Yeah. All right. We'll call the meeting to order. Please stand if you're able for the pledge of allegiance to the flag of the United States of America to the republic for it stands nation. Uh Tom, take the roll call, please.
Mayor King, present. Council member at large Austin, present. Council member Fischer present. Waller present. Baskin Fosma present. Heli present.
Mubala present. We have a quorum your honor. Thank you Tom. And before we get anywhere near in the weeds of this meeting, I want to uh make a special presentation of the key to the city for Tom Dankard, our city uh administrative services director, finance director.
been uh wishing him a happy retirement. And uh and who knew that we thought last meeting was going to be his last meeting, but oh god, no. We knew him that there was going to be there was going to be a need for Tom Danker services in a big bad way one more time with this seventh uh public
meeting on our finances. So Tom, I want to uh hopefully get council in the background. If we if we stand out here, Holly's going to take our picture and you I will present you the key to the city. It's real distancing. Only one. [Laughter]
So Tom punish force him into an acknowledgement. So 29 years 29 years of service that nobody's welcome to replace Tom. We have come to rely upon him uh every day city government every day.
So the importance is not lost on me that uh that you have to say more. We just we just will have a hard time filling your shoes. But I just wanted to acknowledge your years of service and the impact that you left for the city of Austin. So congratulations on retiring. [Applause]
And then you want to slide over so we can get Oh, sure. This is the wizard of She's like, "No." Yeah, that is so funny. It opens up the fine.
That's right. Thank you. Thanks, Holly. All right. So, the only thing on the agenda tonight is uh further budget discussion. When when we left last, um this the council voted to have our levy increase for 2026
be 7.5% increase uh year-over-year with uh no real clear path to try to get to that 7.5, but I'm open to at this point we got to open it up to suggestions to find $273,000
Thomas in savings or cuts. Yes, that's where we're at based on the proposed budget. I'm sorry, proposed tax levy that you passed at the last meeting that's been filed with the county uh treasures office. And I would certainly just assume if there's going to be cuts to employees that we do it through attrition. I don't
know if there's a clear path to that, but opening it up now to uh to council for any kind of ideas you might have to get $273,000. And Laura, you're online, too. Let them recognize Laura Heli. Council member Hel's on on the Zoom.
be a quick meeting. Be a quick meeting. One thing I want to also, you know, I uh I I I I recognize the difficult difficulty this puts uh our department heads in and I I wanted to have council shoulder this, not not
the department heads. I understand you probably couldn't find any place to cut or at least come forward with anything. uh whether that's uh you can prove me wrong if you will, but I do I do want uh if we do start talking about uh cuts to our employees that and not through
attrition, I would certainly uh want council to be the be the person that's uh putting that out there, not department heads. Yeah. So I I guess maybe just for sake of discussion, I'll start um with a couple ideas and I don't know that I'm necessarily led to it, but would love to.
I think there's three things that I've kind of thought about it that we could look at. Um, you know, I think there's certainly the option of attrition. Um, there's enough turnover, you know, as we start to look at the numbers on a year in and year out basis that I think it's a fairly reasonable assumption that we
could get down to FTEES throughout that course. Um, I mean, none of these are easy decisions. I don't really want to lay anybody off. And so, that's kind of option one. Option two could certainly be the do we look at like an early retirement option um where it's a little
bit if people are going to go within the next year or so is there kind of an enhancement or something like that similar type of thing where we're not necessarily taking somebody and taking them out of a job right now but kind of giving the opportunity to to retire early. Um and then there's always the we
pick two specific positions that we're going to cut or you know three position whatever that looks like. And so I guess I would just love kind of the fellow council's thoughts on early retirement attrition specific cuts like do we have a preference or desire or any other
ideas because I'm wide open for those two. Uh Craig or Tom or can you speak at all to the attrition uh formula or idea path? We've offered that in the past. I think it's been several years where um we
bought out or offered early retirement to I believe it was four positions with the intent or the council direction that those four positions would not be coming back ever. If I recall over the last several years, three of the four have come back with only the engineering tech
being the one that has never been replaced. So, we did go through some of those processes years ago, which involved, I think, some health insurance payments for six months or something and maybe a lump sum payment of a couple thousand dollars, whatever it might be. It's been a long time. I think it's when
we had the million-doll LGA cut back in the early 2000s. Is that that was an early retirement program, you said? That's we offered it then to cut positions because of the million-doll LGA cut by the state of Minnesota. And back in the mid 90s when the fire
full-time fire went away 94 that was uh paid their insurance or I can't remember what that was. I think that also requ that one required special state legislation because of the compensation package was significantly above what state statutes allowed. So, we had to get the legislators involved
in order to allow for that early incentive and the health insurance payment for that long for those individuals. And that with the incentive, is there a way with uh with attrition just naturally losing two to three people a year that we might lose? Is there a is there a formula that we could hang our
hat on to get a levy down 273,000 or so with a with that? You know, depends on, you know, these are would these be positions you're not going to fill again. And then um you know it's just based on the class and the grade and the and the compensation
