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SCC Item 1. Introductory 2025 Budget Discussions City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 TO: Mayor and City Council FROM: Adam Flaherty, City Administrator & Finance Director DATE: May 13, 2024 SUBJECT: Budget Meeting #1 On Monday, Council and staff will begin the 2025 budgeting discussions. This meeting is intended to focus on the big-picture and not specific departmental budget requests. I have developed an outline of discussion topics below, however; the most important aspect of this meeting is to provide the opportunity for the Council to set priorities, set expectations and to provide direction to staff for preparation of the draft budget. Proposed Budget Calendar City staff has developed a budget calendar that outlines several meetings to provide review opportunities for the 2025 budgets and property tax levy. The schedule will be reviewed with the City Council to determine if any additional meetings should be included and to set certain milestone dates to effectively navigate the process. Staffing Plan The City’s 2022 Strategic Plan includes a strategic direction of Positioning for Growth, which includes a specific action item to develop future staffing projections. The draft plan has been reviewed by both the Administrative and Public Works Subcommittees at their respective April meetings. City staff will review the 2025-2029 Staffing Plan during this meeting with the full Council. Property Tax Levy The City’s tax rate for taxes payable 2024 is 23.109, which is a decrease of 21.86% from the previous year. City staff will review several charts showing how the City’s current tax rate compares to that of surrounding and comparable sized cities. At this time of the year, the only available information is the market value presented by the County Assessor at the April 22 Local Board of Appeal and Equalization meeting. That data compared with the same data from the previous year indicates an increase of less than 1%. Staff will discuss assumptions that will be used during the early stages of tax levy review until more information is available, which likely will not be until after September 1. City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Employee and Volunteer Recognition Program Policy Consistent with normal review of City policies, City staff has developed proposed amendments to the Employee and Volunteer Recognition Program Policy. The Administrative Subcommittee has provided a review of the proposed amendments at previous meetings, and staff will present the policy to the full City Council to gather additional feedback with the intent for future consideration of approval. Employee Allowances Evaluation During the most recent Classification and Compensation Study conducted in 2023, there was certain benefit information obtained, but not analyzed by the contracted service provider. City staff will present the data obtained and provide recommendations for City Council consideration. Council Roundtable This is an opportunity for the City Council to outline priorities for the 2025 budgets and property tax levy. Next Meeting Pending discussion of the proposed budget calendar, the next budget meeting would be on Tuesday, May 28. The review will include the line-item budgets and respective property tax levies, if applicable, for the Debt Service and Special Revenue Funds. A motion to schedule a special meeting for May 28 would be necessary. Packet Materials - Proposed Budget Calendar - Draft 2025-2029 Staffing Plan - Tax Rate Comparison Charts - Draft Employee and Volunteer Recognition Program Policy - Memorandum: Employee Allowances City of Otsego 2025 Budget Process Proposed City Council Meetings Meeting Meeting Date Type Objectives May 13 Special Introductory Budget Discussions May 28 Special Debt Service & Special Revenue Funds Review June 24 Special Capital Improvement Plan - Preliminary Review August 2 N/A Distribute Draft General Fund Budget TBD Special General Fund Review August 26 Special Additional Tax Levy & General Fund Review (if necessary) September 9 / TBD Regular Adopt Preliminary Tax Levy October 14 Special Capital Improvement Plan - Final Review October 28 Special Utility Operating & Capital Budgets November 25 / TBD Special Truth-In-Taxation Presenation & Public Input Process Adopt Final Property Tax Levy Adopt Final Budgets Adopte Capital Improvement PlanDecember 9 Regular Y:\Budget\2025\2025 Budget Calendar 2025 CC City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 TO: Mayor and City Council FROM: Adam Flaherty, City Administrator & Finance Director Sabrina Hille, Assistant City Administrator & Human Resources DATE: May 13, 2024 SUBJECT: 2025-2029 Staffing Plan The City’s 2022 Strategic Plan includes a strategic direction of Positioning for Growth. City staff has implemented development of an annual five-year staffing plan, with the current version forecasting 2025 to 2029. In preparation of the 2025 budgeting discussions, City staff has developed a draft five-year staffing plan. This outlook will be a benefit to the City as it will provide: - An opportunity for the City Council to question and comment upon future staffing needs. - A planning document that will aid in budgeting. - A document that looks beyond the current year. - A familiar document that will be reviewed and updated annually. Population and Staff Members (Excludes Temporary, Seasonal, and Paid-On-Call Staff) Note: Population growth for 2023-2029 estimated at 5.65% annual growth (average % from 2015 to 2022). City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Administration Departments 2025 Requests No additional positions will be requested. City staff will provide discussion on the potential for responsibilities of certain positions to be adjusted during the year to increase department efficiency, foster employee growth, and improve operations. 