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FY 2016 Strategic Investments - FINALFY 2016 Proposed Budget Strategic Investments & Capital Improvements Program August 18, 2015 [SKY] Good evening, Mayor, Members of the City Council. First formal presentation on the proposed FY 2016 Annual Budget. Overview of how we have prepared a budget to invest in your strategic goals & capital improvement program plans The team has worked hard to prepare the proposed budget and are here this evening to answer your questions. 1 FY 2016 Budget Goals Advance City’s strategic goals Adhere to strong financial principles Manage multi-year impacts [SKY] Primary goal with this budget – achieve the results Council has identified as priorities Allocating resources – align with goals, commit to performance excellence Balance our needs with good financial decisions and management Proud of AAA reputation and the principles that helped us get that designation actually position us nicely for the future 2 Budget Information CityofSouthlake.com/FY2016 [SKY] Tonight, we will be providing an overview of how the budget meets our strategic priorities Won’t cover ALL of the details But we’ve put the budget materials on our website, and a copy of the document has been placed in the Library Encourage people to visit and review Staff is present to answer questions Council may have. 3 Budget Basics Budget prepared annually October 1 – September 30 Multi-year components Fund Accounting General Fund Debt Service Fund Utility (Enterprise) Fund Special Revenue Funds Other Funds 4 [SKY] We want to begin this presentation with some basics. Although the budget is prepared and approved on an annual basis for a fiscal year that begins October 1 of each year, there are several multi-year components to it. For example, the budget includes a multi-year capital improvement program and staff performs a multi-year analysis to assist the City Council in its review of planned programs and budget options. Dollars are accounted for in a series of “funds.” These funds are accounting entities with their own self-balancing set of accounts recording cash and/or other sources of revenues against expenditures for specific activities. As we go through the next series of slides we will share with you how these funds work together to ensure we provide exceptional service. Guiding Principles [SKY] Many of the guiding principles that were put into place several years ago continue to provide the framework for the preparation of the budget. Establishing a set of budget goals and abiding by them has been developed as a part of the city’s budget culture – and will continue to be priorities for the coming fiscal year. As mentioned, budget supports strategic goals and the implementation of Southlake 2030 recommendations Always look for ways to reduce the cost to the taxpayer Unlike the federal governments budget, ours is balanced! Also, no reliance on our savings acct to balance the budget We consider the impact of today’s budget decisions on future budgets…also plan for future needs based on City growth Finally, understand that we have to have great people to get the job done – Want to be an employer of choice 5 FY 2016 BudgetProperty Tax At A Glance Tax Rate [SKY] The first thing to note is that no tax rate increase is proposed for this year. The tax rate of .462 per $100 valuation is proposed, the same tax rate that has been in place for 13 years. The tax rate is split between an allocation for operations and an allocation for debt service. Currently 34 cents ops/12 cents for debt service The debt service tax rate for FY 2016 will be reduced to $0.10, two cents less than the rate adopted for FY 2015. This reflects the reallocation of these tax rate pennies to the operating fund which is now at $0.36. This will allow us to proceed with projects without having to issue additional debt. Staff analysis has shown this tax rate to be sufficient for covering existing General Fund debt. This year’s budget also increases the homestead exemption, changing it from 10% to 12%. 6 Homestead Exemption $66,900 (average priced home) FY 2016 Budget Property Tax At A Glance [SKY] CC has approved an increased exemption. For an average priced home ($557,693) in Southlake, this equates to about a $66,900 exemption or a FIVE AND ONE-HALF cent tax rate reduction. This exemption will save the homeowner OF AN AVERAGE VALUED HOME $309 a year IN TAXES. The impact to the City’s budget is a revenue reduction of over $3 MILLION, which is inclusive of both the general fund operation portion of the tax rate, as well as the debt service portion. 