2026.

I'm Alder Woman Marina Dmitrievich, the chairperson of the committee.

I'm joined by my vice chair, Alderman Peter Bergellis.

We had Alderman Scott Spiker.

I'm sure he'll flow back in.

Alder Woman Melee Lake Hoggs is with us virtually.

And Alder Woman Charlotte Moore is on her way to the room.

That does provide us a quorum to begin our business with item number one.

26001.

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 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 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, especially 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.

So with that, thank you so much, Director Kovac, and the floor is yours.

Thank you, Madam Chair and Committee members.

It's good to be here this morning.

And uh, like the chair said, this is an this was done at the request of the common council uh but also done uh somewhat of our own volition and that we agree that alignment, how I like your phrase, the alignment getting the assessment aligned will allow decisions to be um to be to be better informed decisions to be made by everyone involved.

So it if you know if 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 I in the last I think three years we have formalized it a bit in that in late July or early August, about midway through our development of the budget.

I've been sending a letter, I think titled Big Picture Budget Prior uh big picture budget issues and request for a common council priorities.

So that that remains, but we're kind of we're jump starting that a bit early, about a month earlier, uh, and we're doing it to the council and also to the public, and we're we're enhancing the mayor's public meetings so that it'll now be two meetings uh at two different uh libraries on July twenty-ninth and july thirtieth, rather than one meeting uh 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.

Uh and I've also shown this to a few different community meetings.

Uh these slides sort of begin with a structural analysis or maybe analysis too strong a word, uh, pictoral description of the structure of the 2026 budget, and then we talk about the 2027 budget gap and and what's likely ahead for that.

So with that, I'll begin.

The 26 budget is 2,075,687,722.

We have that in words and in numbers, different people learn differently.

Uh, 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 um expenditures, but then I will describe um the revenues as well on one slide, and keep in mind they have to 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.

Uh, 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 two point two billion seventy five million dollar uh city budget.

But let's put that up into the the parts that the public, the mayor, and the council have the most control over.

I mean, the mayor and the council and the public control the entire budget, but there's quite a few rest some some of the funds are are restricted in various ways.

So the first we're gonna peel off nearly a quarter of it, about 23%, $484 million is self-supporting, uh, which means that that ties out separately.

Revenues and expenditures equal here, and um the bulk of this is the um uh enterprise funds like sewer, water, and transportation.

It also includes grant 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 is the primary example of 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 prop the property taxes do not support the sewer and water fund, and vice versa.

So this 1.6 billion dollars 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 big the four big categories I've I've split off here.

Three of them are actual different sections of the budget.

If you look at our rate sheet, uh which is in your in your budget documents every year, you'll see that it's 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 we are committed to in the same way we're committed to debt.

Capital improvements is cash revenue 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, you know, later, and that's that's why that's so the green and the black portions of this pie chart interact over time in that way.

And then we did split out health care 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, you the blue and the red are often merged.

We we chose to pull out the red because there is some flexibility in health care plan design, but ultimately we're committed for a variety of reasons, some contractual, some ethical, uh, to to pay for health care for our employees.

So uh it that's money that we're more or less committed to when you when once you establish the size of the workforce, the health care costs and the workers' comp costs are more or less baked in.

So that's about 136 million dollars between them that that makes up the red part part of the pie chart.

So if you're looking for how we did that math, you would peel that off by looking for the health care and the total all the different health care SPAs and 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 uh this year and every year.

Well, that number is specific to 2026, but every year that 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 um 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 of this of the um section A budget, the general city purposes budget that goes to each department.

We 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 we 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 the with departments operating uh 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 cost of the departments.

So if you actually look at the underlying data of this chart, it's not gonna add up to six hundred eighty five million because we allowed the fringe to stay in the department because especially when you're looking at 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 SPAs a few other SP a few other smaller SPAs and especially sometimes in the salary line some 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 transparent see 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 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.

So in this case we we're gonna kind of go through the big chunks we have I have three slides that break up this chart into pieces to make sure everyone understands there's limitations even within day to day operational cuts besides the obvious limitation that if you make cuts you'll you'll 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 12 so you understand how that changed uh the options before the city but because of act 12 specifically we are the city is forbidden to reduce in fact has to increase uh uh slowly and steadily well steadily certainly based on revenues that come in and with the target by 2033 we have to increase daily minimum staffing for fire and we have to increase the total number of of actual funded not just funded but actual sworn personnel in the police department and so there has to be an annual increase in those in the in the number of sworn personnel and then because of existing state law and contractual are uh uh negotiations that are mandated by the state with uh the three public safety unions the same number of personnel cost 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 you but state law is not violated if those are reduced however 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 you know so it's not it's not uh restricted by the state but it's a practical restriction there in terms of the 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 Chairman um just really quick Nick um so when we're talking about you know just Act 12 um is it specifically looking at the salary so or personnel versus yes we have to go up in personnel right salary but we may have to decrease in a different um line items like what I don't know maintenance of vehicle whatever I don't know whatever to 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.

Act 12 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 personnel separately because of Act 10 because Act 10 allowed the three public safety unions to continue negotiating.

Got it.

So but the combination of Act 12 and how Act 10 didn't change that status of public safety unions the two laws working together mean you must have at least as the same amount and 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 the 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 and firefighters need.

Thank you.

Um different state laws.

Oh sorry, went the wrong way.

So now if you remember, so this pie chart, we looked at the 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 uh permit uh 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 uh however close you are to 100% cost recovery, you can only cut that margin.

So if what if you said all right, I'm willing to, I don't want to only want to say something specific, but I'm willing to accept some major reduction in department of public work services.

Keep in mind those services are garbage pickup, recycling pickup, forestry work, uh, you know, street sweeping, uh pothole filling, sidewalk maintenance, street lighting, being some pretty fundamental core services.

But even if you were willing to pick one of those services and say snowplowing and say I'll do a lot less of that, you 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 a hundred percent funded with combination of permits and violations.

So it's kind of a similar 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.

Uh and then now this it gets I'm getting a little squishier here to use uh Alderman Spikers' favorite term, a different use of the word squishy.

Uh when you you know it's a little less firm here.

When you look at health and then the various departments that are that are combined into administrative departments.

Um in the case of health.

There uh they have over 10 million dollars in grant funding, their overall budget's about 30 million.

So if you wanted to make major reductions in health, it likely you know you'd be it would not be a dollar for dollar savings.

You'd also be given grants back, most likely.

Again, with the caveat that are around the edges, can I keep all my grants and reduce services slightly, or better yet, then 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 that the large grant funding, it's not going to be dollar for dollar.

And then in 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 that the practical restriction, the same one I described in police and fire, where you sure I could legally reduce a lot of it and uh 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 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 on the making decisions.

I think we'll get better advice uh from the public.

If the public also understands the practical restrictions on a number of of these cuts.

