July 21, 2010
Last week the Metropolitan Water Reclamation District Board of Commissioners held a public study session meeting to discuss its upcoming FY2011 budget and projections for what the financial year may hold. The picture staff painted was grim, with increasing expenses for the District while revenue projections remain flat.
The District is projecting that health care expenses will rise by 12% or $6 million in FY2011 and noted that since FY2006 employee health insurance expenses have increased by 58.6% or $16.7 million. Rising energy expenses are also an ongoing concern for the District, as are increasing salary expenditures.
The MWRD is projecting that its Corporate Fund revenues for FY2011 will fall to FY2006 levels. The District estimates that if it decides to increase its property tax levy to the maximum allowable under the tax cap for the upcoming fiscal year, it would receive an additional $5.5 to $6.0 million. Staff noted that this increase would only be enough to cover the projected increase in health care expenses. Staff also cautioned the Board that FY2011 revenue projections may be overly optimistic.
The District stressed that its current financial condition is not due to the recent economic downturn. Instead, staff pointed to large increases in health care, energy and personnel expenses as the main causes of the looming financial pressures and said that since FY2007 District appropriations have outpaced revenue receipts.
In response to this information the Board of Commissioners raised and discussed numerous cost-cutting options, most of which centered around personnel expenditures. Reducing the number of employees and/or mandating that employees take unpaid days off were the first options discussed, although MWRD Executive Director Richard Lanyon stressed his desire to avoid layoffs and furloughs. Other personnel-related measures, including the elimination of both cost of living and merit pay increases for the upcoming fiscal year, were discussed, as was commissioning a compensation and classification study to review existing staffing needs and salary scales.
Commissioners asked about other cost-savings ideas, including reducing the employer contribution to retiree health insurance from 75% to 50% of premiums, along with a simultaneous reduction in the employer health care contribution for current employees. Reduction of the District’s motor vehicle fleet, overtime pay, travel expenses incurred by staff, tuition reimbursement by Commissioners and training were all mentioned as possible means of cost-cutting by sitting Commissioners.
Recognizing that the upcoming financial challenges will be difficult, the Board agreed to hold an additional study session to discuss the cost-savings ideas discussed during this meeting. This meeting is scheduled to take place on August 12, 2010 at 2:00 p.m. at the MWRD headquarters.