7 FY 2016 BudgetGeneral Fund - Fund Balance 25% Optimum Fund Balance (General Fund) [SKY] This proposed budget provides an ending fund balance for the General Fund of 25.99% of planned expenditures, the level deemed optimal in the city’s fund balance policy. Fund balance is a key metric for you as a policy maker and the first point of discussion for the budget. Because we have achieved the optimum balance, funds that would create a higher fund balance are transferred to the Strategic Initiative Fund for use on high impact, one-time expenses. The Strategic Initiative Fund primarily infuses cash into the City’s CIP, which minimizes borrowing needs. 8 FY 2016 General Fund Budget [SKY] Transferring dollars over the City’s optimum fund balance to the Strategic Initiative Fund provides cash funding for capital projects addressing the City’s master plans. For FY 2016, $6.5 million dollars in cash will be available for use in funding the General Fund CIP. That is sufficient to cover the cost of ALL OF the FY 2016 general fund capital budget and provides that no bonds will need to be issued for this purpose. Note: Also – We are cash funding all CIP projects this year… The only bonds we plan to issue are those required for the voter-approved Marq. 9 FY 2016 Debt Service HighlightsProperty Tax Supported Debt 85% 10 years [SKY] The City has over the years issued certificates of obligation to fund many of its capital improvement programs. It is important to note that about 85% of the City’s overall existing property tax supported debt will be retired within the next ten years. This reflects aggressive amortization schedules and the City’s efforts over the past decade to use cash funding for certain projects. No debt for this year’s capital budget means that we will not be adding to the debt load that is supported by property taxes. 10 FY 2016 Planned Expenses $86,972,982 [SKY] The City accounts for its revenues and expenses in various funds These funds constitute mini-budgets that show revenues, expenses and ending fund balances Together, they make up the City’s FY 2016 budget As shown on this slide, the total budget for FY 2016 is about $86.9 million Comparing the FY 2015 Adopted Budget to the FY 2016 Proposed Budget, expenses are increasing 0.3% I want to note that the “other” category depicted on the slide includes the following funds: Reforestation: $70,000 Park Dedication: $80,000 Parks/Rec (Sponsorship Fund): $81,000 Library Donation Fund: $10,000 Vehicle Replacement Fund: $538,000 Court Security: $85,504 Court Technology: $81,500 Red Light Camera: $380,160 Public Art: $135,500 Commercial Vehicle Enforcement: $123,201 11 FY 2016 Budget HighlightsExpenditure Overview How does the budget support the City’s strategic goals? Safety & Security Infrastructure Mobility Quality Development Partnerships & Volunteerism Performance Management & Service Delivery [SKY] So as you begin your review of this budget keep in mind that resource allocation is aligned with a well-developed strategy It ensures that policy-makers and staff are working in tandem to meet the community’s needs. It is geared toward accomplishing City goals outlined in our Strategic and implementation plans found as part of Southlake 2030 The next few slides will answer the question, “How does this budget support the City’s strategic goals?” [Hand off to Alison – note that Sharen & Directors available to participate in the discussion. 12 Safety & Security The establishment and maintenance of protective measures and policies that reduce danger, risk or injury to individuals who live, work or visit the City of Southlake and their property. [ACM] The first focus area we will be discussing is Safety & Security. For Southlake, we have defined this priority as <READ> As we have discussed before, this is often considered a DPS-driven priority, but it is much more. It is tied to building codes and inspections, safety in our parks and facilities, and many other ongoing activities in which the city is involved every day. 13 Safety & Security Investments [ACM - ***Be prepared to discuss specifics of highlights***] The proposed budget addresses Safety & Security in many ways including police, fire, EMS, emergency planning, SRO program, building inspections, employee safety programs, etc. This slide shows highlights of supplemental requests that address safety & security: NETCO (Northeast Tarrant County Trunked Radio System): $62,412 The NETCO contract redevelopment covers an increase in the original contract costs for maintenance to hardware and software associated with the radio system infrastructure. For FY'16, the initial warranty for the radio system will expire. The price covers two price increases: one for NETCO