June 9, 2025 City Council Budget Workshop (2025-06-09)

MINUTES WORKSHOP DESTIN CITY COUNCIL JUNE 9,2025 ANNEX COUNCIL CHAMBERS 6:00 PM The Council of the City of Destin met in special session with the following members and staff present: Mayor Pro Tem Dewey Destin Councilmember Kevin Schmidt Councilmember Sandy Trammell City Manager Larry Jones Exec Asst to the City Manager Sheri Bethea Parks and Recreation Director Lisa Firth Projects/Grants/Contract Manager Jeffrey Cozadd Deputy Comm Dev Director Steve O'Connor Records Specialist Sharon Garner Community Dev Director David Pritchard City Attorney Kimberly Kopp WORKSHOP Destin City Council Councilmember Jim Bagby Councilmember Teresa Hebert City of Destin Staff Deputy City Clerk Kim Montgomery Public Information Director Tamara Young Finance Director Krystal Strickland IT Director Andy Peters Library Director Wen Livingston Public Works Director Michael Burgess HR Director Jaime Haynes City Engineer Robert Tomasek A. Fiscal Year 2026 Budget Cycle The City Manager began the workshop by presenting the preliminary FY26 operating budget with a theme of " preserving our heritage and protecting our future through good decisions. He emphasized that while the budget was still in draft form, it reflected thoughtful planning aimed at sustainability. We preserve our herita €mot and protect our future with good decisions today_

Council Objectives CRITICAL PRIORITIES: 1.1 Offer livable wages 8z benefits to attract and maintain high caliber, qualified staff 2026 Budget Highlights Ad Valorem: Uncertified taxable values rose 5% Operating Expenses — Decreased 3% Personnel — 7%Increase Wages — 3%Increase ( removed positions, added COLA 3%,Merit 3%) Benefits — 17%Increase ( FRS & Social Security) Page 2 of 6

PERSONNEL Wages FICA ( medicare, social security) Retirement Insurance ( health, dental, disability, workers comp, life...) TOTAL FRS ThriftPlan $ variance % variance 7,828,971 $ 7,828,971 $ 0% 594,234 146,021 448,214 307% 1,232,851 970,971 261,880 27% 1,686,663 1,686,663 0% 11,342,719 $ 10,632,625 $ 710,093 7% Florida Retirement System - 13.63%FRS + 6.2%Social Security ( 19.83%) 1 year vest " investment plan"//8 years vest " pension plan" Thrift Plan - 7.5%base + 5%match ( 12.5%)Require moo work hours 7.5%no vesting schedule ( in lieu of SS)//match on 7 -year vesting plan 7.000.000 6.000,000 5.000.000 4,000,000 3,000,000 2,000.000 1,000.000 FY26 Proposed Operating Budget Vs FY25 Operating Budget ( by Function) Public Safety Culture & Transportation General Recreation Government to FY 2025 Budget 0 FY 2026 Budget Debt Service IIII Physical Environment tt 10 Page 3of6

Personnel 2026 Proposed FTEs ( 124.2) 2025 budgeted 127.08) Public Safety, 21.05 , 17% Culture & Recreation, 55.40 ,45% Transportation, 14.26 ,11% Physical Environment, 2.20 , 2% General Government, 30.80 , 25% July 1: Attain certified values from Property Appraiser July 14: Budget Workshop#2 -Capital Projects July 2,1:Council Adopts Tentative Millage Rate July 25 - 31: Detailed Budget Briefings September 3 & 15: Budget Hearings Page 4 of 6

DISCUSSIONS: The City Manager noted that the proposed operating budget totals $ 27.3 million, a 2% increase from the previous year's $26.88 million. Key allocations include: 38%to Operating Expenses 29%to Staff Wages 20%to Debt Service 13%to Taxes and Benefits He also pointed out a 3%wage increase to accommodate COLA and merit adjustments. However, benefits are seeing a 17%increase, largely due to the proposed re-entry into Social Security and the Florida Retirement System (FRS). The City Manager compared the estimated costs: 11.3M for FRS + Social Security 10.6M to stay with the current Thrift Plan A 7%difference. He stated the city is presenting the high -end option but acknowledged a scaled - down FRS model is possible. Participation would initially be voluntary, with new employees required to join FRS if adopted. A 3%employee contribution and 6.2%Social Security tax would apply, potentially reducing some take-home pay by up to 9%,but the city would ensure all staff receive tools and counseling before any decision is required. Councilmember Schmidt questioned the absence of detailed backup documentation for the budget, asking when they will be distributed to the council. The City Manager clarified that the Finance Director will soon be providing that information at whatever level of detail the council desires. Councilmember Schmidt clarified that he was not seeking an exhaustive, 175 -page, line - by -line breakdown of the budget. Instead, he emphasized the need for a level of detail sufficient to reveal the driving factors behind the budget figures. He expressed a desire to understand the underlying elements influencing decisions and to identify the key points that the council should be aware of in order to make informed choices and ensure transparency for the public. Councilmember Schmidt also expressed discomfort with how FRS is already included in the proposed budget, stating it feels a little premature to just put it in the proposed budget at the first workshop without a full understanding of what it truly means. Councilmember Bagby clarified that the council had previously passed a motion to pursue FRS and Social Security for staff and emphasized that the budget is a fluid document. He supported the hybrid approach, allowing existing employees to choose and requiring new employees to join FRS. He also spoke about FRS being a superior retirement option, especially for long-term staff. Councilmember Schmidt commended staff for achieving a 3%reduction in operating expenses and expressed hope of avoiding a net 2%overall budget increase by the final version. Page 5of6

Councilmember Bagby raised concerns about overly generous health benefits, noting they are now competitive on salaries for staff but still over -competitive on healthcare compared to other peers. Councilmember Bagby and the HR Director presented a comparison showing Destin contributes 100%for employees, and 66.67%for family plans — 20-30%more than peer cities. Councilmember Bagby stressed the importance of balancing staff benefits with fiscal responsibility and resident value. The HR Director confirmed they are exploring a cost -sharing model, suggesting family/spouse/child coverage shift from 66.67%to 50%. Councilmember Trammell strongly supported FRS, noting her own positive experience. She asked if a senior leadership or employee committee had vetted FRS. The HR Director noted that they have conducted an all -employee survey, revealing a 50/50 split between those wanting to stay with the Thrift Plan vs. moving to FRS. Department - level listening sessions confirmed this breakdown, with younger/newer staff favoring FRS and long -tenured staff preferring to remain in the current system. Councilmember Trammell requested an estimate of how many might convert FRS, to which the HR Director reiterated the split and the individualized nature of the decision. Councilmember Bagby reiterated that this hybrid system avoids the flaws of past all -or - nothing votes, giving employees individual choice. He also emphasized the importance of financial education for employees before deciding. Councilmember Destin praised the City Manager for presenting a workable plan to reintegrate FRS despite its costs. He noted the City needs to find long-term solutions to fund this responsibly —either through hiring restraint, health benefit changes, or other fiscal strategies. ADJOURNMENT Having no further business at this time, the meeting was adjourned at 6:35 PM. Dewey Destin, Mayor Pro-Tem ATTEST: Rey Bailey, City Clerk Page 6 of 6