they get. 273 grand is roughly two people two to three people when it's all said and done. Um I guess it's all going to be based on who's closest to retirement. It's got to be out of tax levy funds. So treatment plant wouldn't do us any good because that's user fee
based from the standpoint of trying to get that tax levy down. I I guess I have a concern about the attrition plan because not only do we have to get the um folks leaving the organization, but they have to be positions we're willing to leave open
and when we know we're already understaffed on police, already understaffed on fire. Um, it seems as though we could have some attrition numbers that that go through but not actually get the savings and then wind
up the year um in the in the red. And I don't want to see that happen. I I I don't know that we can take that gamble. I guess I would say that barring a great loss in the police department, I guess if we lost somebody
in the police department, I would be in favor of rehiring um as soon as we could. Um but I guess it's I think we did this several years ago where if somebody quit, it was up to council to decide if we wanted to
replace that person or not. Um, you know, and if you lost somebody in public works and then you lost somebody at the library, then you decided, you know, which one you were going to replace if you brought them back. I mean, if we got down below three people,
if more than three people quit next within the next year, then it would come back as to who gets priority to rehire. I think that's how we did it the last time as I recall. And I think we I think we maybe shifted
some people around or whatever needed to be done at the time to get work covered depending upon who it was that quit. I guess the attrition is my favorite way. If we assume that we're going to get two or three people to quit anyway, it just
naturally happens. Um, then I guess I would be from there I would be in favor of some kind of a a package to encourage somebody that's on the verge of retiring to maybe retire a little bit early.
So I thought at least as far as kind of an attrition thing go just go through the year and then last 250 doesn't get paid. Um, we were I think I felt like we were sort of already on that path where in previous work sessions we had kind of agreed to freeze hiring and have council approve
any position that opened for the next I don't know year, however long we decided want to do it. What has me concerned about that is a Laura's point, I don't know that at least for any of our first responder positions, we're looking to leave those open because we're already on the short
end. And two, if folks don't retire until say June, well, now you're two to three that you needed to get that $275,000 for the year. They've worked half the year. So now you need four or five the last 6 months. You know, we've we have
now painted ourselves into a corner with the 7.5% levy increase. So I think if we're looking at having to cut positions to get there, we just need to I mean, I'm not looking to do it, but that's what the council voted to do. So, I
don't think just hoping that people decide to retire or leave or else we're got to pay $275,000 out of our savings is a great strategy financially. Well, yeah, I guess I would be in favor of using fund balance to cover the
difference to get us to that point because yeah, they're probably not going to quit tomorrow, right? They might not quit by January 1st. Um, so yeah, you're not going to see that full savings right away, but um, eventually you will.
And you know, and we got a we got we got grant, our employees are great. I love our employees, but our employees are also our biggest costs. So when you start to look at where to cut, it's, you know, that's where it comes down to,
unfortunately. And if we can do it by attrition, that's I would think the least painful way. And if we don't do some I mean we've been in this position now every year for how many we're going to be in this position for how many more years if we don't start finding a way to do things
differently. I I'm going to actually disagree um with you there council member Austin. I I don't it's the cost of delivering services to our residents that is high. It just so
happens that that's it. It it leaves our budget as payment to employees. I don't think we have an expense problem or employee problem. I think we have a revenue problem. And you know, we're not going to solve the revenue problem tonight, but I just want to go on record
and say we're not overstaffed. Um we're not paying for our people too much. We don't have too many people. We we really just have a revenue side problem. And um I made clear the residents wanted to continue delivering the services. The cost of delivering the
services keeps going up. Um to get through 2026, I think we're unfortunately going to have to at least accept attrition or some other way of losing folks. But um as soon as we are done talking through this budget, I
would like us to start talking about additional revenue in a serious way. Okay. So, I think what I'm hearing from this group is as we think about the three options, you've got attrition, the concern is it's challenging. I I guess I'll give you my view is it feels good,
but I I worry that a we're not going to get to where we need to get to and b we just prolong the inevitable and we make it a very uncomfortable piece. And so, this sucks. There's tough conversations and tough decisions we need to make. I
would rather make the decision. Let's get through it and treat people let's not have the entire city hanging in limbo for the next, you know, 6 to 12 months. And so in my head, I like the idea of offering a couple of targeted
early retirements because and I don't think it's a you get six months. It's a hey, you got 30 days to make a decision on do you want to do this or not. we can get some clarity and if we're able to cut two positions through that then I think that moves us in a really good direction. We'll have to figure out working with Craig and with the HR team
like what the requirements are with that. But that would be option one and it I think there's a time limit on it. If we don't have that then I think we've got to have an ability to come back and say here's the two specific areas that we're going to cut. Um none of it's good
but I think I would rather figure it out. Let's rip the band-aid off. Let's treat people with dignity and respect, but let's also make sure that we don't hold everybody in limbo as we go through. So, that's where my head's at, but I could be convinced either way.
