Memorandum

City of Lawrence

TO:	Mayor and City Commissioners
FROM:	City Manager David L. Corliss
Date:	November 16, 2010
RE:	2010 Longevity Payments

I am recommending that the City Commission provide longevity payments to eligible City employees this year at the $48.00 per year of eligible service rate as budgeted for 2010. 

Status of 2010 Budget

As outlined in the third quarter report and shown on the attached fund projections, we believe we are on track to meeting projected expenditures of $63,503,413 in the general fund.  With the revenue projection of $63,402,126, this would require spending just over $101,000 of fund balance.  Recent sales tax figures as well as continued growth in franchise fees and fines indicate that revenues may exceed that projection.  Regardless, the projected ending fund balance in the general fund is still expected to be nearly 20% of expenditures.   

As the City Commission knows, earlier in the year, departments were directed to reduce non-personnel related expenditures by 2.5%.  In addition, we have reduced our general fund non-public safety workforce.  As of January 1, 2011, our authorized non-public safety workforce in the general fund will be 15.8% less than in 2008.  Other funds, including Water and Wastewater as well as Solid Waste have also eliminated positions.  Despite reduced numbers, however, City employees continue to provide excellent service, in many cases with reduced resources for equipment or materials and added responsibilities. 

Cost of Longevity Payments in 2010

The attached memo provides a history of longevity payments and explains the parameters typically used to calculate longevity.  The payment has been at the rate of $48/year of eligible service every year since 2000. 

The 2010 budget included $416,366 for longevity payments.  The total cost of longevity payments at the budgeted rate of $48/year for 2010 would be $396,608. 

Justification for Longevity Payments

As noted above and in the budget attachments, we are currently projecting general fund expenditures to exceed revenues by no more than $101,000.  Any additional expenditure may increase the possibility of having to dip into our existing general fund balances.  However, I believe that a revenue/expenditure balance below a 1% margin on $63.5 million in expenditures continues to demonstrate good fiscal practices.  This is especially true considering that the fund balance in the general fund has grown by $1.4 million since the end of 2006.  The longevity payments at the $48 per year level will not inappropriately challenge City finances this year, particularly given the City’s – and City employees’ – continued commitment to controlling expenditures during this tough economic period.

Action Request

Approve payment of longevity at the rate of $48/year of eligible service for 2010.