So to review, this was the back to that the the bigger chunk of pie.

I just spent a lot of time splitting up the blue, the 685 billion.

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 these, 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 the third different size pie chart, even though they all look the same.

We went from two billion to six eighty-five.

This is now 1.6 billion.

And these are the sources of our revenue.

Uh 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.

Uh second largest is state shared revenue and other state aids, and then uh third largest is now the sales.

Well, although I'm leaving out borrowing because borrowing is in there but that's money that 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 that that just 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 is comes in third so obviously it's at 13% it participated to be a 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 well we we would have had doomsday scenarios which we described before act 12 was passed and then user charges are are right behind that and those are becoming bigger and bigger the the five big user charges are snow and ice storm water sewer sanitation and street light and we always those get discussed on a regular basis annually I know this committee is very familiar with those user charges.

So now um 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 uh departments submit requests uh and then and 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 ninety seven million uh when you adjust for the 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 uh on the second Tuesday in May so this is the part that we 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 uh still what is it july so still still two months before um the proposed executive budget will be will be released and of course I think in the context of a two billion dollar like should I be thinking of that ninety seven in relation to two billion I'd encourage you to think about it more in relation to probably 685 million so now that's suddenly in relation to two billion 97 million might sound manageable in relation to 685 million not so much it's a really big percentage now so uh of the budget that we can effectively change so then you're f you're probably gonna ask how bad was last year I'm sure this committee remembers last year was was slightly worse so that's the good news.

Last year was 101 million um and it was closed and and these numbers are also in the the budget introduction that we talked about last fall so uh this isn't like a this isn't a big reveal it's really just a review it was closed uh in with in three ways reductions revenues and reserves reductions are expenditure reductions which often but not always correlate to service cuts obviously the big part of my the uh the job of my team in the budget office and the 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 and you know right so-called right sizing now the problem is when you review actuals sometimes you got to raise some and lower some so it's not always a reduction but you look 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 or you look to places in personnel where is is there a job where if we don't fill that if some if there's an opening and we don't fill it can that work of that work uh that employee was doing be absorbed by other workers that's the classic you know do more with less mantra.

I mean ultimately is when you 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 you can find deficiencies or you can 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 uh without having major consequences but for all the reasons I just described there's a real challenge there's restrictions where you can't even do it in some cases and then those those practical restrictions of if I do it, how will service be reduced?

Is a big part of 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.

So and it was the biggest one we we mostly closed that $100 million, $1 million dollar gap with revenues.

Obviously, we got way more than 38 million in revenues.

That 38 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.

So to some extent, the council and 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.

There's 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 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 you're there's a 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 uh consumption patterns.

So is it possible we'll get even more good news again?

Maybe the problem is the country's office has already made the adjustment for last year's good news in this year's May numbers.

So we'd have to get double good news.

We could, you know, 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 we I don't think we we're gonna expect that amount of of new revenue.

Reserves is something I can speak more definitively about at the next committee or after that, because uh I think the the annual comprehensive financial report, the ACFER, will be released sometime 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 uh for uh 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 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 like in other ways, but most likely the the reserve we don't assume reserve use when we do um in May.

Uh and then the question is is that sustainable?

That's a question that I'll again will be able to speak more about uh in a month, um, what what what the what the mayor thinks uh reasonable and sustainable use of reserves might be for 27.

Okay.

Uh and would you have to conclude?

Oh, I'm sorry, and then 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 30 years.

Now you can see how that orange line, the the blue line is if if it had kept up with inflation, the orange line is what we actually collected.

Statewide consumption patterns.

Yeah.

Well, yes, right, yeah.

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 you can see that the orange line actually went down, it's most especially with the act when Act 10 got passed in 2011.

There was a big reduction.

And it finally is going up again.

So this 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 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 and the residents of Milwaukee and the residents of Wisconsin were paying more, and the state of Wisconsin was just keeping the money instead of and this was not just a Milwaukee, 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 dollars higher because of the lower of the dis lowering of the discount rate.

So 250 million dollars less in revenue and 200 million dollars plus in expenditures, add that up.

It's over 450 million that were short.

So when people say, Didn't you get this sales tax?

Yes.

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 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 two twenty and growing every year between the increase the 20 million dollar increase in shared revenue and the 200 million plus in sales tax collections.

That's 220 million dollars and 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 uh 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 five percent reduction scenarios from the prior year, not from current year cost to continue.

So that even ignores inflation in their requirement.

So we've obviously 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 those a four percent raise, it kind of washes out.

So 10% from current year cost to continue is about the same as five percent 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.

Uh, and and the big uh thing we'd like, and the the hope for September, October, and November is that we spend July and August in a in a wise and reasonable way between the mayor's office, the budget office, and 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 to talk through general big picture items as well as if there's particular line items that are of uh that matter to you that let us know now, and we'll we'll we'll try to propose a budget that closely matches what the public wants and what the council wants you know in advance of the mayor's proposal in September.

Thank you, Madam Chair.

Wonderful.

Let me just take a moment.

Um for our um young friends here, the summer interns.

Um I'll let you all decide your work.

But this might be an interesting kind of project to lean into what you just heard for 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 dollar gap, right?

So we got to 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, you know, working with Alderwoman Moore.

Um, 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 if you'll think about that, um, and we need help.

We can add to this alone.

So um 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.

Um, but the decisions we make will will truly impact your lives because you're gonna be here longer than us.

So I I'm serious about that.

Um, on that positive note, um Alderman Virgales, please.

Thank you, madam chair.

Um, you mentioned a couple things you you mentioned uh the challenges and the um realities of uh taking out of reserves to help balance the budget.

It last year uh for this year we uh that was to the tune of 35 million dollars from the tax stabilization fund.

Um how did twenty twenty five play out?

Um what did we add back to this tax stabilization fund?

Yeah, um we we took 30 we took well thirty two million of the thirty five was from the tax stabilization fund.

They re we got the thirty five 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 thirty two million has been taken out of the tax stabilization fund the last couple of years the good news is last year for this year yeah but right to be well when I say last couple years I mean twenty five and twenty six budgets because we're I'm already in twenty seven budget but technically yeah this year um but then you've you know you find out when the when when the when the AC for comes out you find out how you're doing the 32 million we took out in for the 25 budget when we got the 24 numbers it actually regenerated more than 32 million and we're hoping that that's the same story again this year although we won't know for sure until the AC for comes out but indications are that likely it will.

So on the one hand you don't we don't know how 25 panned out yet not not fully not until the Act was released on July Bill Bill can speak more to that time.

Yeah we just wouldn't want to share unaudited figures at this point but with a ninety to ninety five percent level of confidence we can say that we had favorable experience in the tax stabilization fund meaning that that that 32 million dollar draw was was most likely more than made up for a true uh 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 when will the 25 numbers be final?