Paul, Obama, Becky. I think for me, I like the early retirement seeing if we can't get a couple people who are on just that edge of maybe, you know, they're not quite sure they want to go now, maybe in the next 6 months, but let's see if we can entice them a little early just to see
if we can get these two spots down. Um, I'd hate to have to go pick positions, but we are trying to get a levy to 7 and 12% and at this point, we've got to make those decisions. So, if we can find the way to do the early retirement, that's
my my push for that one. Um, mayor, I I am with uh Council Baskin and and Rebecca uh because this is this is going to be tough and um as we all have
seen it um that we have to make um a good decision. You know, I love all our employees. Um what they do every day for us. At the same time, this is one uh something we know ahead that in the next year we're going to go into it again. The year coming, you're going to go into
it again. But making those decision now, you know, we are still respecting them as uh um Mr. the bus can say that you know giving them those options um it will give them a better idea you know sit down with their family what they need to do and if because this has
happened every year you know um we didn't know this year we will have early retirement but we do have on our roster now I think if we go through this way he will give us this opportunity to talk um with Craig and um see what area um the
department head where they have with um upcoming retirement and then make that decision and move forward because I know very well we will be in the same position next year because not getting any aid but it's good to um deal with
what we have now instead of looking into another 34% next uh next year again uh the same discussion. So, if we're talking about early retirement options, are we going to be specific about what departments we're looking at? Because, you know, at least
for me, I don't know that early retirement from the police or the fire department does a lot of good because we're going to I'm going to feel the need to replace those positions. Yeah. I Mike, from my perspective, and I know that there's I guess I would look to Trish for this as we design the
parameters of it. I know that there's some HR and some legal aspects of how the program has to be designed. Um, but I would agree. I think you can exempt areas and so in my head it becomes something like okay if you're 58 years
with X amount of service or 55 with X whatever the numbers are with that fire safety excluded it would be. So I think we would strategically target it to not do those areas. Okay.
And then we've got to figure out what is the package. Is it healthcare? Is it, you know, pension top up or whatever that is because I think we want to be fair to those employees. And it's not the Yeah, I can support the early retirement concept. Um, and I if we get to that
point, I will vote for it. I just want to point out that it does have the cost of those who are still working at the city are going to have expanded workloads and we're going to see our uh morale uh go down. So, I just want to be
clear about the the cost that it's going to cost us to make this budget work. Craig, what does the mechanics look like for asking or putting out there a package for early retirement?
