Finance & Personnel Committee - Regular Meeting

2026. I'm Alderwoman Marina Dimitrievich, the chairperson of the committee. I'm joined by my vice chair, Alderman Peter Bergelis. We had Alderman Scott Spiker. I'm sure he'll flow back in. Alderwoman Milele Coggs is with us virtually. And Alderwoman Sharlyn Moore is on her way to the room. That does provide us a quorum to begin our business with item number one, 260001, communication from the mayor relating to the proposed 2027 budget. I truly want to thank Mayor Johnson as well as our budget leadership with Nick Kovac for starting this discussion earlier today. than ever, so we really appreciate it. This is a communication file, and I think the way that I've been framing it is we may have different decisions along the way, and certainly that's how democracy works, but it would be great if we can at least try to share uh... the same assessment of our fiscal situation and that's what we're hoping to accomplish today so this is not meant to be like a pre budget deliberation but it is available for knowledge uh... specially as the department goes into the community for additional feedback on to a peek into what will be pretty much informing likely the 2027 budget choices in the administration. So we're happy to get the same glance, and I think this will help hopefully for additional alignment. So with that, thank you so much, Director Kovach, and the floor is yours.

uh... thank you madam chair and committee members that's going to be this morning the kovac director of the budget management division uh... for mayor cavalier johnson and uh... like the chair said this isn't this is under the request of the common council uh... uh... but also done uh... somewhat of our own volition and that we agree that alignment hot hot like your phrase the alike getting the assessment aligned will allow decisions to be uh... to be better informed decisions to be made by everyone involved. So before communication between the budget office and the common council about the proposed executive budget while it was in deliberation between May and September was mostly informal. uh... uh... in the last i think three years we have formalized it a bit in that in late july early august about midway through our development of the budget i've been sending a letter entitled big picture budget prior big picture budget issues and request for common council priorities so that that remains but we're kind of for jump starting that early about a month earlier And we're doing it to the council and also to the public and we're enhancing the mayor's public meetings So that it'll now be two meetings at two different libraries on July 29th and July 30th rather than one meeting In the City Hall rotunda as it's been the last couple of years going way back that meeting used to be in the fishbowl over on Broadway So we're trying to enhance our communication with the Common Council, but frankly, we're also trying to enhance both the Mayor and the Common Council's communication with the public. So I would say there's a couple different goals here. And then the slides, I think I've shown it to three of the five committee members already, and I've also shown this to a few different community meetings. These slides sort of begin with a structural analysis, or maybe analysis, too strong a word, pictorial description of the structure of the 2026 budget, and then we talk about the 2027 budget gap and what's likely ahead for that So with that, I'll begin. The 26th budget is $2,075,687,722. We have that in words and in numbers. Different people learn differently. And also keep in mind throughout all of this, And I apologize to the committee who probably knows this already, but I do think it's important to underline some key concepts. Every dollar spent must also be received. So there's expenditures and there's revenues, and they have to completely tie out. Most of the conversation on these slides will be about expenditures, but then I will describe the revenues as well on one slide. And keep in mind, they have to tie out. And that's per state law for every city, town, and village in the state of Wisconsin every year. DIFFERENT RULES FOR STATE AND FEDERAL GOVERNMENT SOMETIMES, CERTAINLY FOR THE FEDERAL GOVERNMENT. AND THEN MOST PEOPLE DON'T THINK IN WORDS OR NUMBERS, THEY LIKE TO THINK IN PICTURES, ESPECIALLY WHEN YOU'RE TALKING ABOUT BIG NUMBERS, IT'S HARD TO VISUALIZE. SO HERE'S THE BIG PIE. THIS IS THE ENTIRE, I'M NOW STARTING TO ROUND, THE ENTIRE $2.2 BILLION, $75 MILLION CITY BUDGET. BUT LET'S PUT THAT UP INTO THE PARTS THAT THE PUBLIC, THE MAYOR, AND THE COUNCIL HAVE THE MOST CONTROL OVER. the mayor of the council the public control the entire budget but there's quite a few risk some some of the funds are restricted in various ways so the first we're going to peel off nearly a quarter of about twenty three percent four hundred eighty four million is self supporting uh... which means that that ties out separately revenues and expenditures equal here and uh... The bulk of this is the enterprise funds like sewer, water, and transportation. It also includes grant and aids and settlements and county delinquent tax fund. But that's money that's sort of in and out and doesn't interact for the most part with the rest of the 1.59, or from now on I'll probably be saying $1.6 billion budget, which is the general fund. also known in a lot of our city facing documents as the levy supported budget. So the property tax levy does not support this 484. If when I say the mayor and the council have control over the budget, so the sewer and water as the primary example is the majority of this. In theory, could there be a budget amendment to do less water pipes or less sewer pipes? Yes, but then that would just ultimately either increase cash reserves or lower, in long term, lower the sewer and water fees. It would not make money available for the rest of the budget and vice versa. Your property taxes do not support the sewer and water fund and vice versa. So this $1.6 billion has to separately tie out. And then when you get into that $1.6 billion, I've just sort of removed the self-supporting as not part of at least the leading edge of this conversation. Only about a third of that total two billion is what remains for day-to-day costs of most city departments. So the four big categories I've split off here, three of them are actual different sections of the budget. If you look at our rate sheet, which is in your budget documents every year, you'll see that it's sections B, C, and D of the budget, the debt, the pension, and the capital improvements. Debt is the cost of prior borrowing. uh... pension is commitments we've already made to employees that because of the city charter state law and private global pension settlement is money we can't we have to we have we are committed to in the same way we're committed to debt capital improvements is cash revenue and and borrowing for new capital improvements so those are expenditures that we talk about extensively with with our budget analyst capital manager mason levy and all the departments that's money we spend on immediate capital expenditures and we fund it with the revenue from borrowing then we pay for the cost of that borrowing so the green and the black portions of this pie chart interact over time in that way. And then we did split out healthcare and workers comp, which are actually part of section A of the budget, so when you're actually talking about the entire general city purposes or section A of the budget. The blue and the red are often merged. We chose to pull out the red because there is some flexibility in healthcare plan design, but ultimately we're committed for a variety of reasons, some contractual, some ethical, to pay for healthcare for our employees. So that's money that we're more or less committed to. Once you establish the size of the workforce, the healthcare costs and the workers' comp costs are more or less baked in. So that's about $136 million between them. that makes up the red part of the pie chart. So if you're looking for how we did that math, we'd peel that off by looking for the healthcare, all the different healthcare SPAs in the workers' comp, SPA, special purpose account. That's where you'd find those, in the same section of the budget, but we've peeled them off for purposes of this discussion to highlight that 685 million out of the over two billion is really what's basically in front of the mayor and in front of the council this year and every year. Well, that number is specific to 2026, but every year that structural concept remains. It fluctuates a bit year to year. And then now, so now we're taking that 685, that one-third of the overall pie and making it its own pie. This is a chart you've... you've probably seen before, we've shown it in a number of different, we pretty much show it every year, which is the section of the section A budget, the general city purposes budget that goes to each department. We did this year, it didn't move the numbers much, barely at all, but we did add in departmental specific special purpose accounts into these numbers. So if you're trying to tie this out with prior years, apples to apples, you probably should do that in retrospect. We probably should have been doing that all along. We do have our separate chart every year that shows special purpose accounts mixed in with with departments operating uh budgets so we did include those and then the other big thing to note if you're trying to make all these numbers tie out these percentages are based on the fringed up costs of the department so if you actually look at the underlying data of this chart it's not going to add up to 685 million because we allowed the fringe to stay in the department, because especially when you're looking at it on a percentage basis, having that fringe cost included I think is important, because it's a real cost, it's just technically not in the department's budget, because we fringe up the department, then we back it out, and then we actually pay for the fringe costs in either the healthcare SBAs, the workers comp SBAs, a few other smaller SPAs, and sometimes in the salary line, some benefits end up there, and then especially in section B of the budget, the pension, is where those costs actually get paid out of. But for purposes of transparency, we left the fringes in, took out all of the non-departmental specific SPAs, most prominently that red slice, and came up with these percentages. And then we're gonna be working off this pie chart, so keep it in your head, to describe, even within that 685 million, I've already told you how most of the rest of the of the budget is is any changes you make wouldn't either you can't make them or they wouldn't um like debt and pension you have to pay it and then if you tried to make them they wouldn't they wouldn't necessarily create money in the rest of the budget like if you decided to borrow less you'd make the green slice smaller on the prior chart but you wouldn't suddenly have more money then you'd actually have less money because you'd be reducing expenditures and revenue uh... so in this case we're going to kind of go through the big chunks it that we have i have three slides that break up this chart in the pieces to make sure one of stands there's limitations even with in day-to-day operational cuts besides the obvious limitation that if you make cuts usual you most likely get uh... less service uh... so within uh... fire and police most especially again this will be repetitive for members of this committee who were involved both before and after act twelve so you understand how that changed uh... the options before the city but because of act twelve specifically we are the city is forbidden to reduce In fact, it has to increase slowly and steadily, certainly, based on revenues that come in and with a target by 2033. We have to increase daily minimum staffing for fire. We have to increase the total number of actual funded, not just funded, but actual sworn personnel in the police department. There has to be an annual increase in the number of sworn personnel, and then because of existing state law and contractual negotiations that are mandated by the state with the three public safety unions, the same number of personnel costs more every year too. So not only can't you cut, but you must increase the largest line item in both the fire and police budget, which is the salary line item for sworn personnel. Having said that, it's not the only line item in the fire and police budget. So civilian salaries, equipment, and operating costs, state law is not violated if those are reduced. The practical functioning of the department and doing support services both by civilians and with equipment and operating costs for the sworn personnel are necessary. So it's not restricted by the state, but there's a practical restriction there in terms of, I would say, you're practically limited in how much you can attempt to reduce. So you can achieve some reductions in police and fire, but the bulk of it is off limits.

Madam Chair. Alderman. Just really quick, Nick. So when we're talking about just Act 12, is it specifically looking at the salary or personnel versus, yes, we have to go up in personnel, right, salary.