July 24th is our publication date right before we go on our August break.

Okay.

But that that's every year around that time.

Thank you very much.

Thank you, Madam Chair.

Okay.

Oh um sorry uh what's the current tax stabilization fund balance?

So current as of the end of 2025 that that's the number that's not yet audited so I don't want to before the 25 figures where were we?

Oh at the end of 24 10 million was the balance of the TSF and we're allowed to to use up to half of that balance to help balance the budget.

Correct okay and that we did discuss that in last year's budget that we we could have taken fifty five we quote only took 32 but I don't know if Bill you if you want to talk about there are we've discussed what what best practices are and what kind of a tax stabilization fund balance we want to have.

But um we've already done that okay so you you understand all that I have 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 gonna pre-debate um the decisions just because that would be a different type of meeting um I might I might request this information for later unless you know 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 it's spent on other items that are eligible uses of the sales tax but indirectly that does improve uh the Act 12 is very specific about how the sales tax money has to be spent directly in two ways.

You can split up the 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 just 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 200 and we expect 17 million and 27 has to be spent on eligible pension costs and eligible public safety costs.

Do we now think you do we now feel comfortable enough with a few years under a belt to make projections or is the economy I mean due to um really the leadership in federal government we're we're in just a really tough economic situation.

I think people are buying less but like are we making projections and then basing the budget on those projections?

Yes well what what I can say is that our early estimates like for twenty twenty four and even twenty twenty five we had very limited flawed data on which to base that estimate.

So we were probably you know more conservative than we are today and moving forward now that we've got like you said a few years under our belts so um I think the there's probably not a continued expectation of large um you know unbudgeted um surplus in in sales tax because we were able to make more accurate projections so yes we are we are um you know using the data available to us and you know qualitative quantitative measures to 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 more are we doing something similar for the vehicle registration fee?

Like are you projecting that because it's not flat like it think it does change so for 2027 are you projecting what 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 know or maybe it was two months two months that we so talk about that for two hours so yeah right yeah so um 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 dollars now was the assumption maybe correct yeah yeah okay okay thank you alderman spiker then all the room and more uh thank you madam chair so there's some huge questions to ask here but I know this isn't the forum for it so we won't ask them today I'll just ask a couple little ones um with respect to the um self-supporting funds sewer water transportation so I guess it was on page three of the presentation um 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 um uh the other two funds we do TSF and debt um so with respect to the transportation fund I know it's early to tell are we thinking that uh you know it was operating at a pretty serious cash deficit are we thinking that um is it in the cards that we might look at doing uh a transfer from that transportation fund for twenty seven or is does it need another year of getting healthy?

I think that's an excellent question that we'll need to analyze this summer uh it's an open question so I can't give you a yes or no it certainly the the twenty the the audited twenty-five numbers will assist in that because the the current cash deficit in the transportation fund is is assigned in the ACFR but is allowable for a TSF withdrawal but highly unrecomended that you would um withdraw assigned money so the size that the transportation fund is underwater I think should influence any of our decisions we make about reserve use so but the your real question I think is is that trend reversing and I can say based on um the new management in the transportation division and some changes in both uh parking checker route distributions number of parking checkers uh other other ways we've been aggressive in cost collection you know at the at the tow lot uh and in other means uh and then also event based pricing for uh for our garages and meters there is good news and there's a good story to be told and I think in 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 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 look.

Wrong way of saying maybe.

And then with respect to the line of questioning pursued before and and transfers from the um tax or use of the tax stabilization fund and how much to draw from that.

So based on the past few years, when we revenues sales tax revenues been good, um it would seem like it wouldn't be that bold to do um a withdrawal withdrawal from that fund is as large as we've done in the past, but sales tax is jumpier than property tax, so is there has the budget office and the administration um and consultation with the comp controller settled in on an approach of how conservative you want to be as far as um exposing us if there is a real dip some year and we've been not having the TSF growing, then we could be have huge cuts some year.

There's a reason they call it reserve.

Like ideally you wouldn't even if you even if you think under current cond 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.

Um are we?

An attitude of how conservative we're gonna be with respect to the recommendation for withdrawal from the TSF.

Um I think you know, in a vacuum, if if you're just 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 I would 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 what's behind door number two?

You know, what what is the what decision does that force me into?

Okay.

Thanks.

That's enough.

Thank you, madam chair.

Okay.

Um Alder Roman Moore.

Thank you.

Um, thank you, madam chair.

Um, I just wanted to ask some practical questions because um, you know, our residents are um seeing, you know, fees, taxes are going up, fees are going up, all these things are going up.

Um but for it does it's not translating to, well, my roads are not getting fixed.

I still got rolling blackouts.

I you know, all these things, right?

Um, so I just wanted to ask some practical questions, just really centered around um infrastructure, roads.

Um typically uh the general stuff when we budget for our streets, um, a portion of that comes from our budget, our city budget.

Is that correct?

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

Got it.

So if the state is not providing, well, actually, I should be the state does give a there's about a million or so annually in aid for local roads.

There is a we'd love for that line item to get bigger in the state budget.

There is a state um aid for local roads, okay.

So if we're not getting more resources from them for the local stuff, yeah, um, it just allows us sort of not to be able to do a lot of the work that we need to get done.

That's typically how it translates.

Okay.

Um how does um does shared how does shared revenue fall into that when we talk about like 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 and I'll be really quick because it's a big one here.

I mean, a big chunk of the green is local roads, and that it both for our local and major roads.

So even though the state and the feds for major roads will make a grant commitment to fund 80% of a of a major road, usually it it varies, but it 80% is usually the standard.

But that's 80% of the cost estimate when the grants given.

Yeah, it doesn't rise as costs rise.

So it ends up being more like 50 or 60 percent.

Still, though, we've never gotten to the point where we've turned down a federal grant.

Although if as the c as pressures on the capital budget, which I didn't really talk about in this presentation, except as part of that green slice there, we could spend I could spend 20 minutes or Mason could spend two hours talking about just the capital budget.

But the when people talk about roads, there's the major roads where we're committing to 20 to 40 to 50 percent of those roads, but we're getting at least half of it paid for elsewhere by by the state and the feds, or by the feds via this fed federal money but via state, a committee um 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, you know, 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 Burgelis has consistently pointed out, even kind of the 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 it's if you're saying we're still at 16 million and I spent sixteen million ten years ago, well, ten years ago, sixteen million meant a lot more than it does today, especially in road.

So per mile, we're falling behind.

Uh, but the but again, with with what money can we not fall behind?

So the capital's a big part of it, but obviously DPW infrastructure and their street maintenance crew, they're the crack fillers and the pothole fillers.

So there's operational money in the DPW infrastructure budget that'll be in the blue section uh on roads.

