Okay, council, we're gonna get started.

Michael and Chris, are you still there?

It's right here.

Thank you.

Okay, I will call our special called budget work session to order and turn it over to Jay Choppa.

So we're gonna try to get through this pretty quickly since we know we've been here all day.

We have a few, a couple of uh presentations to really respond to previous budget issues that were brought forward, and then also the actually one of them the group health fund updates.

But we also wanted to touch on the classification and compensation updates a year ago or a little bit over 18 months ago, the city started a compensation study, and so we have the outcomes from that.

So I'm gonna turn it over to Chris uh Kristen Smith, our HR director, and it's her show today.

Good afternoon, Mary and Council.

I will talk really fast.

I know y'all have had a very long day.

All right, so as um the city manager mentioned, the first presentation is about classification and compensation and what we are projecting for potential contributions in this area.

But just for a little bit of background, our employees move throughout our pay structures in just really a couple of ways.

So at initial placement, so that includes at higher or at promotion.

Uh their base pay is set.

We do periodically look at market driven data, and by market I mean our labor market.

So we tend to look at you know larger cities.

We have kind of a mix of 10 cities that we look at, but we also look at aggregate data from private sector employers as well to make sure that we have a good gauge on where people should be placed.

But these types of studies are infrequent, they happen over several years as opposed to things that you know happened year over year.

Annually, we do have our performance management process, which includes a merit increase or pay for performance, which it's called here.

So that's another opportunity for an employee to grow their base.

And outside of just their initial placement and what they trend upwards as far as their performance, outside of ad hoc, excuse me, or one-time kind of you know, special merit type processes, our employee pay stays fairly flat.

So best practice with compensation is to make sure that you are competitive.

Sometimes it is based on indicators.

If you have more turnover, are you having to you know kind of pay more to attract a certain level of talent that lets you know that it may be time for a market study?

But regardless, employers, you know, historically will periodically do reviews of their salary structures to make sure that they're competitive and that they're paying at a rate that's um attracting and retaining the level of talent that's needed for the organization.

So the classification and compensation study was a comprehensive uh project that started in 2025, looking at overall base pay, our salary structures, uh alignment on position levels, meaning if you are you know a planner one, then planner two, planner three is a good example, and then also any impacts to compression across our structures uh due to the change to the $18 an hour minimum wage, so our initial study findings uh really show that our compensation structures, so our salary grades are pretty closely aligned with market, but what the primary uh area of opportunity is is our employees in their seats and where they sit in their salary grades are falling behind market.

So overall, from minimum to maximum, our salary grades are competitive, but the placement of our employees taken into account things like years of experience, span of control, breadth of responsibility, our employees are generally falling behind in that area.

So given the FY27 financial outlook, our recommendation is to focus on keeping our salary structures as is for this current fiscal year, but really focusing on the employee placement in those grades since that was the largest gap that was identified in the study.

But this was again a very comprehensive study.

It will also allow us time to look at a multi-year implementation plan of what the full study looks like, and so that includes wage progression, really incremental adjustments based on years of years in position, years of experience, other indicators, but also creating a governance model around pay placement so that we have consistent and competitive practices for our employees.

So based on those recommendations and again the highest priority area from the class and comp study, we are looking at between eight to ten million dollars towards those market adjustments, and then you know plan to come back with further recommendations around a multi-year strategy to implement the full classification and compensation study.

So the city does have a citywide performance management process for general employees, so non-civil service, and that typically follows a merit increase based on where employees are placed.

So right now, our performance management process slates employees overall as accomplished or valued or underperforming.

And for the last year, which was a little bit of an unusual year because of the Med Star transition, we had a 41% accomplished, 57% valued, and the overall average increase was about 3.8%.

Starting on this fiscal year, we are uh revamping the performance management process.

This is all as a result of feedback from our department heads wanting to be able to identify talent and have a broader scale to address that.

So we are moving to a five-point scale for our performance management process.

Currently, it is a two-part process, and I'm gonna pause for a minute because it may be a little bit complicated to explain.

