Rehoboth considering full employee healthcare coverage

In an effort to retain and attract staff last year, Rehoboth Beach commissioners approved an increase in healthcare coverage from 80% to 90% for city employees as part of the city’s current budget.

Now, as part of next year’s budget, city staff have recommended an increase to 100% coverage, but some commissioners are questioning the proposal. As proposed, employee family members would remain at 80%.

The city has had trouble filling positions because it's competing against other municipalities, the county and private companies offering better plans, said Jean Lee, the city’s human resources director, during a meeting Feb. 21. The city has to up its game to attract candidates, she said.

Lee said an increase to 100% coverage would save an employee about $1,500 annually, $4,700 for plans with their spouse; $3,100 for plans with a child; and $6,000 for a family.

Commissioner Craig Thier said it is a difficult issue, but the city is already offering a very generous plan.

Commissioner Suzanne Goode described the increase as a bridge too far. The proposed budget includes a 3% cost-of-living increase that will help, she said.

Commissioner Patrick Gossett reiterated what Lee said. He said it’s not much of a competition if Rehoboth is competing for the same people against other municipalities that offer 100% coverage.

After a lengthy discussion, a consensus was reached to gauge the reaction from employees if the city offered 100% coverage for those making $60,000 or less annually, and then keeping 90% for those making more.

Commissioners are also considering a change in the bonus program from a merit-based increase to a one-time bonus that’s not tacked onto the salary. Using $60,000 per year as a threshold, commissioners proposed a bonus of 0% to 4% for those making under that amount and 0% to 3% for those making more.

Gossett and Commissioner Edward Chrzanowski said they have concerns about the change, and would like to hear what employees think before making any decisions.

No decisions were made on either subject.

Surplus projected 

City Manager Taylour Tedder is projecting a surplus for the current fiscal year in excess of $5.5 million. Between the water and wastewater enterprise funds, there’s an expected surplus of about $1 million. The general fund and capital improvement budget comprises the remainder of the surplus, with more than $3 million related to the city’s decision to finance up to $5.5 million of construction costs for the beach patrol project instead of paying for it out of the capital improvement budget as originally proposed. 

Tedder said it’s up to commissioners to determine what to do with the surplus. If nothing is done, it will go to the general fund, he said.

Thier, Goode and Commissioner Francis “Bunky” Markert said they’d like to see a way to roll back property taxes, which were increased by 29% for the current fiscal year.

At the city’s second budget meeting, commissioners discussed giving themselves a pay raise as part of next year’s budget. However, attorney Max Walton, the city’s temporary solicitor, has advised that the charter calls for commissioner salaries to be addressed during the annual meeting in September. A consensus was reached to wait until that meeting to resume discussions on the topic.

Changes from the previous meeting also include the removal of a city planner, a reduction of unemployment in administration, a reduction in dispatch overtime by $100,000, removal of a building and grounds part-time position, and an increase in rental tax revenue. There was a $114,000 increase in chemicals for the wastewater treatment facility.

As of now, there are two more budget meetings left. The first is Monday, March 10, which will include a discussion on community partner contributions and other unresolved issues. A fifth budget meeting is scheduled for Friday, March 21, with the expectation that the budget will be approved during a regular commissioner meeting later that day.

Fund balance and net position policy approved

Commissioners also approved a fund balance and net position policy. Brought forward by Assistant City Manager Evan Miller a year ago, the purpose of the policy is to provide the city with a financial base sufficient to sustain municipal services and to maintain the social well-being and physical conditions of the city in the case of an emergency.

As approved, the policy sets aside 30% of budgeted operating expenses, 100% of budgeted debt service (excluding capital contributions from Sussex County in the wastewater fund), and 100% of budget capital improvements. Additionally, the policy sets aside funds for natural disasters in the amount of $9 million in the general fund and $2 million in both the water and wastewater funds. Finally, the policy includes an annual reporting requirement and a process for addressing underfunded and overfunded minimums.

The policy requires the city manager to prepare an annual action report by the January regular commissioner meeting that provides a clear picture of the fund’s status. If needed, at the time of the report, the city manager is expected to also present a strategy to address any underfunded or overfunded minimums.