City of Portsmouth, New Hampshire 2022 - 2024 City Council, 25 Jan 2023

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From YouTube: 1.25.2023 City Council Work Session

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1.25.2023 City Council Work Session

A

I only see you when you pop up on the screen yeah, but it's always the side side profile.

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Welcome everyone to tonight's city council work session uh for wednesday january 25th on the.

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Budget I know that there was a meeting that just ended so we're gonna um here shortly.

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Going to pass it over city manager to walk through schedule.

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Thank you mayor, good evening. Everyone. Thank you to the council. Thank you to my colleagues who.

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Are here tonight we are pleased to present what we know to be in the picture for the fy24 budget.

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As we know it today, we know that will change, but we're happy to walk through with you. What we know.

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Today- and this will be our agenda similar to how we we covered these topics this time last year,.

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We'll go through the schedule first, so people have a sense of expectations and then judy will jump.

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Into the forecasting itself and then we'll leave time for discussion by council and then always.

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Public comments, so when we sought to build this year's budget, we reflected on the goals that had.

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Been compiled by this council, which did not exist at this time last year, if you'll recall, these are.

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Now the goals that are updated that were created by you that we, um through which you know we threw.

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We run all of our operations and our requests through the through the lens of these goals and.

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The budget schedule is as follows: tonight we're at the work session at next at the next regular.

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Council meeting, which is february 6th, we will hold the public hearing on the cip. It will not be the.

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Long presentation that you saw at the work session that presentation is available on our website and.

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We will be there to answer questions and hear from you in greater detail on that. Then of note.

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The fire commission will hold this public hearing on valentine's day. Wow. That's that's valentine's!.

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Day um as well as the school board, I guess with some of us aren't going to get celebrate.

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Valentine's day and uh and then lastly, the police commission will meet on wednesday february 15th.

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Moving into march, we look to adopt the cip because, as you know, the cip has adopted in march that.

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Then gets incorporated into the budget march is also when we will complete the department head.

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Conversations get to work on putting the budget to print, and on may 1st we will have that document to.

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You on may 8th. We will have the public, the first public hearing on the budget and then per your.

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Request we're going to have a super monday work session for all of the departments. Will.

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um And in order to be determined, make your their presentations we'll have one big gigantic budget.

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Review and listening session, we think in the in the same way that you held uh requested last year.

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We'll have a public dialogue session on thursday may 18th and we'll do it again. I think, with your.

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Approval in three different locations trying to cover different time frames. I know council moreau.

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And I will have planning board that night, but we'll figure it all out and then we will have a.

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Budget wrap up work session on monday may 22nd with hopes in adopting the budget on june 5th.

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So that's the schedule, it's also on our website. I know it's a lot and with that I'm going to stop.

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And turn it over to judy and if it's amenable to you all, I think questions at the end would.

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Be preferred but um judy. Thank you. Thank you um good evening, mayor members of the city council.

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um Today, we're just going to walk through start with the fy 23 final.

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Budget and then turn into the long-term financial planning tools, because this is.

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A really important aspect of how we build our budget and then we'll talk about some.

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Of the impacts and highlights that we see and forecasting currently for fy24.

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So we'll begin with the fy 23 budget and as it was adopted on june 5th of 2022, it was just under.

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132 million dollars 131.7 million dollars and when we prepare the budget, of course, we don't have our.

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Tax rate, so we estimate our tax rate at that time. There are a number of factors that go into state.

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Revenues, the rooms and meals the highway block, grant that we that are unknown in the county tax.

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That are unknown at the time that we're preparing on budget. um We did have um local revenues of 23.

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Million dollars state revenues of 7.4 that we were anticipating and then the use of fund balance of.

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2.8 million dollars and I'm going to talk more um in detail on the use of fund balance later in this.

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Presentation, but, as a result, as I go to the state to set the tax rate, I'm going with these numbers.

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Right here, and the tax levy is basically the number of the dollars that we must collect from.

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The uh all the properties in portsmouth to fund all the services that we have in the general fund.

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So when we went when we were preparing the budget, we estimated the tax rate to be 15.30.

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Which is a 27 increase over the prior year when I went to the state and filed all the necessary.

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Reports we did get final numbers um for the adequate education and a one-time revenue for.

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The retirement employee contribution, which was the adequate education, which is the next slide.

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Was it was higher than we anticipated and so with all the adjustments that took place during.

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The tax rate setting we were able to reduce that estimated tax rate down by 10 cents. So the final.

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Tax rate of 20 at 15.20 was an increase of 17 cents per thousand over fiscal year. 22.

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So I wanted to focus on the one-time revenues and we talked a lot about this when we were.

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Preparing the fy 23 budget, the adequate education grant again, um we anticipated.

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3.1, we actually received 3.285 million dollars and again this is one time so we're not going to see.

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um This revenue moving forward in fy 24. and then on the retirement contribution of.

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Reimbursement we received a little bit less than we expected, but the two combined of 3.9 million.

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Dollars really equates to 61 cents on that tax rate, so that was your savings for uh fiscal.

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Year, 24. we'll also talk about retirement later in this presentation going forward.

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So um once the budget is adopted, anything that comes after that any adjustments to.

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That budget would be it require a supplemental appropriation, the final budget adoption we had.

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Two: supplemental appropriations, one for the dsa settlement for 500 000 and then we.

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Had a recent supplemental appropriation for the mcintyre design and engineering of 150. so that.

