Destin council reviews preliminary FY26 operating budget, discusses return to Florida Retirement System and Social Security

City Manager presented a preliminary FY2026 operating budget and described it as an early plan that could change as council and staff continue work.

The City Manager said, "what we have before you tonight is a proposed, operating budget that is preliminary. So a lot of things can change between now and then, but this is where we've kind of landed at this point." The presentation showed a proposed operating budget of about $27.3 million, a roughly 2% increase from the prior year, with staff wages and benefits driving most of the change.

The nut graf: The discussion centered on personnel costs — a proposed modest 3% wage increase, a larger jump in benefits tied to possible re-entry into the Florida Retirement System (FRS) and the requirement to participate in Social Security — and on requests from councilmembers for more detailed backup before taking further steps.

The City Manager walked council through high-level allocations: debt service about 20% of the proposed budget, operating expenses 38%, staff wages 29% and taxes/benefits 13%. He said staff wages include a proposed 3% increase for cost-of-living and merit adjustments, while taxes and benefits were modeled as a 17% increase because of projected changes related to retirement plans and Social Security.

On retirement plans, staff discussed a potential move that would allow employees to participate in the Florida Retirement System and require participation in Social Security. The City Manager said, "the reality is some of our staff's take home checks could be reduced by 9%" — a reference to a 3% employee FRS contribution plus 6.2% Social Security withholding described in the presentation.

Staff said the switch would initially be voluntary for existing employees and mandatory only for new hires going forward. The City Manager noted the FRS thrift plan cost estimate presented in the slides was roughly $10.6 million (figure described as preliminary) and said staff would explain details before any employee was required to move.

Councilmembers pressed for more documentation and analysis. One councilmember said they did not want an exhaustive line-by-line manual but asked for enough detail to understand how major numbers were composed, calling for the backup packet the staff promised. That councilmember also said, "I still don't think I'll fully be able to, support an overall 2% increase in the overall budget, when we're all said and done in a few months."

Several councilmembers and the City Manager also discussed employee health insurance costs. The City indicated it currently pays 100% of employee-only premiums and approximately two-thirds of family premiums, which staff said is roughly 20–30% higher than nearby jurisdictions. Staff said they are proposing a move to cover 100% of employee-only premiums but reduce the city share of family premiums from 66 2/3% to about 50% as one option to control rising health costs.

Staff reported results of an employee survey and small-group sessions: "right now, we're about half of employees who'd wanna stay in the old system and half who'd wanna move to the new," a staff member (Jamie) said, indicating split preference between remaining in the current Thrift plan and moving to FRS. Staff said newer employees tended to favor switching while longer-tenured employees tended to remain in the existing plan.

Staff described next steps: staff will obtain certified property values from the property appraiser, provide a more detailed backup packet on the operating budget, schedule a second budget workshop focused on capital projects, and hold detailed budget briefings and hearings in September. Staff also said they plan to bring a representative from Centria (an investment advisor) to a forthcoming meeting to outline options for controlling health insurance costs.

No final vote or formal budget adoption occurred in this workshop. Council discussion included references to a prior meeting motion to "pursue" consideration of FRS and Social Security, but no formal action on plan adoption was taken during the session recorded in the transcript.

The workshop concluded with staff agreeing to supply the additional documentation and analysis requested by councilmembers and to return with more detailed options on retirement plan participation, Social Security implications, and health insurance cost-sharing strategies.