Council reviews personnel assumptions: 3% placeholder, URS tier‑2 one‑time bonus and 10% medical cost placeholder

City staff told the Council the tentative FY26 budget includes a 3% overall placeholder for employee compensation increases. Finance staff said the 3% is a placeholder while the city completes a market and merit analysis with a third‑party tool.

Mortensen also described a one-time proposed payment to offset increased employee retirement contributions for URS tier‑2 employees. He said last year the city provided a one-time bonus matching a 0.7% contribution; this year the required contribution rose to 0.81%. “We are proposing the same thing for this year, but with that slight increase of .81%,” Mortensen said. Staff estimated the total cost to Highland City at approximately $12,500.

On health insurance, staff included a 10% placeholder for medical-benefit cost increases amid uncertainty from insurers. Mortensen said the city’s benefits broker warned of increases as high as 10% in other entities; staff will meet the broker and update the council if renewal rates come in lower.

Council members asked how negotiable the medical rates are and whether employees’ deductibles or plan designs might change; staff said they negotiate with carriers and brokers and explore plan design changes as needed.

Staff also noted two federal Social Security-related rules referenced in conversation (Windfall Elimination Provision and the 40-credit rule) would not affect the city’s FY26 budget directly but could affect individual retirees’ benefits.

No formal wage or benefit changes were adopted at the meeting; council members will review final recommendations in subsequent budget sessions.