Mm-hmm.

but we may have to decrease in a different line items like what, I don't know, maintenance of vehicle, whatever, I don't know, whatever, to balance it out, or will that budget, everything sort of stays the same while personnel continues to go up, thus making that line item bigger and bigger over the years?

it actual does is not specific to the expenditures at all well parts of it are but the part that requires maintenance of effort for police and fire specifically say the number of separately because of act ten because act ten allowed the three public safety unions to continue negotiating got it so but the combination of act twelve and how act ten didn't change that status of public safety unions The two laws working together mean you must have at least the same amount and each year likely a little more. Yep. And then also you have to pay all of them likely more because of the results of negotiation. Sure. So that is your, because of those two state laws, that budget will inevitably increase. The question is just by how much that portion of the police and fire budgets, which are the largest, overwhelmingly largest portion of their budgets. Everything that remains is what you're not restricted in reducing, except by the practical expediency of the support those officers and firefighters need. Thank you. Different state laws, oh sorry, I went the wrong way. so now if you remember so this pie chart we looked at the bulk of it more than half of it is police and fire and then a big chunk of it is public works and neighborhood services and there is a state law that basically says what you charge for in in especially in user charges but also in any kind of permit permits and user charges you can't you can't charge more than the cost of the service delivered for that fee so that that means that you However close you are to 100% cost recovery, you can only cut that margin. So if you said, all right, I'm willing to, I don't even want to say something specific, but I'm willing to accept some major reduction in Department of Public Works services. Keep in mind those services are garbage pickup, recycling pickup, forestry work, street sweeping, pothole filling. sidewalk maintenance, street lighting, some pretty fundamental core services. But even if you were willing to pick one of those services and say snow plowing, and say I'll do a lot less of that, your savings would be limited by the margin between the cost of the fee and the cost of delivering the service. So some reductions can be made here, but if you're looking for major reductions at scale, you're limited by that. It's a little more clear in DPW where you have user charges. DNS is nearly 100% funded with a combination of permits and violations. So for different reasons, it's a similar story in police and fire. Can you find some reductions in these two departments? Yes, but you can't find big reductions. And same thing with police and fire. I'm getting a little squishier here, to use Alderman Spiker's favorite term, a different use of the word squishy. It's a little less firm here. When you look at health and then the various departments that are combined into administrative departments. In the case of health, they have over $10 million in grant funding. Their overall budget's about $30 million. So if you wanted to make major reductions in health, it would not be a dollar for dollar savings. You'd also be giving grants back, most likely. Again, with the caveat that around the edges, can I keep all my grants and reduce services slightly, or better yet than reduce services, reduce expenditures slightly to align them with core service delivery. So yes, cuts can be made here in the health department, but keep in mind, given the large grant funding, it's not gonna be dollar for dollar. And then an administrative, a number of those services that administrative departments deliver are state mandated. Now, they're not state mandated to be funded at a certain level. That's why I say it's a bit squishier. So you could make large reductions to that staff, but here then you have the practical restriction, the same one I described in police and fire, where you're sure I could legally reduce a lot of administrative support staff, but then likely a lot of administrative support staff supports all the other departments the bigger ones so there's there's a practical limit to what you can cut before you've really affected city operations uh and so that gives you some sense of of of the restrictions that face uh that face the city budget both the mayor and the common council and and then of course the public as they try to influence the mayor and the common council into making decisions i think we'll get better advice from the public if the public also understands the practical restrictions on a number of these cuts So to review, this was back to the bigger chunk of pie. I just spent a lot of time splitting up the blue, the $685 million. This is where the money goes. And if you recall the initial chart that said the money has to tie out. So the part that you don't see on this pie chart, the self-supporting section, ties out separately. This $1.6 billion, the general fund, also known as the levy supported budget, has to tie out. And so all of this between health care, capital improvements, pension, debt, and day-to-day operations of city departments is funded in this manner. So this pie chart is now, this is a third different size pie chart, even though they all look the same. We went from two billion to 685. This is now 1.6 billion. And these are the sources of our revenue. The big ones are Intergovernmental revenue and the overwhelming majority of that is state shared revenue. Property tax is still the biggest, even though state shared revenue is growing finally, thanks to Act 12 property tax. It used to be state shared revenue was the biggest source until about 15 years ago. Property tax for the last 15 years has unfortunately been our largest revenue source. Second largest is state shared revenue and other state aids. And then third largest is now the sales, well, I'm leaving out borrowing because borrowing is in there, but that's money that is sort of specifically aligned to certain capital projects. It can't and really shouldn't, can't slash shouldn't be used to fund day-to-day operations of any departments. So it's not completely self-supporting, but in some ways you should take borrowing proceeds and capital expenditures and look at them a bit separately too. Sales tax comes in third, so obviously it's at 13%, it participated to be, I think it's over 200 million in the 26 budget, anticipated to increase by a consistent percentage in the 27 budget. Without that 13%, without that 200 plus million, uh... we would have what we we would have had doomsday scenarios which we described before act twelve was passed and then user charges are are right behind that those are becoming bigger and bigger though the five big user charges are snow and ice stormwater sewer sanitation and street light and what we always those that get discussed on a regular basis annually i know this committee is very familiar with those user charges so now uh... Now to the big reveal, how's 2027 looking? All those prior numbers I showed you were about the existing adopted 26 budget that's currently being implemented by all city workers. Every May, departments submit requests and the mayor instructed all departments to submit cost to continue requests. Then we subtract projected total revenues. If expenditures exceed revenues, then we have a budget gap. This year that budget gap is 97 million when you adjust for the pension numbers that came in a few weeks after, that they moved about a million dollars. They came in a few weeks after the requests were received on the second Tuesday in May. So this is the part that I think we normally sometimes have informal conversations about. I want to thank the chair for allowing us to have a formal conversation about the size of the budget gap early, still, what is it, July? So still two months before the proposed executive budget will be released. And of course, I think in the context of a $2 billion, should I be thinking of that 97 in relation to 2 billion? I'd encourage you to think about it more in relation to probably 685 million. So now that's suddenly, in relation to 2 billion, 97 million might sound manageable. In relation to 685 million, not so much. It's a really big percentage now of the budget that we can effectively change. So then you're probably gonna ask how bad was last year? I'm sure this committee remembers. Last year was slightly worse, so that's the good news. Last year was 101 million, and it was closed, and these numbers are also in the budget introduction that we talked about last fall, so this isn't a big reveal, it's really just a review. It was closed in three ways, reductions, revenues, and reserves. Reductions are expenditure reductions, which often but not always correlate to service cuts. So obviously the big part of the job of my team in the budget office and their counterparts and departments is to find ways to reduce expenditures without service reductions or with minimal service reductions. So that could mean reviewing actuals and various line items and so-called right sizing. Now the problem is when you review actuals, sometimes you've got to raise some and lower some, so it's not always a reduction. But you look to areas where you can look at prior year actuals and achieve savings there to maintain current service levels. You also look to efficiencies or you look to places and personnel where is there a job where if we don't fill that, if there's an opening and we don't fill it, can that work of that employee who's doing be absorbed by other workers? That's the classic do more with less mantra. I mean, ultimately, especially when you scale it, there is no such thing as more with less. Ultimately, if you fund less, you get less. But on the margins, you can find efficiencies or you can find ways to improve workflows. And we're certainly looking for that. That's a big part of our job to find a way to get that reduction number as high as possible without having major consequences. But for all the reasons I just described, there's restrictions where you can't even do it in some cases. And then those practical restrictions of if I do it, how will service be reduced? is a big part of what we try to do every summer and then the departments communicate with this committee what their plan is and why various reductions hopefully won't be, have a service impact. Or they will have a service impact and we've made a decision that that service isn't as important as other services. Revenues, this is the one that we got really good news on last year and it was the biggest one. We mostly closed that $100 million, $1 million gap with revenues. obviously we got way more than thirty eight million revenues that thirty eight million just points to the difference between expected revenues in may and expected revenues by september or in some cases november because the council made some adjustments to the budget which also affected revenues uh... so uh... so to some extent the council the mayor do have control over this revenue line again revenue line again within limits so there's the you know user charges can be increased as obviously political reasons and resident feedback reasons why you wouldn't want to increase user charges, which I don't need to explain to this committee. It's putting more pressure on residents in times when the economy is putting all kinds of other pressures on them. So it's an option, but it's limited because you can't charge more than the service costs. And same thing with property taxes. You can increase them, but only by the amount of CPI plus net new construction plus a debt cost adjustment. So there's a state limit to all of those revenues, and there's also a political choice that has consequences for residents that need to be made, but it is a choice that can be made by the mayor and the council. But the bulk of that 38 million was stuff that we basically got good news from the pace of our own sales tax collections and statewide sales tax collections, so we ended up getting more money in sales tax by September than we thought in May, and the same thing for shared revenue, because shared revenue is now adjusted for statewide consumption patterns. So is it possible we'll get even more good news again? Maybe, the problem is the comptroller's office has already made the adjustment for last year's good news in this year's main numbers. So we'd have to get double good news. It has to be just as good as last year and then some for this number to move. So I don't think, no one's holding their breath expecting that. So I just want to point out that that's a big reason why even though the gap is slightly smaller this year, I actually think it might be slightly harder to close. Because I don't think we're going to expect that amount of new revenue. Reserves is something I can speak more definitively about at the next committee or after that, because I think the annual comprehensive financial report, the ACFR, will be released sometime later in July. So that's when we'll know the total amount of money in. the general fund and the public debt amortization fund that could be available for transfer to the general fund. Now, keep in mind that any time you're using reserves, you're sort of admitting to a structural gap in your budget. So if you're plugging it with reserves, you're reducing reserves so you have less to spend next year, and you're basically, next year's gap starts out at this level. If we spend another $35 million in reserves this year, then next year's gap is a minimum of $35 million. I mean, unless you get really good news in other ways. But most likely the reserve, we don't assume reserve use when we do in May. And then the question is, is that sustainable? That's a question that, again, we'll be able to speak more about in a month, what the mayor thinks. uh... reasonable and sustainable use of reserves might be for twenty seven uh... and did you have to conclude oh i'm sorry and i have uh... this is something the committee knows but uh... intergovernmental relations division would would prefer if i never speak about the size of these gaps without reminding everyone why the gaps are so big so two big reasons state-shared revenue was frozen for over thirty years now you can see how that orange line the blue line is if if it kept up with inflation the orange line is what we actually collected statewide consumption what patterns yet what you think yet so basically the blue line is it's just inflation adjusted so it's not exactly statewide consumption patterns but statewide consumption patterns more or less track cpi so So you can see that the orange line actually went down, most especially when Act 10 got passed in 2011. There was a big reduction. And it finally is going up again. So this problem shouldn't get worse because it now does track statewide consumption. But for 30 years, we were a quarter billion dollars short. So that's the biggest driving factor. If people want to know... Well I'll get to that slide in a second but the biggest driving factor in why is the city have structural gaps is the 30 year freeze in state shared revenue where we were paying more sales tax we were paying more income tax all those years maybe not each individual might have fluctuated but as a group the citizens of Milwaukee and the residents of Milwaukee and the residents of Wisconsin were paying more. And the state of Wisconsin was just keeping the money. And this was not just Milwaukee specific, this was all city, towns, and villages. And then this is Milwaukee specific though, the pension obligations, which we've discussed a lot at this committee. We basically went from zero to over 200 million. And Act 12 itself made that 200 million at least $50 million higher because of the lowering of the discount rate. $250 million less in revenue and $200 million plus in expenditures. Add that up, it's over $450 million that we're short. So when people say, didn't you get this sales tax? Isn't that supposed to pay for everything? There's obviously a number of other factors we don't have time to get into, but the three big factors are, So you got less shared revenue, you got more in pension costs to the tune of about 450, and then yes, we're making 220 and growing every year between the increase, the $20 million increase in shared revenue and the 200 million plus in sales tax collections. That's $220 million in growing. Great news, but that does not equal 450. So the fact that we still have gaps the size of 100 million, if you just know those three facts, shouldn't be. all that surprising. So that's the driving force behind why we have these gaps, why they persist. And frankly, it's how Act 12 was designed. You don't have to take my word for it. Act 12 asks us every year to look at 5% reduction scenarios from the prior year, not from current year costs to continue. So that even ignores inflation in their requirement. So we've asked departments to consider reductions well every year by state law in may they show us a five percent from prior year reduction and the mayor has then followed up now with guidance to look at actually it's not quite double that because ten percent from current year cost to continue is different than five percent from prior year actuals and especially when you consider there was a four percent raise Kind of washes out so 10% from current year cost to continues about the same as 5% from from last year prior So that's what we've asked departments to at least consider and obviously the details of where those considerations land will be a big part of our deliberations throughout October when the mayor proposes an executive budget and the council considers amendments to that and and the big thing we'd like and the hope for September October November is that we spent July and August in a in a wise and reasonable way between the mayor's office the Budget Office of the Common Council so you can give us feedback We can let you know how things are looking we want we want the communication to begin before September if possible as it is now and to talk through general big picture items as well as if there's particular line items that matter to you, let us know now and we'll try to propose a budget that closely matches what the public wants and what the council wants in advance of the mayor's proposal in September. Thank you, Madam Chair.