So if 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 and that's so the 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 and you know, when it comes to just increasing the fees of the vehicle tax registration, um is th is there state statute that we can only increase so much?

Um not necessarily I think on the wheel tax, no, the council has said you want notice now by July thirty-first, partly because of the timing issues, uh Comptroller Christianson just alluded to.

So uh I know you didn't ask the question, but it's it's under consideration, both for the mayor or the council.

Yeah, whether whether and whether or not to to was to make sure that whether you'd want to tie uh 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 I'm driving on really crappy roads, right?

So I just wanted to sort of you know get that out of because I I I hear every single day, you know, the potholes and the roads are horrible, and you know, and um I and I'm curious at how many folks have uh sued the city for you know damages to their vehicle.

I'm sure the number is really high this year.

Um but the last question that I have is you know, the slide um page number eight for us, but uh um where the um why are the gaps so big and you you have the um the two different, you know, uh 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 will we ever get to where we need to be, you know, for the state to be able to provide us, you know, our sort of our fair share.

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

It's uh it was yeah, it was a tough question.

I just uh looking at it, Nick, it's just like it it'll take us some quite some time, you know, to even just close the gap because it's not like inflation is gonna stop.

You know what I mean?

So it's it for me it's figuring out, you know, how do we not continue to because we're gonna still have to have increasing cost right, you know, for fees and things like that, and that's all of that is coming back on our um our residents, and we want people to stay in Milwaukee, please stay in Milwaukee, but you know, it's just seems like we're making it really challenging, you know, just with some of the basic 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 gonna go to all the room and cogs, and then I guess I'll probably conclude.

Um, 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 like you might want to get back to us on before now, and obviously the budget um 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 room in cogs.

Um, you probably already know this, but uh sitting on public works is is very evident that there is somewhat of a correlation between um some of the road condition issues that people have more recently had over the last year and the level of flooding um that has occurred.

So I will hope as we um try to address uh people's concerns about the roads in the ways that we can afford to, um, that we also are taking that into account and working with MMSD and whoever else to try to address um what I'm sure this last year flooding that we had, unfortunately given to the environmental reality, it might not get any better.

Um so I don't want us like investing 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.

Um so I know it's a balance um as to how to do it.

Um I just hope you keep that in mind with the departments and the subject matter experts.

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

You gotta balance both, yeah.

Yeah.

Um 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 um 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, um, all the trees that are down and branches that are down and um and um injury to people's cars and all that kind of thing, and how I see 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 uh pruning cycle, um how if that would have made a difference um in it um as well.

And so I just hope you looking at all of that when you're talking to them as as we choose with the limited resources we have is like where to invest uh with the biggest bang that um we're not gonna continue to have the same level of issue, um, 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.

Yeah, well, 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, um, which is why we justify the the stormwater transfer to fund forestry operations.

There's also money in DPW infrastructure to absorb water through green infrastructure.

You know, if you're gonna have a wider sidewalk, make it 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, um, when the pruning cycle was gonna be cut, and then we uh started funding forestry out of the stormwater transfer.

The forestry and the and 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 uh 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 it, 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 you 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, that's all.

Thank you.

Okay, that will conclude.

I guess my only um 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 um 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 gonna feel it in all of our budget in all of the ways.

Um and it should be kind of like an offense and a defense, like the Alderwoman was saying, we need to adjust, but we also need to I think reinvest in things that are gonna 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 um that we used to put forward, you know, like 10 years ago in regards um whether it be salting, just uh just everything.

So that's that's a lens that I'll be using, unfortunately.

Um I'm I'm disappointed that that's how we have to go forward, but we do so.

But 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.

Um I would just ask that whatever is proposed, um, because inevitably there will be things that you that the mayor has to cut.

Um that you look at it through a lens of equity.

Um 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 uh 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.

Um Alderman Bergelis moves to hold the call the chair and hearing no objections so ordered.

Now, I was going to bump up um Goikey, 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.

Um we'll move item seven up.

Thank you.

Um, you know what?

While you're walking up, let me take care of one other matter of business.

Item three, two six oh three three six 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 Bergellis moves to hold the call of the chair and hearing uh 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, two six oh three five eight resolution reserving and appropriating up to one point five million dollars 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 um chair of the judiciary committee, and we have with us our city attorney Evan Goikey.

Good morning.

Good morning, madam chair.

Thank you for taking the item up so that I could be here.

And um 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 not I want to get on the record.

But would this take our common council contingent fund to once this allocation is made?

Prior action to 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.

So for the half of the year.

This is a pretty aggressive withdrawals, but city attorney can we we my uh Anjali Pettigrew from my team has worked with Evan and his team in Tawana.

And there's that there's definitely enough cases to justify this uh 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 seventy five percent less than the first half.

And in 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.

That was an in-custody death case.

And so uh we were budgeted for 2.5 million, but 1.5 went to pay the pri you know, 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 one of this year.

Yeah, so for for context, we had discussions with the city attorney at the end of 25 about whether we could pay this two five all at once, and we actually couldn't, I don't think we even had the full amount of the time, but we thought let's not let's not zero it out because we'll probably need it to close the books.

And it 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 um this year, if you want to call it that on a case that was determined last year.

Okay, all right.

Any questions on item seven questions on item seven?

Alderman Vergelis.

Um first um uh City Attorney Goickey, do you anticipate any other large settlements before the end of the year?

Um that's always a possibility.

It's hard to predict.

Um there are two state court matters, there are uh caps in place in state law of the dollar amount.

We are uh in the in a state court case where the law limits us to two hundred and fifty thousand dollars of exposure.

Uh I I have on my radar two cases where uh liability is uh there are kind of common examples where liability is very hard to fight, but think of like uh as an example, a rear-end car accident where the stopped car really is not contributorily negligent to the car accident.

Um and so we have two on our radar um and then uh 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, are 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.

Uh, and my follow-up to that will be do you anticipate any any of those same similar needs before the end of the year?

Um well there's the settlements there is uh 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 um uh in the last couple of years.

Um, and then there's other unexpected costs, uh one of which will probably be coming up at the next um next council meeting would you know would be cost related to the enterprise resource program.

That's a generational issue, but it it's coming up um around also this year.

Um, the one that was extended, yeah.

And the extended and then re-extended again.

I don't know if it's been to just oh it was only twice.

Yeah, okay.

Uh and uh you know uh other unexpected major capital purchases.

I mean, generally speaking, if they're 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 it anything unexpected on anything unbudgeted in twenty-six that you need money for is what the contingent funds for.

So that can be right.

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 another Fed chairman answer.

Thank you very much.

Okay.

I don't know yet.

I don't know how to answer.

You're asking about the future.

Well, you're budgets are indicators of future performance.

Future facing documents.

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.

Thank that concludes item seven.

We'll now move on to item number two.

Remember, three has been moved to the next cycle.

