058 Months on hand 3.78 4.20 2.91 3.59 6.95 © 2023 Baker Tilly US, LLP Source: current and prior year financial statement information and other benchmark information as noted. Page 8