Wonderful. Let me just take a moment for our young friends here, the summer interns. I'll let you all decide your work, but this might be an interesting kind of project to lean into. What you just heard here for about 20 minutes was in 20 minutes our budget director talked about a $2 billion budget, which is the budget that we'll start working on in October. So I'd be kind of interested to just, not now, but informally get your feedback. What would you do if you were in our seats and we had this $97 million gap, right? So we gotta figure out, we have to balance it with we can only pay for the services that we have the money coming in with. So I'd be really interested, just like some informal feedback, working with Alderwoman Moore, What's like the first thing that comes to your mind a little bit not today, but that could be a really interesting project I think and I think we would love to hear from you. So so if you'll think about that And we need help we can add to this alone So we know and and I guess last but not least it's kind of obvious, but I don't mean to call you all out But the decisions we make will will truly impact your lives because you're gonna be here longer than us. So and I'm serious about that. On that positive note, Alderman Bergalis, please.

Thank you, Madam Chair. You mentioned a couple things. You mentioned the challenges and the realities of taking out of reserves to help balance the budget. Last year, or for this year, that was to the tune of $35 million from the tax stabilization fund. How did 2025 play out? What did we add back to this tax stabilization fund?

Yeah, we took, well 32 million of the 35 was from the Tax Stabilization Fund. We got the 35 by taking an additional three million out of the Public Debt Amortization Fund. So that one has been up from the three we anticipated. So six million has been taken out of the Public Debt Amortization Fund the last couple years. And 32 million has been taken out of the Tax Stabilization Fund the last couple of years. The good news is. Last year for this year's budget. Yeah, right. Well, when I say last couple years, I mean 25 and 26 budgets, because I'm already in 27 budget, but technically, yeah, this year. But then you find out when the ACFER comes out, you find out how you're doing. The $32 million we took out in... for the twenty five budget when we got the twenty four numbers it actually regenerated more than thirty two million and we're hoping that that's the same story again this year although we won't know for sure till the ACFER comes out but indications are that likely it will so on the one hand we don't know how twenty five panned out yet Not fully, not until the ACFA is released on July. Bill can speak more to that time.

We just wouldn't want to share unaudited figures at this point, but with a 90% to 95% level of confidence, we can say that we had favorable experience in the tax stabilization fund, meaning that that $32 million draw was most likely more than made up for.

Spoken like a true Federal Reserve chairman.

So the direct answer to your question is, in retrospect, that level of reserve withdrawals in the last two years was sustainable for next year, likely. But there's always the question of, will it be sustainable long-term? Because we've gotten really good revenue news the last couple years, and we've also had good expenditure news because of the high vacancy rate.

When will the 25 numbers be final?

July 24th is our publication date.

Right before we go on our August break.

Okay.

But that's every year around that time.

Thank you very much. Thank you, Madam Chair. Okay. Oh, sorry. What's the current tax stabilization fund balance?

So current as of the end of 2025, that's the number that's not yet audited, so I don't wanna.

Before the 25 figures, where were we?

Oh, at the end of 24, 110 million was the balance of the TSF.

And we're allowed to use up to half of that balance to help balance the budget? Correct.

And we did discuss that in last year's budget, that we could have taken 55. We, quote, only took 32. But I don't know, Bill, if you want to talk about.

We've discussed what best practices are and what kind of a tax stabilization fund balance we want to have. But we've already done that.

Okay. So you understand all that.

Thank you so much.

Okay, and again, I want to ask members to continue to direct questions on understanding the fiscal picture. We're not going to pre-debate the decisions, just because that would be a different type of meeting. I might request this information for later, unless you know off the top of your head. I thought any kind of, I guess the word is overage, of sales tax goes into tax stabilization fund. Is that correct still? I guess I don't know when it's overage if it keeps growing.

So I guess not directly. I mean, it's spent on other items that are eligible uses of the sales tax, but indirectly that does improve the- Yeah, Act 12 is very specific about how the sales tax money has to be spent directly in two ways.

You can split up to two ways. I think I can answer, it could take me five minutes to answer this question, but the two categories of expenditure that are eligible for sales tax disbursements are public safety and pension. But within those, not all of the expenses. Certain pension costs are eligible, certain public safety costs are eligible, and actually depending on the pot of money, certain public safety costs are eligible for this money and not for that money. But the entire $217,027,000 has to be spent on eligible pension costs and eligible public safety costs.

Do we now, thank you, do we now feel comfortable enough with a few years under our belt to make projections? Or is the economy, I mean, due to really the leadership in federal government, we're in just a really tough economic situation. I think people are buying less. But are we making projections and then basing the budget on those projections?

Yes, well, what I can say is that our early estimates, like for 2024 and even 2025, we had very limited flawed data on which to base that estimate. So we were probably more conservative than we are today and moving forward now that we've got, like you said, a few years under our belt. I think there's probably not a continued expectation of large unbudgeted surplus in sales tax because we were able to make more accurate projections. So yes, we are using the data available to us and qualitative, quantitative measures to come up with the best, most accurate sales tax forecast that we can and that's the case for the 2027 budget as well.

Last, then I'll move it to Spiker and Moore. Are we doing something similar for the vehicle registration fee? Like, are you projecting that? Because it's not... flat, like it does change. So for 2027, are you projecting with the increase we put in for 2026? Like, how are we budgeting for that?

Yes. So for 2026, I think there was one month that we, you know, maybe it was two months, two months that we talked about that for two hours.

So

yeah right yeah so we'll obviously take that into account and then i think based on the data available to us related to 2026 if there's any trends that would meaningfully you know affect our um estimate we would we would take that into account okay but you're assuming that it's at 41 now what's the assumption maybe correct yeah yeah okay okay thank you alderman spiker then alderman moore

Thank you, Madam Chair. So there's some huge questions to ask here, but I know this isn't the forum for it, so I won't ask them today. I'll just ask a couple little ones. With respect to the self-supporting funds, sewer, water, transportation, so I guess it was on page three of the presentation, sewer and water are self-contained but transportation in years past we've made a transfer to the general fund so the health of that fund is is very relevant to whether we can lean on transportation fund as well as the other two funds we do, TSF and debt. So with respect to the transportation fund, I know it's early to tell, are we thinking that it was operating at a pretty serious cash deficit? Are we thinking that Is it in the cards that we might look at doing a transfer from that transportation fund for 27 or does it need another year of getting healthy?

I think that's an excellent question that we'll need to analyze this summer. It's an open question so I can't give you a yes or no. Certainly the audited 25 numbers will assist in that because the current cash deficit in the transportation fund is assigned in the ACFER but is allowable for a TSF withdrawal but highly unrecommended that you would withdraw assigned money. So the size that the transportation fund is under water I think should influence any of our decisions we make about reserve use. But your real question I think is, is that trend reversing? And I can say, based on the new management in the transportation division and some changes in both parking checker route distributions, number of parking checkers, other ways we've been aggressive in cost collection at the tow lot and in other means. And then also event-based pricing for our garages and meters. There is good news and there's a good story to be told and I think in October when DPW transportation presents, they'll be able to tell a positive story. Just how positive that story is and is it enough to justify transfers to the general fund? I'm not prepared to say now, but I am relieved that we're beginning to see anticipated revenues and transportation funds actually be met by current operational practices.

Okay, so that's a maybe. Maybe.

Long way of saying maybe.

Yep. And then with respect to the line of questioning pursued before and transfers from the tax or use of the tax stabilization fund and how much to draw from that. So based on the past few years when sales tax revenue has been good, it would seem like it wouldn't be that bold to do a withdrawal from that fund as large as we've done in the past. But sales tax is jumpier than property tax. So has the budget office and the administration in consultation with the comptroller settled in on an approach of how conservative you wanna be as far as exposing us if there is a real dip some year and we've been not,

having the tsf growing then we could be huge cuts there's a reason they call it reserve ideally you wouldn't even if you even if you think under current economic conditions you can justify a sustainable withdrawal to your point those conditions can always change and it's good to have a reserve in case they change not in your favor

So does that, I feel like I am talking to the Fed Chair, are we, is there an attitude that you care to, or you wanna talk behind closed doors, that's fine too, an attitude of how conservative we're gonna be with respect to the recommendation for withdrawal from the TSF?

I think in a vacuum, if you're just reporting to auditors and bond raters, there might be a best practice, but then that always gets overlaid with, but now what service do I have to cut to make that work? So I would say the guiding philosophy is to be as judicious and conservative as possible with reserves, but always balancing it against, but what's behind door number two?

you know what what is it what decision does that force me into thanks that's enough thank you manager uh... all the woman mark thank you uh... thank you madam chair uh... i just wanted to ask some practical questions because uh... you know our residents are uh... seeing you know fees taxes are going up fees are going up all these things are going on uh... but it's not translating to, well, my roads are not getting fixed, I still got rolling blackouts, all these things, right? So I just wanted to ask some practical questions just really centered around infrastructure, roads. Typically, the general stuff, when we budget for our streets, a portion of that comes from our budget, our city budget. Is that correct?

Well, for local roads, all of it comes from, but there's a cost share with the state and federal government on the major roads.

Got it.

So if the state is not providing... Oh, actually, the state does give, there's about a million or so annually in aid for local roads. We'd love for that line item to get bigger in the state budget. There is a state aid for local roads.

Okay. So if we're not getting more resources from them for the local stuff, it just allows us not to be able to do a lot of the work that we need to get done. Yes. That's typically how it translates. Okay. How does shared revenue fall into that when we talk about our local roads?

Yeah, well, local roads get funded in a couple of different ways. I'll go back on the chart maybe just to the big one here.

And I'll be really quick.