maintenance to connect to the Fort Worth system and the connection fee; and one for the Motorola service agreement for software updates and service. Police Worn Body Cameras: $27,210 (cost of 30 body cameras) working on policy now which will be in place by October 1st - will comply with national best practice standards and work with attorney to balance needs for transparency with privacy considerations Will then begin training for officers (do/do not record) (PIA requests – what is and is not releasable) Police vehicle dash cameras upgrades: $167,770 right now quality is poor and not user friendly; trouble connecting from car to server…often cannot find video due to poor connections using same company for dash cams as body cams; reviewed system on local PD who uses them; dash cam and body cam will find one another and link together; maintained in same database so when videos are searched, see split screen view age of current dash cameras, in neighborhood of 10+ years old but different components have been replaced over the years Radio Bidirectional Amplifiers: $60,000 2 bidirectional amplifiers (BDA) to provide adequate radio coverage in 2 CISD schools (Johnson Elementary & Carroll Middle School) that have significant radio (Police/Fire) coverage gaps. that could result in an inadequate emergency response & could interfere with emergency responder safety The next two are companion items to improve security in Town Hall: Town Hall Security Cameras Upgrades: $102,307 The proposed project is to install additional dome cameras on all levels of Town Hall and around the exterior of the building. They are currently only located at the entrances to the building and in the elevators. These cameras are needed in order to have coverage of the lobby, stairwell, staircases, and hallways. The project includes the installation of domed cameras, HP storage, and a Dell Server. Town Hall Security Services Contract: $106,450 Recommendation of Town Hall Risk and Vulnerability Assessment. The purpose of this study was to be proactive in preventing possible acts of crime in Town Hall. The results of the study indicate that Town Hall is very open and needs to have a consistent security presence given the number of residents, Board Members, Council Members and employees which conduct business at Town Hall on a daily basis. A security contract is essential to preventing theft, vandalism, assault, possible active shooter and other such acts of crime in a government building. Mobile Outdoor Warning System: $80,000 A key component to our City's readiness capability is the ability to warn the public. The public is most vulnerable when they are outside and Southlake hosts multiple events each year including Art in the Square, Stars and Stripes, Green Fest, and Country Music in the Square to name a few. The result is thousands of people being outside where they are most vulnerable. Our current in-ground outdoor warning system is designed to be sounded when winds are above 70 mph, hail of 1.25" or greater, or for a tornado warning. But, an outdoor event with tents, trailers, and stages is vulnerable to much less-severe weather, typically beginning around 35 mph. This mobile outdoor warning system helps address this gap in our comprehensive warning system by providing a mechanism to use a targeted siren system during special events and any event that has a large outdoor component. The siren system has several features that make it ideal as an intermediate warning mechanism: it is capable of remote activation through the current radio system and is voice capable, is equipped with a NOAA weather radio, so it can be set to automatically sound warnings, includes led lights that allows people with limited auditory capability to see the system activate, can use a standard police or fire radio to communicate, has the ability to serve as a lightning detector, and can be tuned to the volume level needed for a particular event. 14 Mobility The efficient movement of pedestrians and vehicles from place to place within Southlake through means such as roads, sidewalks, and trails. [ACM] Focus area tied Citizen Survey concern Traffic #1 Gap Issue Roads, PLUS other initiatives, like clearing accidents or providing route alternatives Next slides show our initiatives 15 Mobility InvestmentsRoadways Total Roads = $ 2,600,000 16 [ACM] Start with proposed roadway investments Slide shows road projects included in this year’s CIP totaling about $2.6 million Selected to add capacity or offer alternatives; Improve connectivity and also implement the Southlake 2030 Mobility Plan recommendations Notes: Project description pages FM 1709 Deceleration Lanes at Byron