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Okaloosa County staff propose 3% market adjustment, recommend holding millage and reserves amid insurance uncertainty
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Summary
County Administrator Hofstead proposed a placeholder 3% market adjustment for employees and staff recommended not using general‑fund reserves to balance FY27; budget staff estimated a 5% health‑insurance premium increase would cost about $600,000 and suggested using pro‑share refunds to offset it.
County Administrator Hofstead told the Okaloosa County Board of County Commissioners on April 21 that staff plans to include a 3% market adjustment for employees as a placeholder in the FY27 budget and will revisit that assumption once state revenue outcomes are known.
"Each 1% market adjustment is about a $705,000 impact across the entire budget," Hofstead said, adding that a 1% change translates to about $285,000 for the general fund. He said the county’s plan is to start with a 3% market adjustment unless revenue forecasts require revision.
Budget staff member Sheila Fitzgerald reviewed reserves, debt and benefit assumptions. Fitzgerald said the county meets its reserve policy of no less than two months of general‑fund operating expenditures (about $28,700,000) and that current reserves total roughly $31,000,000—an excess of about $2,200,000. Given the uncertainty of pending state action, her recommendation to the board was to avoid using general‑fund reserves to balance FY27.
On health benefits, Fitzgerald said the county is completing an RFP and that consultants estimate a possible 5% premium increase, which she said would equate to about $600,000. She noted roughly $1.8 million remains in pro‑share refunds that the board could use to offset premium increases.
"We are recommending in this fiscal year 27 budget to hold the current health plan and HSA contributions at the current rate for employees," Fitzgerald said, adding that the pro‑share dollars are an option to avoid passing costs to employees or dipping into the general fund.
Several commissioners voiced support for protecting employees’ buying power and for the proposed market adjustment, while acknowledging the need to remain nimble given economic uncertainty and possible state actions. Hofstead said staff will conduct department one‑on‑ones in May, produce draft budgets for July workshops, and return with refined projections once the revenue‑estimating conference and property appraiser certifications are complete.
Next steps: staff will present detailed personnel and benefit cost impacts during May and July reviews and will recommend a course of action on using pro‑share refunds, applying market adjustments, and the final millage rate as revenue information solidifies.