I mean, a big chunk of the green is local roads, both local and major roads. So even the state and the feds for major roads will make a grant commitment to fund 80% of a major road usually. It varies, but 80% is usually the standard. But that's 80% of the cost estimate when the grant's given. It doesn't rise as cost rise. So it ends up being more like 50 or 60%. Still, though, we've never gotten to the point where we've turned down a federal grant, although as pressures on the capital budget, which I didn't really talk about in this presentation except as part of that green slice there, I could spend 20 minutes or Mason could spend two hours talking about just the capital budget. But when people talk about roads, there's the major roads where we're committing to 20 to 40 to 50% of those roads, but we're getting... at least half of it paid for elsewhere by the state and the feds, or by the feds via the federal money, but via a state committee or state process. Then the local roads, like I said, we get about a million dollars from the state to support that work in general. We spend, and this has been a hot topic for amendments every year, if you add up high-impact paving and local road reconstruction, about $16 million a year. Under ARPA, we did spend a bit more. We were closer to 18 or 19 on that. We're now at 16, but as Vice Chair Bergelis has consistently pointed out, even kind of the inverse of my slide where I say the state gave us more, gave us the same amount of money, but it was worth less. If you're saying we're still at 16 million and I spent 16 million 10 years ago, well, 10 years ago, 16 million meant a lot more than it does today, especially in rural. So per mile, we're falling behind. uh... but but again with with what money can we not fall behind so the capital is a big part of it but obviously dpw infrastructure and their street maintenance crew there the crack fillers in the pothole fillers so there's operational money in the dpw infrastructure budget that'll be in the blue section uh... on road so people are talking about the quality of the roads Long term, the way to avoid potholes is to replace the roads more rapidly. And then the short term, you just want your potholes filled. So the long term is paid for out of capital borrowing and cash revenues from state and feds for capital for major roads projects. And then the short term is paid for out of DPW infrastructure operating budget for roads specifically.

And when it comes to just increasing the fees of the vehicle tax registration, is there a state statute that we can only increase so much?

I think on the wheel tax, no. The council has said you want notice now by July 31st, partly because of the timing issues Comptroller Christensen just alluded to. So I know you didn't ask the question, but it's under consideration, both for the mayor or the council, and whether or not to make sure that whether you'd want to tie a wheel tax increase with road spending.

Yeah. I mean, you know, that's the you know, as far as when we're talking to constituents, they're like, well, you know, you're charging me, you know, for more in vehicle registration, whatever. But, you know, I'm driving on really crappy roads. Right. So I just wanted to sort of, you know, get that out because I hear it every single day. The potholes and the roads are horrible. I'm curious at how many folks have sued the city for damages to their vehicle. I'm sure the number is really high this year. But the last question that I have is the slide. Page number eight for us. But where the why are the gaps so big? And you have the the two different, you know, state shared revenue received. And then where if they would have kept up with inflation, like based on our gap, based on this sort of gap, you know, yeah, it's going up slightly. Right. Is it possible for, you know. for us to even get to where we need to, will we ever get to where we need to be for the state to be able to provide us our fair share.

I'd like to phone a friend now and bring in IRD, because of course I hope the answer is yes.

It was a tough question. Looking at it, Nick, it's just like it'll take us quite some time to even just close the gap because it's not like inflation is going to stop. You know what I mean? So for me, it's figuring out how do we not continue to, because we're gonna still have to have increasing costs for fees and things like that. And all of that is coming back on our residents. And we want people to stay in Milwaukee. Please stay in Milwaukee. But it just seems like we're making it really challenging just with some of the basics things that people are paying for and just feel that they're not getting.

You know, the second committee member to bring up roads as your initial reaction to this in every budget and based on initial feedback we're getting from the public, it's top of everyone's mind. The mayor is very aware that roads are a big issue. Yeah, thank you. Thanks, Madam Chair.

Okay, I'm going to go to Alderman Coggs and then I guess. I'll probably conclude. This is obviously not the end of the conversation. It's the beginning. And I'm hoping there's a lot of free flowing and things that you might want to get back to us on before now. And obviously the budget receipt in September, we've got some time. So we started way earlier than we usually do. And hopefully that'll be helpful. So all the Roman Cogs.

You probably already know this, but sitting on Public Works is very evident that there is somewhat of a correlation between some of the road condition issues that people have more recently had over the last year and the level of flooding that has occurred. So I would hope as we... try to address people's concerns about the roads and the ways that we can afford to, that we also are taking that into account and working with MMSD and whoever else to try to address what I'm sure this last year of flooding that we had, unfortunately given to the environmental reality, it might not get any better. So I don't want to invest so much in roads and then we're not investing in the stuff that can help stop the flooding. And we continue to have the same issue. So I know it's a balance as to how to do it. I just hope you keep that in mind with the departments and the subject matter experts.

Oh, you mean ways to do more green infrastructure to absorb more water?

I think you've got to balance both, yeah. So yeah, I would just say that. I would also say since I'm on environment flooding roads, as I was driving here today, I was thinking about we always have the debate annually about forestry and the pruning cycle and all of that and how much it costs for how many years and what the national standard is and what ours is and all of that. And I can't help but to think every time after major storms, all the trees that are down and branches that are down and injury to people's cars and all that kind of thing. and how I see that as a direct correlation with the environment, the storms, and all of that stuff too, and how if we had a more robust pruning cycle, how, if that would have made a difference in it as well. And so, I just hope you're looking at all of that when you're talking to them as we choose with the limited resources we have. It's like where to invest with the biggest bank that we're not going to continue to have the same level of issue. Because if we start pushing the money in and it's still all the same and we don't think about all of those things and the impact they have on each other, I can see constituents still being pissed after we put more money in on this or that. If it doesn't feel to them like there's a marked improvement.

trees are one way to absorb water. The more trees you have, the less water you have for flooding because the roots and the leaves absorb some, which is why we justify the stormwater transfer to fund forestry operations. There's also money in DPW infrastructure to absorb water through green infrastructure. If you're going to have a wider sidewalk, make it green so it can absorb water. One thing I'll say on the pruning cycle, something we've been following closely since we both started here, the 2009 budget, when the pruning cycle was going to be cut, and then we started funding forestry out of the stormwater transfer. Forestry can speak in more detail to this. They have gotten, I think, a lot more detail oriented in their analysis of how to prune. So it used to be there was a pruning cycle. Then there was a small tree, big tree pruning cycle. Now they're using data from academics and satellite imagery and a major supercomputer with MSOE has worked with them. They did a good partnership there to actually try to determine based on data we already have which specific trees are most vulnerable to to floods and then prune those so it's not just we're trying to get more exact in our response which should make us more efficient but to your point you can only be so efficient if you have more tree pruners you can prune more trees so even if you're exactly pruning just the right trees you still might not be pruning enough and so you could always look to make more investment there which would reduce the effect of flooding on make it less likely that a branch will fall on your car or your house yeah

Thank you. Okay, that will conclude. I guess my only feedback. I felt like when we met, I received a lot of information. Now I need to get my thoughts together and like communicate what some of the district needs are. But it's just so clear to me that we need to build budgets that are ready for an ever-changing climate. many of the things that we're talking about road repairs flooding trees i mean the fact that we just like can't have rain in this town without a severe storm unfortunately while it's painful seems like the new norm so i just think we're going to feel it in all of our budget in all the ways and it should be kind of like an offense and a defense like the other woman was saying we need to adjust but we also need to i think reinvest in things that are going to long term hopefully somewhat um protect us from this intense climate change um that many want us to normalize um and while i refuse to do it we do have to at least adjust our budget because so much i mean it's just so much money is going into post flood cleanup economic recovery you know the trees the roads After the fact so it just can't be the budget that we used to put forward, you know, like 10 years ago in regards Whether it be salting it just just everything so that's that's a lens that I'll be using unfortunately I'm disappointed that that's how we have to go forward but we do so I mean obviously even the leaf collection was Is interrelated with all that they're they're difficult things but it's because things are changing so

Manager?

Yes, Alderman.

I would just ask that whatever is proposed, because inevitably there will be things that the mayor has to cut, that you look at it through a lens of equity. By everything from racial to geographical to socioeconomic. um to the impact that such cuts have so that whatever cuts do need to happen or must happen that there is a level of shared um loss and not disproportionate loss thank you yeah that's that's incredibly important okay

Thank you so much, that'll conclude our communication from the mayor, item number one. Alderman Bergelis moves to hold the call of the chair. And hearing no objections, so ordered. Now, I was going to bump up Goikee, but then looks like he, unless he's out there, let me just check. I think he said that he had to get going, so hold on, let me just double check here.

Oh, hey, there we go.

Good thing we didn't say anything negative about you. Just kidding. Okay, so with that, we'll move then. I was just checking what time you had. We'll move item seven up. Thank you. Oh, and you know what? While you're walking up, let me take care of one other matter of business. Item three, 260336, communication relating to an audit of municipal court cash controls. We had a request from the municipal court to hold this for the next cycle. Alderman Bergelis moves to hold the call of the chair and hearing no objections, so ordered. So item three is not before us today. in case anyone was here waiting for that. So item seven, we've now taken out of order. Item seven, 260358, resolution reserving and appropriating up to $1.5 million from 2026 Common Council Contingent Fund to the 2026 Damages and Claims Fund Special Purpose Account for resolutions related to settlements of lawsuits and or claims, sponsored by Alderman Jackson, the chair of the Judiciary Committee, and we have with us our city attorney, Evan Goike. Good morning.

Good morning, Madam Chair. Thank you for taking the item up so that I could be here. And I know committee members are familiar with this type of file, happy to answer questions that you might have.

Okay, anyone have questions on this appropriation? My only question is what would this then, I think I have the notes, but I wanna get it on the record, but would this take our Common Council Contingent Fund too, once this allocation is made?

Prior action to the same fund and outside council fund earlier this year was 1.85 million. This is an additional 1.6. 1.5. Sorry, 1.5 brings us down to 1.6. Okay. Which is lower than we usually are in July. That's lower for the half of the year. This is pretty aggressive withdrawals, but City Attorney, Angelique Pettigrew from my team has worked with Evan and his team in Tawana, and there's enough cases to justify this withdrawal.

Okay, I just it's leaving us very tight and not reflective of the first half So let's hope the second half is 75 percent less than the first In an unusual way to begin the year and we talked about this in April on April 15 when that first transfer started there was a large settlement that was split between 2025 and 2026 with 1.5 million paid of 2.5 million and That was an in-custody death case, and so we were budgeted for $2.5 million, but $1.5 went to pay a settlement that kind of bridged the two years. We did that to avoid borrowing to pay the entire settlement at the end of 2025 to avoid interest payments, but it dug a hole for damages and claims on January 1 of this year.

yes offer for context we had discussions with the city attorney at the end of twenty five about whether we could pay this to five all at once and we actually couldn't kind of we've had the full amount of time but we thought let's not let's not zero it out because we'll probably need to close the books and turns out we did we ended up spending all but twelve hundred dollars in the contingent fund to close the twenty five books so but we were then basically starting out one half of two point five million behind this year, if you wanna call it that, on a case that was determined last year.

Okay. All right, any questions on item seven? Questions on item seven? Alderman Bergelis.

First, City Attorney Goyke, do you anticipate any other large settlements before the end of the year?

That's always a possibility. It's hard to predict. There are... two state court matters. There are caps in place in state law of the dollar amount. We are in a state court case where the law limits us to $250,000 of exposure. I have on my radar two cases where liability is there are kind of common examples where liability is very hard to fight, but think of like as an example, a rear end car accident where the stopped car really is not contributory negligent to the car accident. And so we have two on our radar and then, but I don't have, in the coming months, anything that I think is close to the size of the one federal case that was settled in the last, um, council cycle, which was over a half million dollars. And that, that was a very large settlement, which is what is why we're here today in part.

Uh, and then thank you. And then, um, to budget director Kovac, uh, in the past, our, legal settlements the only thing we use our contingent fund for or what other things have we used it for in the past?

No, I mean it's certainly been the bulk of it in the last few years.

And then my follow up to that will be do you anticipate any of those same similar needs before the end of the year?