Nelson and Southridge Lakes, p. 361 FM 1709 at Southlake Marketplace Improvements and Signalization, p. 362 Pavement Management Application, p. 363 Kirkwood Boulevard Widening (Stockton Drive to Tyler Street), p. 364 Street Rehabilitation – Partnership with Tarrant County, p. 365 Mobility InvestmentsOther [ACM] IN ADDITION TO ALL OF THE PLANNED CIP PROJECTS Traffic Management Technician – $26,845 (mid-year start) Managing traffic congestion is the #1 2013 Citizen Survey gap issue with the difference between the importance of this function and the citizen's satisfaction of how the City is handling this issue yielding a "gap" of 54%. Needed to maintain the City owned traffic signals in a timely fashion (currently 4 signals; growing to 6 by Summer). This position will be responsible for trouble shooting signal problems, and implementing timing improvements recommended by engineering timing studies. This position will also be responsible for maintaining the database of traffic signs, maintaining sign reflectivity standards and other traffic control devices such as lane markings, roadway buttons and dilineators throughout the community. Having a trained, certified, dedicated person on staff that can perform these duties is crucial to improving mobility in a just-in-time fashion as potential issues may arise. This will improve the City’s response times and help mitigate traffic congestion. Lease of Streets Equipment - $16,000 (less expensive than purchasing equipment outright) Funding to lease a Caterpillar Motor Grader for 2 months of the year at a cost of $8000/month or $16,000 for 8 weeks. This request is in lieu of purchasing a new Caterpillar Motor Grader Model 120M2 for $249,000. Street Light Electrical Costs - $25,000 (Increase in street light electricity costs due to growth and new development.) Increase is due to new growth and development and is based on historical trends. In FY13 and FY14, the City spent $366,650 and $351,146 respectively on street light electricity costs. The budget was $325,000; therefore, an additional $25,000 is requested as a supplemental request. 17 Infrastructure Capital assets that provide city services within Southlake such as parks, buildings, water, sewer, drainage systems, sidewalks and roadway systems. [ACM] Moving on to next Focus Area – Infrastructure Invest funds to ensure that the City’s infrastructure is properly sized, meets master plan requirements, and is maintained in good condition. 18 Infrastructure InvestmentsWater Total Water = $ 2,500,000 19 [ACM] Summary of FY 2016 water projects included in the CIP Funding – Utility Fund, Water Impact Fees Planned investments totaling almost $2.5 million – cash funded Notes: Project description pages Repainting of Pearson Ground Storage Tanks, p. 377 System Capacity Improvements (Future Projects), p. 386 Waterline Upsizing - Whispering Lane and Whispering Dell Court (8-inch), p. 387 Waterline along Union Church Road and Pearson Lane (12-inch), p. 388 Waterline along East Dove Road from Estes Park to Winfield Estates (12-inch), p. 389 Waterline for Fuel Farm Protection Improvements (12-inch), p. 390 Infrastructure InvestmentsSewer Total Sewer = $ 2,700,000 [ACM] Summary of sewer projects planned for FY 2016 Funding – Utility Fund, Sanitary Sewer Impact Fees Planned investments of $2,700,000 – cash funded Notes: Project Description Sewer Line in Basin N-12 and N-12a that crosses SH 114 (15-inch), p. 378 Sewer Line in Basin N-13 south of Burney Lane (12-inch), p. 394 Sewer Line in Basin N-13 along Emerald Circle (15-inch/10-inch), p. 395 System Capacity Improvements (Future Projects) , p. 396 Sewer Line along Market Loop and Commerce Street (8-inch) , p. 397 Sewer Main Upsizing from Eagle Bend / Strathmore Drive across Timarron Golf Course Creek (10-inch), p. 398 20 Infrastructure InvestmentsStorm Water Total Storm Water = $ 1,470,000 21 [ACM] Summary of FY 2016 Stormwater projects Projects for FY 2016 constitute $1,470,000 – cash funded List represents identified critical drainage improvements needed to maintain integrity of City’s storm water system Funding comes from Stormwater Utility System District funds NOTES: Page Numbers Dove Creek at Dove Creek Trail, p. 403 Summerplace Drainage Improvements, p. 404 Kirkwood Branch and South Kirkwood Branch at North White Chapel Boulevard, p. 405 Infrastructure InvestmentsFacilities Total Facilities = $ 34,491,000 22 [ACM] Other facilities are shown on the screen Huge investment this year on facilities. Totaling $34,491,000 The Marq Phase 2 consists $30,291,000 – THE ONLY BOND PROJECT These facilities are directly tied to the City’s master plan Funding sources include the General