Boise evaluates rising PERSI retirement costs and software maintenance impacts on budget

During a recent Boise City Council work session, significant discussions centered on the city's financial outlook, particularly regarding employee costs and software maintenance. The meeting highlighted the growing expenses associated with the city's workforce and technology needs, which are expected to impact the budget in the coming years.

One of the primary topics was the rising costs of software maintenance, which have increased from approximately 1.5% of the general fund budget in fiscal year 2018 to an anticipated 3.75% by 2035. This increase is attributed to several factors, including the transition to software as a service, heightened technology demands, and the need for enhanced cybersecurity measures. As the city expands its employee base, the demand for additional software licenses has also contributed to these rising costs.

Another critical issue discussed was the Public Employee Retirement System of Idaho (PERSI) contributions. The city is facing potential increases in retirement costs, which could rise by over $7.5 million over the next decade. Currently, PERSI costs account for about 5.8% of the general fund budget, but projections suggest this could increase to nearly 8.5% by 2035. Factors influencing these increases include the number of retirees, life expectancy, and compensation levels, particularly in light of recent inflation trends.

Council members expressed concern over these financial pressures, particularly how they might limit the city's ability to hire new employees. The discussions indicated that without addressing these rising costs, the city could miss opportunities to add essential public safety positions and general employees in the future.

In conclusion, while Boise is currently not projected to face a budget deficit in the upcoming fiscal year, the council's discussions underscored the importance of strategic financial planning to manage increasing costs associated with employee benefits and technology. As the city navigates these challenges, the focus remains on ensuring that it can continue to meet the needs of its growing population while maintaining essential services.