Two is 26037.

Communication relating to the Milwaukee Police Department Information Technology General Controls Audit Report.

It looks like should we automatically go into closed session for this or only on the nature of certain things?

What did you think?

Um we could probably touch on the low findings.

Okay.

Um without being in closed session.

Um maybe we can do that, have the presentation, and if members have questions that like you flag for us, if we really need to go into closed session and you can't reserve those for another time, we can do so.

Okay, but let's do that, but let's just tread carefully.

Yeah.

So we'll stay in open session.

Um Ms.

Molina from the Comptroller's Office.

Good morning, Adriana Molina, audit manager.

Um we will be presenting the MPD ITGC audit, which was conducted by CLA.

Um, Brian and from CLA will be presenting and going over the findings, and we will I'll call out whenever the findings seem.

And they're on virtually.

Yes, they should be on virtually.

Hopefully they heard how we're trying to keep it they did.

I think the low communicating level.

Yep.

Keep it at low level.

Okay.

It seems yeah.

And then we just we have we were given this in advance.

Correct.

Okay, so let's do a mic check.

Who is that again?

Their name?

Um Brian.

Brian, can you hear us?

Yep.

Okay, Brian.

Yes, ma'am, I can.

We do need just like a um 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.

Um, so from a from a high level overview, let's go through the I would say the the lows from a low findings perspective.

Um, a lot of it's really just gonna be right around some password lockout controls, um, some minor uh vendor oversight for the police department, uh, password configurations.

You know, we're they're not some of the applications that the police department is using on a daily basis, uh, but not really we see we've seen that they're not in alignment with some of the um the CGIS guidelines, um well, they were in alignment with the CGIS guidelines, but it's more just there's nothing formally documented.

Um, some of the other low items was regarding checkout sheets for for new hires, um and then security awareness training, and then some additional items for policies governing backups uh for applications, and the continuity of operations plan for the CGIS requirements for recurring disaster recovery testing.

So that's really just more of like the high levels from a lows 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.

Um administrative access was appropriately restricted.

Um MFA VPN controls not only for standard users but also for elevated users uh were in place.

They were implemented and but demonstrated strong baseline security for uh for the police department, they do regular vulnerability scans, penetration tests, um key controls such as firewalls, antivirus, uh, train uh some fishing simulations, all those were implemented and functioning.

And again, some of those minor areas just though there we consider those really more opportunities than anything, and that's where I think one of the from a ratings perspective, we have that as improvement needed.

Any questions on the lows before we uh I did want to ask if there's any regular cadence to the department reviewing their policies internally?

Is that something that audit looked at at all?

We did look at that.

Um was that done, or was that um set aside?

Or no, that was completed.

That was part of our that's part that was part of our audit procedures.

No, no, but uh was was the performance was the department performing that function.

The department was performing that function, yes.

Um if there were any that let's say user access policy if that wasn't reviewed on a timely basis, we would have noted that in our findings.

Um the findings right around policies were more just uh backups and community of operations, more just adding some additional detail to them.

Okay, thank you.

Any other questions from committee members?

That's a no.

All right, alder woman more uh moves to place this item on file.

Hearing no objections, so ordered.

Thank you for Mr.

Chair.

We weren't gonna discuss the high priority things.

Um 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.

All right, yep.

Thank you for that.

Um 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 uh moves to move into closed session.

Uh roll call, please.

On the motion to go into closed session.

Um pursuing to 19.85 Wisconsin statutes.

No.

Otterman Audible Man Moore.

Aye.

Honor Miss Biker.

Aye.

Honorable McCoggs.

Aye.

And Mr.

Chair?

Aye.

Prevails.

Four eyes, zero no's.

We will move into closed session.

Thank you, everyone on the 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.

Two six oh two six oh, or two six oh, two six.

Oh, 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 um proposal here today.

Basically, what we're asking is that um give us the opportunity to explore what's out there, what uh as a relates to insurance for stop loss.

And what does this mean?

Is because we are self-insured in 2025 in an aggregate level, we expanded almost we could have expended almost 163 million dollars between pharmaceutical and medical costs, healthcare cost.

And so with that, we notice because again, because we're self-insured, we don't control the the expenditure coming in.

And so as a result, we could increase we can have uh claims coming up to the millions of dollars.

Currently, things that are trending are gene therapy, gene therapy or other specialty drugs that can cost us between a hundred to a million dollars if we um if we have experienced one of those claims, and 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 dollars 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 health care reserve to um compensate for about four point some million dollars in higher than anticipated health care costs over our budget so what this little stop loss insurance will help us do is to mitigate these big claims and so we're working with our um 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 want to 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 is going to be doing this for us at no cost um and so they'll come back to us with some uh uh 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 right sounds very corporate right I mean you know when you say mitigate I guess I'll just I mean this is just the first step in the 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 I I I my um 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 coverage for the city not this hasn't to individuals just saying hey because I again I use something like sickle cell I always use that example sickle cell impact our population we have a very diverse work population if you have one child born with sick cell that could cost the city one patient can cost the almost two million if not higher.

And so 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 so deductible anything over a million dollars this insurance plan the stop loss plan will cover that giving this help us risk control our risk so to speak does that make sense yeah like I said I think to me it sounds like insurance and hub of insurance yeah yeah yeah madam chair um really quick Molly the um in the email or in communication that we received you shared that um there were some high level things that had happened as far as what some of our employees just being general what were some of you know those sort of um ailments like what what are we talking about?

I is it the high it's not asthma you know right it's right we get I mean someone had a brain aneurysm for example heart disease you know that's one of our top five highest costs um and so depending on the severity could cause us see last year we had the one of our higher claims or just um what we pay out about a nine hundred and eight million dollars uh thousand dollars on one one claim one I gotcha okay and we have seventeen almost eighteen thousand subscriber in our plan so the the risk is high the exposure is high this is just helping us have a contingent plan in place to control those uh level of risk thank you okay I'm sure yes I'll remember gallus I see no reason that an RFP is um unnecessary if or is is would not be warranted to have information we don't know what we don't know um but I think it would we would need some very compelling figures to change our longstanding um self-insured um position.

So I just I I really don't see that I don't think that the risk is a doomsday scenario like you maybe uh alluded to uh a moment ago uh this has happened for health care costs are up um across the board uh like everything else.

But this isn't anything new.

Insurance salespeople are very compelling um uh but I don't I it would it would take a lot to see uh that this expense would be justified and needed in the city.

Thank you, Madam chair.

Okay.

All right.

Well, it's just a step to explore.

So yeah, but I hear.

And again, we'll bring this back the results to this.

And this is not changing our plan, our self-insured plan.

It's just giving us a cushion and umbrellas to help mitigate or not control excessive expenditures.

I move approval, Madam Chair.

Okay.

Adoptions been moved by Alderwoman Moore on item four.