Fund, CCPD, HOT and the newly created CEDC NOTES: Page Numbers Municipal Service Center, p. 368 DPS West Reconfiguration, p. 369/409 Southlake Visitors Information Center, p. 413 The Marq – Phase 2, p. 417 Infrastructure InvestmentsParks, Sidewalks & Trails and Community Enhancement Total Sidewalks & Trails = $ 300,000 Total Parks = $ 3,000,000 Total Community Enhancement = $ 600,000 23 [ACM] Parks and Sidewalks shown on this slide Both projects are directly tied to the City’s master plan Funding sources include the Southlake Parks Development Corporation and General Fund – Cash Funding NOTES: Page Numbers B. Park Phase III, p. 425 Sidewalk Retaining Wall (Southlake Hills Church), p. 367 SH 114 Bridges Repainting, p. 366 Infrastructure InvestmentsOther [ACM] The budget also includes funds for the improvement or maintenance of existing infrastructure Expansion of Citrix virtual infrastructure (SIF): improvements include SCADA upgrade ($23,620) This will expand our virtual environment in resources and migrate 2 legacy servers to the disaster and recovery (DR) environment. Environment reliability and performance will be improved while expanding the capacity of the disaster infrastructure. The Datacenter licenses are required for each server to run our virtual services. Town Square Public Space Enhancements (SIF): $3000,000 FY 2016 Public Works portion of the Town Square Enhancements in the amount of $150,000 is being requested. The scope of this project will be to continue and complete the striping and pavement markings in the public areas of the Town Square Development. In addition, Sidewalks in the Grand Avenue area have settled causing significant heaving resulting in cracks beneath the covered walkways adjacent to the retail stores along Grand Ave W and Grand Ave E. Library Space Analysis (SIF): $40,000 During the 2030 PROS-CF Master Plan process, the committee recommended staff conduct a Library Site Analysis Study to determine the long term location of the Southlake Public Library. The committee ranked the study as a Tier 1 recommendation. FY16 is the last year for Tier 1 recommendations to be completed. Tennis Court Resurfacing (General Fund): $3,000 Pricing for resurfacing and power washing has increased this year. In order to maintain our current levels of service, we need to increase the budget to accommodate the pricing change. Contract Landscape Services (SPDC Operating): $557,000 Park Signage Implementation (SPDC Operating): $60,000 This funding would allow for the implementation of new internal park signage throughout the park system as per the proposed internal park signage plan. BJNC Building Improvements (SPDC Operating): $19,500 The Bob Jones Nature Center Organization has requested additional office space to accommodate staff working out of the Nature Center Building. They have proposed modifying a portion of the kitchen to create a staff office. In addition, the BJNCO would like to transform the back patio to a classroom which would allow them to expand nature programs and activities. [tranistion to next ACM] 24 Quality Development The skillful preparation and thoughtful execution of plans and policies ensuring an attractive, safe, financially viable and sustainable community for Southlake residents and businesses. [ACM] The next strategic focus area we would like to discuss is Quality Development. Read definition 25 Quality Development InvestmentsCommunity Enhancement Total Community Enhancement = $ 400,000 Conceptual Renderings 26 [ACM] For 2016 we are proposing to implement one of the recommendations from the Southlake 2030 Major Corridors & Urban Design Plan, as well as the Wayfinding Sign System Plan. Funding is requested for the construction of an iconic entry tower located in the vicinity of McPherson Park and 114 in Town Square. This tower will also be illuminated. The funding source for this investment comes from the General Fund CIP , totaling $400,000 in cash funding NOTES: Page Numbers Tower Entry Feature at Town Square and SH 114, p. 370 Quality Development InvestmentsOther 27 [ACM] Quality Development has always been a top priority to the City Council, and this budget supports the focus area in many ways. Of course, the budget includes funding to promote quality development through our work and investment. This screen simply highlights a couple of the proposed expenditures for FY 2016. There will be a transfer into EDIF of $150,000; and We are continuing our Contract Services arrangement for Building Plan Review in the amount of $60,000 Partnerships Relationships between the City of Southlake and groups or individuals that are characterized by mutual cooperation and responsibility toward the achievement of a common mission, broad objective or specific goal. [ACM] Our next focus area is partnerships, which are…. We have a large number of partnerships that help us leverage resources to meet the needs of this community. And this proposed budget reflects our ongoing commitment to working with those partners to achieve our strategic goals. 