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Amends your budget, so this is the final legal budget for fy 23 and it's 132.4 million dollars.

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So as we talk as we prepare and start working on the budget, you know one of.

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The one of the most important things is really not to focus on one year at a time.

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That makes it difficult when we had the one-time revenue source, because we were kind of forced.

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Into you know having that affect the one year and not be able to spread it out over over.

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Time but but our main focus on a financial forecast is really to to to eliminate any.

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Spikes or large increases or decreases in any given year, and and so we'll talk about.

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um We'll talk about some of those financial tools that help us along that line next slide.

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So we have a number of policies that assist with stabilizing costs.

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These policies were put into place. You know several a couple decades ago and really has put.

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Portsmouth in a very uh strong financial position over a number of years- and we incorporate this.

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Approach recap and we carry over for several years. These policies has also placed portsmouth ahead of.

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Other communities helped us get through covid-19, and so we want to continue this long-term planning.

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And now we'll go over some of those policies as we move forward. So uh what.

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Is fun balance, and I want to start with this because I think that it's confusing.

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um To some, but in um when we talk about fund balance, if the term it's a governmental.

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Reporting term for the general government on a modified basis of accounting using current.

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Financial sources, so what what does that mean? We look at a balance sheet assets, liabilities and.

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Fund balance and if you look at the the fund balance sheet, it's all on a current financial.

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Resource which means we're not reporting any capital assets such as land or buildings, we're.

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Not reporting any long-term liabilities such as debt service and any other long-term liability.

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So fund balance is a term that we use there's five components of fund balance.

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And what we really focus on is our committed fund balance and our unassigned fund balance.

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So the unassigned fund balance was an ordinance that was um well with the.

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Policy actually was established many years ago, and it was amended in 2013 to say that we want.

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To annually maintain an unassigned fund balance between 10 and 17 percent of the appropriations.

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Unassigned fund balance is your area where it's not designated for any specific purpose.

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um And this is where, mostly, when you do, supplemental appropriations or use.

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To offset the tax rate, we take it from unassigned from balance.

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So at the end of june 30th of 2022, we just had our audit presentation and our unassigned fund.

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Balance uh was just over 17 million dollars or 13.57 of appropriations, as you can see from this.

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Chart here from fiscal year 16 through 22, we pretty much remained in that area and remained.

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Pretty consistent, which is very favorable to our rating agencies and then total fund balance.

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Combines the total of those five components of fund balance as a whole. This is also looked at.

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By standard and pores, and the good measurement tool to use here is to remain over 30 percent.

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um In any given year, that's a that's, also a very favorable position to be in so at the end of 22.

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It was 39.7, I think my chart is a little off on that one, but I should say 22., but it was.

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um 39.7 of appropriations so now we'll talk about the use of unbalance. So.

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um The use of fund balance can take place during the budget process, as you're deliberating the.

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Budget, we typically use some of our reserves to offset the tax rate and then any supplemental.

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Appropriations beyond that would also take in consideration the use of fund balance here.

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As you can see, every year we utilize sun balance and what and how we replenish. It is surpluses.

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From the prior year, when we close the year, if there's a surplus, that surplus folds back.

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Into fund balance- and then it's utilized in the next year to offset the taxes, so it benefits the.

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Taxpayer, as you can see, in fy 22, we used nearly 5.7 million dollars and in fy 23 3.4 million.

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Dollars and the next slide actually itemizes those uses of fund balance. So um if we didn't use this.

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Fund balance, for instance, in fy 22 5.6. This would just be added on to that tax levy and then that.

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Would be distributed through the tax rate and collected so so we always rotating out the use.

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Of thumb, balanced surplus gets closed back into some of those reserves and the an assigned fund.

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Balance so that we can use it to keep the tax rate as stable and as possible going forward.

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Now we have the two supplemental appropriations.

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um That I talked about earlier, and so we ended the year in fy, 22 or 13.57. We use 650.

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000, it drops the unassigned fund balance down a little bit, but you know we're.

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Probably anticipating some surplus at the end of fy 23 and we'll be able to replenish that.

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So now moving on to the leave, it termination stabilization fund. This, this policy has been.

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In place um for a number of years, and what this was was earlier back in uh prior to 1996, that all.

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Employees were able to accumulate sick leave and cash that sick leave out upon termination.

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So um this caused significant spikes in valleys and unpredictable budgets within the departments.

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Because also the individual departments had to know who was retiring in that particular year.

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Who was leaving and then their budgets would be dramatically reflected in spikes to have to budget.

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That year of you know, year of year, you could have three people leaving in one year, no one leaving in.

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The next two years so in order to be stable here and to help mitigate those large hits in any one.

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Particular year there was a couple of things that happened. One was during negotiations of all the.

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Labor agreements that any new employee coming aboard after 1996 no longer could cash in that.

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Sick leave so one that that reduces that long-term liability and the accumulation of that liability.

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Just getting larger and larger over time and then the creation of the leave a termination fund.

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um Was established so that we did an actuarial study and we determined over a long period of.

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Time what we would need in the future to pay this liability, and we have the departments just fund.

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A certain amount pretty level for the most part and we had adjusted over time. But that would help.

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Offset that spikes and valley and keep the budget easy to maintain this chart here shows general.

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Government, school police and fire each individual, so the orange line represents the budget amount.

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In those departments from each year and then the blue line represents the actual paid out amount.

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For leave in reference to those departments, so, as you can see, the blue list spikes. So if you had to.

