Budget Meeting Minutes 05/11/05 - Laserfiche WebLink

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as needed fire facilities, items from the Planning and Development Department, or road operations and maintenance. He said this would allow the City Council to make the decision on what to spend the money on in the context of the "universe of all of the City's major needs." City Manager Taylor stated that calling the bonds provided an opportunity to have an annualized revenue of $500,000 into the General Fund in reduced interest cost. He said this was part of the strategy to determine what kinds of investments would produce out-year revenues to provide for ongoing costs as .opposed to one-time costs. Mr. McDonald asked if there would be an interest payment in addition to the seven percent should the Supreme Court rule favorably. Ms. Hardt affirmed that any liability owed to the PERS system bore interest at eight percent, as well. She was uncertain as to how retroactive this would be. Mr. McDonald asked what percentage of payroll was made up by fringe costs and PERS. Ms. Hardt thought the overall fringe load was over 40 percent. Assistant City Manager Jim Carlson said it could be 50 percent. City Manager Taylor said it would be very helpful to the Budget Committee to understand the entire fringe cost. He emphasized the importance of remaining a competitive employer. Mr. McDonald remarked that the committee had seen an unrelenting escalation of costs. He asked at what point the cost benefit would be outweighed by the fringe cost. Ms. Hardt related that the PERS actuary anticipated that the rate will level out. She noted that some of the reform involved an entire new retirement plan and the employer rate for that system was likely to be 11 percent for the fire and police departments and`eight percent for the rest. Mr. McDonald agreed that PERS . '" rates may flatten but underscored that health care costs were not flattening. City Manager Taylor stated that the six-year financial forecast was intended to help to project these increases. Mr. McDonald said one strategy could be to offload jobs to another entity. City Manager Taylor acknowledged this to be a possibility but felt it could also ultimately cost more money. fIe agreed that employee costs were a large part of services costs. . Ms. Beaman commented that outsourcing would only work to save money if the higher wage jobs were butsourced. She said outsourcing lower wage jobs, the jobs most likely to be outsourced, tended to have costs that outweighed benefits. Ms. Beaman noted that contract employees negotiated for benefits and asked what cost-saving measures the exempt employees had taken. City Manager. Taylor responded that the City had maintained a non- exempt salary schedule that was significantly lower as well as having created a different administrative structure within the Public Works Department that reaped some cost savings. In response to a question from Ms. Beaman, City Manager Taylor indicated that there was not a specific cost-saving strategy for exempt employees in the FY06 budget. Mr. Clark asked what mechanism was used to determine the cost of health. Ms. Hardt responded that the cost of health insurance would be discussed by Ms. Daut in the next presentation. MINUTES-Eugene Budget Committee February 7, 2005 Page 13