Well, the settlements, there is closing the books. You like to have a little room for that because otherwise you have to do contingent borrowing to close the books, which we didn't have to do this year or in the last couple of years. And then there's other unexpected costs, one of which will probably be coming up at the next meeting. Next council meeting would be cost related to the enterprise resource program. That's a generational issue, but it's coming up around also this year. And.

The one that was extended? Yeah. And re-extended and then re-extended again.

I don't know if it's been that many. Oh, it was only twice. Yeah. And, you know, other unexpected major capital purchases. I mean, generally speaking, if it's a low number, you use the contingent fund. But if it's... if it's millions you you try not to you try to contingent borrow because you because then you know you'll end up needing it later anyway i mean the contingent fund is for any contingency so anything unexpected on anything unbudgeted in 26 that you need money for is what the contingent funds for so that can be a priority so we're you're not confident that we'll stay under our given that we're already at one six i'm way less confident this year that we won't need to continue another fed chairman answer thank you very much I don't know yet. I don't know how to answer.

You're asking about the future Budgets are indicators of future performance their future facing documents.

I

item seven is before us any other questions or comments on item seven okay alderman moore moves adoption discussion of adoption objections hearing none so ordered thank you that concludes item seven we'll now move on to item number two remember three has been moved to the next cycle two is 260337. Communication relating to the Milwaukee Police Department Information Technology General Controls Audit Report. Looks like, should we automatically go into closed session for this or only on the nature of certain things? What did you think?

We could probably touch on the low findings without being in closed session.

Maybe we can do that, have the presentation, and if members have questions that, like you flagged for us, if we really need to go into closed session and you can't reserve those for another time, we can do so. But let's do that, but let's just tread carefully. So we'll stay in open session. Ms. Molina from the Comptroller's Office.

Good morning, Adriana Molina, Audit Manager. We will be presenting the MPD ITGC audit, which was conducted by CLA. Brian from CLA will be presenting and going over the findings, and I'll call out whenever the findings seem.

And they're on virtually? Yes, they should be on virtual. Hopefully they heard how we're trying to keep it to the low level.

Keep it at low level.

We were given this in advance? Correct. Let's do a mic check. Who was that again? Brian. Brian, can you hear us?

Yep.

Okay, Brian. Yes, ma'am, I can. We do need just like a... I would say a high level overview of the low items, and then also please in less than five minutes. So if you could begin.

Yeah, absolutely. So from a high level overview, let's go through the, I would say the lows from a low findings perspective. A lot of it's really just gonna be right around some password lockout controls, some minor vendor oversight for the police department, Password configurations, some of the applications that the police department is using on a daily basis, we've seen that they're not in alignment with some of the CJIS guidelines. Well, they were in alignment with the CJIS guidelines, but it's more just there's nothing formally documented. Um, some of the other low items was regarding check out sheets for for new hires. Um, and then. see security awareness training and then some some additional items for policies governing backups for applications and the continuity of operations plan for the sieges requirements for recurring disaster recovery testing so that's really just more of like the high levels from a lowest perspective um i would say all in all from the procedures that we did for the police department um They did have very comprehensive user listings. Administrative access was appropriately restricted. MFA VPN controls, not only for standard users but also for elevated users, were in place. They were implemented and demonstrated strong baseline security for the police department. They do regular vulnerability scans, penetration tests. key controls such as firewalls, antivirus, some phishing simulations, all those were implemented and functioning. And again, some of those minor areas, we consider those really more opportunities than anything. And that's where I think from a ratings perspective, we have that as improvement needed.

Any questions on the lows before we?

I did want to ask if there is any regular cadence to the department reviewing their policies internally? Is that something that audit looked at at all?

We did look at that. That's part of our standard procedures. We did note that.

Was that done or was that set aside?

No, that was completed. No, that was part of our audit procedures.

No, no, but was the department performing that function?

The department was performing that function, yes. If there were any that... let's say their user access policy, if that wasn't reviewed on a timely basis, we would have noted that in our findings. The findings right around policies were more just backups and continuity of operations, more just adding some additional detail to them.

Okay, thank you. Any other questions from committee members? Alderman Moore? Oh, that's a no. All right, Alderman Moore moves to place this item on file. Hearing no objections, so ordered.

Thank you very much. Mr. Chair, we weren't gonna discuss the high priority things?

If we do the high, I think we should go into closed session, yes. So Brian just touched on the low ones.

Right.

Not the high, yep.

Thank you for that. Alderman Spiker, are you asking to go into closed session?

Yeah, I'd like the presentation of the high ones, because that's, there's one high one that's.

All right, Alderman Spiker moves to move into closed session. Roll call, please.

On the motion to go into closed session pursuant to 19.85 Wisconsin statutes, no. Otterman, Otterwoman Moore.

Aye.

Otterman Spiker.

Aye.

Otterwoman Coggs.

Aye.

And Mr. Chair.

Aye.

Prevails.

Four ayes, zero noes. We will move into closed session. Thank you everyone on the board.

Amen.

Any discussion of placing item two on file? Hearing no objections, so ordered. Three has been held to the call of the chair, seven has been taken care of, which now puts us on item four. 260260, there we go. Resolution authorizing the Department of Employee Relations to issue a request for proposal for stop loss insurance for the city's medical and prescription health plan. From the Department of Employee Relations, we have Ms. Molly King, good morning.

Good morning, Madam Chair and committee members. Thank you for taking up this proposal here today. Basically, what we're asking is that give us the opportunity to explore what's out there as it relates to insurance for stop loss. What does this mean? It's because we are self-insured. In 2025, in an aggregate level, we could have expended almost $163 million between pharmaceutical and medical costs, healthcare costs. And so with that, we notice, again, because we're self-insured, we don't control the expenditure coming in. And so as a result, we could have claims coming up in the millions of dollars. Currently, things that are trending are gene therapy. Gene therapy or other specialty drugs, that can cost between 100 to a million dollars if we have experienced one of those claims. We have not yet had one of those claims, but in the last five years, what I could tell you is that we had spent over 23, almost $24 million in high claim cost. In 2025, for example, we had about six claims, over half a million dollars. And a few years ago, we did tap into our healthcare reserve to compensate about $4.7 million in higher than anticipated healthcare costs over our budget. So what this stop loss insurance will help us do is to mitigate these big claims. And so we are working with our consultant at Gallagher to explore what this could look like and to see the various level of premiums. what would it be if someone, if you wanna have deductibles up to 500, 750, or a million dollars, anything over that, the insurance will consider paying for it. So it's just exploring this. Gallagher's going to be doing this for us at no cost. And so they'll come back to us with some proposals, at which point we'll bring that back to this committee.

Is it like taking out insurance for our insurance?

Exactly. Well, we don't have insurance.

Sounds very corporate to me. I mean, you know, when you say mitigate, I guess I'll just, I mean, this is just the first step in a process, but like, and we should always have the conversation, but I hope mitigate isn't like. an aggressive way to deny. I mean, if somebody's in that great of need, you know what I mean? I just, my concern kind of just gets increased here. Like I get there's some costly situations, but normally they're paired with somebody in great need. So I don't want to lend into a way where we're like trying to say no, but it sounds like when we say yes, we're just trying to cover ourselves with an extra cushion.

This is a coverage for the city, not, it has nothing to do with individuals. Just saying, hey, because I, again, I use something like sickle cell. I always use that example. Sickle cell impacts our population. We have a very diverse work population. If you have one child born with sickle cell, that could cause the city, one patient can cause the city almost 2 million, if not higher. And so that will come out of our budget. We have to pay that as part of our book of business. What this stop-loss insurance will do is, let's say hypothetically, we decided to go with the million-dollar deductible. It's a deductible. Anything over a million dollars this in short this plan the stop-loss plan will cover that Giving us help us risk control our risk so to speak. Does that make sense?

Yeah, like I said, I think to me sounds like insurance and hub of insurance. Yeah.

Yeah.

Yeah Okay, madam chair. Mm-hmm really quick Molly the in the email or in communication that we received, you shared that there were some high-level things that had happened as far as with some of our employees. Just being general, what were some of those sort of ailments, like what are we talking about? Is it the high, it's not asthma, you know, right?

Right, right. I mean, someone could have brain aneurysm, for example, heart disease, even though that's one of our top five highest costs. And so depending on the severity, it could cause, let's see, last year we had one of our higher claims, just when we pay out about $908,000. on one claim.

One, I gotcha, okay.

We have 17, almost 18,000 subscriber in our plan. So the risk is high, the exposure is high. This is just helping us have a contingent plan in place to control those level of risk.

Good, thank you.

Okay, I'm sure yes.

I'll remember gals. I see no reason that an RFP is yeah Unnecessary if or is would not be warranted to have information. We don't know what we don't know But I think it would we would need some very compelling figures to change our long-standing Self-insured I really don't see that, I don't think that the risk is a doomsday scenario like you maybe alluded to a moment ago. This has happened for, healthcare costs are up across the board, like everything else, but this isn't anything new. Insurance salespeople are very compelling, but I don't, It would take a lot to see that this expense would be justified and needed in the city. Thank you, Madam Chair.

Okay, all right. Well, it was just a step to explore, so yeah.

Again, we'll bring this back, the results of this. This is not changing our plan, our self-insured plan. It's just giving us a cushion, an umbrella to help mitigate or control excessive expenditures.

I move approval, Madam Chair.

Okay. Adoption's been moved by Alderman Moore on item four. Any other discussion? Objections? Hearing none, so ordered. Item five, 260261. Resolution authorizing the Department of Employee Relations to issue a request for proposal for the administration of the city's worker compensation benefits plan. Ms. King.

Yeah, and this is simply a, we don't know what we don't know. It's another situation. We've had our relationship with Corvell, a Corvell plan, a company that we've worked with since 2018 to administer our third party administration for our workers' compensation And so since then we've had several extensions. We've never went out for an RFP. And we know technology has changed, the whole workforce has changed. We just wanna know what we don't know. And I think it behooves us as fiscal agents of the city to go out and explore what is out there and see what an RFP can bring back to us.

Okay. Questions on item five? Sure. Alderman Vergelis?

Thank you, and how long is the current agreement?

Our current agreement expires at 2027.

And it has a contingent or automatic extension that we could exercise?

It has a contingent or we will come to you requesting an additional extension as we did in the past.

So we're just doing our homework before we execute that. Yep. Thank you.

Great. Any other questions on item five? Alderman Coggs moves adoption of item five. Any discussion of adoption? Objections? Hearing none, so ordered. Thank you. Item six, 260276, communication from the deferred compensation plan relating to the auto escalation program. We're joined by Beth Cleary from the deferred compensation. Sorry, look at my notes.