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Budget that annually within your budget, that would be very unpredictable and really hard to manage.

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um The next slide actually tells you uh pretty much where we're at now so.

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um Over time it has been dramatically reduced uh through um for students, and so if you look.

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At the table, on the right hand, side, the um the total amount of employees now is on the.

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General fund side only is down to 56 employees out of all employees, so we're at 7.86 percent of.

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Eligible employees, this fund will not go away because we still use this fund to pay out for.

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Vacation upon termination- and so it will continue but we'll see that it's really dwindling down.

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I anticipate that we will probably use the same appropriation number from.

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Fy 22 that flight that we use in fy23 and probably moving forward in fy 24.

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So the next slide shows the liability as of june 30th, and I think this is pretty.

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Interesting so back in 2000, when we pretty much implemented this policy, the liability just for.

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The general fund was at 7.6 million dollars and this is when we implemented it. So you know.

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um So we still had employees accumulating time and, as you can see in 2002 it's still growing. It was.

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Over 10 million dollars and then as people leave, you can see that that liability is is dwindling.

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Down so at the close of fiscal year, 22 is 4.4 million dollars for general funds. So it's working.

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Health insurance- this is very similar to leave.

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It term the spikes and valleys in health in health premiums is very unpredictable.

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um We had set aside a policy to use a 10-year rolling average of the premiums and then.

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Increase the budget for the departments by um by that 10-year average. This is an area where.

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um The city manager and I have had lots of conversations. I think this is an area where we.

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Really need to do some, um maybe different approach to this policy. It has become very skewed over time.

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Because we were going off a budget from year to year to year and the number of ftes that are in.

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Place so the changes in families and plans and and vacancies, it can all kind of skew that number, but.

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This is just talking about the policy today. Health trust gave us a guaranteed maximum rate of 3.6.

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Percent, but that 10-year average is 2.1. So if we ask the departments to budget the 2.1 percent or.

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Are automatically underfunding the current year um the school department's school care came in at 3.5.

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But that 10-year average is 5.3. But if you look at the table down below um where, where the proposed.

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um Estimated city cost- and we include all vacancies at this point- is about 15.6 million.

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Dollars, but using this policy, the 10-year billing average we're budgeting 13.9. So if all these.

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Positions were filled and policies and premiums were the same we'd be short about 1.7 million.

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Dollars which we would use from the stabilization fund. So what we're going to look at that? A little.

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Bit more closely going forward, one of the things that helped us sustain this fund was the holiday.

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Premiums, we talked about holiday premiums last year, and this essentially was a reimbursement.

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I have found the health test. It was a law that was set back in in fiscal year, 12. That stated.

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That they could not that the health trust in school care could not keep a high surplus more.

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Than their capital adequacy reserve target, so they they maintain a certain amount in their.

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Net position for their capital adequate reserve and if their surplus goes higher,.

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Than that, then they have to refund that we've already got notification from health trust that.

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The that the way that their adequate capital adequacy reserve is that we will not receive.

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Any refund in fy24 we had received refunds in the past because covid there was, when you ever.

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Received over a million dollars, but going forward that's going to really start to dwindle down and.

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Go away another reason to look at policy and how we handle the health insurance stabilization fund.

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I'm moving along the cost of living adjustments.

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So here's a table excuse me of the 16 collective bargaining agreement.

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um We've ratified a lot of the contracts, but we still have.

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um Contracts that are highlighted uh in tan that will expire on june 30th of 23, and we have still.

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Cafeteria and custodials that are still behind a little bit and so going forward and putting our.

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Budget together for 24, we'll probably be trying to estimate some collective bargaining contingency.

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The 10-year rolling average in the contract is 2.55 percent. There's a little history table on.

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What the actual um november to november, we use the boston, cambridge newton, mass new hampshire.

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um A cpi, and that came in at seven percent for november 10-year rolling average, is 2.55 as you.

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Note here, social security for calendar year 23 is 8 percent most of the contracts that.

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Have been ratified for fy24 has a four of three percent and a sailing of five percent.

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So we'll be utilizing that and preparing our estimates for salaries.

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So now the new hampshire retirement, they set their biennium budget and they set their rates for a.

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Two-Year period so that changes fiscal year, 24 and 25. now how the pension is funded, is in three ways.

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It's the employee contribution, the employer contribution and their investment income and.

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That's what funds the pension! Now we had, um what took place in consideration in establishing these.

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Rates as you can see, the rates had dropped for 24 and 25, and that is because the new hampshire.

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Retirement system realized that 29.4 percent return on investments in their fiscal year, ending.

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June 30th 2021, which is the year that they used to establish those two rates now they've since lost.

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um Some investments going forward, but they're kind of locked into these rates for 24 and 25.

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So this will also help in preparing the budget of for fiscal year. 24.

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Now this is a conversation. That's been taking place on on the loss of state contributions.

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Trying to bring back some contributions from the state, but we always had received prior to.

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Fiscal year, 10 35 of the employee contributions for just for teachers, police and fire personnel.

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And then they reduce that they reduce that obligation to 30 percent fiscal year 10 to.

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25 fiscal year 11 and then zero percent fiscal year 12, and so we haven't received any up until.

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This fiscal year 23, where we received that one time, uh reimbursement of seven and a half percent.

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There um isabel uh house bill 50 that is asking if that passes, would restore this.

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7.5 percent state share of the employer cost for the police teacher in fire personnel. This.

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Would change the rates it would not be if it goes through. It would not be a one. A revenue.