But we have our performance review process, which is pretty standard, and then following that, based on the allowable budget, uh our uh anyone that has a direct report is able to calibrate their merit.

So let's say I have five employees and I have a you know bucket of a certain amount, I can kind of adjust those employees.

I may give one 5%, one four, one, three, one, two.

So the that decision right now is at the individual supervisor level.

So another change that we're implementing for FY26 is expanding the review process, but once that performance management process ends, providing city management with a report of all of our overall rankings and city management will determine the merit distribution.

So it allows for more consistency citywide.

It also allows city management to drive the timing of when merit is actually allocated based on allowable budget and other conditions that may need to be considered.

So we will be working on lots of education and prep for our employees and our reviewers, our hiring managers, and supervisors in this area.

But again, the review process and having expanded criteria was directly related to feedback from our department heads, and you know, again, looking for consistency in our processes.

So, in summary, the labor market adjustments and being responsive to our classification and compensation project, between eight and ten million dollars for the next fiscal year, and then the pay for performance uh allocation is roughly 12.5 million.

Questions from council?

Yeah, Councilman Flores and then Chris.

Um, yeah, a couple of questions.

So on the compensation of the compensation.

I know we had talked about this a couple years ago, and uh well, I think when Dr.

Williams was here, we talked about the pay increases, and our goal was to get to uh starting pay at 20 dollars, and we negotiated uh or worked around to get eight eighteen eighteen dollars.

And so when you talk about the eight to ten million dollar uh look of those that are in positions, is this including the high-tier employees as well?

I think we kind of talked about um we thought a best practice was to work from bottom to top, and so where you have the top tier, maybe the top department heads are um in the ranges of north 150 or 200,000 versus your smaller tier employees that are making 16 at that time now are making eighteen dollars.

So when you include this eight to ten million dollars, who are who's all included in this amount?

Yes.

So the eighteen eight to ten million dollars includes all general schedule employees that have an indication that they need to move within their range.

So we're not just you know it's not a blanket move of everyone.

We're looking at where they're sitting in their salary um grade based on years and position and making recommendations for where they typically should be based on that experience level.

But I will also say that raising the minimum wage, you know, you mentioned working from kind of bottom to top, it forces that anyway.

So part of the class and comp study is looking at wage compression as the you know kind of bottom of our pay scales move up, then compression happens, so we're taking that into consideration.

But the majority of the eight to ten million is really looking at years in position, how people are placed in their salary grade.

So it could potentially be multiple levels, but you know, for an organization this size, you're going to see a lot more movement at the bottom and the middle than you would at the top, just because that's where the majority of our employees are actually being paid.

And it compensation gets very confusing.

So help me get to an explanation that that fully answers your question.

But the eight to ten million and could potentially include a director if they are falling way behind in their salary grade.

So where that may be common is somebody that maybe moved within the organization as opposed to coming from the outside.

So if they're falling behind in their salary grade, there could be some examples of leaders that have adjustments, but the class and comp study um did provide us a recommendation for all employees, but it was focused outside of the directors.

So okay, well, I appreciate the um I guess the knowledge or information you have on paper, maybe a graph would maybe better help me understand uh where this eight to ten million dollars uh increase is going to go.

Uh, because I think if I'm you know, maybe I came in because I have a higher education and I was at a certain level, and maybe Beck come in, she didn't have the higher education, but she's worked longer than I have.

So she might fall under this eight to ten million dollars where I may not because I'm already there.

Is that kind of what I'm understanding?

So partially, so primarily we're looking at years in position.

We're not taking into account education levels.

So if you know we are as an example, we may have the same title, we're primarily looking at our years of years in position, so how much experience or tenure we have with the city, generally where we should fall in our salary grade, and that then gives us an indication of whether someone needs to have an adjustment.

So you could have two similarly situated employees with the same title, different education levels, different prior experience levels.

We're just looking at how they're progressing within their salary grades based on tenure.

