Proposed Budget and Compensation Philosophy Overview

2023 PROPOSED BUDGET SEPTEMBER 6, 2022

PRESENTATION TOPICS PRESENTATION TOPICS Employee Compensation and Benefits Proposed 2023 Pay Plan Retirement Plans Old Hire Police and Old Hire Fire Plans General Employees Retirement Plan Police and Fire Retirement Plans Health Benefit Fund NextLight Programs 2

COMPENSATION PHILOSOPHY COMPENSATION PHILOSOPHY The City s compensation philosophy states that the City will strive to pay competitive prevailing market rates. In 2017, as previously discussed with Council, the City began to move toward a philosophy of paying at 102% of market. We have not been able to fund the 102% target to date 3

PHILOSOPHY APPLIED TO 2023 PHILOSOPHY APPLIED TO 2023 Benchmarks have been used for 2022 position pay All open ranges have been increased a minimum of 6% and maximum of 12% Recommendation is to continue to pay at 101% of market. Exceptional pay budget to continue 4

SPECIAL POSITION RECOMMENDATIONS SPECIAL POSITION RECOMMENDATIONS Collective Bargaining to follow CBA contracts Police step positions increase 4% FOP open ranges increase 6% Fire step positions increase 4% LPC Step Positions increase a minimum of 6%

BENEFITS BENEFITS 2023 Kaiser to continue to provide Health Care 2023 -4.61% rate decrease Rate cap for 2024 No more than 5% increase Delta Dental 2023 flat renewal Rate cap for 2024 & 2025 No more than 5% increase Mines & Associates (Employee Assistance) 2023 flat renewal 2023

FUTURE DIRECTION FUTURE DIRECTION Compensation and Total Rewards Study Will look to what compensation and total rewards could be in the future Review the current approved pay plan and provide recommendations to better track market competitiveness Conduct a total compensation study utilizing reputable, reliable, and comprehensive data Analyze data received to determine how salaries should be adjusted to achieve and maintain market competitiveness

FUTURE DIRECTION FUTURE DIRECTION Employee Benefits: Review current total rewards package, including recommendations regarding ancillary benefits and/or additional employee benefits currently not offered to the city of Longmont employees Review Leave Plans Current leave amounts and design Evaluate the benefit of a Parental Leave program 102% remains the target for salaries as budget and conditions allow

OLD HIRE PENSION FUNDS OLD HIRE PENSION FUNDS Old Hire Police Plan has a negative unfunded liability (surplus) of $182,404 and is 117.0% funded. Old Hire Fire Plan has a negative unfunded liability (surplus)of $536,288 and is 121.4% funded. No city contribution is required for either plan. 9

GENERAL GENERAL EMPLOYEES RETIREMENT EMPLOYEES RETIREMENT PLAN PLAN The GERP plan had a history of being fully funded through 2008. Benefit increases are not built into the plan and cannot occur under TABOR unless the plan is fully funded. The plan is to move more aggressively to full funding. 10

GENERAL GENERAL EMPLOYEES RETIREMENT EMPLOYEES RETIREMENT PLAN PLAN In 2016, the GERP Board proposed a change to the funding policy to amortize the unfunded liability over a closed 30-year period with subsequent gains/losses amortized over closed 20-year period. Although this approach moves toward full funding it is still over a significant period of time. 11

GENERAL GENERAL EMPLOYEES RETIREMENT EMPLOYEES RETIREMENT PLAN Funding policy amortizes the unfunded liability over 24 years from January 1, 2021. Gains and losses are smoothed and recognized over five years. In 2022, GERP reached an unfunded liability of $30.6 million and 86.3% funding versus an unfunded liability of $37.2 million in 2021 and 82.7% funding. PLAN 12

GENERAL GENERAL EMPLOYEES RETIREMENT EMPLOYEES RETIREMENT PLAN PLAN Contribution requirement decreased from 15.85% to 14.86% of compensation. Proposed 2023 budget includes no change in the city contribution requirement of 9.0%. Employee contribution requirement to remain as 6.6% for Tier 1 employees and 5.6% for Tier 2 employees. 13

POLICE & FIRE RETIREMENT PLANS POLICE & FIRE RETIREMENT PLANS 2022 CBA s approved offering FPPA retirement system. The 2022 budget included an increase in the city contribution from 10.0% to 13.7%. Employee contribution requirement in 2022 increased from 10.0% to 12.0%. 14

POLICE & FIRE RETIREMENT POLICE & FIRE RETIREMENT PLANS PLANS Police results were: 109 stayed in the City DC plan, 19 entered the FPPA DB plan, and 19 entered the FPPA Hybrid plan. Fire results were: 36 stayed in the City DC plan, 18 entered the FPPA DB plan, and 37 entered the FPPA Hybrid plan 15

POLICE & FIRE RETIREMENT POLICE & FIRE RETIREMENT PLANS PLANS 2023 Contribution Requirements for the City will be: FPPA DB plan new employees 9.5% FPPA DB plan re-entry employees 11.4% FPPA Hybrid plan re-entry employees 13.7% City DC plan employees 13.7% 16

HEALTH BENEFIT FUND HEALTH BENEFIT FUND 2023 proposed budget includes health benefit cost inclusive of 4.61% decrease in cost from Kaiser. Kaiser costs since 2007 averaged aggregate blended premium increases are at 3.72% compared to industry average increases of 7-11%. City contributions to health benefit fund as a percentage of salary drop from 16.0% to 15.0%. 17

HEALTH BENEFIT FUND HEALTH BENEFIT FUND Health Benefit Fund costs include a projected $32,000 for wellness incentive costs. $50,000 for police and fire physicals. $50,000 for Public Safety counseling program Health Benefit Fund fund balance projected to end 202 over $9 million. Balance projected to increase slightly in 2023. 18