In a meeting Tuesday afternoon, the Little Rock Board of Directors voted unanimously to accept Mayor Frank Scott Jr.’s proposed $15 million city employee health care plan for 2020. The city will remain under its “fully insured” plan with United Healthcare, and because of a 15 percent increase in insurance costs over the last year, employees will be asked to pay a premium for their coverage for the first time in the city’s history. Directors also received the first draft of the 2020 budget and reviewed the recommendations of the Little Rock Governance Structure Study Group.
Scott said the city will pay about half of the cost of the 15 percent premium increase — which totals about $1.2 million — and employees will pay the other half. The city has a little over 2,000 employees. Employee premiums will increase to $6,331.68 annually per employee. The city will contribute $5,920.32 — about 93 percent — of that cost, and each employee will contribute $411.36 annually — about 6 percent — or about $34 per month.
Scott told directors that he understands that requiring city employees to pay a premium for their health care for the first time is a “very tough decision,” but the mayor emphasized that paying 100 percent of employee premiums is a “generous benefit” and as the health care market evolves, so must the city’s policy.
“We know this is a challenge, but even with splitting this 15 percent increase, [the employee premium] is a very generous amount of money compared to other city municipalities, state government [and] the private sector,” Scott said. “I know it’s a tough choice, but we are all fiscal stewards as you know, and we’ve got to make the right decision.”
Scott reiterated that his goal in remaining under the fully funded health care model in 2020 is to prepare the city for a switch to a clinically integrated network in 2021.
At the board’s Oct. 15 meeting, several directors emphasized the importance of an “extensive communication dialogue” between Human Resources staff and employees to educate them about the changes in health care costs and benefits. At Tuesday’s meeting, Stacey Witherell, director of Human Resources, emphasized the importance of the board passing the ordinance so the department can begin meeting with employees to inform them of the changes. Witherell said that after the board’s vote, the department will begin sending out “flyers, text messages [and] emails” informing employees of open enrollment meetings and one on one sessions with enrollment counselors. Open enrollment for employees begins on Nov. 4 and runs through Nov. 15.
Scott and Witherell also revealed that a few city positions will receive salary increases in order to help supplement the new premium cost for some of the city’s “lowest level” employees. Code enforcement and animal services officers will receive a $2,500 salary increase, bringing the entry salary for code enforcement officers up to $32,000 annually; this change will cost the city $162,944 in total. Waste disposal personnel will receive salary increases of $2 per hour for a total cost of $689,182. “Front line” street fund personnel will receive a salary increase of $1 per hour for a total cost of $364,169. AFSCME employees — those part of the American Federation of State, County and Municipal Employees union — who are not covered by the waste disposal or street fund salary increases will receive $500 lump sum salary increases, for a total cost of $107,650.
The city is currently in negotiations with the Fraternal Order of Police and the firefighters union about 2020 salaries and health care. Richard Morehead, president of Little Rock Fire Fighters Local 34, told directors that firefighters have not been a part of the conversation about insurance changes and expressed his concern about exponentially increasing health care costs.
“We need to see some contract language from the city about how to move forward. If you want us to pay $34 a month, we need to see how that’s going to work moving forward,” Morehead said. “And if we’re going to go with this clinically integrated network that’s going to save the city money, we want to see how that’s going to improve health insurance for the employees. We want a say in more physical therapy visits; we want a say in how we improve our mental health. We want a say in how to reduce copays, we want a say on how to produce out-of-pocket costs. … We’re not at the table. We want [to be] at the table. We’re all on the same team.”
Witherell said she is scheduled to meet with Morehead again next week to continue negotiations.
Directors then received a first draft of the budget for the 2020 fiscal year. The balanced budget totals equal general fund revenues and expenditures of $212,125,253 each. Of the general fund revenues, 51 percent come from sales and use tax. Of the general fund expenditures, 75 percent are personnel costs. Scott said his goal is for the city to eventually reach 65-70 percent personnel expenses through “attrition.”
