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City Finance Warns of Rising Benefits Costs; Recommends 2.73% COLA for Payroll Budget
Summary
Rexburg's CFO recommended a 2.73% cost‑of‑living adjustment for payroll budgeting and warned of possible large health‑insurance premium increases — staff modelled up to 42% for medical — that would require notable employer and employee contribution increases.
Rexburg's treasurer and CFO, Matt Nielsen, told the council the recommended payroll budgeting approach would use a 2.73% COLA (West Region CPI Jan–Jan), which equates to roughly $344,000 in additional wage cost citywide and about $205,000 in the general fund. He asked council permission to proceed with payroll budgeting using that figure.
More consequentially, Nielsen said the city's health insurance plan faces material pressure from recent claim experience and a smaller enrollee pool after the fire department left the plan. He showed staff models that assume as much as a 42% increase in medical premiums and recommended budgeting for a more modest but significant employer increase of about 22.5% (with a corresponding employee contribution increase of about 26%) to maintain plan viability. Under that scenario, staff estimated the city would need to cover roughly $671,000 of increased employer costs and that employees collectively would pay roughly $122,000 more than under current premiums.
Nielsen said the city is exploring mitigation options, including joining pooled purchasing groups, but noted many groups require multi‑year commitments and that short‑term relief options are limited. He also noted a portion of costs could be offset if medical trend moderates or plan enrollment recovers.
Council members asked for clarification on the numbers, which staff provided in detail, and the CFO said he would proceed with the payroll budget process using the 2.73% COLA and continue to refine health‑insurance forecasting as plan renewal information becomes available.