Councilman, but a couple of things.

So if you have a ban, say somebody the pay is between a certain position, and a person's been there for 10 years, right?

But we did a market adjustment on the band and the band moved up, right?

But they only got their three and a half percent or four percent one year, then they're actually lower in the band, even though they're been longer.

You hire somebody in that at the same level with two years, but what this is telling us is that that person that was been here for 10 years should get an increase so that they're more compared to market for others that have worked for that period of time.

So it would impact that employee, that tenure employee would then get an increase to be more aligned with the market overall in that eight to ten.

All of these, I just want to preface this.

All of this these dollars is what the study's telling us.

We're looking at a budget deficit.

Yeah, the ability to do all this is contingent on where we end up with all and how we we implement it.

So I just wanted to reiterate that that's I won't get into lease here, so I mean, you know what I mean.

No, you know what I mean.

Okay, sure.

Okay, I do have a note to so maybe graphing my position and possibly including some of the other indicators of where people may be placing their salary grade as a follow-up.

Okay, I think you alluded to this uh when you made a mention of the in-field positions in our uh IREMS system, but uh does the compensation study also take into account unfilled positions of city house.

So the the compensation study, are you talking about the full classification project or the eight to ten million for recommendation for next fiscal year?

Talking about the A 10.

Okay.

So the eight to ten is looking at um where our existing employees are in their current seats or where they're falling within their salary grades, but you know, we have some cushion there to take into account for vacant positions, but primarily we're looking at our existing workforce and where they're falling in their salary grades, and if a new person was to start, they wouldn't be eligible for you know some of these adjustments, it's primarily focused on retention of our current employees.

These do not cover civil service.

And I did have just I wanted to mention just you know, compensation is one piece of uh overall total award strategy.

So as we're talking through pain benefits and many other areas, just know that um, you know, we're considering all things that impact in employees uh take home pay and other salary benefits.

Okay, the next presentation is on uh group health.

If we're ready to move to that, all right.

So I won't um spend a lot of time on this.

We talked about this um last month, but um we know that our group health fund is projected to um continue to operate at a deficit, uh, and also currently does not have a reserve uh to help address any um fluctuations uh in claims utilization or other costs, and because of that, we have a multi-year strategic plan that we are working on for group health for FY27, and um as much as possible for the remainder of FY26, our focus is on cost containment, so rebuilding our reserve uh requirement, making sure that we're accounting for all expenses that are um hitting the fund, uh, as well as uh right sizing our claims utilization, and then in future years that looks at our plan and program design changes, making sure that our uh plans are more competitive because our benchmarks show that the city uh is actually lagging in this area as well.

Uh, and then long-term um planning, so we make sure that the fund stays whole and can sustain itself.

So I did because GOP1s became um a big conversation last time, and I know it's a hot topic just for many employers.

I did want to share a little more information about how we got here.

Uh, it is not unique to the city of Fort Worth that GLP ones have you know drastically increased pharmacy costs.

Um, like most employers, GLP ones were introduced as a new category to treat type 2 diabetes.

A lot of employers, including the city, uh, offers a higher level of coverage for uh individuals with type 2 diabetes because it tends to be one of our higher uh diagnosis uh cal categories.

Uh, but because GLP 1s were a new drug category that had not been uh available on mark to market before, it took you know a couple of years for many employers to understand the impact of what that cost looked like.

So um the cost really grew exponentially, and based on the data that we're seeing, plans that it will continue to grow, and right now we don't really have any safeguards around utilization or cost in this area.

Also wanted to share that again, GLP 1s make up a large percentage, about a million dollars a month in cost to our plan.

Since just last month, my presentation last month, the number of subscribers or members that are using GLP ones purely for weight loss increased almost 50%.

And so the number is, you know, continuing to grow.

The million dollars or so per month was at the you know 900 level as far as participation, but you know, we've far surpassed surpassed that already.

And again, we're not recommending any changes for diabetes related GLP one use.

So recommendations also include looking for additional options if we do navigate members away from GLP 1 use on our plan.