Scott and Sara Lenehan, city finance director, pointed out that the 2019 budget amendment, passed by the board in July, made the balanced 2020 budget possible, emphasizing that “ongoing expenses match ongoing revenues.”
“I know how hard it was to amend the 2019 budget earlier this summer that was approved in the later part of 2018,” Scott said. “It was a tough decision, but as you can see, if that decision was not made, we would see a different picture today. We would probably be faced with somewhere between a $5 to $6 million dollars in [a] budget deficit.”
Scott added that not only is the 2020 budget a balanced one, but it’s a “budget that listened to your concerns,” referencing Ward 6 director Doris Wright’s past insistence that city code enforcement officers receive salary increases, which is now reflected in next year’s budget draft.
In addition to salary increases for some city employees, the 2020 budget includes $180,000 for the storage and maintenance of 150 body cameras for the Little Rock Police Department. Lenehan said the 150 cameras cover two shifts for officers, who will turn the cameras back in after a shift, and grant funding acquired by the department will help the department purchase additional cameras to cover the rest of the shifts. Lenehan said the city’s objective is to have body cameras for all of the department’s patrol officers. The budget does not include funds to support 100 new police officers, a component of Scott’s mayoral campaign, as Scott said he and Police Chief Keith Humphrey are going to see how things go with the current, almost fully staffed department.
According to Lenehan’s presentation, county sales tax revenues are expected to grow 2 percent from $43.26 million in 2019 to $44.57 million in 2020. City sales tax revenues are expected to grow 2.5 percent from “anticipated year-end results” of $58.06 million in 2019 to $60.81 million in 2020. Both projections include additional growth anticipated from internet sales tax revenues, following the passage of Act 822 earlier this year.
At-large directors Gene Fortson and Dean Kumpuris both asked Lenehan for her opinion on the accuracy of the anticipated growth of county and city sales tax revenues in 2020, citing revenues consistently coming in under projections in past years.
“I like to be as optimistic as the next person, I just think that the basis for sales tax is economic activity, and even the Federal Reserve experts can’t agree what 2020 is going to look like, as far as the economy’s concerned,” Fortson said. “Taking a conservative approach makes me somewhat skeptical about those revenue projections.”
“I guess Gene and I [have sat] next to each other [for] too long. I hope these budget projections for tax revenues are correct, but we have been notoriously optimistic,” Kumpuris said. “In the fall, we’re [good] before Christmas, and then spring comes along and reality hits us. This is a balanced budget, but if we don’t hit these numbers, it won’t be balanced next time you talk to us about this.”
Ward 3 director Kathy Webb brought up the need for the city to look into new forms of recurring revenue.
Scott said the city should remain “business friendly” and avoid increasing business fees and increase sales tax revenue by continuing to foster job growth. Scott addressed at-large director Joan Adcock’s previous suggestion of increasing court fees, but said that from a “community standpoint,” such increases can have a “disproportionate impact on minorities and men and women of color, and that’s something from a management perspective that we’re not willing to do.”
Instead, Scott said the city essentially had two options for revenue growth: more “strategic partnerships” between public and private organizations and increased sales tax revenues through improved “quality of life.”
Scott maintains a goal of passing the 2020 budget on Nov. 19. Several directors asked for breakdowns of the budgets of individual city departments, and budget discussions will continue for the next few weeks.
Directors also received a report from the Governance Structure Study Group, which the board voted to establish on Dec. 3, 2018. The 11 person group, made up of members from all seven wards and four at-large representatives, studied different forms of government over the past seven months. Rick Campbell, chairman of the group, presented city leaders with the group’s recommendations, which include greater powers for the mayor and a restructuring of the board of directors.
The report can be read in its entirety here.
Campbell emphasized that the group’s mission was to research and recommend the best form of government for Little Rock — “not the best form of government for Little Rock if certain public officials are a part of it.”