I mean, we can't, you know, sort of shop it around. We just have to establish what we feel would be attractive enough and how much you'd want to put on on the table to make somebody make an educated choice to
retire early. So, and it might be five in order to get 273. Might be might be a different number than two. It probably it's probably at least three based on the cost of the health care and any other part of the package. Any idea what even six months of healthcare looks
like, Tom? On the city's cost probably based on next year's proposed increase could be anywhere from 15 to 18 grand potentially based on what coverage you had. Okay. I I guess you do have the ability, you know, if you've decided that's what
you're going to do, um you could use fund balances council at large Austin did for that interim time and then you'd start out the 2027 year uh free and clear. Um so I if if that's the direction you want to take, I guess you just got to decide
what your package is and yeah, it'll be part of the program, but something if that's what you're going to do long term, you'll need to do. Tom, I I feel like when we started this budget process, you gave us some warnings about fund balance and in particular the amount that we need to have in reserves
versus budgets. Can you tell us what that remind us what those numbers look like as we start to talk about fund balance to fill in gaps right now? So you you don't get your major revenue sources to operate until July. So local government aid to the tune of 4.5
million and your taxes which this year about 4.9 million you didn't get them till July. So the first six months the general fund your main operating fund of the city literally has no real revenue coming in. This year was a little
different because they had a one-year this is the second year they did it two years ago where they gave you a portion of your LGA upfront like 9% for some goofy reason. But otherwise, that's your your um operating cash for the general fund for
the first half of the year. For 2026, the general fund proposed budget is $23.7 million at this point. So, you need about, you know, 11.52 million sitting in the bank to do that. Each year, your
your your costs are going up about a million bucks a year just through your investment on employees, insurance, you name it. So each year, if you got to keep 50% in fund balance, you need to be banking another half a million dollars or so each year savings. Whether it's, hey, we
took in 101% revenue or we spent 98% of our expenditures. That that flush amount is what's been able to carry your fund balance that, hey, you've got enough to pay the bills the first six, seven months of the year. Um,
state audit recommends 35 to 50% in fund balance. Our auditors have been at the 50% uh mark for years. That's where they really want you to be because that gives you adequate cash flows with a balanced budget. As I think many of you are aware, there are some entities within the probably
read the newspaper that have some real problems. Um using millions of dollars in fund balances here because of accounting issues, finance issues. Oh, we didn't know this. I think a school district was just in the newspaper for a $20 million error.
You don't make those up overnight. Okay? So, you know, I've been Thank you for listening for preaching for 27 plus years. You need to balance the budget out. Otherwise, it will cost you the next year twice as much and the year after
the year after. So, you know, my goal has always been to balance that budget um to keep some sane level of capital in there to be able to replace the roofs and the playground equipment and the police cars. Um but that's kind of, you
know, we're at that pre prefaceis like council member at large Austin and Obala said, state of Minnesota is not looking good the next two years. Um council member Hely is correct. We have a revenue problem. Every greater Minnesota city has the same revenue problem. You
get LGA and you get taxes. That's all you get, folks. The rest of it, no offense, building permits are great, but it doesn't amount to much when it's when you look at your total operating cost of a municipality. Um, good news is we've been able to keep
that capital outlay at a certain level so that we don't have to run out and ask for operating referendums or levy referendums to fix roofs and all those sort of things. It's you're you're coming to a head. These next couple years are going to be tough and a decision you make today or
don't make today, it will compound the problem the next year and the year after. So, what we know for sure is we're at 7.5. That's been certified. You brought that over to the county. Um, and we have we have a drop dead date of what December to go find a solution. the
truth and taxation statements will be mailed out based on your 7 and a half percent percent probably about mid November. Um somebody will have to create that truth and taxation hearing document. So by that time at the latest uh some decisions you'd want to make
whether it's attrition more expenditure cuts or just using fund balance and we'll deal with it in 2026. That's a decision folks will have to make right now. all the budget to get it on the uh balance. It's out of fund balance until you make that determinating factor. And and then how much time would you
need uh to look at incentivizing a retirement before we meet again? I I mean that's a little bit subjective, but I by the time we got it put together, I'd say a month for people to digest it,
figure out a what what is an incentive to begin with, right? It takes some time to do that and then when you take it to employees, it could be shorter, but I'd say a month would probably be the fairest. Are you saying a month to design it or a month to a month for people to
evaluate it? Got it. Okay. You might be limiting yourself if you only allow age 58 or whatever it might be for retirement. There might be some individuals that, hey, I, you know, just won the lottery, you want to pay me an extra x,000 go away and I'm 28 years old. I'm out of here. Some people might do that. So,
I would consider that as part of your offer, too, or your your parameters whether or not they have to be retirement age or not. Yeah. So, I think where my head's and maybe the motion I'll make is I would make the motion to ask
the HR to come back to us at our next October work session with a early retirement program for us to evaluate. I think the goal is number one excluding public safety, police and fire. Number two is the target is cutting two to
three total FT or reducing our FTEEs by two to three. Three is I think we want to make sure that people are treated with dignity and respect and appreciation and obviously we've got to be legally compliant. But you know I think as we so that would be I guess my
motion and where my head goes to is okay attrition's not going to get us there. I don't love the idea of just randomly going down a list and saying you you and you are out. And so I think it's got to be time limited with it as well, but this gives us the opportunity to evaluate it, decide if we want to move
forward with it, and then ideally we can get that in front of employees. We can have an idea here by the time we get into November what this looks like and then we can have decisions so that we're not impacting people going into the holidays and we've got everything kind
of taken care of. Um, obviously if we can't get enough early retirements, that puts us in a different position. But I think my goal would be let's figure out how to do it legally compliant and in a way that moves us forward.