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Source that we used in fiscal year, 23 for pairing a budget going forward preparing.

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This budget, we can't count on that. We won't have any expectation or know anything probably till.

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Till june, so we'll prepare the budget with what we do know in the rates that we have.

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So talking about the new hampshire retirement system and.

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um This unfunded liability piece, which has has come up in the past.

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um There is this huge unfunded liability that was, that was known back in 2009. uh The new hampshire.

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Retirement system established a 30-year plan to pay down this unfunded liability piece.

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um And part of what happened in fiscal year, 15 is that there was a gatsby pronouncement.

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That said to all governmental entities that you now have to put this liability piece onto your.

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Government-Wide financial statements, so this impacted our our financial statements. You can.

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See there's a row: that's set in fy 15 68 million dollars. Fy 22 is we're at 87 million dollars and.

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The highlighted assumed rate of return changed and when that changes that also changes, our liability.

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And the assumed rate of return is adopted by the new hampshire retirement system board of trustees.

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And the unfunded liability is calculated and provided to the members of the new hampshire.

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Retirement system, so that number that's in this line is calculated by the new hampshire.

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Retirement system we're told what to put on our financial statements so, um and it is a.

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Plan listening for in year, 14 uh 24 would be 15. um to to reduce that there's. Also another house.

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Bill on the table, hb 555- and this would require the state to transfer 75 percent of their biennium.

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Surplus to the new hampshire retirement system to reduce the retirement system's.

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Unfunded liability, which in return, would reduce future employer contributions. So again, that's a.

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House bill: that's just on the table now and we won't have any information on that for some time.

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But what happens with this unfunded liability- and this is why I want to bring this up so we're.

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Paying these contribute, the employer contribution rates and the table on the left shows a 15-year.

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Retirement rate from fy 9 to 24. and as you as shown in this table over that time, the total.

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Increasing for teachers went up, 239 police went up 164 percent, so this is a big lot. This is a big.

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Cost and the table to the right breaks down what those rates in the employer's contribution goes to.

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The the column that is gray is the percentage of the rate of uh that goes to the unfunded.

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Liability piece so, for example, if we look at the fire department, their new rate is 30.35 percent.

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So 77.4 of that rate just goes to the unfunded liability piece. Six point: two eight percent goes.

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To the normal cost pension plan, so they're theoretically, at the end of this 30 year.

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Or if this house bill 555 would help these rates are supposed to go down in the future [applause].

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So next is workers compensation that we're looking at for fy24. The overall cap rate increase was.

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Eight percent um breaking this down into all of the funds in the departments it. It is an increase.

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Of 10.8 to the general fund, now these rates are established by primex and they vary depending on.

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The experience and the number of claims from our employees that go through through primex.

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So this is the the dollars that they were that were asked to increase by.

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So looking at the operating budget and looking at the departments now.

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um We don't have sound numbers for you tonight in these particular areas. We do have highlights of.

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What is going to impact the fy24 budget, starting with the general government, and we have salaries.

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And color adjustments and also step increases, and we have delayed hires that were in fiscal year, 23.

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And any kind of time we do delayed hires, and this is the same for the police department.

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That impacts your next year's budget, because we we cut, you know halfway through the year in the fy 23.

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Budget but now we get to fund those positions in a full year, so that will have an impact for them.

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There's also other departmental needs and fte increases in information technology as.

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You know, we've been really ramping up the I.t department and the needs that we have for our.

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Safeguarding our systems, planning legal recreation and the finance department will all have requests.

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And then contractual services increase increases there, the police department again they do not.

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Have contracts going forward for their of police personnel, but they will have stepping pieces and.

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And also they're delayed hired. There is a crime analyst in two sworn officers that were delayed.

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And then they're they're hoping to uh discuss the social worker uh fte and reinstating the.

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Dispatcher position the mandated training this was mandated by governor sununu's executive order.

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um It required a total of 24 hours per officer for this special training. This was spread out.

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Over three years to to reduce the impact to any particular one year in the budget.

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Software maintenance increase and then a new initiative is the mental health and.

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Wellness program for officers, so that will be an impact to fy24 the school department.

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Again has increases in special education tuition and student transportation. They.

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Also have cola and stuff increases associated with their budget they've already released.

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Their budget in their their proposed starting point here, is at 3.99 increase.

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The fire department um is pretty bare boned they're they're, moving forward with the fy.

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24 budget, basically under one percent increase, they also, you know they do not.

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Have their contracts for their value personnel? So again that will be in collective bargaining.

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So moving on to non-operating is our debt service. We've had lots of conversations.

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Through the cip process so you've seen this chart, the city's policy is to use.

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No more than 10 of the annual appropriation towards the net debt service payment to keep.

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Debt, manageable, very positive, positive and favorable plan that is highly looked at by.

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You know rating agencies and it helps with smoothing out the budgets from year to year.

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Capital outlay, also in the cip, so in this policy really is to use.

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um No more than two percent of the prior year's appropriation for capital outlay,.

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Capital outlay is your: is your pay as you go for your for your capital projects.

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um This appropriation of 1.92 million is about 1.45 of the 23 budget.

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uh There's a note on the bottom that during fy23 budget deliberations, 405 uh thousand six hundred.

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Dollars of capital outlay was funded by arbor and that's how we were able to reduce the fy 23 budget.

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Now this is just a list of the capital outlay projects, just for your reference.

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Now the rolling stock is another policy that we have in the appendix in your.