Any other discussion?

Objections?

Hearing none so ordered.

Item five, two six oh, two six one 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 uh we don't know what we don't know as another situation.

We've had our relationship with Corvell commun um Corvell a plan, a company that we've worked with since 2018, um, to administer our third-party administration for our workers' compensation um plan.

And so since then we've had several extensions.

We've never went out with an RFB, and we've no technology has changed, a whole workforce has changed.

Um we just want to know what we don't know.

And I think it's it behooves us as fiscal agents of the city to go out and explore what is out there and see what an RFB can bring back to us.

Okay.

Questions on item five.

Sure.

Alderman Vergallis.

Um thank you.

And how long is the current agreement?

Our current agreement expires uh 2027.

And it has a contingent or automatic extension that we could have.

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 Cogs moves adoption of item five.

Any discussion of adoption, objections?

Hearing none, so ordered, thank you.

Item six, two six oh two seven six communication from the deferred compensation plan relating to the auto escalation program.

We're joined by Beth Cleary from the deferred compensation.

So look at my notes.

Thank you.

Thank you.

Beth Cleary, executive director with deferred compensation.

Um, so the file and hopefully uh the memo that I included explains some background.

Uh, this is not a request, it's actually a communication to let you know that the um the board has made the decision um which the master agreement gives them the oversight for this decision-making authority um to implement the auto-escalation program, which we're referring to in layman's terms as auto-increase programs.

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 uh so this program anticipates that anybody saving between three and six percent 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 reenrollment process that we currently have.

Which again, that's for any employee that is not in the plan, um, up to one or two percent, and so if they're part of the auto enrollment, they get defaulted into three 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 um 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.

Um I did meet and I I reached out to each of the committee members ahead of time to make sure if there are any questions.

And I I talked at length with um Alderman Burgelis, 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 um an assumed fixed income, which hopefully they'll over the years get a little bit more over the years with a raise once in a while, but the ma it 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 uh potential create a 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 uh thanks to you know, as Einstein said, the eighth wonder of the world is um compound interest.

So that that shows that this does really really have an impact on people's ability to save um and prepare for their retirement.

So I thank you for um encouraging me to look at that perspective.

Um again, uh uh all anybody can always opt out and not just at open enrollment, but at any pay period.

They can say, No, I don't 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.

Sure, they can true their contribution down to zero and then start start it up again when they're ready.

So there's always maximum control at all times.

So the 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 time frame 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 one percent.

The way it would work is like let's say you're at 3%, and this year you get part of the you're 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.

Um, sorry to take the wind out of your sales 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.

Um so our plan is roughly over 10,000 participants, but that includes retirees, people who've left, actives, beneficiaries, everybody.

Of these of active employees that are just covered, again, not fire police.

There's um, 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 at three to six percent, right?

Because if you're at seven, you won't be a part of this program.

So this number's a little bit bigger, and um I've asked for them to tweak the number for me, but uh any covered employee who's at three to seven percent currently.

We have three thousand three hundred and thirty active employees, so that's about how many people that we're going to have um see this program or be be part of this program.

We have a very robust campaign that we've started to roll um, we've started to work on and we will be rolling out um 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 gonna try to flank them and hit them over the head so it's not coming to them as a surprise.

Um so I have talked a lot here.

I will stop and see if there's any questions.

Madam Chair.

Okay.

Uh Alder Woman Moore and then Bergellus, did you want to speak?

Okay.

No, I just had a simple question as far as um the escalation goes up to seven percent.

Can a person opt in to say, you know, I may be at three, but I want to do five.

Yes.

Okay, or they could say I want to do seven.

Okay, okay.

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.

Sure.

Okay.

All the member Gallis.

Thank you very much.

Thank you, Madam Chair.

And thank you for taking um some time out of your day yesterday to meet with me.

Uh, just to bring the numbers down to the most basic.

Uh, for that $50,000 salary um salary employees 35 years old now, the extra one percent translates to nine dollars and sixty-one cents per week of additional contributions, which nets them when they retire, uh a balance of a hundred and sixty-eight thousand five hundred dollars more.

So nine bucks a week, it's a hundred and sixty eight thousand dollars more when you retire for each percentage point.

Yep, so that's a McDonald's and we help right there.

Um, I remember when a Big Mac was two ninety-night with social funds.

And then for the $75,000 employee who's 35 years old, $14.42 per week.

That's 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 this is a very big difference for very small cheese.

Yeah.

Right?

Uh, shouldn't be nine bucks in Wisconsin.

Um, that's one of my favorite quotes.

But um, but this is uh in a time when affordability is a top it 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 one percent uh contribution to your retirement, which isn't a bad idea.

Um, and you know, and I appreciate that there's a plan for robust engagement on how people can very easily opt out with even just sending uh even just sending an email and you know making this as straightforward as possible.

However, this is still forcing an increased or a higher contribution uh for employees.

I would much rather see a robust engagement for employees to voluntarily do a two percent or three percent annual increase.

And you can do that, and you can you can you can uh in um embed automatic voluntary deductions uh in your plan uh without being forced to do it.

I'd much rather see that auto that robust engagement encouraging higher participation rates, higher voluntary participation rates.

I get it, this is um uh kind of the next step uh following that automatic and uh enrollment that we passed recently.

Um so I I don't want to oppose this, but I see the concern for some employees that will be surprised.

Uh I am satisfied though that there are safeguards in that 30-day window in place where any kind of um uh objection will be uh ret even retroactively uh um 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.

Um it's just that automatic mandatory um 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 uh our valued employees are ready to retire.

Thank you very much, ma'am chair.

Thank you.

Yes.

Um, I also was surprised looking at the comparisons of what our peer municipal or governmental bodies are doing.

Uh, that we're only we're stopping this, we're cutting this off at seven percent when most other peer uh 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 seven percent instead of fifteen?

Sure.

So there were a number of data points that we worked with Voyah, they 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 someone all the way up to 15% with their program.

Our average contribution for our employees is currently seven percent, and I think that's one of the reasons why the board felt comfortable with that number, um, trying to have parity with that.

Um, 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.

Um, I appreciate your thoughts, and I I appreciate you looking out for employees and trying to help them understand um, you know, this part of why what we're we're talking at this level too, and we will uh a variety of other stakeholders um I would just point out that some people would might I'm not doing that myself but some people might take issue saying it's um it's mandatory because it is I I think semantics are always at play for all these things but a default I'm not say I 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 where you can't force them to drink so 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 like okay if you want to overcompensate we'll work with you and say like let's model this you want to true it down to one percent if you know to make up for the fact that you had gotten it up from three to four for three pay periods you can do that you know so to me it's an opportunity for engagement and we know and I've I I sent this to Alderman Borgellis I'll send it to the rest of the committee but we recently um started we I did a an 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 like again engagement points I equate financial wellness with any time we can have a a presentation or a consultation and just sit down with people and have them talk about their situation look at their account 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.