28 Partnership Investments 29 [ACM] This budget provides funding for a number of partnerships that the City leverages for better service delivery. For example, we work very closely with CISD – and those agreements with them support our recreation programs, elections and other efforts. NetCom is a great example of how several cities can share facilities and personnel to provide important services ($39,380 increase) As you know, we also recently merged our annual control services to save money and improve service. The annual participation with the City of Keller for those three services is just over $1million. Our community services agreements allow us to partner with community organizations to offer services we wouldn’t otherwise be able to provide. We partner with group such as Apex: ($5,000 plus $3,000 allocated annually in Public Art Budget for APEX sponsored programming), and ARTSNET: ($22,000) to provide art and music programming. Of course you are familiar with the work of Southlake Sister Cities: $7,500 We contribute to assistance groups such as Grapevine Relief and Community Exchange (GRACE) - $5,000 and SafeHaven: $1,000 to help those in need. CARS: ($15,000) and Metroport Meals on Wheels provides services to our Senior population. (MMOW: $15,750; requested increase of $4,250 for FY16 for existing services. Additionally staff requested $15,000 for increase in lunches provided once The Marq opens for a total of $35,000 to be paid to MMOW if approved in the FY16 budget). Southlake Community Band: $9,000 provides music at our many annual events. Total: $79,250 Finally, working with HOT funds, we are able to jointly market the City with the Hilton. Volunteerism The active promotion of alliances through community involvement focused on giving time, energies or talents to individuals and groups for the enrichment of the Southlake community and its strategic affiliations. [ACM] A Big part of everything we do in the City also includes the assistance of many volunteers. Board members Community groups Individuals Just as the HR department focuses on supporting City employees, the budget should also support our many volunteers 30 Volunteerism Investments *April to March [ACM] 1,258 active volunteers 21,072 hours $493,084 cost avoidance based on volunteer wage of $23.40/hour (source: Independentsector.org) *********************** Cost avoidance is based upon an hourly wage of $23.40 according to www.independentsector.org. Volunteer hours includes all volunteer hours from April 2014 to March 2015 (the award period for the Presidential Volunteer Service Award). A few notes: It includes Boards and Commission hours, but only for official posted meetings. Any other meetings they may have are not included. It includes DPS volunteers, but only those hours volunteers reported in the volunteer tracking system. DPS is in the process of implementing the system to allow DPS volunteers to "clock in and out" to track their hours. It includes coach hours for practices and games. 31 Performance Management & Service Delivery The formalized, results-oriented method used to apply best management practices and fact-based decision making to measure, monitor and improve performance toward meeting strategic objectives, providing services, and enhancing accountability. [ACM] Our organization is very committed to excellence. Since we are a Service organization – a big majority of our budget is related to labor. We work hard to invest appropriately in our workforce in order to recruit, develop & retain high quality staff, which ensure that we are always performing at the highest level, offering services to meet our residents needs. 32 Performance Management Investments [ACM] Here are some of the budget requests that will help us provide great customer service with our residents, businesses, and visitors. We will be conducting a technology Study ADA - $60,000 UB electronic communication is a software module that will allow us to mass electronic messaging with our UB customers. DocuSign is a software that you are probably familiar with that will provide a customer convenience for our residents. ($24000) Disaster Recovery infrastructure will allow us to further invest in maintaining a strong business continuity environment with all of our critical systems. The Organizational and Community Tech master plan is a technology study for our organization a as we look into the future and better understand the moving tech environment and its associated risks, etc. There is a community component to the study that we hope will help us understand future technology needs in the community. And finally we have many Training offerings that will help us with our Ongoing professional development needs, maintain required certifications, as well as help out with succession planning. I am now going to turn the time over to Director Black to further discuss our workforce investments. 