Mesquite finance director reports healthy reserves but flags rising police overtime and health-claim costs

Mesquite's finance director told the City Council the city ended fiscal year 2025 with generally healthy reserves but identified two areas of concern: sharply higher police overtime costs and a large, unexpected increase in health-insurance claims.

"We ended the fiscal year with a cash balance of $33,900,000 and a fund balance of $39,807,364 as of Sept. 30," said Ted Chin, Director of Finance, in a staff presentation of preliminary financial statements. He added that the city currently holds about 75.5 days of operating funds under the general fund policy. Chin also reported the seizure fund balance — after allocating money for the Bearcat armored vehicle purchase — is "estimated $1,500,000."

The presentation highlighted revenue gains, including a record $48.1 million in sales tax for the year and overall revenues of $177.9 million that exceeded expenditures by roughly $1.3 million before audit adjustments. Still, several spending categories exceeded amended budgets: police overtime rose sharply. Chin said straight police overtime increased by $3.4 million and, with benefits, totaled about $4.3 million over prior estimates. "Overtime was up 23% from 2024," he said.

Chin and council members discussed possible causes. Council members pressed staff to distinguish between overtime caused by increased callouts and overtime that results from comp-time or staffing patterns. "Criminal investigations is due exactly to your point of increased activity and callouts for those officers," the city manager said, and staff promised a deeper analysis and a subsequent report from the chief of police and finance.

The city also recorded a substantial one-year health-fund loss. Chin said total health claims were about $4.2 million higher than the prior year, producing a net loss for the group medical insurance fund of roughly $2.2 million even after a $2 million one-time transfer from the general fund. He said 21 catastrophic claims — averaging about $300,000 each — accounted for 38% of total claims activity. "We received $778,000 in stop-loss reimbursements for 2025," Chin said, "but stop-loss coverage applied to only four of the 21 catastrophic claims."

Council members asked whether staff would plan additional transfers to cover the health-fund deficit and whether such transfers would affect the general fund's target days of operating reserves. Chin said staff would consider increasing the one-time transfer if audit adjustments hold and would present options during the budget process. "If this holds true after all the audit adjusting entries have been made, staff would recommend increasing that $2,000,000 transfer from that residual amount," Chin said, noting the general fund days-of-fund-balance would drop from 75 to 73 days and still remain above the 60‑day policy minimum.

Other fund highlights included a healthy water and sewer fund (about $100.3 million in working capital, roughly 389 days of working capital) despite a 6.6% drop in water consumption attributed to a milder summer and higher rainfall, and a stronger-than-expected commercial solid-waste enterprise that produced additional municipal revenue after the city resumed commercial collections.

Chin said the annual audit was being finalized and that figures remain preliminary pending audit adjustments; staff promised a follow-up with more detailed analysis on overtime drivers and proposals to stabilize the health-fund long term.

The council did not take formal action on these reports but approved the associated consent agenda items and asked staff for additional follow-up during the budget cycle.