2026 – 2029 Forecasted Positions - Communications Specialist; 2026 (Increase to Full-Time) - Finance; Part-Time Position in 2026 and Increase to Full-Time in 2028 - HR Generalist; 2026 - Building Permit Technician; 2027 - IT Specialist; 2027 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Emergency Services Department 2025 Requests - None. 2026 – 2029 Forecasted Positions - Duty Crew Responders (9); 2026 - Paid-on-Call Responders (20); 2026 - Deputy Chief; 2028 (Succession Position) City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Public Works Department 2025 Requests None. 2026 – 2029 Forecasted Positions - Street Maintenance I; 2027 - Building Maintenance; 2029 - Administrative Assistant; Part-Time in 2029 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Parks and Recreation Department 2025 Requests No additional positions will be requested. City staff will provide discussion on the potential for responsibilities of certain positions to be adjusted during the year to increase department efficiency, foster employee growth, and improve operations. 2026 – 2029 Forecasted Positions - Parks Maintenance I; 2028 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Utilities Department 2025 Requests Foreperson (Additional Responsibilities) The Utility Foreperson responsibilities have evolved into divisionally focused leadership roles supporting the department organizational specialization at each Wastewater Treatment Facility. Aligning with site complexities, operational and maintenance improvements; current Staffing Technical Memorandum, and regulatory compliance; this is an opportunity to further empower a leadership path. Primary Reasons for Request - Treatment Facility improvements, Complexities and Regulatory Requirements - Divisionally Focused Team Specialization Primary Job Description Advancement - Strengthened Divisional and Staff Supervision Expectations - Expanded Budget and Capital Improvement Plan Involvement - Accountable for Workforce Performance and Staffing Schedules Alternatives - Jeopardize Facility Compliance and Program Development - Reactive Approach to Infrastructure and Customer Service Needs Implementation of these responsibilities would occur in January 2025 and would warrant review and modification of the current Foreperson Job Description and review of Position Scoring by the City’s HR Consulting Firm. City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Utility Operator Addition (Full-Time) A Utility Operator is a requested staff addition in 2025. This addition will be cross-trained in all Department responsibilities and participate in the on-call emergency response rotation. The Department continues to progress to divisionally focused responsibilities with specialization of Collection & Distribution; West Wastewater Treatment; and East Wastewater Treatment and Solids Production. Primary Reasons for Request - West Wastewater Treatment Facility Capacity Expansion and Initiation of Operations - Water Treatment Expansions and Initiation of Operations and Maintenance Activities - Critical Infrastructure Improvements and Resilience - Community Growth and Customer Services Primary Job Functions - Monitor, Operate and Maintain the City’s Wastewater Systems and Solids Production - Monitor, Operate and Maintain the City’s Water Systems - Ensure Regulatory Compliance, Public and Environmental Health and Safety - Address Customer Service Needs Alternatives - Supplement Various Activities to Contracted Services - Risk Service Disruption, Responses and Compliance The 2025 Budget would include funding for the position, and recruitment would begin in March 2025, with an anticipated start in June 2025. This timeline allows for a partial year budgetary impact and allows for employee onboarding to be completed prior to water treatment operations implementation expected in Summer 2025. Utility Office Coordinator (Part-Time) A Utility Office Coordinator is a requested staff addition in 2025. The role provides a specialized contact for municipal utility customer services parallelling department and peer activities. The addition supports documentation needs, organizes regulatory programs, and provides scheduling efficiencies. The West WWTF Administration building establishes the workspace and staff access to support success. Primary Reasons for Request - Community Growth and Customer Services Advancements - Multilevel Efficiencies of Administrative and Office Support Primary Job Functions - Customer Service Responses and Coordination - Office and Program Management - Clerical and Scheduling Alternatives - Supplement Various Activities to Operations Staff - Risk Customer Service Relations and Responses The 2025 Budget would include funding for the position, and recruitment would begin in December 2024, with an anticipated start in March 2025. This timeline allows for a partial year budgetary impact and aligned with construction completion of the West WWTF Administration Building and prior to initiation of seasonal department activities. 