I like like 95% of that. The one tweak that I would make if folks are willing is I think just looking at the calendar, we're up against a clock and so instead of a work session, I think it's got to come to the full city council meeting. Maybe, you know, we can still edit it
there. I'm sure we can still give Craig or Trish feedback between now and then on what they've come up with, but I think we need to approve something October 6th to give folks a couple of weeks to work with it because if we don't have takers by October 20, we have to start to do the hard work ourselves
so that, you know, we can know by the 1st of November if we're having to cut folks in again going into the holidays. So, I think we got to do it at the the regular meeting. Is two weeks realistic or should it be October 20th?
I think it could be realist I mean we're not talking about realistic anything super crazy to try and come up with here. All right. Any thoughts on this is healthcare or any one way or the other? I would I would think incentive for the
younger folks be for the ones that are older I suppose. But whatever I think you could get I'd leave it open to I was going to say you could do an either or a lump sum of x amount of money or healthcare for six months valued at this sort of a thing and I agree not necessarily putting the
age cap on. I mean the rate the we want a couple of people to take this so broadening our reach as far as possible is probably the best likelihood of getting the result we want. I guess it'd be important to know that by October 6th if we have nobody either.
That's an important answer to have if we don't find anybody. Well, we won't know. On October 6th, we're we're authorizing the incentive. Okay. And we're going to need to know by October 20th. Fine. Well, I would think if we're talking about it tonight, the employees know
we're talking about it. They're going to talk about it and they're going to say, "Hey, I'm thinking about retiring. I guess this is what I need. If they offer me this, I'm out of here." Yep. So, we might have an idea who might be interested if they come forward. If not, then I guess we just wait till we have
what the package available. Yeah, I would agree. I I like bringing it to the full session. So, however we need to amend that motion, I think we can provide feedback and approve it there. Let's get it in front of people and then let's have clarity because the last thing I want to do is roll in on December 3rd and start picking people
that we're going to fire in the middle of the holidays, which would be a horrible decision. So, we have a motion, Tom. Do you understand it? Um, I I second the motion. My understanding is you want to come back at the October 6th work session with a plan to uh for
the early buyout retirement for which if approved would then um staff would work through to see who can come through October 20th um with whoever is wants to can to can take this out and that's about what I've got at this point. Yeah,
I think the one nuance is it was Yeah. At the council meeting, we would like a proposed program that we can authorize at the October 6 council meeting. October 6. Yes. Employees would have and no, Tom, you're not eligible. Sorry.
Yes. Police chief's looking his chat. Oh, sorry. Public safety not available. Also ineligible. Just to clarify, Craig, just you know, so the employee would have to October 20th once it's approved, the incentive, they have to October 20th to make a decision.
They got a couple weeks. How long are we going to give them? I think we got to do it's I think you got two weeks now to know something's coming and to start having those discussions. And on October 6, you'll know what the actual authorized package is. Yes. And by October 20th, we got to know so that at that work session, we can start having much harder conversations if we
need to. Yeah. I I think the one nuance is let's figure out I want to at least leave enough wiggle room for if there's an HR best practice of you got to give people 30 days or a week or 40 whatever that
looks like but yeah come back to us with the best in class. All right so we have a motion. Is there a second? I second motion in a second. Any further discussion? Could Could we just ask Trish uh Wikman if she needs any clarification before we vote or if she
has any input before we vote? I feel like this is her. She's given the thumbs up. She's been nodding as she's got a thumbs up. She'll she'll take care of that. Thank you. Thank you. All right. So, with that, Tom, take a roll call, please.
Council member Fischer. Hi, Waller. Hi, Baskin. Hi, Oma. I Hely I Obala I councilman at large Austin I
resolution motion passes seven sub and zero your honor thank you Thomas all right I guess that's the only item on the agenda other than congratulations again Tom on your retirement wish you the best out at AU enjoy your key to the city it unlocks most things
we also have a plaque for you I might have to hand deliver that Um but uh we do have that ready for you too. So October 3rd is your last day here. Yes. Congratulations on your retirement time. Thanks everybody. Thank you. Thank you Thomas. Been great working here. Appreciate your support. It'll be
very messed up. Great having you. All right. With that looking for a motion to adjurnn. So move. Second. All in favor? I opposed. We are adjourned. Thank you everybody.