City Council Agenda and Packet 2010 10 12 SP 2011 BUDGET

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Significant Issues As stated previously, the 2011 budget simply maintains the current level of service and, when the year -end turnback is factored in, keeps General Fund expenditures slightly below anticipated revenues. That will enable the City to weather the current economic conditions. When the outcome of the November elections is known, we can revisit the budget if necessary. Until then the following issues are significant: Compensation, Benefits and Training Reflecting our guiding principle that "Talented, motivated, well- trained employees are the City's most important asset ", we continue trying our best to minimize the negative impact on employees in order to maintain their ability to serve the public effectively. The following actions reflect this approach: • Merit Increases. We must maintain our commitment to enable high performing employees to move through their pay range over time. To do this, staff recommends that we provide merit increases for performance that is documented as "Outstanding" (3.0 %) or "Exceeds Expectations" (1.5 %) and "Meets Expectations" (0 %). Also, in order to maintain the City's commitment to Police Officers and the pay range and steps we established two years ago, Officers whose performance demonstrates merit would receive a 5% increase. As was the case last year, however, there would be no increase or bonus for anyone who is at the top step of their pay range. In the Police Department almost half of the Police Officers and Sergeants are at the top step of their pay range. • Medical Insurance Coverage and Other Benefits. As you will recall, last year we reduced employee benefits in several ways, including increasing the percentage of premium that employees must pay for health insurance (from 15.2% to 25% for family HMO coverage) to make the cost sharing comparable with similar jurisdictions. With that change, the City's current total benefits package including health insurance coverage, paid vacation, holidays, employer contributions to a 401 (a) retirement plan —which is a "defined contribution" plan, not a "defined benefit" or "pension" plan —and other benefits are either comparable to or slightly less generous that comparable employers in the North Denver metro area. Consequently, it is appropriate to maintain the existing benefits package and not shift any more of the cost to employees. Service Levels Given the continuing economic trends, and the uncertainty with measures on the fall ballot, staff is not proposing at this time to restore any of the service cuts implemented in late 2009 and early 2010 to reduce expenditures to fit within available revenues. Those cuts included: • Eliminating positions, reducing staff hours or not filling vacant positions in many departments or divisions including Parks and Recreation, Police, Building Safety, Finance, Public Works, City Manager (including the Human Resources, City Clerk, and Records divisions), and the Museum. • Closing the City's branch drop off site. • Reducing the scope of native areas mowing operations. • Reducing or eliminating expenditures for various special events (4 of July, Fall Festival, John Breaux Clean -Up Day, Festival of Lights) • Reducing funding for the Senior Meal Site and Special Transit (the reduction in funding from the City of Louisville was offset by increases in contributions from the Senior Advisory Board and by Special Transit). 3 17