The rollercoaster of planning the City of Turlock’s 2010-2011 budget has had its ups and downs, but Tuesday’s meeting of the budget subcommittee ended on a high point, namely, the discovery of approximately $4 million in effective General Fund reserves.
The subcommittee members learned on Tuesday that two funds, a Worker’s Compensation Insurance Fund and a Self Insured Casualty Fund, were each overfunded by about $3 million. By returning some of that money to its original sources — the General Fund and various enterprise funds — Turlock could have an additional $2 million per year for the next two years in one-time reserve funds.
“That’s good news,” Mayor John Lazar said.
In even better news for the City of Turlock, by reducing funding for those two funds to better match expenditures Turlock will save an additional approximate $1 million per year in ongoing costs.
The shift would give Turlock an additional $3 million each year for the next two years. That’s much appreciated wiggle room as the city approaches an expected $5.49 million deficit this year.
But it wasn’t all good news Tuesday afternoon. The city’s self-funded health insurance fund “is not healthy,” City Manager Roy Wasden said.
The reserve fund is down to under $300,000 this year due to increasing costs. The City will likely either reduce benefits offered to employees to fit the current contribution, or else pass along cost increases to workers. Some cost increases could hit retirees still under the City of Turlock health insurance plan, who are currently asked to pay the same as existing employees despite coverage costing more.
On average, medical and dental insurance costs are projected to increase 22 percent citywide this year, though some departments will see a larger percentage increase. The City Council budget has the largest projected health insurance cost increase, at a whopping 110 percent more than a year ago.
The large increase in council health costs can be attributed in large part to a policy that sees the City pay into a health savings fund even if council members opt out of coverage. That funding is used to subsidize shortfalls elsewhere in the City, but the policy could be overturned in the coming budget.
According to City staff, that citywide 22 percent increase is in large part due to an 8 percent cost increase which was mistakenly not budgeted for a year ago. Costs are projected to increase an additional 15 percent this year.
Despite the increasing costs, the City of Turlock still pays less in health insurance than most governmental agencies.
The budget also projects an eightfold increase in State Unemployment Insurance costs across all departments, regardless of whether a department has generated unemployment claims. That money is used to pay for all unemployment claims unrelated to the June 30, 2009 layoffs, which are billed directly to departments.
During the Thursday meeting of the subcommittee, a possible change to bill SUI increases to the departments which generate the expenses will be considered. Currently, most unemployment costs are related to part-time contract workers filing for unemployment once their term is completed, city staff said.
“It’s alright, healthcare is going to make it so we don’t have any part-time employees anyway,” said Councilman Ted Howze.
Following the implementation of the federal health insurance reform, part-time employees could become too expensive for the City to hire due to massive benefits costs, he said.
Eliminating vacation conversion pay citywide — another proposal made by Howze — could generate more possible savings for the City. But the City could incur additional costs next year associated with a changeover to a new software suite in the finance department.
There were a few other bright points, including news that the City Attorney department has reduced its impact to the General Fund by more than 60 percent since Phaedra Norton assumed the post two years ago. Hope was also expressed that the City may be able to cut down on costs for mandatory ethics and sexual harassment training by partnering with the City of Modesto.
Some solutions were even proposed for an estimated $600,000 plus shortfall in costs related to maintaining and operating the city’s streetlights. Approximately $285,000 of that will go to maintenance, while the rest is electricity costs.
Lazar announced he would meet with Turlock Irrigation District staff next week in hopes of brokering a price break on electricity. A pilot induction lighting project also looks to shift 1,800 Turlock streetlights to more energy efficient bulbs this year, saving $75,000 annually, but many of those savings won’t be realized until next year.
City Engineer Mike Pitcock suggested shuffling cash between a few different street maintenance funds to free up additional dollars for streetlights in the meantime, and also responded to Howze’s requests to see potential cost savings associated with turning off some streetlights.
About 48 percent of Turlock’s streetlights — mainly those in newer neighborhoods — are part of benefit assessment districts, where residents pay to keep the lights on. In the remainder of Turlock, the City would save about $140,000 annually by turning off half of the streetlights — a strategy employed by the City of Fresno.
The budget could also see revisions to the City’s Economic Development and Redevelopment Department, which Howze sees as somewhat redundant. The City currently pays the Stanislaus Business Development and Workforce Alliance to provide economic development services while doing some similar functions in house.
Howze suggested that the department might be moved to a pay-for-performance model. He also floated the idea that, should the Convention and Visitors Bureau be rolled into the City of Turlock — a solution he proposed for recreation cost shortfalls a week ago — a single position might assume both CVB and economic development duties.
“There needs to be some discussion of putting a stop to our duplication of services,” Howze said.
The subcommittee will meet next at 2 p.m. on Thursday in the Yosemite Room of Turlock City Hall, 156 S. Broadway, when public safety budgets will be discussed.
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