33 Workforce Investments [SB] As a service organization, labor costs are a significant portion of the budget. For FY 2016, about 70% of planned expenses are related to personnel. The budget supports the culture by funding the supervision, training and assessment of employees who are tasked to carry out the City’s mission Also, funds the implementation of the City’s compensation and benefit program, which has been designed to attract and retain the best of the best. Additionally, we promote excellence through the use of Lean, Six Sigma, performance measurement, and other techniques. All designed to meet the performance requirements of the City. There are three areas I would like to highlight this evening… The continued implementation and maintenance of the City’s compensation System Employee Health Insurance The employee retirement system 34 Compensation System Proposed Employee Pay Raises [SB] Compensation System Implementation Our goal is to offer a fair pay program in conformance with the City’s adopted compensation system and that is also competitive within our labor market We pay a lot of attention to how well we are doing when it comes to recruiting and retaining top talent For FY2016 we are proposing to address compensation using a two-pronged approach: First is by offering a 1.5% COLA: To all Employees hired before October 1, 2015. If hired during FY 2015, the COLA is prorated based upon the number of months employed. In FY15 we also made a 1.5% Adjustment Secondly we will be further implementing our merit system by offering a possible 0% - 4% Merit increase: This is the second year of Merit Increases We are exploring the option of using a bell curve to apply raises. Still working out how to apply it: across the City, department, supervisory level, etc. Generally the idea is that our highest performers will get the highest raise. Must receive a "Meets Expectations" or better to even be eligible for a pay increase. Employees are eligible if hired before October 1, 2015. If hired during FY 2015, the Merit is prorated based upon the number of months employed. FY15: First Year was pass / fail. If employee received a "meets expectations" or higher on evaluation, eligible for 1.5% merit increase. If less than "meets", no merit increase. Cost: All Funds: $760,351.07 General Fund: $672,514.81 Anticipated wage and salary increase of about 3.5% 35 Benefits to Payroll Ratio City Target: ~30% Market Avg: 32.46% FY 2016: 28.2% [SB] One way we measure the competitiveness of the City’s comprehensive benefits program is to look at the benefits to payroll ratio. At the City, we strive to maintain a benefits ratio of around 30%. For FY 2015 this ratio was around 28.1% and around 28% for FY 2015. The market average is 32.46% For FY 2016, we are projecting a benefits to payroll ratio of 28.2%. This includes the cost of two proposed benefits enhancements: an increase in the City funded supplement to employees covering their families on the City’s health insurance and a reduction in the amortization schedule of the City’s employee retirement system. I’ll talk about each of those enhancements in more detail over the next two slides. With the exception of the proposed benefit enhancements, a review of benefits offered within the City’s defined labor market, found that the City’s comprehensive benefits package, including insurance, leave and retirement benefits, is competitive. Without benefit enhancements, the projected FY16 ratio drops to 27.4% With the proposed benefit enhancements, the projected FY16 ratio increases to 28.2% The additional dependent care contribution equates to a projected change of 0.3%. Prior to increase the family contribution, the projected ratio was 27.9% Goal: Around 30% Market Average: 32.46% Historical: Projected FY15: 28% FY14: 28.1% FY13: 28.7% FY12: 28.9% ++++++++++++++ 18 Market Cities: Allen, Arlington, Bedford, Carrollton, Colleyville, Coppell, Euless, Farmers Branch, Flower Mound, Frisco, Grapevine, Hurst, Keller, McKinney, NRH, Plano, Richardson, University Park 36 Employee Health Insurance [SB] The City offers its employees health insurance through United Healthcare. City Council recently approved a contract renewal for FY 2016 that included no plan changes with a modest 5% increase. Employees are given the opportunity to choose from four different coverage options: Employee Only, Employee plus Spouse, Employee plus Child(ren) or employee plus family. This allows employees to choose a coverage level that best meets their own unique coverage needs. As part of the normal annual evaluation process, staff reviews the plan design and employee premiums in comparison to the market. The data revealed that the plan design – the deductible, coinsurance and copayments -- of the City’s health plan is market competitive. We also looked at the City funded supplement for dependent insurance premiums. The market data showed that with our family coverage option employees within the City’s designated labor market, pay on average, $343.75 per month to cover their family coverage, whereas Southlake employees paid $718.92 per month in FY 2015, which will increase to $776.12 per month. Currently, the City pays approximately 35% of the monthly family dependent premium, and the Employee is paying 65%. Market data showed that, on average, employers are paying 79% of the monthly family premium and employees are paying 19%. The other two coverage levels, employee + spouse, and employee + child(ren) is more competitive with the City paying 48% and 61% of premiums, respectively. Within the FY 2016 budget, staff is proposing the City increase it’s contribution to absorb the 5% cost increase on the employee + children and employee + spouse coverage levels, and increase it’s contribution to the family premium to reduce it to $516.12 per month. This will increase the City’s contribution percentage to 57% and reduce the employee’s contribution to 43%. Although still far from the market average, it is anticipated that the reduction will help the City attract and retain top talent. It is anticipated that the budget impact of this benefit enhancement is $150,180 across all funds. 37 Employee Retirement Program 88% Funded Ratio 30 Years 25 Years [SB] As part of it’s standard benefits package, the City provides its employees with participation in the Texas Municipal Retirement System TMRS is a statewide multiple-employer public employee retirement system created by law in 1947. The program provides retirement, disability, and death benefits to employees in participating cities. As a hybrid, defined benefit plan, TMRS members contribute at a designated rate toward their own retirement benefit. At retirement, the member’s account balance (including credited interest) and employer matching contributions are used to calculate the member’s retirement benefit. As of December 31, 2014, 859 municipalities in Texas have a retirement benefit plan administered by TMRS, including the City of Southlake. It is important to note in the late 1980’s the City opted out of the Social Security program and choose to instead offer TMRS to its employees. No plan changes are proposed for FY 2016, although a proposal is included to strengthen the financial position of the City’s fund by decreasing the amortization period specified for the fund. The City enjoys a relatively low plan contribution rate at 12.39% and a plan funded ratio of 88%. The individual plan is stable and well-funded. But, the amortization schedule – the period of time required to fully fund City liability – is currently at 30 years. Staff is proposing to reduce the amortization period to 25 years, strengthening the financial position of the City’s pension account. The cost of this initiative for all funds is approximately $45,000 [transition to SKY] 38 FY 2016 General Fund HighlightsExpenditure Overview How does the budget support the City’s strategic goals? Safety & Security Infrastructure Mobility Quality Development Partnerships & Volunteerism Performance Management & Service Delivery [SKY] So, hope it is evident that this budget plan has been designed to meet Council’s strategic goals. This presentation, along with the budget packet, provides a lot of details, and discussion will continue. 39 Taxpayer relief Strategic investment Debt management Limited cost increases Multi year approach Financial integrity In Summary… 40 Next Steps Public Hearings Tuesday, September 1 Tuesday, September 15 [SKY] Next step – formal consideration of FY 2016 proposed budget & tax rate, as well as homestead exemption Public Hearings held during next two City Council meetings, September 1st and 15th 41 www.cityofsouthlake.com/FY2016 Questions? Thank you. Experts are here…Happy to answer questions. 42