Thank you. Thank you. Beth Cleary, Executive Director with Deferred Compensation. So the file and hopefully the memo that I included explained some background. This is not a request. It's actually a communication to let you know that the board has made the decision which the master agreement gives them the oversight for this decision-making authority to implement the auto escalation program which we're referring to in layman's terms as auto increase because it kind of makes more sense to people So what I wanted to just walk you through and make sure to answer any questions is, so this program anticipates that anybody saving between three and 6% currently would be part of that program subject to it. And it would be in alignment with open enrollment and also our annual auto-enrollment and re-enrollment process that we currently have, which again, that's for any employee that is not in the plan up to 1 or 2 percent. So if they're part of the auto-enrollment, they get defaulted into 3 percent. And at every moment in time, they always have a decision to opt out of any of these programs. So another qualifier I just wanted to put out there is that it's just for covered employees, which is defined as basically non sworn employees. So general city and elected would be who's covered with this. So the decision that the board came up with in terms of turning on this auto escalation program was that this would be another tool to help nudge our employees to save for their retirement. I did meet and I reached out to each of the committee members ahead of time to make sure if there are any questions. I talked at length with Alderman Bergalis and he had some really good questions. along the lines of what would the impact be of this program? And so I did model, and I believe it's in the file now, but there are different illustrations using a couple assumptions based off of an employee who's 35, 45, or 55, assuming they retire at age 65. And then there's two different sets of that example. One is at an assumed fixed income, which hopefully they'll over the years get a little bit more over the years with the raise once in a while. But it was modeled at someone who's at 50,000 income and then someone who's at 75,000 income. So then it accounted for a potential greater return of 7% annual. So then it showed what the compound interest would be. So that information is part of the file too, and it shows that thanks to, as Einstein said, the eighth wonder of the world is compound interest. that shows that this does really, really have an impact on people's ability to save and prepare for their retirement. So I thank you for encouraging me to look at that perspective. Again, anybody can always opt out and not just at open enrollment, but at any pay period. They can say, no, I don't want this. I want to true it down. Like let's say they're having a hard time paying their bills. Something big comes up. They can true their contribution down to zero and then start it up again when they're ready. So there's always maximum control at all time. So there's a 30-day window, and again, it aligns with the start of open enrollment, but then there will be two additional weeks after open enrollment timeframe that will be within that 30 days where employees can make the opt-out. If they don't, they'll be defaulted and increased up to 1%. The way it would work is like, let's say you're at 3% and this year you're a part of the program, Then you would be treated up to four percent this year and the following year if you're still part of the program You didn't opt out you'd be going up to five six until you're at seven and then the program would no longer impact So another good question that came up Sorry to take the wind out of your sails if you're ready for these is how many employees would be impacted by this So the numbers I got are you reading my notes? some telepathy going on here. So our plan is roughly over 10,000 participants, but that includes retirees, people who have left, actives, beneficiaries, everybody. Of these, of active employees, that are just covered again not fire police there's uh... and that are that are making contributions at well the stats i got are a little inflated because it's people who are at three to seven percent so if you're trying to accurately look at who's going to be subject to this program it'd be people who are three to six percent right because if you're at seven you won't be a part of this program this number is a little bit bigger and i've asked for them to tweak the number for me but Any covered employee who's at 3% to 7% currently, we have 3,330 active employees. So that's about how many people that we're going to see this program or be part of this program. We have a very robust campaign that we've started to work on, and we will be rolling out soon. It's going to be emails, mailers, e-notify, presentations, videos. Our goal is to, I mean, we understand this is moving people's cheese, as I like to say. So we want to make sure that everybody's aware of this. And so we're going to try to flank them and hit them over the head so it's not coming to them as a surprise. So I have talked a lot here. I will stop and see if there's any questions.

Madam Chair.

Okay.

Alderman Moore, then Bergelis, did you want to speak? Okay.

No, I just had a simple question as far as the escalation goes up to 7%. Can a person opt in to say, you know, I may be a three, but I want to do five. Yes. Okay. Or they could say, I want to do seven. Okay. Okay. Thank you.

They can go up to 80% a pay period as long as they stay within the annual limits that the IRS has for them.

Gotcha. Okay, thank you.

Okay, Alderman Vergelis.

Thank you very much. Thank you, Madam Chair, and thank you for taking some time out of your day yesterday to meet with me. Just to bring the numbers down to the most basic, for that $50,000 salary employee who's 35 years old now, the extra 1% translates to $9.61 per week of additional contributions. which nets them, when they retire, a balance of $168,500 more. So nine bucks a week is $168,000 more when you retire for each percentage point. Yep, so that's a McDonald's meal right there. I remember when a Big Mac was $2.99. And then for the $75,000 employee who's 35 years old, $14.42 per week nets them an additional quarter of a million dollars when they retire. Wow.

Assuming a 7% rate of return, which nobody can guarantee.

But this is a very big difference for very small cheese, right? Cheese shouldn't be nine bucks in Wisconsin. That's one of my favorite quotes. But this is in a time when affordability is at top of mind for our residents and our constituents and our employees. affordability, everything is costing more. And now the city's coming in and saying you shall have this additional 1% contribution to your retirement, which isn't a bad idea. And I appreciate that there's a plan for robust engagement on how people can very easily opt out with even just sending an email and making this as straightforward as possible. However, this is still forcing an increased or a higher contribution for employees. I would much rather see a robust engagement for employees to voluntarily do a 2% or a 3% annual increase. And you can do that. embed automatic voluntary deductions in your plan without being forced to do it. I'd much rather see that robust engagement encouraging higher participation rates, higher voluntary participation rates. I get it, this is kind of the next step following that automatic enrollment that we passed recently. So I don't want to oppose this, but I see the concern for some employees that will be surprised. I am satisfied though that there are safeguards in that 30-day window in place where any kind of objection will be even retroactively corrected so that employees don't get taken by surprise. If you have a robust engagement and someone doesn't pay attention, That's on them, right? But this is still taking money out of people's paychecks, although it will have hundreds of thousands of dollars of impact when they retire. It's just that automatic, mandatory default that I have some personal reservations on. That said, we should be encouraging more participation. And instead of looking for those opt-outs, I'd much rather see a heightened focus on opting in. Because this small impact can have such a big result when our valued employees are ready to retire. Thank you very much, Madam Chair. Thank you, yes. I also was surprised looking at the comparisons of what our peer municipal or governmental bodies are doing that we're cutting this off at 7% when most other peer municipal bodies or governmental bodies are capping the program and escalating it all the way to 15%. Can you talk a little bit about why the board decided to go with 7% instead of 15?

Sure. So there were a number of data points that we worked with Voya. They looked at their public plan employees to say this is who's currently doing this. They didn't give us specific names, but they gave us some comparisons. And that's where those numbers came up, that some went all the way up to 15% with their program. Our average contribution for our employees is currently 7% and I think that's one of the reasons why the board felt comfortable with that number, trying to have parity with that. And also realizing there is no match from the city. This is all voluntary and the fact that there's also a DB plan. So I think seven they thought was somewhat reasonable for the expectation. I appreciate your thoughts and I appreciate you looking out for employees and trying to help them understand and this is part of why we're talking at this level too and a variety of other stakeholders. I would just point out that some people would might, I'm not doing that myself, but some people might take issue of saying it's mandatory because it is, I think semantics are, always at play for all these things, but a default. I don't look at it as forcing, it's always choice. And again, we're gonna be educating people, and to your point, you can lead a horse to water, but you can't force them to drink. But again, there's always a safety net. They can always say, no, thank you, or I didn't like the fact that I missed this for the last three pay periods, and then we're like, okay, if you wanna overcompensate, we'll work with you and say, let's model this. You wanna true it down to 1% to make up for the fact that you had, gotten it up from three to four for three pay periods. You can do that. So to me, it's an opportunity for engagement. And we know, and I've, I sent this to Alderman Bregals, I'll send it to the rest of the committee, but we recently started, I did an award nomination application that showed benchmarking for people engaged in the Healthy Rewards Program with the financial wellness. And we looked at it from the initiation of that program, which was 2018. So we've got eight years of data. It's showing that, again, engagement points. I equate financial wellness with any time we can have a presentation or a consultation and just sit down with people and have them talk about their situation, look at their accounts. Any time we have that, the numbers show that we can have an impact on their ability to think about and make decisions that move the needle for a better retirement security. These are all opportunities for engagement points. And to me, that high touch is what makes a difference in our plan. So we're going to continue with that. Madam Chair.

Yes, Alderman. Thank you so much. And I appreciate my colleagues, you know, sentiments. And I do like the feature where it's just automatically done because then again, you know, I can look at it as, you know, Maybe I try it for the first quarter and see how it works with my budget, right? But thinking about just sustainability during retirement, it is one of those things, particularly for me, that is so important for our employees that are working here. And so I'm glad that you all have put some systems in place and again, it's the communication as well, right? There are plenty of opportunities to opt out for whatever reason that you have, but I do like the option of being intentional with our staff about really them thinking forward thinking because a lot of times we don't do just the day-to-day stuff that our employees are dealing with. For some, that's probably the last thing on their mind. But to have a system that's already in place to be able to support them in the long run and then again, they always have a choice. They always get to choose to, hey, I got to stabilize this or I can go up more, I can go down, whatever. But I love that we have this option for them. So thank you all for putting in the work to do this. So 7% is a cap, so an employee can't say, hey, I want to do eight?

Oh, they can, but just for part of this program. And we do have an opt-in auto escalation where someone can set it so it goes up every single year, and we don't cap it. It can just be there until you're maxed out if you want to. That's pretty cool. Yeah. Okay, thank you. Sure.

Okay. I am looking at the illustration. So the column of additional employee contributions, that's the money that the employee puts in at 7% hypothetically with a 7% return. throughout their career pre-retirement? Is that, I'm trying to figure that out.

Well, the example that was modeled, it takes into account like if you're age 45 and you're gonna be subject to this, let's say you start at three, so you're one, you're gonna be at four, five, six, and then once you hit seven, you're gonna stay at seven. So that's what that example models. You'll stay at that. If you're a part of this program and you don't touch it.

Mm-hmm.

Okay, let me ask it like this. What is the kind of average that our employees are at? Is most people at three? Seven. No, I know you want them to be at seven. I'm saying where are they at now? Right now, yeah. Oh, wow. Well, if they're at seven, then...

Some people are putting in 15, so that's where they balance out. That's how we get to seven. The average is seven. Oh, the default is three, but the average is seven. So some people are doing more than there's.

Oh, but there's a whole lot of people. I'm a co-worker. I'm not caffeinated for all that math, but like less than 50% of the people are clearly under seven.

Yeah.

But they're made up for by the people who are way over seven. Yes. Okay. So this will affect. like a good roughly half of the employees. It'll be almost a doubling of what they're used to.

Well, we have, so I can't remember what the current, so active employees that are eligible for a plan, I think it's like a little over 5,000 because we don't have like less than half time or temporary, you know, so there's some rules that exclude eligibility. And again, only covered employees. So you kind of whittle away. That's where we get that 3,000, just about 3,000 number that will be part of this.

Okay. And then last but not least, why is seven considered kinda like the golden number?

Again, because I think the board's logic, I mean, we do have a board member here sitting. Kathy serves on the board if you wanted to share. But I think the logic was, well, seven seems like a reasonable number. That's our bogey for, you know, it's the average amount that people are contributing overall with the plan. And we don't want it to be too high because, you know, it could be a big strain on people's budget and their paycheck.

And so someone could go down to zero at any time. I always thought... Okay.

They'll still be part of the plan, but yes.

Yeah. Oh, okay. I really did think it was an open enrollment type of thing. Okay.

No, every pay period they have a choice, and that includes how they invest their money too. They can make election changes for that as well.

