2006-10-09 Regular Meeting and Workshop Meeting of La Porte City Council

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City Council Regular and Workshop Meeting —October 9, 2006 Page 8 Councilmember Howard Ebow wanted to clarify that the amount he understood it to be was $183,000.00. Interim City Manager John Joerns noted no, because at the budget hearing, staff had proposed at 15% increase on the employee and City side. Council directed staff at that time to absorb the 15% employee increase. That amount was $83,000.00. Mayor noted of employee and retiree costs. Interim City Manager John Joerns indicated yes. Mr. Joerns noted he understood the question from last weeks meeting to be what would the impact be if we froze retiree costs. He noted the impact was the additional $171,000.00 for this plan year only. The costs would continue to increase in future plan year. Councilmember Moser inquired as to if the $171,000.00 for retirees was for the next plan year. Interim City Manager John Joerns noted that would be the amount if retiree rates were frozen. Councilmember Moser inquired if the $170.000.00 was for the retirees if we freeze the 15%? Mayor Porter indicated no it was the increase if we froze retiree rates. Councilmember Griffiths noted in 2008, we either freeze the retirees or they would receive a huge increase at that time. Interim City Manager John Joerns noted the increase would be to keep the plan solvent. In addition, he reminded Council there would continue to be increases each plan year. Councilmember Griffiths noted it would be great to freeze retiree rates but it would be very costly and costs would continue to increase in future plan years. Interim City Manager John Joerns noted if Council directs staff to freeze retiree rates, we would start off a $253,000 subsidy before we look at any other medical trends. Councilmember Moser inquired we are up to $253,000.00 now. Interim City Manager John Joerns noted he jumped ahead to the next plan year. We are already $253,000.00 in the hole from the recommended funding levels for this year. Councilmember Moser inquired recommended by? Interim City Manager John Joerns noted when we started off on the budget, when the administration provided that recommendation. Next fund year you are starting off $253,000.00 before the recommended funding level. It gets back to what we discussed the night of the public hearings. It is targeting the health fund with the number of working days capitol and having a healthy fund balance. You would always be starting off that much in the hole for the next plan year.