City of East Lansing Budget Discussion FY 16

Challenges Economy: City Operations: Housing market crash and decreasing property values Act 51 money Long-term decrease in State Shared Revenue City Operations: Legacy cost increase (pension & retiree healthcare) Streets, water, sewer infrastructure improvements are essential Parks, recreation and facilities need significant investment over next five to ten years

Property Values Year Taxable Value Percent Change 2006 $886,390,650 6.1% 2007 $937,926,770 5.8% 2008 $975,983,770 4.1% 2009 $1,014,757,420 4.0% 2010 $981,486,740 -3.3% 2011 $945,134,040 -3.7% 2012 $911,082,510 -3.6% 2013 $900,289,494 -1.2% 2014 $915,991,890 1.7%

Parks, Recreation & Facilities 3 voter approved bonds, 1995 and 1998, but now need reinvestment. Preliminary renovations/ reinvestment costs estimated at $7.5-16.5 million Playgrounds: $655,000 Neighborhood Parks: $450,000 Hannah Center: $1,115,200-$3,351,800 Softball Complex: $185,000-$285,000 Aquatic Center: $772,000-1,047,000 Natural Areas Management: $250,000

Steps Taken Decreased overall size of government Healthcare Task Force Restructured pension and retirement Department consolidation and restructuring

Compensation and Benefits Employee Wage Increases Retirement and Health Care 1993 Eliminated healthcare at retirement for non-union new hires 1999 Moved from defined benefit pension to defined contribution for new hires in non-union and two other unions. Other non-public safety groups followed. 2010 Moved from defined contribution to hybrid plan for new hires in all non-public safety groups 2011 Changed retiree healthcare and pension plan structure for new hires in public safety. Pushed back the age of access for retiree healthcare for existing non-public safety employees 2002: 3% 2003: 3% 2004: 3% 2005: 2% 2006: 2% 2007: 2% 2008: 2% 2009: 2% 2010: 2% 2011: 0% 2012: 0% 2013: 1% 2014: 1% *The City’s Health Care Task Force has controlled plan costs, at approximately 3.5% annually, for the past 9 years. Currently meets hard caps established by the State.

Pension Payments 2001-2015 Projected payments 2016-2020 273 396 TOTAL ACTIVE TOTAL RETIRED 273 396

Cost Controls Share trade inspectors with Meridian Township City IT providing services to the Court Share Assessor with Meridian Township Reconfigured media services contract ALFA & LAP Respite merger

Positive Signs Increased unassigned fund balance from 7.35% in FY07 to 15.8% in FY14 Completed sixth consecutive OPEB payment $12.5 million in OPEB trust Strong community as home to MSU Have some time to work on major issue Maintained well regarded services

What Now? Will continue to strive for increased efficiencies and cost controls Gained some ground with OPEB, now look to invest more in infrastructure improvements Expect small increases in revenue sharing from state & property tax revenues Sustained fix for legacy costs will have to come from improvement in the economy; we remain positive for our financial future

Questions or Comments?