So we've been exploring direct to consumer options that could represent between eight to 10 million dollars in cost savings, but looking at a way to offset that transition for members so that it's not you know an immediate hard stop with them being able to utilize other programs, and then the city always also offers uh several health and wellness programs that have both the weight loss and nutrition and other focus to them.

So making sure that there is a lot of member engagement and education and resources for options that are available.

Can you tell me how much we spend collectively on Noom, Wonder Health Form, Ramp Health, and Digby?

I will take that as a follow-up.

I actually just looked at Noom's contract today, it was about a hundred thousand, but I will take that as a follow-up for all of those.

Wonder is a good example.

We don't pay anything additional for them, it's a part of our Blue Cross membership, but I will take that as a follow-up for the remainder.

Thank you.

Can you can um I don't need an IR or anything, I'm just you can email it to me about it.

All right, and then again in summary, so GLP ones are not the only area that we're looking at for cost reductions.

Uh, several of the items listed here are really just moving towards best practices.

So doing a dependent audit is a great example of making sure that we have the right members on our plan, uh also offering support for you know higher term uh more chronic surgeries like MSK treatments, which is also a very high cost to our plan.

Um, so everything is not GLP one related, but GLP ones are you know one of the actually the fastest growing cost to our plan and has the most opportunity for more immediate impact if there is a change.

So overall, and this includes potentially uh reimbursement or having a model for direct-to-consumer GLP ones, around 12 and a half million for cost reductions to the plan, but we are continuing to explore other areas as well.

So some of those are yet to be determined.

Right, and in summary, um between 89 to 99 million dollars is what our employer contribution is expected to be.

This is just for claims uh and third-party administration.

So our this is over 30 million dollars in increase as a baseline just to right size our claims activity on the plan.

In addition to that, about five and a half million for overhead.

So that's any additional contracts like NUM and other programs, uh staffing that supports our benefit programs, and then working on a multi-year strategy to build up the contingency reserve so we meet that requirement.

And then lastly, just long-term planning.

This will, you know, for many, many years and really probably for the foreseeable future, will continue to be a work in progress and a very high focus because of the impact of this fund, and you know, with health care changing at a much faster rate than you know our annual annual budget process can support.

So plan and program design changes, making sure that our plans are competitive from our employee perspective, that they're accessible and affordable, that we have a cost share model that supports the sustainability of the fund.

And then looking at other programs like our health centers and wellness programs to make sure we have the right level of engagement and many, many other uh opportunities that are a part of our multi-year plan.

I'll open up for questions on group health questions, Councilmember Hill and Buck.

So for the wellness programs, do we utilize any local companies or are they all large national companies?

Uh, right now our uh primary wellness partner is ramp health.

We do have various wellness options that are available to us through Blue Cross at no additional charge.

Um I'm not aware of any um I'm not aware of the location of some of our other like fitness instructors, um, but most of them are large branded programs.

Okay, is there a way if we had ideas on local companies that provide nutrition or wellness services, could they get in touch with you?

Okay, absolutely.

Just trying to think of other ideas outside of the large national companies and help support our small businesses.

And then two, the audit for eight hundred and fifty thousand dollars, is that not something Blue Cross Blue Shield does anyway for dependents?

So this they don't do a dependent audit.

We do have the ability to engage in a claims audit with Blue Cross Blue Shield, which is part of our strategic plan.

So this is really best practices from an employer perspective.

We should be doing a periodic audit anyway.

So this is just moving us towards best practice.

And does the audit just examine how many dependents what is the what is the ultimate eligible dependents that we have and and again spouses and children are um often high cost drivers, so we want to make sure if we are covering family members that they are qualified family members that are eligible for participation in our plan.

I see, okay.

And that costs eight hundred and fifty thousand dollars.

It's a savings of estimated savings of eight, so what is the audit cost?

Um I don't have the amount, but I can follow up with that.

That's fine, okay.

Thank you.

Okay, thank you.

