Page 15 - Approved Annual Budget FY 2019-2020_Flat

CURRENT YEAR ISSUES

This year, we are anticipating that General Fund revenues will increase by 6% over last year’s adjusted
budget. When compared to the preceding fiscal year FY 17-18, it increased by 7.90%. Transfers-in are
budgeted with a decrease of 5.23%.

In this year’s budget, expenditures were increased by $4.8M or 4.31% over last year’s adjusted budget.
This increase in expenditures was adopted while taking into consideration the anticipated revenue
increases while maintaining a healthy fund balance. Refer to pages viii-xxii of the Executive Summary for
additional information.

During the budget process, several issues were raised:

Personnel-Related Issues

Employee Pay Raises
This year’s budget provides a 2% increase to city employee’s wages/salaries. In addition to the days
designated and recognized as official City holidays, the City Commission approved three new floating
holidays for all full-time City employees.

Living Wage Issue
In addition to the City funding skilled-job training to promote higher paying jobs, it has taken the lead in
setting an example by raising the City minimum wage rate for full-time employees to $11.5986 per hour
and for part-time employees, $10.1278.

City Retirement Plan (TMRS) Funding
The City’s contribution rate for the City of McAllen for calendar year 2019 and 2020 was 7.76% and
7.81%, respectively for a blended rate for the fiscal year 2019-20 of 7.80%. The plan is almost fully-funded
with a funded ratio of 92.8%. The rate used to develop the budget is 7.76% of payroll.

Health Insurance
This year, the City’s cost of providing health insurance is budgeted a slight decrease from last year’s
adjusted budget level. The total amount budgeted for claims is $12M. Last year’s estimated claims were
$12.1M----- under the $19.8M quoted by the carrier for aggregate stop loss coverage that the City elected
to renew. There were some changes necessary as a result of the decreasing fund balance that supports the
funding of the City’s Health Plan. A three-year premium adjustment recommendation was reviewed that
would align our premiums with the actuarial evaluation of premiums. The City added a “Buy Up Plan” to
its coverage. The premiums under this plan would increase for each respective classification. Employees
Only cost would increase from $10 to $32; Employee plus Child - $98.50 to $118; Employee plus Spouse
- $123 to $145; and Employee plus Family - $129 to $177.

Retiree Health Insurance Plan
The City had an actuarial valuation performed as of October 1, 2014 to determine the annual required
cost (ARC) as well as the unfunded liability. Under GASB 45, which prescribes the City’s financial
reporting of the effects of this valuation for fiscal years 2015-16 and 2016-17, the ARC was determined to
be $825K for all City funds. The amount used in the budget is $844K.

2019-2020 Budget Message iv