CC PACKET 02031998 - Laserfiche WebLink

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1 1 MEMORANDUM 1 DATE: January 27, 1998 TO: Mike Mornson, City Manager 1 FROM: Roger Larson, Finance Director ITEM: RENEWAL OF LAUDERDALE & FALCON HEIGHTS ' CONTRACTS Under the terms of the police contracts with Lauderdale and Falcon Heights, both If parties are to commence negotiations for the annual costs on or before April 15' of even numbered years (this is a two-year cycle). I' Attached is a review the reserves created by the contracts since their inception in 1994. Some highlights of the activity include: I'. 1) Since 1994, all squad cars purchased have been funded by contract revenue. 2) The total reserves on hand after squad car purchases totals $56,638. ' 3) In 1998, the capital equipment budget includes three new squad cars and a $10,000 office copier funded by contract revenue and reserves. 4) Additional reserves will be available from the 1997 contract activity. ' A large part of the contract reserves was created by budgeting officers at full-scale, while in reality the officers hired receive a starting wage of 75% of scale (It takes three ' years to reach full-scale). Since we have completed the three-year process of step increases, the reserves generated by the contracts should level off at approximately $50,000 annually. Previously, we discussed that once the first three years of the contracts were completed; ' expenditures would become consistent and should remain inflationary. Thus, the annual increases to Lauderdale and Falcon Heights would also be inflationary. ' Basically, I am comfortable with an inflationary increase for both contracts. However in 1998, costs for employee benefits and health insurance increased significantly. Those costs should be reflected in the contract increase. It would be my recommendation to ' propose a 5% for the first year and 4% for the following year (the last increases were 7.5% and 4%).