2026 – 2029 Forecasted Positions - Office Coordinator; 2026 (Increase to Full-Time) - Utility Operators (2); 2026 - Utility Foreperson; 2027 - Utility Operator; 2028 - Utility Operator; 2029 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 2025 Proposed Organizational Chart 2025-2029 Outlook (Excludes Temporary, Seasonal, and Paid-On-Call Staff) 2025 2026 2027 2028 2029 Additions Administration - 0.20 - - - Finance - 0.50 - 0.50 - Information Technology - - 1.00 - - Human Resources - 1.00 - - - Building Safety - - 1.00 - - Fire & Emergency Services - 9.00 - 1.00 - City Buildings - - - - 1.00 Streets & Fleet - - 1.00 - 0.50 Parks & Recreation - - - 1.00 - Utilities 1.50 2.50 1.00 1.00 1.00 Total of Additions 1.50 13.20 4.00 3.50 2.50 Beginning Staff 39.80 41.30 54.50 58.50 62.00 Ending Staff 41.30 54.50 58.50 62.00 64.50 Disclaimer It should be noted that inclusion of a staff addition within this outlook does not commit final approval by the City Council. Rather, it directs City staff to plan towards and gather necessary information for an educated final approval on each respective addition. Each individual addition is planned, researched, and brought back to the City Council for final approval when the respective staffing addition is ready to move forward. Notes: (*) Indicates a City has either an EDA or HRA Tax Levy in addition to the tax rate included above. Tax Rate is Final Tax Rate for Taxes Payable 2024. City Tax Calculation Assumes Residential Value of $386,400 (Otsego median appraised value for taxes payable 2025). Otsego St. Michael (*) Monticello (*)Dayton Rockford Hanover (*) Waverly Delano Albertville Annandale Buffalo (*) Clearwater Maple Lake Cokato Howard Lake South Haven Tax Rate 23.109 25.715 34.547 35.653 36.599 38.015 41.147 41.419 41.954 42.945 47.867 52.292 52.694 55.238 57.926 74.141 City Tax 866 963 1,294 1,336 1,371 1,424 1,541 1,552 1,572 1,609 1,793 1,959 1,974 2,069 2,170 2,778 - 500 1,000 1,500 2,000 2,500 3,000 - 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 Wright County Cities - Tax Rates Tax Rate City Tax Y:\Budget\2025\Property Taxes\Tax Levy Calculations (2025) Tax Rate Charts Notes: Tax Rate is Final Tax Rate for Taxes Payable 2024. City Tax Calculation Assumes Residential Value of $386,400 (Otsego median appraised value for taxes payable 2025). Chanhassen Otsego St. Michael Maple Grove Northfield Prior Lake Andover Rogers Chaska Lino Lakes Champlin Savage Forest Lake Elk River Ramsey Farmington Hastings Tax Rate 20.956 23.109 25.715 27.187 27.437 30.303 32.181 35.599 35.947 36.098 37.479 37.606 37.616 37.817 41.430 45.069 55.230 City Tax 785 866 963 1,018 1,028 1,135 1,206 1,334 1,347 1,352 1,404 1,409 1,409 1,417 1,552 1,688 2,069 - 500 1,000 1,500 2,000 2,500 - 10.000 20.000 30.000 40.000 50.000 60.000 Comparison Cities - Tax Rates Tax Rate City Tax Y:\Budget\2025\Property Taxes\Tax Levy Calculations (2025) Tax Rate Charts Page 1 of 3 Employee and Volunteer Recognition Program Policy Adopted: DRAFT TO CITY COUNCIL – May 13, 2024 Introduction: The Otsego City Council values its volunteers and employees; therefore, the Otsego City Council has adopted an Employee and Volunteer Recognition Program by resolution for the purpose of expressing appreciation and acknowledgement of contributions and accomplishments made by volunteers and employees. The effort and talents of the volunteers and employees advance the goals and objectives of the City. This policy recognizes their contributions and aids in attracting and retaining volunteers and employees. Annual Commission Recognition: Each year the City will host an Annual Commission Recognition event to recognize all Commissioners for their service to the City. Commissioners, elected officials, and the staff members that interact with the Commissioners on a regular basis will be invited to attend the event. The City Council has authorized a budget of $25 for each Commission member for each respective year. This event would provide food and non-alcoholic beverages for those invited to attend the event. The event would be after normal working hours and would be strictly voluntary. It would not be considered time worked. Commission members might be honored to recognize exceptional years of service, and items might include a plaque, certificates of appreciation, Otsego branded apparel, and memorabilia. Employee Recognition: To recognize employees for their dedication and service to the City, the City Council has authorized a budget of $25 for each full-time, part-time, and seasonal employee included within the budget for each respective year. The expenditure is intended to recognize employee dedication to the City, to foster employee morale, encourage and recognize employee achievements, and to recognize the ongoing Page 2 of 3 contribution of the employees to the City and its residents. The funds may be spent for no more than two events per year and in no case shall exceed the budgeted amount. Examples of recognition activities/events include: a picnic, , after work gathering or other event as authorized by the City. Funds shall not be used for alcoholic beverages and the City of Otsego will not assume any liability for consumption of alcoholic beverages at any recognition event/activity. Unless approved by the City Council, these events should be scheduled outside of the employees’ regular work hours to ensure continuation of departmental services provided to the community. Employee Service Recognition: Purpose This policy is intended to set forth the objectives of the City of Otsego’s Employee Service Recognition program and to provide for the expenditure of public funds as necessary to achieve objectives in a manner consistent with state law. (Minn. Stat. Sec. 15-46) The objectives of this program are to: 1. Increase morale and employee motivation. 