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Council hears personnel-cost pressures: wages, insurance spikes and pension/OPEB positions
Summary
City Manager Stewart told council that personnel costs are stable in the near term but flagged a 3% police raise, proposed 3.1% nonunion increase, a roughly 20% jump in insurance costs, and the city's funded status for OPEB and pensions.
City Manager Stewart briefed the council on personnel and benefits costs during the April 21 budget workshop, noting near-term wage proposals and mounting insurance and benefit pressures.
Stewart said police contract raises of 3% are included in the draft budget and staff proposes a 3.1% increase for nonunion employees, which matches the state inflation measure used in recent years. "Our police contracts have negotiated raises for 3%. Those are included within the budget. And then our nonunion employees, we're proposing a 3.1% wage increase," Stewart said.
On health insurance, Stewart said the city experienced a more-than-20% increase in the current year and that the city is near the "large employer" threshold that would trigger additional premium exposure. She estimated that if a census were taken while fully staffed, the large-employer designation could add roughly $70,000 to the city's insurance cost; staff do not expect that to occur this fiscal year but noted it risks future budgets as staffing increases.
Stewart reported the citys other-post-employment-benefit (OPEB) liability is nearly fully funded (about 99.8%) and that pension funding was at about 73% in the last actuarial. She told council actuarial assumptions can materially change pension-funded percentages and staff will continue reporting updates when new actuarial information is available.
Stewart also explained a proposed wage-study for nonunion staff and a personnel-level program intended to provide internal career ladders and retention incentives. She said two additional staff are proposed in year two of the multi-year projection but no net staffing increases in FY2025-26.