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Budget books, and also in the cip, is a nice inventory of all of our equipment.

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And vehicles and a rollout policy so that we can maintain and keep keep the rowing stock.

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um Level funded pretty much or or I don't know what I say: keep the maintenance class.

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Down and keep our vehicles up to up to snuff uh during the fy 23 budget deliberations here.

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um The police used 187 600 from upper and the fire 196 000 from opera. So as you'll see in.

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Fy 23 we had uh 601 000 and the request right now and again. This is the request needs to go.

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Through and work with, the city manager before we put together the final proposed budget.

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Information technology, um as as we mentioned, we're ramping up the it.

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Department for necessary needs of upgrades and replacements, also in fy 23. We use 250.

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000 um from the opera funding for itv placement, so the request right now is at 1.6 million.

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So when we talk about using the opera funds, we put this table in here in the presentation so that you.

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Can see that we still have a list of projects that we utilized opera funds for, and we have a.

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Balance available that has been undesignated at this point of almost 5.4 million dollars.

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Rockingham county, um so obviously this is a tax that we have to pay the counties. um The.

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Rockingham county tax is based off of two factors: it's based off of what their adopted budget is, and.

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Then it's also proportioned throughout all 37 communities based on our equalized value.

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So, even though we're like the fourth populist community of the 37, our values are higher than.

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Some of the other communities and proportionment is right now 11.4 percent. Again this is a number.

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That we won't have determined until we get closer to setting the tax rate for 24..

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So what we anticipate for fy 24 is that fy 23 we funded 5.7 we've budgeted 5.7.

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Million dollars, the actual was 5.5 million dollars. So we're we're recommending at this.

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Point until we know a little bit more is to not increase the budget from fy 23.

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So with the proposed non-operating preliminary budget projections shows as as this and these.

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Are the topics that we talked about in overall uh seeing an increase of 185.

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000 or 0.71 now the other non-operating line. That's here, the decrease of the 1.2, those were.

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Certain supplemental appropriations that took place in fy 23 that we will.

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Not be using in or have to budget for an fy 24., so it shows us a difference.

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So that kind of wraps up, we don't have a combined total. As I talked about the individual departments,.

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Gave you some ideas of what they're looking at as an inside? So thank you judy and as a bit of.

C

A recap: um counselor tabor. We we took to heart your motion. We spoke to the trends. We share. What.

C

The budget drivers that we know to be true at this point we can consider potential tax.

C

Impacts such as that 61 percent offset that was achieved last year by the adequate education and.

C

The new hampshire retirement contribution and um what we will do now is take the guidance we.

C

Hear tonight work that into the department head budgets which are formally submitted to judy and.

C

To me by the middle of february, and then we have um and those will come on the heels of the public.

C

Hearings in that second week in february, and then what we will do is um put take, take your guidance.

C

Put it to work in our budgets, and the one thing I did want to mention is that we did not take into.

C

Account any additional considerations of the arpa money aside from moving two small items out of.

C

Capital outlay and and suggesting use of our pro, which were the cardiac monitors for the fire and.

C

The library courtyard, those are small dollars less than 50 grand total. I believe so. The idea is what.

C

Still remains to be determined is how to allocate that remaining 5.382 million in arpa money, which.

C

Has to be obligated by the end of calendar year, 24 and spent by the end of calendar year, 26.

C

So we will pause there and take questions comments. Anything you'd like to give us.

B

Before I guess, I have a quick question on health insurance policy.

B

um What uh I guess, what have you shared with the city manager about uh different paths, to go.

B

um [music] I think it would be helpful for always helpful for the council but helpful. The.

B

Folks, watching at home, explaining the difference between the health insurance that we provide as a.

B

City and how maybe somebody that's getting health insurance through an employer would understand.

B

Kind of premiums and deductibles how we have to think about and allocate for that is that doable.

D

um Well so we are self-insured, but it's managed through a third party which is health trust, so.

D

They established those rates, um I'm gonna, go back to the presentation. Is that helpful? Would.

C

That be helpful when you say self-insured. What is that? So, if somebody is not a small business.

B

Owner has no idea of when they're coming to you know health insurance. They just get it their w-2.

B

Employee and they they get health insurance. They have no idea how their health insurance works at.

B

Their company, can you explain what uh self-insured means from, I guess a health plan, for I will try so.

D

um So we're all pooled so we're we're called members of the health trust in.

D

School care, so it's across the the state of new hampshire who wants to be a member of.

D

um Of health trust who offers different plans and we negotiate those plans through contract.

D

Negotiations, I offer several plans, but in a in the union contracts some of those are limited to.

D

To what we offer as portsmouth is concerned, so those all of those members are pulled together.

D

So that it helps reduce the premium rates over across the board. Now, when they establish the.

D

Rate and what they did this year is really overall, their increases were eight percent uh overall, all.

D

Of their members, but for portsmouth the increase because they go by our experience of the employees.

D

Experience how often we use those plans, whereas that came in at like a 3.6 guaranteed maximum rate.

D

um The deductibles are are built into the to the plans themselves in what is selected through the.

D

Negotiations- I think, if I can add to this what's concerning to judy and to me, is the the continued.

C

Deficit, particularly in the school side- and we want to correct that right, so the policy.

D

um You know was, has been in place for a number of years and it worked really well.

D

um When we first implemented it, but we we do need to change, because um we've had increases in ftes.

D

And and we built it off a budget over budget over a budget and not really taking consideration the.

