Memorandum

City of Lawrence

City Manager’s Office

 

DATE:

4/28/2008

TO:

Mayor and City Commissioners

FROM:

David L. Corliss, City Manager

CC:

Cynthia Boecker, Assistant City Manager

Diane Stoddard, Assistant City Manager

Casey Toomay, Budget Manager

RE:

Budget Issues Related to Employee Compensation and Benefits for 2009

 

As we develop the 2009 City Budget, we will be paying very close attention to costs related to employee compensation and benefits.  As you are aware, we have a number of committees working on these issues, two of which are highlighted below.  I will be using this information, along with direction from the Commission, to develop my recommended budget for 2009. 

 

v      Employee Compensation Committee.  Actual expenditures in the General Fund related to personnel have increased 36% since 2003.  Some of this increase is due to the addition of positions, however, some of the increase can also be attributed to the structure of our base pay programs.  A committee has been created to develop recommendations for long-term structural changes to the primary base pay program that place greater emphasis on pay-for-performance principles and that allow greater flexibility to align the compensation budget to available revenues.  The committee’s work should be completed by May 1, 2008. A second committee is working to develop recommendations for a more effective performance appraisal process. Changes to the primary base program are expected to have a measurable effect on the 2009 budget.

 

v      Healthcare Committee – The healthcare committee has received contract renewals from Blue Cross and Blue Shield of Kansas and MedTrak Pharmacy Services which indicate expected total cost increases of approximately 10% (and include the previously approved phasing in of increased coinsurance maximums for both medical and prescription drugs).  The committee is developing recommendations on how to mitigate these increases through City funding (including some use of retained earnings), employee contributions, and plan design changes (i.e. increased co-insurance maximums).  Those recommendations are expected by May 9, 2008.  As a reminder, we will be sending out an RFP for medical, dental, and prescription drug plan related services (e.g., third party administrator, reinsurance, and pharmacy benefits manager) in 2009 for the 2010 plan year.