2008/10/15 Council Agenda Packet

CITY OF EVERETT FISCAL ANNEXATION ANALYSIS 6.4 Operating Cost Analysis Ongoing Costs The fiscal model estimates changes in the cost of services based on relationships between direct services, such as maintenance workers or planners and underlying demographic and community changes such as increases in population, housing units, commerc'al activity and land area. • Costs are broken up into labor and non-labor categories • Non-labor costs in each department are driven by the number of Full Time Equivalents (FTEs) in that department Drivers for FTEs in each position within all City departments are variable in the model, and fall into one of four categories: • Fixed. These positions do not change over the planning horizon (for instance, there will always be one Police Chief). • Direct.These positions are driven directly by changes to the underlying land base of the city, such as population or employment. The relationship between demand for services and the underlying land base is determined based on the types of services each position provides. For example, parks maintenance staffing is directly related to the number of park acres that must be maintained. • Indirect(by Position).These positions are driven by staffing levels of one or more positions in a specific department For instance, a Police Commander is related to growth in the number of Police Officers. • Indirect (by Department). These positions are driven by staffing levels of one or more departments. For instance, an Accountant position in the Finance Department is related to total new staffing levels in most other City departments. General Assumptions Annual salary and wage escalation is assumed to be 3.5%, while annual benefits are assumed to grow at a rate of 6.0%. The assumption regarding benefits escalation accounts for the possibility of growth in overall benefits costs above inflation due to the expected continuation of benefit cost increases primarily related to health care costs. Impacts to City Staffing Annexation in Scenario 3 is estimated to increase City staffing by approximately 37 FTEs, or 4.8%. Along with staffing increases attributed to City growth, this brings total City staff from the current 767 FTEs to 834 FTEs in 2009. Annexation in Scenario 4 increases City staffing by an estimated 79 FTEs, or 10.3%. Including staffing increases for City growth, total City staffing is estimated at 875 in 2009. [ri Final Report:October 2008 Page 33