D

Actual cost, so we do. We do estimate the actual cost which is on that sheet and what we anticipate.

D

But the cost of for each department can shift dramatically each time. So if there's a qualifying.

D

Event that someone gets married say now they're picking up a family plan, which is much more.

D

Expensive than when they were single, so it it can vary over over the fiscal year. If we have lots of.

D

Vacancies typically, we have a surplus and that's how we replenish that reserve in the stabilization.

D

Fund so we've been able to sustain it for a period of time. What happened um the especially with the.

D

School department is a little bit behind quite a bit behind over time, and that is because they were.

D

Ones on health drives switched to school care. School cares premiums for are low at one time.

D

But we still maintain that 10-year rolling average on the health trust on a budgetary standpoint and.

D

Then they had changes in ftes, so we need to kind of analyze and cost out and try and come up with.

D

Some other kind of policy, as I mentioned, we um took a benefit from the holiday premiums, but.

D

Those are going to start dwindling away. Well, we'll get a little bit. You know, depending on how they.

D

um And their fiscal year, but I think it's worth noting well, I asked judy the question: isn't it.

C

As easy as moving all the people in school care back in the health trust- and that's not so easy.

C

Because it's a matter of collective bargaining- and I should also mention that, when we budget for this.

C

We budget most conservatively to assume that every new hire taking insurance takes a family.

C

Plan right so if, if that isn't the case, then we benefit, but we we do budget for that, and so I'm.

B

Always a little slow on these things, so the just the difference between a a self-funded versus a.

B

You know like if you have blue cross blue shield in a self-funded environment. The city is assuming.

B

The liability for all health care costs related to the employees that we we serve correct and.

B

It's managed through health trust and that's how we get our our rights down. Kelly harper is nodding.

C

Yes, yes, all right and so yeah, and this is kind of unfair because it's kelly's. But I guess this.

B

Sets up my my next question this is, you know I would definitely support. Looking at the policy.

B

Differences in terms of you know one lever of government to figure out how we can lower.

B

Our exposure and right sizes, the other thing I would love to see- and I don't know if this is.

B

A part of collective bargaining, but since we are in charge of every health, you know every.

B

uh Health issue for the city of portsmouth employs if we could figure out other ways.

B

To enable cost savings through you know it could be there's a lot of since covet direct primary.

B

Care where it's easy, just to you know, text a you know a doctor and you don't want people.

B

Not using health care because then it it builds up into higher costs uh longer down the road, but.

B

To explore ways that if we could spend money on increased programs that we would expect to.

B

Have healthier employees because of that to lower health care costs? The example that I would use and.

B

I don't know if we have any data from it, but the fire department went through a you know: a health.

B

And fitness program it wouldn't have to be health and fitness that relates to their activity. But you.

B

Know being able to make sure that people have very easy access to doctors, so they don't turn into.

B

Emergency situations, because you know the data two kids. I know it's not always super easy to get into.

B

Our primary care, so sometimes we go to urgent care. I know the cost may be higher for that than the.

B

Primary care so looking at the options outside of simply our policy when it comes to that and that's.

B

Probably a kelly harper question, but to lower our our total cost and make sure our employees.

B

Are as healthy as possible and they do offer different programs, they have wellness programs.

D

um And kelly, can you know by far speak to this subject? They also offer employees or encourage.

D

Employees to do what they call a shopper, so if you need a certain procedure, you go on to their.

D

To their health trust website- and you know- and they encourage you to take, go somewhere where.

D

It costs less money, so there are mechanisms where they are trying to reduce that cost. One of part of.

D

Our premiums also include our retirees, so once you retire, you can stay on the city's plan. The.

D

Retirees pay 100 of that plan, but it's called an implicit rate so that blended experience.

D

Includes the retirees and um so their experience is built in to the active employees or the newer.

D

Employees that may be younger and not need the health care, so our premiums are are slightly.

D

Higher the active employees as a result of the you know the whole pool and with their retirees.

B

Thank you, councilor cook. um I just had a question around utilization of health insurance.

A

um Not utilization utilization of health care, but how many of our employees seem to take our health.

A

Insurance versus um a an alternative option say through a spouse, and is there a way to.

A

um I know that some employers have different policies if you have the option to take a second.

A

Type of insurance- yes, so we do offer through collective bargaining and it's different from each.

D

Union that, if you do not take the city's health insurance- and you have health insurance say if I'm.

D

A spouse that you get a health insurance stipend that stipend varies um within the different unions.

D

It saves the city money because that stipend is, you know less than the cost of the premium.

D

um And it it gives them an incentive, but we have to make sure that they're covered.

D

um And I would say predominantly: um the employees are on our plans and but you can get those yeah.

B

Councilor tabor and councilman thanks mayor.

E

um Thank you uh judy and city manager, uh conard for looking at some of the big drivers.

E

um And I wanted to go to that page. um So, did I hear you to say the school budget has been.

E

Presented at 3.9, yes, they um have had their public hearing and they have submitted their budget.

D

um Out in public and they're they're coming in right now at 3.99 percent, okay and.

E

Fire department at one percent: well speaking with the chief, I know, he's been working with.

D

The commissions and they're trying really hard to to keep it um the very minimal increase, so they're.

D

Shifting things around that they haven't had their public hearing yet right. So then we get to general.

E

Government and we do have, as you say, some delayed hires so we'll cycle through we'll have 12 months.