So these are all opportunities for engagement points and to me that high touch is what makes a difference in our plan.

So we're gonna continue with that.

Okay.

Yes Alderwoman thank you so much um and I appreciate my colleagues you know sentiments um and I do like the the feature where it's just automatically done because then again you know I can look at it as um you know uh 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 um particularly for me uh that is so important for our employees that are working here um and so I'm glad that you all have um put some systems in place and again um it's the communication as well right there are plenty of opportunities to to opt out um for whatever reason you know that that you have um but I do like the option of you know being intentional um with our staff about really you know them thinking forward thinking because a lot of times we don't just the day to day stuff that our cons our our employees are dealing with that's probably for some that's probably the last thing on their mind right but to have a system that's already in place um to be able to support them in the long run and then again they always have a choice they always get to choose to you know hey I gotta stabilize this or I can go up more I can go down whatever you know um but I I love that we have this option for them so thank you all for putting in the work to to do this and then question um so seven percent 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 yeah they can and 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 at maxed out if you want to that's pretty cool yeah okay thank you sure okay um I'm I am looking at the illustration so the column of additional employee contributions that's the money that the employee puts in at seven percent hypothetically with a seven percent return throughout their career pre-retirement.

Is that what I'm trying to think?

For example, that it was modeled.

It it takes into account like if you're age forty-five, and you're gonna be subject to this.

Let's say you start at three.

So the year 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 with that.

If if if you're part of this program and you don't touch it.

Mm-hmm.

Um, what okay?

Let me ask it like this.

What is the kind of average that our employees are at?

Or is most people at three?

Seven.

No, I know you want them to be at seven.

I'm saying where they at right now.

Yeah.

Oh wow.

Well, if they're at seven, then some people are putting in fifteen, so that's where they balance out.

That's how we get to seven.

The the average is seven.

Oh.

The default is three, but the average is seven.

So some people are doing more than they're oh, but there's a whole lot of people who do the 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 uh almost a doubling of what they're used to.

Well, we have uh so uh I can't remember what the current so active employees that are eligible for a plan, I think it's like a little over five thousand because we don't have like less than halftime or temporary, you know.

So there's some rules that exclude eligibility.

And again, only covered employees, so you kinda whittle away.

That's where we get that three thousand, just above three thousand number that will be part of this, okay.

And then last but not least, um why is seven considered kind of like the golden number?

Again, because uh I think the board's logic.

I mean, we do have a board member here sitting at Kathy's uh serves on the board if you wanted to share.

But um, I think the logic was well, seven seems like a reasonable number.

That's our bogey for uh you know, it's 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 it uh and you'll still be part of the plan, but yes.

Yeah, oh okay.

I really did think it was uh 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?

It again, it is a communication file.

It's my understanding that the deferred comp themselves um 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 um i in terms of what's taxable.

So this is on a pre-tax basis, so it will help people that way.

Okay.

Aldrin Spiker.

Uh 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?

If is there any danger?

Are you gonna be close enough that you could get escalated into a violation with your other plans?

Uh, thanks to working with the comptroller's office, we have those limits already pre-programmed and set.

So someone hits that ceiling of what that IRS limit is for the year, their contributions will be turned off.

So, right within run into it.

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 program.

Okay.

So it's siloed.

Yep.

Um, 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 and then wait for any complaints to come in.

Um, it's 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, uh, we did not do outreach.

We did look at our peers to see what they're doing both voyage clients in the public space, and then I did look at um my trade group association.

Um I sit on the board for as well.

We do have data.

There were two hundred and sixty-two public defer compensation plans across the country, so that's state, local government, municipal government.

Um, of those two hundred sixty two plans that filled out information, um, forty-one 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 gonna track it, we're gonna 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 we looked at the research and we know that this has a big impact on people's um, 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.

Um what if somebody displays a pattern of opting out of say the escalation, they're happy at five percent 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 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.

So 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 defer 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, no, I I'm really happy at five, I'll I'll tell you when I want to go up.

Yes, that is true.

It is an annual auto increase program.

So what sort of notice do they get and how far in advance, like uh 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.

Um, 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 time frame, 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 um, so if the average right now, I don't know if it's mean or median is seven percent for contribution, this would take those sitting at three by default up to seven over the course of four years.

Um, so that would mean the amount of contribution uh, you know, for the city as a whole from the employees would go up under this.

That's the goal, right?

Um, does that impact um anything relating to the administrative fees associated with any of this now that we have uh bigger?

That's a great question.

So uh we're currently doing an RFI process for a record keeper.

Our contract with VoIA 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 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 VoIA 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 the 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.

And Voyo 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 like this is the number of employees that it would impact.

You know, we model it that way, and we say, Do you 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 the Alder Burgels, you know, looked at some other places and saw maybe 15 being more the norm, is there is the board gonna continue to review this and um uh what kind of guides their their process for um I know they picked the magic number just because it's the number on average we do, but that's not that's not saying that's the number you should do um for retirement.

I know everybody's situation is different, but um, 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?

Um yes, so in the master agreement there is a cap, they can go up to a certain amount.

I think it's fifteen.

I should know that off the top of my head.

I apologize, I don't have it.

But yep, the way that it's figured and and um written into the master agreement is that annually they the board will be looking at this, and if they want to tweak that seven percent, and they could do that.

Um 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's it going.

Because every time we make a shift like that, we have to change all of our communications, we have to educate people.

You know, it's a it's a big implementation part of that too.

Yep.

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

I'm happy to talk to anybody um who's not happy about it.

Um, happy to talk to them directly, please.

Okay, thank you.

And 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.

No.

Um, Alderman Bergellus 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.

Thank you.

Thank you very much.

I hope it helps a lot of families and they're built for their futures.

Yeah, and if 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 perspective.

Thank you.

Thank you.

Great.

Item eight, two six oh three-two-one, 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.

Um, I guess between city clerk and LRB, just talk extremely briefly and then uh maybe read the amendment, like let us know what's the difference between the amendment and what we had.

Sure.

Uh Dana Zellini, deputy city clerk.

Um, this is to reimburse an employee for travel that has already taken place on behalf of the emerging youth achievement advisory council.

Um, 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.

Um, the amendment that is in front of you is a simple amendment.

It's still a chair file.

I would ask that it be offered by a member.

Um, all it does is makes release of funds contingent on future approval by EAC.

Um, they had a meeting about a week ago, and unfortunately they lost quorum before they got to this item.

Um, 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.

Um, we expect them to approve it then, and we would reimburse funds after that.

Okay.

Madam Chair.

Yes, Alderman Moore.

Um, I am, I would love to author this motion.

Okay, all right.

So Alderman Moore 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 of the resolution as amended.