Right. Thank you. Any other questions? We also benefited from a pre-meeting conversation. Thank you. Questions or comments? Again, it is a communication file. It's my understanding that the deferred comp themselves somewhat govern themselves this way and have made this decision. We're not voting on this today. You're just communicating it to us. Correct.

So the master agreement allows for them to have oversight of this decision. So every year they've been looking at this and saying, do we want to implement this? And this year they decided yes. I'll just also say the silver lining for our employees is that they will have less take home in terms of what's taxable. So this is on a pre-tax basis. So it will help people that way. Okay. Alderman Speicher.

Thank You madam chair so I guess on that point so there are IRS contribution limits you said we somebody could elect up to 80% as long as they're under those limits what if you have another plan or another employer or something like that is there any danger are you going to be close enough that you could get escalated into a violation with your other plans

Thanks to working with the comptroller's office, we have those limits already pre-programmed and set. So if someone hits that ceiling of what that IRS limit is for the year, their contributions will be turned off. So they won't run into it.

Right within the city of Milwaukee, but what if they have another?

So the way it's set up is they're all mutually independent of each other. So those limits are per plan.

Oh, okay. So it's siloed. Yeah. What sort of outreach did the board or you or anybody do, if any, to see what employees might think about this? Is this, well, this is gonna be for your own good, so we're gonna do it, wait for any complaints to come in.

It's a very good question. We did not do outreach to see do you want this because most people if you say like this is an auto program I mean some people might say I don't care or you know we did not do outreach. We did look at our peers to see what they're doing both Voya clients in the public space and then I did look at my Trade Group Association, I sit on the board for as well. We do have data. There were 262 public defer compensation plans across the country, so that's state, local government, municipal government. Of those 262 plans that filled out information, 41 of those plans have an opt in auto escalation and 23 have an opt out. So this is kind of like a cutting edge power tool to have as part of your program design. And you can also, I just wanted to assure you, like I do every year with the budget hearing, I will come back and I'll give you benchmark numbers when it comes to How this program is working too. So we're going to track it. We're going to see, you know, get feedback. The board can reevaluate this every year. So to answer your question, we did not engage a personal survey with our employees, but we've looked at other plans and we've looked at the research and we know that this has a big impact on people's. And then through the examples too, it shows you what the impact can be.

Yeah, and I understood your point earlier. It's voluntary in the sense somebody can always opt out. They can opt out of the escalation or they can opt out of the contribution. What if somebody displays a pattern of opting out of, say, the escalation, they're happy at 5% or whatever. And so we're forcing them every year, though, to engage in the opt out process, even if they say, no, I really mean it. I don't want to go any higher. Please stop asking me every year.

I like to think of it as we're inviting them to review it annually. There you go. Again, we're trying to do high touch engagement. And I can tell you too, ever since the Common Council worked with our board to say, hey, let's make these design changes 10 years ago, because of our auto enrollment, it has allowed my staff and I to really, it freed up capacity. We're not chasing enrollments for the plan. So we can really focus on things like financial wellness and those engagements. So it's an opportunity just, because prior to all these design changes that you guys were very helpful with helping us implement, we would just say here's your deferred comp when you started and then when you retire if you have questions let us know but now we're trying to work with them every single year think about it trying to meet them where they're at with different programming different life chapter events all that so but the answer is they they would have to even if they think they know their own mind even if they say hey you know i i'm really happy at five i'll tell you when i want to go up yes that is true it is an annual auto increase program.

And what sort of notice do they get and how far in advance the escalation happens? When each year?

It will align with the start of open enrollment just because that's when people's radar screens are attuned to different benefit choices. And so I believe it will be 30 days prior to that, that they'll start getting information. It might be sooner than that. It might be longer timeframe, but they'll be getting emails and mailers. So it will mirror basically what we do for our auto enrollment program, but we'll just do it with this other segment of the population.

Okay, and then, so if the average right now, I don't know if it's mean or median, is 7% for contribution, this would take those sitting at three by default up to seven over the course of four years. So that would mean the amount of contribution for the city as a whole from the employees would go up under this, that's the goal, right? Does that impact anything relating to the administrative fees associated with any of this now that we have a bigger

That's a great question. So we're currently doing an RFI process for a record keeper. Our contract with Voya expires in October. So that is something that we look at is the amount of people that are in the plan, which we're at 91%. That's a really high average for us participation. And then we're at 1.4 billion. So anytime we have higher funds, that gives us leverage for pricing and negotiations of contracts. as well as for our investment managers and things of that nature. So we always take that to account. So more money in the plan would help situate us better for negotiations, for sure.

And it wasn't like Voya came to the board and recommended this. The board internally decided to

So ever since 2017 when that was the first year based off of the changes to the master agreement, once we had all the design changes, that was the first year that this program was available for the board to consider. So annually we've looked at it every single year since then. Envoy is not pushing it on us. Nobody's pushing on it. It's basically just like a baked in thing that we do this review every year. So this is the number of employees that it would impact. You know, we model it that way and we say, are you interested in invoking this program? Yes or no. And so.

and uh i know there's been a lot of questions so i'll ask one more and thanks for talking to me in advance as well but if alder bergel's you know looked at some other places and saw maybe 15 being more the norm is there is the board going to continue to review this and um what kind of guides their process for, I know they picked the magic number just because it's the number on average we do, but that's not saying that's the number you should do for retirement. I know everybody's situation is different, but if seven is what you landed at because that's what people do on average now,

Is there any thought given to looking at what the norms are more generally and whether you want to go there Yes, so in the master agreement there is a cap they can go up to a certain amount I think it's 15. I should know that off the top of my head. I apologize. I don't have it. But yes the way that it's figured and Written into the master agreement is that annually they the board will be looking at this and if they want to tweak that 7% And they could do that. I'm guessing they'll probably want to just test it and see how it goes. I don't anticipate them probably making those tweaks for a while until we can get our arms around how is it going. Because every time we make a shift like that, we have to change all of our communications. We have to educate people. It's a big implementation part of that too.

And I'm sure if we get complaints, we can send them your way and kind of explain.

Yes, I'm happy to talk to anybody who's not happy about it. I'm happy to talk to them directly, please.

Okay, thank you.

Then I will give them a list of options and say let's work together.

Okay, thank you. Sure. Thank you, Madam Chair.

Okay, final thoughts on this communication file?

Alderman Bergalis moves to place it on file. Then any discussion of placing on file? Any objections? Hearing none, so ordered. Thank you so much for that information. Hope it helps a lot of families and they're built for their futures.

Yeah, and I also wanted to, I forgot to mention this, but all of you, you have great ideas. If you have ideas of how we can communicate this more effectively, please, I mean, you will all be impacted as well. Reach out to me, talk to me, and I'm open to it. Appreciate your perspectives.

Thank you. Thank you. Great. Item 8, 260321, Substitute Resolution, Authorizing Reimbursement for Attendance at the Strive Together Policy Summit. I hear we have an amendment, is that okay? Thank you. Okay. All right, this is just for reimbursement for travel. I guess between city clerk and LRB, just talk extremely briefly and then maybe read the amendment, like let us know what's the difference between the amendment and what we had.

Dana Zeleny, deputy city clerk. This is to reimburse an employee for travel that has already taken place on behalf of the Emerging Youth Achievement Advisory Council. This would be funded out of that special fund, which is held in the city clerk's office. That's the only reason we're really at the table with this file. The amendment that is in front of you is a simple amendment. It is still a chair file. I would ask that it be offered by a member. All it does is makes release of funds contingent on future approval by EAC. They had a meeting about a week ago and unfortunately they lost quorum before they got to this item. The body does support it. They had voted previously on it to approve the travel but not the expense. They lost quorum, unfortunately, before they could approve the expense. Their next meeting, I believe, is on the 17th. We expect them to approve it then, and we would reimburse funds after that. Okay.

Madam Chair. Yes, Alderman Moore. I would love to author this motion.

All right, so all the Roman more is moving to amend substitute one of file number two six. Oh three two one We have the proposed language and therefore she's also moving adoption the resolution as amended discussion of this item number eight Objections to the amendment objections to adopt it as amended and Hearing none, so ordered. Thank you. Thank you. Okay. Item 9260288, resolution relating to increasing the reimbursable expenditure authority for the Department of Public Works, Department of Administration, Department of City Development, and the Health Department in the Reimbursable Services Advance Fund. We're joined from the Budget Office, Mr. Levy.

Yeah, good afternoon, Madam Chair, members of the committee. Mason Levy, City of Milwaukee Budget Office. This file is exactly what it says. It increases authority for those departments so they can charge the reimbursable fund. Basically the reimbursable service advance fund is SPA. It's set up via resolution when the budget is adopted. Departmental reimbursable authority is outlined in exhibit A which is attached and is generally projected using department past expenditures and what they think they're gonna use in the upcoming year. We generally increase this if they've come up on their limit and they can't charge it anymore. So anything charged to this fund is then reimbursed by other departments.

Okay, questions on item nine? Questions on item nine? Alderman Spiker moves adoption. Discussion of adoption. Objections to adoption? Hearing none, so ordered. Thank you. Item 10, 260326, communication from the Department of Administration, Budget and Management Analysis Division regarding vacancy requests, fund transfers and equipment requests. Okay, just a one pager today, no fund transfers. So we'll start with our property tax levy supported positions, Department of City Development Associate Planner, Urban Design Coordinator, Common Council City Clerk, Executive Administrative Assistant, Customer Service Representative Two, Department of Emergency Communications, Emergency Communications Manager, three positions, Emergency Communications Supervisor, Emergency Communications Officer, 15 positions. Fire Department, Youth Fleet Apprentice, three positions, Fire Cadet, 28 positions, Firefighter Z, 50 positions. Police Department. Police Services Specialist Investigator, Office Assistant IPD, Office Assistant, I think it's probably like one PD, or I maybe, Custodial Worker 1, Crime Analyst 1. Department of Public Works, did you have a question, Allerman Spiker?

No.

Okay. Department of Public Works Administration Division Program Assistant, Department of Public Works Infrastructure Division Inventory Control Assistant 1, Inventory Control Assistant 1, Department of Public Works Operation Division Drop-off Center Attendant, Fleet Operations and Training Manager. Anything in property tax levy supported positions? Hearing none, we'll move on to non-property tax supported, tax levy supported positions. Employees Retirement System, ERS Pension Investment Analyst, five, two positions. Department of Public Works Sewer Maintenance, Sewer Crew Leader, three positions. Engineering Technician, one. Department of Public Works, Water Works, Office Assistance 4, Water Treatment Plant Operator 4, Water Treatment Plant Operator 4. Questions on property tax or non-property tax levy supported positions? Okay, hearing and seeing none, Alderman Bergelis moves approval of our Item 10 here, discussions of approval, objections? Hearing none, so ordered. Okay, we're now on 11-260-328, communication from the Department of Administration informing the Finance and Personnel Committee of waivers granted for certain single or sole source contracts or contract amendments. And from purchasing, looks like we're being joined by Ms. Moore. Oh, there you are, hey, good morning. I was gonna look on the virtual there, so thank you.