Little Rock has a “hybrid” form of government, as the city has both a popularly elected mayor and a city manager appointed by the board of directors. The study group recommends that this hybrid form remain intact, but with additional powers given to the mayor, most notably the ability to hire and remove the city manager without “precondition” — or without “first having to seek the approval of the board of directors.” The board would be able to veto such an action by a two-thirds vote. The group also recommends the mayor be able to hire the city attorney, subject to approval by a majority vote of the board, and fire the city attorney “without precondition.” The board could then override the mayor’s decision to remove the city attorney with a two-thirds vote.
The board of directors paved the way for this potential change to the mayor’s abilities when it passed a 2007 ordinance that made the mayor a full-time position with appointment and veto power. This ordinance designated the mayor as “chief executive officer” of the city and the city manager as “chief administrative officer,” and it also gave the mayor the ability to appoint and fire the city manager and city attorney — “subject to the approval” of the board. While this ordinance has been in place since 2007, directors have said former Mayor Mark Stodola didn’t “take advantage” of the powers made available to him. Scott campaigned on a promise to be a “strong mayor,” and since his inauguration in January, his efforts to do so — including his reorganization of which city departments are overseen by himself and City Manager Bruce Moore and his amendment to the 2019 city budget — have been variably received by directors and city leaders.
The study group also recommends changes to the structure of the board. “A majority” of the group favored reducing the current seven ward positions and three at-large positions to six ward positions and two “regional district” positions. “Regional districts” would be established to replace at-large positions, which are currently elected citywide. Only residents of the districts would be able to elect the regional directors, and regional directors would be required to reside in the region they represent.
Campbell told directors that the issue of the structure of the board — whether or not to reduce the number of ward directors and “regional” directors — was the only issue the study group took a vote on. Six people voted for it, four voted against it, and one abstained from voting.
A shift to regional directors elected by voters in each region can’t take place without a city vote first. The report recommends city directors “immediately” pass an ordinance establishing regional districts — with residency requirements — for the three current at-large positions on the board, and then putting the issue of regional, rather than citywide, elections for these seats to a vote in November 2020.
The enhanced mayoral powers can be enacted by a two-thirds vote of the board, and it can also be referred to voters.
The report also recommends that city board members should be required to win 40 percent of the vote to be elected. Ward 1 director Erma Hendrix, whose 2018 re-election bid featured 8 opponents, said she knew the 40 percent rule was about her.
“I had eight opponents. It bothered the Caucasians. They thought they were going to win,” Hendrix said. “It’s not for anybody to determine that you’ve got to have 40 percent plus to run for office. Where’s the money coming from? Are you trying to eliminate minorities? Are you trying to eliminate poor people?”
Campbell said the 40 percent recommendation had “nothing to do with any external force” and said it was “one of the easiest decisions” the study group reached. Loretta Hendrix, daughter of Erma Hendrix and the Ward 1 appointee to the study group, came forward to say that several people in the group did not agree with the 40 percent recommendation, but Campbell insisted it was achieved through a “consensus.”
Adcock said she saw similarities between the study group’s report and the Scott Script, a compilation of the findings of Scott’s transition team that was released in April.
“When I was reading this — and I’ve read it three times now — I kept thinking, ‘I’ve read this before,’ ” Adcock said. “And I finally figured out why I felt like I’d read it before, and I went and found my Scott Script.”
Adcock pointed out specific page numbers that contained similar recommendations to those in the study group’s report and asked Campbell whether the group used the Scott Script during its process. Campbell said it did not.
Other directors had mixed reactions to the report. Vice Mayor B.J. Wyrick said her constituents in Ward 7 are “happy” with the current structure of the board but are confused about “who’s at the top” of city leadership, between Scott and Moore. Wright said she disagrees with the 40 percent recommendation because it “puts a burden” on people who want to run for office. Capi Peck seemed pleased by the recommendations, calling the report a “labor of love” and saying “nothing is terribly surprising in it to me.” Ward 5 director Lance Hines said he had “philosophical differences” with some of the recommendations and would be speaking “offline” about them with different study group members.
Scott said the board is going to focus on getting the 2020 budget passed, but once approved, he’ll bring the group’s recommendations back before the board for further review and potential votes.