19 - Memo to GB - Proposed FY24-25 Budget - July 2024 (002)

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comparable and market rate pay,issuing only a handful of cost-of-livingadjustments (“COLAs”)over the prior 20+ years.This pay study was implemented for non-civil service employees in FY21/22, and across two phases for civil-service employees in FY21/22 and FY22/23.This change also resulted in a comprehensive overhaul of the Fire and Police Department seniority scales, eliminating any overlap between ranksand making a smooth and progressively increasing tiered scale for all the ranks.Third, each of the last fourbudgets, the City has implemented 2% COLAs to help offset our employee’s rising cost of living. While this can be seen as apay raise, it is more appropriately seen as a means to ensure the employee’s personal purchasing power is not eroded by market inflation while working for the City. Market inflation –the increase in price you pay for a standard basket of goods –can become a leadingreason for why employees seek other employment opportunities of higher pay.Fourth, the City implemented a transition of all Fire personnel from the Paris Firefighters’ Relief and Retirement Fund (“pension”) to the TMRS in FY22/23. The City “froze” the pension while simultaneously moving all existing and future fire employees over to the TMRS program. To accomplish this, long term debt via a pension bond was issued. This successfully dropped the City’s contribution rate from 14% to 5.1% (the FY22/23TMRS rate), and 16% to 7% for the employee –both proving to be significant annual savings to the City and employee. The City took on additional debt payment to fund this pension bond, but the ultimate long term cost benefit to the City of Paris of this bond far outweighs the ever-growingunfunded liability the City would be facing were the pension to have continuedits previous trajectory.At the time of implementation, the City of Paris’ Fire Pension was known as the least funded fire pension in the State of Texas at 28% funded. We are now fully funded and on course to sunsetthis liability. Fifth,with the rising cost of health insurance, the city’s health insurance program has become more expensive. This cost increase is primarily borneby the employee as the City pays a flat monthly amount that does not change unless approved by the City Council. The City Council agreed to increase the monthly contribution from $565/employee to $595/employeein FY22/23, and then to $625/employee in FY23/24. This has helped offset the rising cost to the employee.Sixth, in FY23/24, the City Council approved a transition from biennial step / seniority increases for employees to an annual step / seniority increase program. This change allows employees to enjoy pay raises every year, instead of every other year, thus providing a cumulative gain in their income over their tenure of service with the City. On behalf of the City Staff, I would like to thank the City Council for all their support for our employees with the above much needed changes and improvements. We are tentatively planning on conducting a new pay study in FY24/25 for the FY25/26 budget. In the Proposed FY24/25Budget, we have included the following adjustments to further make positive impacts to our employee pay and benefits in order to attract and retain quality personnel in the service of our community. 1)A 2% Cost of Living Adjustment for all full-time positions. 2)A $25/month increase in the City’s monthly contribution for Health Insurance from $625/month to $650/month. 3)In lieu of #1, the Police Department sworn officers will see increases as described in Priority #1 of this Executive Summary. 4)A comparable pay study has once again been included in the budget. 5)The city is working with a consultant to advertise for bidding its health insurance program for FY24/25 in pursuit of a more favorable policy for employees. Regarding item #1 –annual COLAs will allow the City to try and maintain its pay program in comparison against our comparable communities and help avoid drastic changes at each pay study. Regarding item #2 –The FY23/24 rates ultimately exceeded what we predicted during the budget process a year ago, which required some changes in monthly contribution among the City’s four different plans. While Page 8of 18