Please begin when you're ready. Good morning, committee members. Delisha Moore, the procurement manager for the City of Milwaukee Purchasing Division, filling in for Rhonda Kelsey, City Purchasing Director. There are four files. I'm sorry, there are four contracts in this file. The first contract is with the Common Council City Clerk and West Care Wisconsin Incorporated, contract number E21126. This contract is for coordinating and overseeing the Big Clean Initiative. This is the first amendment to this contract. This amendment will add $100,000 to the current contract value of $100,000 for a total contract value of $200,000. to continue West Care's work with the Big Clean Initiative to remove trash and litter in specific Milwaukee areas and neighborhoods through the current contract end date of February 28th, 2027. The next contract is a citywide contract with Converge One Incorporated, contract number E15299. This contract is for Avaya Equipment and Service Assistance. This is the seventh amendment to this contract This amendment will increase the current contract total of $2,026,061.82 by $1,305,483.16 for a total contract value of $3,331,544.98 and will also increase Extend the term for two years from July 1st, 2027 through June 30th, 2029 to cover the three-year subscription renewal, continuing operations of telephone services for city and public safety non-911 systems. The third contract is with the Health Department and Life Technologies Corporation, contract number E17074. This contract is for preventative maintenance for laboratory equipment. This is the eighth amendment to this contract. It will increase the current contract value of $589,018.73 by $58,232.17 for a total contract value of $656,250.90. to continue the essential and mandatory maintenance of the health department's lab equipment used for virus testing and diagnosis of communicable diseases, including COVID-19 testing, as well as maintaining public, I'm sorry, clinic laboratory improvement amendments, compliance and transitioning from older testing technologies through the current contract in date of December 31st, 2029. And the last contract is with D E R and culture city contract number E two one nine zero seven. This contract is, um, for Culture City Sensory Inclusive Certification Program Services. This is a new contract that has a total contract value of $75,000 and a term of three years from July 1st, 2026 through June 30th, 2029, this contract is to enhance accessibility and inclusion through implementing Culture City Sensory Inclusive Certification Program across city facilities, supporting individuals with sensory processing needs such as autism, PTSD, ADHD, OCD, Parkinson's, and other neurological conditions.

Okay, those are four before us. Any questions on any of those that have been presented to us? Any questions for item 11? Okay. Hearing and seeing none, Alderwoman Moore moves to place this on file. Discussion of placing on file. Objections? Hearing none, so ordered. Thank you.

Thank you, have a great day.

Thank you, you too. Item 12, 260329, communication from the Department of Employee Relations relating to classification studies scheduled for fire and police commission action. Department of Employee Relations, Ms. Knickerbocker.

Thank you. Andrea Knickerbocker, General Resources Manager.

I'm sorry, excuse me one second. I should be reading in 13 so you can freely speak about all of those. Item 13-260-330, communication from the Department of Employee Relations relating to classification studies scheduled for City Service Commission action. Okay, please.

Good morning, still morning. Andrea Knickerbocker, Human Resources Manager, Department of Employee Relations. This report before you includes the report that was at the previous meeting as well as some follow-up reports that went to both the Fire and Police Commission and the City Service Commission meeting. I have some brief presentation notes that I can go through that are also in the file. These reports recommend new pay rates for business operations and human resources professional titles. They're primarily in the comptroller's office, budget office, employee relations, and fire and police commission, although you will find that kind of position in most city departments. And just for context, these are the individuals that are implementing Workday. These reports make changes for approximately 150 classifications. And the actual cost for the study, not counting matrix placements, is 1,581. We did another analysis just to show the cost per position. And for this study it comes out to 5,901 per position that was studied and recommendations were made on. And in the file for context there's the cost per position for other reports that have come before. such as the IT titles, marketing and communication, engineers, architects, and planners. And some of those costs were at $18,000, $14,000, $11,000 per position in making the recommendations. This is the last citywide report that will complete a multi-year report project that goes back to 2022 so we've been at this for five years and this of course came about as a result of difficulties with budget constraints and the reduction and elimination of employee pay increases dating back to 2011. really want to thank the staff in employee relations and also in the department for the research for the work in implementing and auditing all of these studies over the last number of years and just want to summarize by saying these are very expensive of course and therefore it is not the way to go forward on retaining employees and recruiting employees Instead, the Department of Employee Relations working in the mayor's office and the budget office to come up with a compensation policy that will focus on promotional career ladders, employee pay progression within a pay range, and periodic across-the-board increases to mitigate market rates of pay concerns. And if you have any questions, I will answer.

Okay, thank you so much. Are the business ops positions, are they all currently filled right now?

I'm quite sure we have vacancies. Like to what percentage? Across city departments, I do not know. I do not know what's vacant. I don't know if you have a guess.

because it's so pricey last minute and we kind of necessarily one could suggest we don't have this in the budget we can go either way um why would we why would we want to make this change for vacant positions in order to recruit Well, if they've been vacant for more than six months or a year, at what point do we decide that something's not working out and that we can live without it? That's a good question, but not my purview.

Yeah, I mean, that's part of our budget process is to evaluate most especially vacant positions because the mayor prefers to avoid layoffs, of course, so does the council. But whether or not positions can be reduced, especially vacant positions, is part of our analysis. I wouldn't say it's not related to this in a way. I mean, the vacancy percentage in these jobs is, I mean, we provide the quarterly update on vacancies across departments.

It was, I guess, I was trying to confirm, because it appeared that this band, if you will, because it's kind of upper management, had a larger amount of vacancies than the norm, but I have nothing to guide that by.

Well, I guess it depends on what you mean by the norm, whether you mean citywide or departmental, because we do provide, some departments have higher than normal, or I shouldn't say higher than average vacancy rates. Yeah. And then there's been a lot of volatility in the direction of lower vacancies since the reclasses have been done citywide. I mean, they were especially high in library and the trades going back a few years. So I think it would be consistent with departmental trends, the vacancy rates here.

Okay. It's just when I looked at the list, like it was last cycle two, there was such, this is just an interesting one because it's like affects almost all departments. I'm talking about the business ops. Although I don't know if there's a business ops. Is there one? I don't think so in the city clerk's office.

Yes.

There is? Okay. Oh, yeah. Oh, okay. Is it always called business ops too?

Some are fiscal, some are budget. It depends. We've tried to cut down on the number of titles, but there's still a variety. Okay.

Yeah, so it's like affecting each department, but each department differently. So it's just been a unique one. And there's like such a variance in the reclass. Like I saw, I felt like the scale was, sorry, I don't have it in front of me.

I should pull it up.

Yeah, like the amount of money per position I thought varied a lot.

These are not reclassifications. They're actually looking at what, the labor market pays for similar duties and responsibilities. There are, but I say there are a couple of reclasses in there, but those are separate and at the end. The cost per person that I had mentioned, 5,900, that's for the study itself. The variability is because of how long individual employees have been with the city. We were giving a matrix placement up to 10%. Obviously, if somebody's been here a year, that's 1%. People have been here for 20, that's 10%. So the variability isn't on that particular title. It's on how long they've been with the city.

Okay, and last but not least, this is not retroactive. Oh, no.

Okay.

Well, you didn't... Comptroller's office would have my head. Okay. Just asking for the records here. Okay. Anyone, all or more, Spiker? Anything on this?

This was the file that was held last time? Yes. Okay.

Because we received it like within a day or two of the meeting and people wanted more time to digest it.

Yep. I remember. Were there any titles that changed between then and now?

Yes. Yes, there was a follow-up report that went to the Fire and Police Commission and to the City Service Commission. I haven't got a list right in front of me, but I think it was like five or six positions.

Okay. And were any of the market studies that were conducted last time adjusted between then and now?

We did have, the ones that went as follow-up were based on feedback that we got from the department saying, wait a second, that's not what this position does. We need to have that looked at for classification. So the additional changes are not necessarily market. They're saying, oh, we changed the job description.

The changes were classification.

Right, so we had to go back and look at it from that perspective.

Okay, so there were no positions that were classified As a result of that, in all those cases where there were classification changes, did that bump the employee then?

Well, my bet is that those would have been increases, you know, that it was actually classified to a higher level title. Then we'd be looking at the market rates for a similar title in other departments.

Okay. All right. Thanks.

Okay. Any other questions on this item?

Madam chair. Yes. I'll run more. I was in regards to something that we actually recently received. Um, there was a notice in the file in regards to a letter. Um, and Ms. Nicobarca, I don't know if you received that same communication that we did. Uh, Oh, it was an anonymous letter that was recently, I got it in my mailbox today, but it looks like it was uploaded in the file as well.

We got it. We sent it over too. Okay.

Did you get an opportunity to take a look at the validity of that?

I can speak to that. I did not go back and watch myself speak. But if I said that, it's ridiculous that I said that. Because clearly there was a market study in 22. And if you look at the first page of the narrative, it explains that there was a report in 22. So I think I left out a couple of words. I'm sorry. No intent to mislead.

Not at all, and I appreciated that. I just wanted to, just on the record for those that are listening, that when these things come in, we have staff that can speak to them, and it's not anything that we're trying to shove under the rug or anything like that. So I appreciate you sharing that information with us.

Definitely. Any other questions on 12 and 13? Any other questions? Okay, Alderman Coggs then moves to place it on file, both of those, discussion of placing on file. Objections? Hearing none, so ordered. Thank you, and thanks for answering that too. Okay, we're now on item 14, 260391, communication from the Department of Employee Relations, amending, yep, looks like we got two more for you. Amending the salary ordinance. to add a percentage increase for bridge operator and bridge operator lead assigned to work on the bridge maintenance crew.

Yes, and the recommendation here is to change it to a 5% incentive. We haven't looked at that pay change for that work in probably a decade or more. And so in talking to the department, the recommendation was 5% and this will save money that currently they're having to pay out to contractors to do the work.

Okay.

Any discussion on item 14? Alderman Bergelles moves to place on file. Discussion on placing on file? Objections? Hearing none so ordered. Item 15, 260331, communication from the Department of Employee Relations amending the salary and positions ordinances relating to clerical or administrative corrections. Just one change. Yes, and that's before us. Questions on that? Alderman Spiker moves to place on file item 15, discussion of placing on file. Objections? Hearing none, so ordered. Thank you, have a great day. Thank you. Item 16, 260284, substitute resolution relative to acceptance and funding of the 2026-2027 Wisconsin Well Woman Program. grant from the Wisconsin Department of Health Services. It did receive a positive recommendation and referral from the Public Safety and Health Committee. We're joined by the Health Department, Mr. Aaron Schepinski. Any questions on this grant acceptance? Discussion? Alderman Spiker moves adoption of 16. Discussion of adoption? Objections? Hearing none, so ordered. Item 17, 260101, substitute resolution authorizing attendance at conventions, seminars, and other travel. Are there any questions on item 17? Alderman Coggs moves adoption. Discussion of adoption? Objections? Hearing none, so ordered. That concludes 17, we're on 18, 260359. An ordinance to further amend the 2026 rates of pay of offices and positions in the city service. This will reflect the action we took in earlier files. Alderman Moore moves passage of 18. Discussion of passage, objections? Hearing none, so ordered. 19 2 6 0 3 3 3 an ordinance to further amend the 2026 offices and positions in the city service this also reflects action We took earlier in this committee meeting and all the Roman more moves passage discussion of passage Objections hearing none so ordered item 19 is concluded and this concludes our meeting Yes Oh Definitely and hearing no objections so ordered that she's in the affirmative Alderman Coggs let the record reflect that and this meeting is adjourned