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Julie Bartell 'Lo 1 73kdrE- From: Dan Tesch Sent: Friday, December 11, 2009 12:00 PM To: Julie Bartell Subject: FW: Budget email... From: Dan Tesch Sent: Friday, December 04, 2009 4:44 PM To: droeser @comcast.net; j- bergeson @bethel.edu; jeff @maildyne.com; Jeffery O'Donnell (jeff.odonnell@impact- group.biz); Kathi Gallup Work (kathi.gallup @dllc.org) Cc: Alan Rolek; Dan Tesch; Dave Pecchia; Michael Grochala; Rick DeGardner Subject: Mayor Bergeson and City Council Members The 2010 Proposed Budget presented to Council includes reduction of 5 FTE positions and furloughs of 2 weeks for employees and 3 weeks for Directors. Staff review of the budget during this week has made an additional $130,000 available due to these reductions. Staff suggests that these additional funds be applied to the areas identified by Council at the last work session - increasing street maintenance and storm drainage maintenance efforts, capital equipment replacement and contingency. This would help to bring these areas more in line with the where they should be according to city documents. Council member -elect Rob Rafferty distributed a matrix at the last work session relative to budgeting for health insurance, showing actual to budgeted amounts and the discrepancy between them. The budgeting philosophy and general policy followed by staff for many years has been to budget for employee health insurance using the family contribution rate and to factor in an adjustment for the expected increase in premiums for the coming year. Up until the last year, the city's renewal date for health insurance was September 1. Last year this changed to January 1. This method of budgeting is conservative given certain uncertainties in expected increases, employee status changes, etc.. For example, the expected premium increase used in 2009 for budget purposes was 15 %, but actually was 30 %. This method of budgeting allowed the additional 15% to be absorbed in the budget as presented. At the same time, actual benefit levels offered in the city offered health insurance plans have decreased over the last few years. The budget philosophy being used now results in a difference of about $180,000. A less conservative budgeting approach may be closer to actual cost but would not provide for these unknowns. A budgeting policy discussion surrounding this budget approach is recommended. Dan 1