Memo

TO:                 Mike Wildgen

                        City Manager

CC:                 Debbie Van Saun

                        Assistant City Manager

Dave Corliss

Assistant City Manager/Director of Legal Services

FROM:           Frank S. Reeb

Administrative Services Director/City Clerk

DATE:            May 7, 2004

RE:                 2005 Significant Issues Memorandum

Introduction

This memo provides a brief budget overview and significant issues facing the three divisions of the Administrative Services Department (City Clerk, Risk Management, and Personnel).  We’ve submitted a proposed budget that allows us to maintain current services while recognizing the significant fiscal challenges facing the City.  As you will see, while all three divisions are requesting increases above 2004 budget levels, we believe there are legitimate reasons and valid justifications for these increases. 

City Clerk

The City Clerk’s Office is requesting an overall 2005 budget that is $29,566 higher than budgeted in 2004.  $25,000 of this increase comes from increased contractual services.  First, 2005 is a City Commissioner election year and funds have been budgeted assuming the City will not share 2005 primary election costs with Unified School District 497 (which would happen if there are not enough school board candidates for a primary election).  In addition, according to Patty Jaimes, County Clerk, state mandated software changes required to be completed by 2006, could be completed in 2005 and those costs may be passed on to city and school district elections.  The second reason for the increase in 2005 requested contractual services is due to a requested increase in Legal Advertising funds.

As for program improvements, we’ve requested funds for business license, “Click2Gov” software.  This software will make it possible for citizens to access the existing HTE business license system.  The program would allow applicants to fill out business license applications through a link on the City Clerk website.  This request may also be mentioned as a 2005 E-Gov application but because of its importance to our office we also wanted to mention it as a program improvement. 

Risk Management

Risk Management is requesting an overall budget that is $121,514 higher than budgeted in 2004. The primary reason for this increase is requested transfers to the liability reserve ($100,000) and a $50,000 increase to the workers’ compensation reserve.  The liability reserve request is based on current and projected city litigation expenses that are causing and will continue to cause significant depletion of the current reserve level.  As for the workers’ compensation reserve fund, it has been drawn down over the last three years primarily because of two catastrophic claims.  As a result, the workers’ compensation reserve balance is significantly less than that recommended by the State of Kansas for self-insured plans.

As for contractual services, insurance coverage costs are still increasing but have begun to stabilize and we expect increases in the 0-10% range.  The addition of a Fire Station in 2005 will also impact property, vehicle, and excess workers’ compensation coverages.  However, despite these expected increases to current premium amounts, the overall total contractual services requested category is actually almost $46,000 less than budgeted in 2004.  This overall decrease is because of staff securing better and significantly less costly auto and professional liability coverage for the Fire and Medical Department in 2004.

Inadequate staffing numbers in the Risk Management Division continue to be a major issue.  While all three divisions are understaffed, Risk Management staffing is most critical.  The Division has remained at its current staffing level since 1987 although the number of City employees has increased more than 46% since 1992.  For this reason, our highest priority Program Improvement is a request for a Risk Management Specialist to provide entry-level professional/technical support to the Division.  Because of the increasing volume and complexity of the work, current staff levels are not sufficient to maintain current service levels. 

Personnel

The Personnel Division is requesting an overall budget that is $104,464 higher than budgeted in 2004.  The vast majority of this increase is because of an increase in total contractual services due to funding necessary to complete the following projects in 2005: Employee Satisfaction Survey (City Commission initiated in 2002); Healthcare RFP; and a Compensation Salary Survey. 

As for significant issues, projected double-digit health care increases will continue to be an issue.  At this relatively early stage, we can expect an 11% increase in total plan costs for 2005.  Assuming no plan design changes and assuming all Healthcare Committee goals are met, and based on preliminary cost projections, the City should budget a total of $5,387,408 for 2005.  This amounts to an increase of $408,558 from 2004.  Employees with family coverage will also be asked to increase their contributions.

Another significant issue for 2005 is the absence of an Employee Assistance Program. Without a comprehensive EAP, Personnel staff, Risk Management staff, and all City supervisors and managers will continue to spend significant amounts of time addressing employee issues involving traumatic incidents, marital, domestic, psychological, stress, or substance abuse problems that manifest themselves in the workplace in the form of reduced job performance, behavioral/disciplinary issues, drug and alcohol policy violations, and workers’ compensation claims.  We are therefore requesting a program improvement (department ranked #2) for a comprehensive EAP to provide employees and supervisors, the professional assistance to deal with these issues.  Based on a return on investment calculator we used, the City can expect to save $10.60 (in reduction in workers’ compensation claims, reduced absenteeism, medical claims and increased productivity) for every dollar spent for the EAP program.  

Lastly, we’ve requested a program improvement for a staff development and education program.  In the past six months, several management team sub-committees have reported on the need for additional staff training in areas ranging from risk management, attendance, customer service, performance measurement, and various city policies (e.g., Family and Medical Leave Act).  Other citywide committees have recommended staff or supervisor training as well (e.g., recommended HIPAA and job evaluation system and compensation pay programs training).  This recommended program would initiate a coordinated supervisor and management education program to provide the tools for managers to lead the organization according to established performance and customer service guidelines. 

Conclusion

We believe all of the requested funds and programs mentioned above help meet City Commission goals and objectives by working to create and foster a safe, high-quality, progressive work environment to allow City staff to be as productive as possible. 

If you have any questions about this information, please do not hesitate to contact me.