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City staff cite compensation study, audits and insurance for higher administration budget
Summary
City staff told the Ways and Means committee the administration budget will rise about 3.8% between FY2024 and FY2025, driven by double-digit salary increases tied to a compensation study, higher audit fees because federal grants triggered a single audit, and rising insurance and utility costs.
Speaker 1, a city staff presenter, told the Ways and Means committee the administration department will see an overall 3.77% increase in expenditures for FY2025 and identified three main drivers: salary increases following the city’s 2024 compensation study, higher audit and accounting costs, and rising insurance and utility expenses.
The presenter said the compensation study moved some positions into higher pay classifications and that “double-digit increases which are salaries and that is primarily because of the compensation study and the related expenses regarding employee benefits.” Dues and subscriptions increased about 11%, and travel and training costs rose as the city is now fully staffed and more employees are attending local and national conferences such as GFOA and the City-County Communications Association.
Finance staff explained the accounting and audit cost increases are tied to federal grant receipts. Speaker 4 said the city will be subject to a single audit because federal funding exceeded the $750,000 threshold for 2024, leading to an additional audit and related fees. "So we'll actually have 2 audits," Speaker 4 said, and staff said they have been monitoring that threshold since 2022.
On other operating costs, Speaker 1 noted municipal legal expenses are up roughly 25% and accounting services about 60%; insurance costs have risen across workers' compensation, property, auto, liability and cybersecurity coverages. Utilities for the new Public Works parks garage have also contributed to higher operating expenses.
Speaker 1 also identified a 44% increase in miscellaneous contractual costs in administration, attributed to the comprehensive annual financial report, and said one staff position (assistant finance director) was moved from contractual services into salaries. Contractual services for the communications plan were shown as up about 47%, with the city funding $25,000 of the cost in 2024 and the balance (identified in the presentation as about $60,000) budgeted for 2025.
The committee asked follow-up questions about these increases and how sustained federal funding could keep audit-related costs elevated. City staff said they will provide additional detail and the pending retail-impact analysis from PGAV at the next Ways and Means meeting.
The Ways and Means committee is scheduled to meet again Thursday, Nov. 7; the item will go to the Board of Aldermen for first reading Nov. 18 and second reading Dec. 2.