Discussion of this item number eight.

Um objections to the amendment.

Objections to adopt it as amended.

Hearing none so ordered.

Thank you.

Thank you.

Okay.

Item 9, 260288.

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.

Yeah, good afternoon, Madam Chair, members of committee, Mason Laby, City Milwaukee budget office.

Um, this um this files is exactly what it says.

It increases authority for those uh departments so they can charge the reimbursable fund.

Basically, uh the reimbursable service advance fund is SPA, it's set up via resolution when the budget is adopted.

Uh departments are rental reimbursable authorities outlined in exhibit A, which is attached and is generally projected using Department um past expenditures and what they think they're gonna use in the upcoming year.

Um, 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.

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.

Oh, I think it's probably like one PD or I maybe custodial worker one, crime analyst one.

Department of Public Works.

Do you have a question, Allerman Spiker?

Uh 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.

Questions on property tax or non-property tax levy supported positions.

Okay.

Hearing and seeing none.

Um Alderman Bergelis moves approval of our item 10 here.

Discussions of approval objections.

Hearing none so ordered.

Okay, we're now in 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.

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.

Um, the procurement manager for the City of Milwaukee Purchase a Division filling in for Rhonda Kelsey, City Purchasing Director.

There are four files.

Um I'm sorry, there are four contracts in this file.

The first contract is with the Common Council's City Clerk and West Care, Wisconsin Incorporated.

Contract number E 21126.

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 E 15299.

This contract is for a via equipment and service assistance.

This is the seventh amendment to this contract.

This um amendment will increase the current contract total of $2,026,061.82 cents by $1,305,483.

And we'll also extend the term for two years from seven.

I'm sorry, July 1st, 2027 through June 30th, 2029, to cover the two, I'm sorry, 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 cents by 58,232.17 cents for a total contract value of 656,250.90 cents to continue the essential and mandatory maintenance of the health department's lab equipment use 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 end date of December 31st, 2029.

And the last contract is with DER and Culture City, contract number E21907.

This contract is 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 cities 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, all our woman more moves to place this on file.

Discussion of placing on file.

Objections, hearing none so ordered.

Thank you.

I'll agree.

Thank 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.

Nickerbacher.

Thank you.

Andrea Knickerbacher.

I'm sorry, excuse me.

One second.

I should be reading in 13, so you can freely speak about all of those.

Item 13, 26030.

Communication from the Department of Employee Relations relating to classification studies, scheduled for city service commission action.

Okay, please.

Good morning.

Still morning.

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 um 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 work day.

These reports make changes for approximately a hundred and fifty 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 dollars per position in making the recommendations.

This is the last citywide report that will complete a multi-year 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 the 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 rate of concern, 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.

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 we 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 would it was I guess I was trying to confirm because it appeared that this band, if you will, um, because it's kind of upper management, um, had a larger amount of vacancies than the norm, but I don't I have nothing to you know guide that by.

Well, I guess you'd depend on what you mean by the norm, whether you mean citywide or departmental, because we do provide that you some departments have higher than normal, or not shouldn't say higher than you know higher than average vacancy rates.

And then there's been a lot of volatility in the direction of lower vacancies since the reclasses have been done citywide.

Um I mean, they were especially high in library and uh the trades going back a few years.

So I I think it would be uh, you know, consistent with departmental trends, the the vacancy rates here.

Okay.

It's just when I looked at the list, like I it was last cycle too.

There was such this is just an interesting one because it's like affects all almost all departments.

I'm talking about the business ops.

Um, although I don't know if there's a business option, is there one in I don't think so in the city clerk's office?

Yes.

There is okay.

Oh yeah.

Oh, okay.

Um is it always called business ops too?

Or is it just state some are fiscal, some are budget?

It depends.

But we we've tried to cut down on the number of titles, but there's still a variety.

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 re-class.

Like I saw the I thought like the scale was sorry, I don't have it from me, I should pull it up.

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

These are not reclassifications.

They're they're actually looking at what the labor market pays for similar do duties and responsibilities.

There are but I say there are a couple of reclasses in there, but those are separate in at the end.

The cost per person that I mentioned, uh 5900, 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 one percent.

Uh people have been here for 20, that's 10%.

So the variability isn't on that particular title.

It's 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.

Just asking for the records here.

Okay.

Anyone all the room more spiker?

Um, this was the file that was held last year.

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.

Um, were there any titles that changed um between then and now?

Yes.

Yes, there was uh follow-up report that went to the fire and police commission and to the city service commission.

Um 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 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, d d we we changed the jobs.

Right.

So we had to go back and look at it from that perspective.

Okay.

So there were no positions that were um as a result of that.

Did 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.

And 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, Alderman Moore.

I was in regards to something that we actually recently received.

Um there was a notice in the file in regards to a letter.

And Miss Nickabarca, I don't know if you received that same communication.

Um that we did.

Uh, oh, it was an anonymous letter.

That was recently um, I got it in my mailbox today, but it was it looks like it was uploaded in the file as well.

We've got it, we sent it over too.

Okay.

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

I can I can speak to that.

I did not go back.

Excuse me, briefly, please, because that's a little bit we 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 pace of the report, page 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 um I appreciated that.

I just wanted to um just on the record for those that are listening that you know when these come when these things come in, um, we have staff that speak, you know, 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 um sharing that information with us.

Definitely.

Any other questions on 12 and 13?

Any other questions?

Okay, all the woman cogs 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.

Um, okay.

We're now on item 14, 260391 communication from the Department of Employee Relations, amending, yep.

Let's see, we got two more for you.

Umending 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, um the recommendation was five percent, 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?

All the member Gallas moves to place on file.

Discussion of placing on file objections, hearing none so ordered.

Item 15, 26031.

Communication from the Department of Employee Relations amending the salary and positions ordinances relating to clerical or administrative corrections.

Okay.

Just one change.

Yes, and that's before us.

Questions on that?

Alderman Spyker moves the place on file, item 15 discussion of placing and 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 uh receive a positive recommendation and referral from the public safety and health committee.

We're joined by the health department, Mr.

Aaron Shapinski.

Any questions on this grant acceptance?

Discussion.

Alderman Spyker 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?

Alder Woman Cogs moves adoption, discussion of adoption, objections, hearing none so ordered.

That concludes 17 run eighteen, two six oh three five nine.

An ordinance to further amend the twenty twenty-six rates of pay of offices and positions in the city service.

This will reflect um the action we took in earlier files.

Alder Woman Moore moves passage of 18.

Discussion of passage, objections, hearing none so ordered.

19, 26033, 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 Alder Woman Moore moves passage.

That would actually be um marked in the affirmative for the files that I missed.

Oh, definitely.

And hearing no objections so ordered item 19 is concluded, and this concludes our meeting in the meeting.

Yes.