E

For those, as opposed to six months, correct and we've got some departmental needs and fdes that.

E

um Are going to be coming forward for us to consider um I'm looking at your.

E

Page in the yeah last year's budget, where you you do a forecast out through fy 24 25 26.,.

E

Just based on trends, you know it's not underpinned by real data. It's just trends right.

E

But the general government's been running at a four percent, roughly increase 4.2. It looks like.

E

I think the biggest challenge this year is the information technology department. We've been.

D

Slowly, increasing it's it's very, very necessary. It is to safeguard you know all of our systems.

D

And sure, let me jump in short, so with the benefit of our cio having joined us and her.

C

Coming right up to speed with what we know, one of the the primary ask for for body count would.

C

Be for two people to take the place of our outside managed service provider, which is nested right now.

C

So the idea would be we would save. I don't have the numbers on me, but essentially a little less.

C

Than half of what we pay in outside managed service provider, contract fees by bringing two.

C

Additional people in-house and again that's based on pat's um knowledge of of what we have what we.

C

Need and what we need and a reasonable expectation of how we can get there um by still, you know, being.

C

Cogent and cognizant of budgetary constraints, but to bring on the two people she's requested.

C

Means a savings in in real dollars and brings in the protection that we previously had outside.

E

Right and that's a.

E

I think the question really is: will we deliver better services for.

E

All our city departments by doing that and I think, there's been a fair case made.

E

So far last year and we'll hear that case again, um the.

E

So the fire is, is being very thrifty and school is about in their typical range. We may have.

E

um One time we we may need to step up our I.t spending um and we have 12-month positions in.

E

General government that go up from six months, so maybe that is a little more than the 4.2 percent.

E

But the big thing we got to overcome is we're this: the 3.9 million state revenue- that was one.

E

Time right um so that, but don't forget this time! Last year we didn't know about either one of those.

C

Right right, so um there could be many things that come across our radar, that to the good or the bad.

C

That can impact the money that we're talking about and we haven't really talked about revenues in.

D

This presentation, just basically the loss of revenue, so we have some work to do there too.

E

Right, right and historically, you know, uh there's some we get some one or two percent increase.

E

In our tax base, just from new construction and that's without revaluing right, but just.

E

Right so that will help right, um which could help offset the loss of some of that state. Tax revenue.

E

um Last question would be around ftes. um We came into last year's budget looking at an.

E

Increase of 27, I think we trimmed that down to 23.. um How are we doing filling those 23.

E

And um are they all filled? That's a really good question. The answer is, I can tell you the one.

C

That's closest to me is physically in my office is still not filled. That was one of the delayed.

C

Hires, the digital communications specialists. um I think the police is still trying to fill.

C

A couple karen is nodding: chief is right here, other than that we have filled them.

E

Okay right right, um so we're not going into this year with more than four or five known.

E

Vacant positions- absolutely not right. um The I'll give you an example of recreations up here.

C

um The two asks there are, one would be a recreation supervisor, because we've taken on.

C

A whole new facility at community campus and the second ask of recreation, is a full-time lifeguard.

C

Because, as you know, we've been challenged with our ability to operate the indoor pool because.

C

You need two lifeguards there at all times and it's hard to rely upon with part-time help, so.

C

I was if we have a second full-time lifeguard at the indoor pool we can maintain regular hours. So I.

E

Was there this morning for my 7 45 swim and we had to do it, you had to wait 15 minutes. I think right.

E

um And can you tell us some of the uh positions that we might be adding considering to add for.

E

The delivery of better service, so um the the two there are two positions listed up in information.

C

Technology, one is an engineer and one is a project manager in planning. We are looking to memorialize.

C

Someone that we brought on in a contractual relationship that is associate environmental.

C

Planner, kate, home a she will count as a new fda in this budget. Although she's been working and.

C

Planning legal is looking to add a staff attorney they're completely overwhelmed with work and susan.

C

Can speak to that if you'd like, but that's the that is a a lower level staff attorney to help.

C

Catch up and mention recreation and finance would be in the in the line of leadership and.

C

Succession planning for when, um when judy decides to leave, we need to bring on some.

C

Expertise with with plenty of overlap- and we have not determined anything, but the idea is.

C

um That would be a smart thing to do if she leaves within the next 12 to 18 months.

E

Four to five ftes in general government that you'll be coming to ask us about.

E

We look forward to hearing the case for those one we haven't mentioned.

C

It's coming out of the water budget is a water quality specialist which.

C

Speaks to our compliance issues with their own state regulations.

B

And if we could just make an x when we say that we will say like it's, a net savings, are we, including.

B

um Benefits and uh yeah we are, we do calculate that yes, counselor. Thank mr mayor is smart, a.

F

Comment versus a question. But when going back to the conversation on healthcare and collective.

F

Bargaining, the focus of most negotiations during covid has understandably been retention and.

F

Due to the great resignation, however, pre-covid, one of the biggest things prior council said focused.

F

On was just that our share of the health care costs and the reason for that's pretty obvious.

F

That personnel costs is the biggest cost that the city has, because we don't produce anything.

F

And the increase in health care was the biggest driver in increases. So what we were talking about.

F

Potentially doing in the future for collective bargain agreements pursuing um a better share for.

F

The people when it comes health care costs that used to be the largest driver, hey councilor den.

B

Any other questions.

B

Open it up to the public comment, thank you, city manager and judy belanger and.

B

Andrew um anybody that wants to come up to the mic- please do so just state your name.

B

City of residence and.

