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Council hears 2026 salary‑plan and general fund preview; staff recommends half of ECI market adjustment
Summary
City staff previewed the mayor’s proposed 2026 budget, including a salary plan update built on a 2.5% step for satisfactory evaluations and a market adjustment equal to 50% of the Bureau of Labor Statistics employer cost index (1.9%); staff said legislative pension changes and health insurance increases add pressure on the general fund.
City staff presented a preview of the mayor’s 2026 budget and the proposed updates to the salary plan at the June 16 Grand Forks City Council meeting, outlining cost drivers, legislative impacts and a plan to phase several personnel changes.
Gretchen, the salary‑plan presenter, told council members the plan provides 18 steps (each 2.5%) and an annual market adjustment tied to the Bureau of Labor Statistics employer cost index (ECI). The ECI for the period was 3.8%; staff recommended applying 50% of that figure as the market adjustment for 2026, equal to 1.9%. The plan also provides a 2.5% step increase for employees who receive a satisfactory performance evaluation, yielding a combined potential increase of about 4.4% for qualifying employees if the recommended market adjustment is adopted.
Why it matters: Staff said the combination of step increases, pension cost changes and a capped property‑tax environment creates budgetary strain. The salary and benefit package, pension contribution changes and a projected health‑insurance increase were presented as primary cost drivers for the general fund.
Key numbers and constraints explained to the council included: - Employer cost index (ECI): 3.8% for the latest period; staff recommended 50% (1.9%) as the 2026 market adjustment. - Annual step increase: 2.5% for satisfactory evaluations. - Estimated general fund cost for step and market adjustments: staff reported roughly $1.2 million for the general fund and about $1.75 million across all funds (figures noted as preliminary and subject to correction in final documents). - Legislative impacts: an increase in employer contribution to the NDPERS public‑safety retirement plan (1.23%, estimated $183,000 impact) and recognition of public‑safety telecommunicators as eligible for the public‑safety plan (estimated $65,000 impact) were included. - Health insurance: staff reported a preliminary 12% rate cap for HealthPartners for 2026; staff said the final number might be lower after insurer confirmation. - Property tax constraint: state law (House Bill 1176) limits valuation growth to 3% for levy calculations; staff projected a levy of about 92 mills in the draft forecast.
Staff also proposed a modest realignment of sales‑tax allocations — shifting 3 percentage points from economic development (1.5% to general fund and 1.5% to street infrastructure) — to generate roughly $220,000 for the general fund and help fill funding gaps.
Council discussion focused on balancing competitive wages with maintenance and operations needs, preserving fund balance policy and exploring recognition or bonus options for high‑performing employees. Several council members asked for binders of the full budget packet for the July 21 presentation; staff said a full budget binder is planned for that meeting and that detailed items will return for preliminary approval Aug. 4 and final approval Sept. 15.
Quotes: "That ECI came in at 3.8%...the employer cost index that's being recommended tonight is at 50% of the ECI or 1.9%," Gretchen said. "The plan has allowed for opportunities for succession planning, and we're starting to see a trend in the number of applicants increasing for positions and a reduction in turnover as well."
Next steps: Staff will return the full mayor’s proposed budget July 21 with a detailed binder and recommendations for preliminary and final actions in August and September.