2. To encourage loyalty and long-term retention of employees. 3. To celebrate the accomplishments and service of retiring employees; to demonstrate the appreciation of the City Council, employees, and citizens of the City of Otsego for the public service provided by all City of Otsego employees. Employees eligible for recognition under this policy are regular full and part-time city employees. Seasonal employees are not eligible. Longevity Pay: Purpose To reward non-union employees for continuing employment with the City, increasing their knowledge and applying it to their jobs, and to maintain high employee retention and competitive pay for the City’s employees.  Pay and Terms: So long as budgetarily feasible, employees will be paid $100 for each full year of service completed with the City, on an annual basis. An employee must have completed at least five full years of service to be eligible for payment. Payment would be made on the second payroll date in December. Taxes such as federal and state withholding and FICA contributions would apply. PERA would also apply. Page 3 of 3  Should an employee terminate during the year, they will not receive any longevity pay. Longevity pay is only paid to employees that are active at the time payment is scheduled to be made. If an employee is out on FMLA leave, they are eligible for longevity pay.  If an employee terminates employment with the City, then is re-hired, years of service shall be calculated from the initial hire date as long as no more than 6 months have passed between the termination date and re-hire date. If more than 6 months have passed between the termination date and re-hire date, longevity pay is calculated based on the re-hire date.  Longevity pay applies only to benefit earning full-time and part-time employees. Retirement Recognition Employees retiring after ten or more years of service shall receive a Proclamation Day in their honor presented by the City Council at a City Council meeting. Policy History: This is the current and most recent version of this policy. Previously: Adopted: November 24, 2014 Revised: November 9, 2015 Revised: TBD City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 TO: Mayor and City Council FROM: Sabrina Hille, Assistant City Administrator/Human Resources DATE: May 13, 2024 SUBJECT: Employee Allowances As part of the 2023 Classification and Compensation Study, staff requested benefit information to be collected, but not analyzed by Abdo. The data was collected with the intention of staff reviewing and bringing recommendations to the City Council at a later date. In addition to the data from the study, staff inquired with other communities, to ensure there was accurate data. There were three allowance items requested, and a summary of each item is below: Uniform Allowance Currently, the City provides a uniform allowance for all employees. Uniform allowances are paid as reimbursements, receipts must be submitted, and payment is made on employee paychecks, as the amount is taxable. The uniform allowance is budgeted for annually and the amount of the allowance varies by department. The 2024 Budget includes the following annual allowances: City Council ($75 per member); City Administrator ($400); Assistant City Administrator ($200); Administrative ($50); Public Works ($600 for new employee and $400 ongoing). The current amount for uniforms is in line with the collected data, with an average of $494 per year; maximum at $1,060 and minimum at $150. Staff believe that the current uniform allowances are appropriate and do not recommend a change. Boot Allowance Currently, the City provides a boot allowance for full-time, part-time, and seasonal Public Works employees. The boot allowances are paid as reimbursements, receipts must be submitted, and payment is made through accounts payable, as the amount is non-taxable. The boot allowance is budgeted for annually and the amount of allowance varies depending on whether the employee is full-time or part-time/seasonal. The 2024 Budget includes the following allowances: Full-Time ($200); Part-Time/Seasonal ($150). The current amount for boots is in line with the collected data, with an average of $253 per year; maximum at $800 (this amount is for all safety gear) and minimum at $100. Staff believe that the current boot allowances are appropriate and do not recommend a change. City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163 Vehicle Allowance Currently, the City does not provide any vehicle allowances, instead reimbursing employees for actual miles of use for a personal vehicle at the IRS established reimbursement rate. The collected data indicated that a vehicle allowance was provided more frequently to the City Administrator/City Manager position and less frequently to other Department Head/Director positions. The collected data showed an average allowance of $386 (per month), with a maximum of $614 (per month) and a minimum of $250 (per month). Staff would recommend a vehicle allowance be provided to the City Administrator position in the amount of $375 (per month) which is the median response of the data collected, less the maximum response as it was not consistent with the other responses. A vehicle allowance would be processed through payroll as the allowance amount is taxable. The 2024 Budget included an allowance of $400 (per month), with the recommended amount within that budget amount. If approved, any employee receiving a vehicle allowance would then not be eligible for mileage reimbursement.