G

Pastor kennedy 41 pickering ave. um I want to thank everyone for sitting through and putting this.

G

Budget together, I am glad to hear where the city manager is coming from. I guess I'm waiting to hear.

G

Where the council is coming from on the budget, um you know uh first of all, health trust has given.

G

I'm assuming they've given because they've given most of us what ultimately we're gonna have to pay.

G

So we know what that rate is um and years going by. I I know that sometimes that wasn't.

G

As good many years ago, but they've really worked and stepped up, so you know what your.

G

Maximum is going to be so. I would encourage you to look at that health insurance line.

G

um I also want to think about putting something in for the police officers to have.

G

um A social worker- I appreciate that, but I also want to know.

G

Why we need a new attorney? I have said over the years that the school district.

G

Has an attorney in there for in particular for special needs. I don't know many cities.

G

Of our size, I have that so I really questioned that role and I guess I would have to question.

G

If we're having so many out of district placements and what are we doing in our schools,.

G

So I especially with um having the capability of having a placement like the lister circle.

G

For students with behavior issues, so I would ask that you look at that a little bit closer.

G

um My other concern is having an all-day budget. Don't get me wrong? I think that's a great idea. We.

G

Did it, but we did it on a saturday and we did have people from the public show up. So I guess I'm a.

G

Little questioning doing it on a monday, so I would hope that you would rethink that. Maybe and do it.

G

On a on a saturday, so the public that works can attend. Lastly, um I would ask you to think about.

G

New positions at this time and really make sure that you have vetted that position.

G

um I know this year in past year. Something we've done really well at in the district of this is.

G

My second round of budgets in the last couple weeks um is really look at retirements and is.

G

That need those people retiring. Are they that position still needed, and I can tell you in as.

G

A school personnel that is something we look at and take seriously and over the years we have been.

G

Able to because our school population everywhere in the state is going down and we've been able.

G

To really evaluate each position, and maybe it becomes a different position so in other words,.

G

Maybe you have positions that people are retiring from and as a council, you evaluate that and see.

G

If that's some money, you can move to a different position, so I would encourage you to look at that.

G

um And lastly, I think that um I heard the other night when they were talking about water and.

G

Sewer on the cip that it's not a tax. Well, it is it's just not in a general fund, so remember that.

G

Not only are people looking at their tax rates here and how much they're going to go up and it.

G

Has gone up as this council, but also their water and sewer rates, which have gone up extreme and per.

G

Some information I've been given are the highest in the state, so I would ask that you really look.

G

At both and consider it as one big the how much the citizen is paying and not just look at the.

G

Tax rate, but let's look at the whole package. Thank you for your time and good luck. Thank you. Esther.

H

Good evening, peter hooda 280 south street, um since this is the first time we've seen.

H

Anything um I do have a couple questions or considerations for you to think about.

H

um Biggest thing is on the last page, the non-operating preliminary budget projections.

H

um The first one debt service uh we're down almost 700 000.. So my question is um since.

H

We just put the pierce island plant over on the state revolving fund and we had two bond offerings.

H

In the last year or two [music] um I I I'm trying to understand why we're going down there.

H

uh The next one is rolling stock, we're going up a hundred and ten percent. Basically.

H

So um that would be a big question in my mind: what what are we actually requesting here.

H

uh I understand the uh the it replacement and um on the statement that was made with the new cio.

H

Coming in, if we are going to look at replacing uh staff with or consultants with staff, it would be.

H

Great for everybody to see a cost benefit analysis on that and how much we would be saving uh if we.

H

Were going to do that going forward because I mean the other things you have to look at it.

H

When you have a contractor, you don't pay benefits and when you bring somebody on board the benefits.

H

From my past experience, maybe 30 40 percent of their salary, so there is a large expenditure.

H

There to also consider uh next uh the same thing with capital outlay. I noticed you uh had some.

H

Items coming out of arpa funds, so I would.

H

Ask that we consider the arpa funds again when we are looking at capital for this year.

H

um Not knowing what the restrictions are just a consideration that I would ask you to look at.

H

And the other thing that caught my eye was in the retirement system.

H

uh In the in I don't know what page it's on, but uh you had a decrease of 37 million from 21 to.

H

22, which is a a very large number- and it would be a very large number for um the city to absorb.

H

On that, so uh I guess I would ask uh what kind of uh analysis we're doing on that, and you know.

H

Please, please be careful there with the liability. Thank you. Petra.

B

Any other speakers any on zoom.

B

Well, uh thank you uh city manager. Thank you for all the uh the work.

B

That went into this and everybody that that uh came forth. We owe you some.

B

um Some guidance around this that expect us to do that at the next council meeting.

B

You know I've got employees, we love all employees that we have. We want to make sure that their jobs.

B

Are done effectively? Sometimes it means adding team members, but the conversation around adding.

B

Those team members is going to be a not only on the cost benefit analysis, but you know how do we.

B

Use the efficiencies that we grow with government to to make sure that we can do that. Obviously,.

B

When we have new buildings, it's tough to be in two places at once, and that should always be a.

B

A lesson for us: when we we talk about acquiring facilities, they don't man themselves so.

B

um Look forward to that conversation um and look forward to uh everybody. That's.

B

Going to come in over the next couple of months, I'll remember uh to keep our.

B

um Our our uh our public hearing open this time, so we don't have to reopen it and look.

B

Forward to the discussion that uh that we'll all have together good night portsmouth. Thank you.