Sorry for the confusion.

Yes, come right back.

Thanks, but uh thanks, Mayor.

Thanks, Beck.

It's been a long day.

Uh, thank you for putting all this together.

I know I had a bunch of questions for you last time, and I appreciate you trying to address them.

Um I'm I'm frustrated and not with you that we're still having discussions about taking a class of medications out wholesale, um, because they are this class of drug is so rapidly um evolving in what is treated or what conditions can be treated with this.

Um I'm concerned that we're taking you know, just wholesale taking that off availability for people is gonna do uh disservice to our um to our employees.

I will say I do think the most prudent um way forward is by reimbursing uh members of the plan for going out to market.

I mean, it doesn't make sense.

If I can go get a prescription for 200, um, it makes more sense for the city to reimburse me that 200 than to pay the 1200 dollars through the contracted pharmaceutical price.

Um and so that would be my direction to city staff is to develop a plan where we're not cutting out um the use of these um prescription drugs, but also um being a little more fiscally responsible.

Well, it saves us about one and a half million dollars a month if we just reimbursed everybody that was using a GLP one two hundred dollars or to go off market.

I think that's much more reasonable.

Um, my question is, and this is really what I want us to think about from a policy perspective, is we're taking this medication away, and we've said, Well, you know, it it's in pig is only used for type two diabetes and these other things, you know, they're off-market for weight loss or or whatever um that puts us that interferes with my relationship with my doctor my doctor gets to choose what medicines I do and don't take and how I take them and what I need and so by us removing that we're remove we're interfering with the um with our medical care with our relationship with our physicians so how do we how do we fix that and that's not a question I'm asking you to answer today because that's probably not a question for you to answer it's a a bigger broader question so I I don't think I'm looking at you to no I understand um but we're interfering with that and so you know if we do this reimbursement there's just we're going down a road right if we do this reimbursement do I have to first show that my doctor has approved it for me or do I just get to haul off and do it right like there's some um there's some trade offs in this and so by by going through a pharmaceutical route and making my doctor prescribe something to me as opposed to me just willy-nilly getting on noom and deciding I want you know monoxidil and GLP ones and hormones and you know whatever else it is you can get on those websites um are we gonna see more people using it and that's the question too so I think I really want us to go back and look at at how we better serve our employees and I don't think a wholesale prohibition is how we get there but I would like to see us um set up a reimbursement plan for our employees up to 200 do you have any idea the back to slide six um pertaining to GLP ones when we're transitioning employees to direct to consumer what the cost differential may end up being per employee if they were on a traditional GLP one.

And again we have multiple options for weight loss providers but I've spent a lot of time in the last couple of weeks talking with our noom contacts I understand that program better.

Okay so on average and I do want to say that uh noom offers both compounded and branded options they offer different dosing levels like microdosing it's about $200 per month depending on what the participant chooses the city as a part of our agreement pays for participation in Noom so it's a you know full program it's not just about accessing the medication.

So there's no cost to the members for that they're also able to engage with a clinician via telemedicine before they get access to the medication.

If they do choose the standard branded options of the GLP ones they are redirected to the provider um site the the manufacturer sites but there are options in their model to get it on average about $200 a month.

Okay and what and right now it's at no cost we're covering full cost is that right we're covering um it depends on which plan you're on so if you're on our uh health center plan about $50 or so um and if you're on um our high deductible plan you are covering um that cost until you meet your deductible and then you're getting it at no cost that's helpful that you okay was there something else or no I was just making sure I was okay in that correctly okay from memory.

Great thank you.

I was just gonna mention I think we modeled this is covering 50% on the on the cost but as we go through the budget process we have to at the end of the day you have to put everything together so we'll be looking at at all the suggestions here and we'll be probably bring back some kind of options to the city council based on our need to fill the gap when we come back in months.

Any other questions or comments, Council?

Okay.

Thank you.

Thank you very much.

Any future agenda items specifically for budget work sessions in the future?

Not, this meeting is adjourned.

Thank you.