STATE OF TEXAS COUNTY OF DENTON CITY OF CORINTH

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1 STATE OF TEXAS COUNTY OF DENTON CITY OF CORINTH On this the 6th day of August 2013 the City Council of the City of Corinth, Texas met in a Workshop Session at 7:00 P.M. at the Corinth City Hall, located at 3300 Corinth Parkway, Corinth, Texas. The meeting date, time, place and purpose as required by Title 5, Subtitle A, Chapter 551, Subchapter C, Section , Government Code, with the following members to wit: Members Present: Paul Ruggiere, Mayor Joe Harrison, Mayor Pro-Tem Jim Mayfield (arrived at 7:23 PM) Mike Amason Lowell Johnson Randy Gibbons Staff Members Present: Jim Berzina, City Manager Chris Rodriguez, Bond and Debt Manager Justin Brown, Public Works Director Fred Gibbs, Planning Director Curtis Birt, Fire Chief Debra Walthall, Police Chief Guy Brown, Exec. Dir. CEDC Guadalupe Ruiz, HR Manager Debra Drayovitch, City Attorney Justyn Fraize, LCFD Susanne Barney, Acting City Secretary Members Absent: NONE Others Present: NONE CALL TO ORDER: Mayor Ruggiere called the meeting to order at 7:00 P.M. BUSINESS: 1. Receive a report, hold a discussion, and give staff direction on the Annual Program of Services. (Budget). Jim Berzina, City Manager This is information we have talked about before. We are here today to get direction and decisions from Council to move forward. Mayor Ruggiere We will talk about Expense Assumptions and Revenue Assumptions. Let's address the Expense Assumptions first. Councilmember Gibbons Do we have any more update on the open IT position? Chris Rodriguez, Bond and Debt Manager - No we don't at this time.

2 Page 2 Jim Berzina, City Manager Not yet. Councilmember Harrison Didn't we get an correcting assumptions that Finance had made last week? Mayor Ruggiere Yeah, regarding the effective rate. What is the impact of the average home rate on calculation of effective rate? Chris Rodriguez, Bond and Debt Manager The average home rate should not affect the rate. We don't include rural in the calculation, single family only. It didn't change the effective tax rate. Mayor Ruggiere When we advertised a potential rate of.60989, is the revenue that is generated by that rate different than what has been presented? When it came to calculating the total value those numbers stayed the same? Councilmember Gibbons If I am reading the correctly, just on the average calculation the rate went from $9-11 on the average per homeowner, so that is a difference of $2 per homeowner. Councilmember Amason Have we heard any more from the consultant on the merit based plan? Guadalupe Ruiz, HR Manager We don't expect any changes on the cost from the Compensation study, we are only expecting information regarding how to make any changes in the future. It is just the rules we are waiting on, we don't expect any changes with the cost. Councilmember Harrison I want to again express my concern about using the effective tax rate, last year's tax rate or the proposed tax rate. I want to reiterate my rationale for going the way I am going. Councilmember Gibbons The health insurance coverage is moving to HSA (Health Savings Account) and the city will fund $1000 into each account. Is that new accounts or existing or both? Guadalupe Ruiz, HR Manager It is budgeted for both. Councilmember Gibbons Everyone gets a thousand dollars and then the premiums would drop depending on the plan they were on. Guadalupe Ruiz, HR Manager Employees already on the HSA will stay the same. Those moving from the base or buy-up plan will see the difference in the high deductible. In a way it decreased the percentage the city is contributing. Mayor Ruggiere I stand behind adopting the employee plans we have discussed. Councilmember Harrison Some employees have mentioned they are concerned about reduction in vacation pay. They feel it is another hit they are taking. They feel it is an unfair balance to their salaries and benefits. What is the rationale? Guadalupe Ruiz, HR Manager - In 2009 we were struggling with the budget and we had issues come up with pay, 7K, police schedule had to stay the same under Texas law, the fire depart had to decide on the 28 day schedule, and we talked about what counted toward the calculation of overtime (sick, vacation, holiday, jury duty). This year everything that was on the table back then was brought to the table again as a consideration. Councilmember Harrison Is the total savings $13,000?

3 Page 3 Guadalupe Ruiz, HR Manager It is hard to predict how much it would be because depending on the schedule and when the vacation is taken it would either cost overtime or not. This is an estimated savings based on the analysis. So, it looked like it was about 5% of the overtime. Councilmember Harrison Being that there is some concern in your staff, have you discussed it with the staff why we were doing it or are we just making the decision and we just left them out in the cold so they did not have any input into it, is that correct? Jim Berzina, City Manager All of these benefit issues have been discussed in our regular staff meetings. Councilmember Harrison - We eliminated for detectives and the police department $800 to reimburse them for clothing allowance? To me we provide uniforms for Public Works and Fire Department and it makes sense to me that they need a clothes allowance for regular clothes they wear on the job. Jim Berzina, City Manager That was not eliminated, it was proposed, we did not choose to take the vote. Mayor Ruggiere For detectives we did not adopt a clothing allowance, it is not that we eliminated it. Uniform police officers receive an allowance. Regarding the Fire Department overtime and vacation calculation, is this city wide? Do others calculate vacation into over time? Guadalupe Ruiz, HR Manager Everyone is included, the departments with the most are Fire, Police, an Public Works. Curtis Birt, Fire Chief In the fire department it is based on the scheduling, part of their scheduling is automatically overtime and the employees have no control over it. Councilmember Amason Were the employees in the fire department hired on with the assumption of receiving a certain amount of overtime? Curtis Birt, Fire Chief They know their rate and they can see what is scheduled. Mayor Ruggiere What is the total cost savings for adopting the new approach? Guadalupe Ruiz, HR Manager We calculated it at a 5% savings of the overtime of total city overtime. Councilmember Amason Were the employees in the police department and public works hired on with the assumption of receiving a certain amount of overtime? Debra Walthall, Chief of Police It is in the city policy. Mayor Ruggiere Overtime is overtime and you get paid for working over time, the question is, if you take vacation during the pay period so you also get paid overtime? Councilmember Gibbons Same with the education pay, if they were hired thinking that and then we change it We have made changes every year to balance the budget. Mayor Ruggiere - With the compensation plan we are trying to structure it in a way that works with the market that lifts a lot of the employees into a better place.

4 Page 4 Councilmember Amason I am looking at where we are sending extra money that we have. I still have to question excess money in the general fund balance and we are taking $500,000 and putting it toward a future to-be-determined project as opposed to employees that we have right now. Why do we have it every year in there not specified for a certain thing? How often do we have excess in our budget each year? We are either over taxing or aren't calculating as well as we should. I know unexpected things pop up but at the same time it seems like every year we are sitting with excess in general fund balance. Councilmember Gibbons What does the law provide as far as options for the unfunded position that goes on for a couple of months so we have salary savings? What are3 we allowed to budget to since a position has been frozen for a few months? Debra Drayovitch, City Attorney I don't know what the GFOA recommends. It is not good government accounting principles, I cannot tell you it is not lawful if you know you are not going to make and expenditure then it is not unlawful to take that out of your expenditure. Jim Berzina, City Manager As you improve benefits you have less turnover. Regarding fund balances, we don't want to increase taxes. The money is not specified in writing but we know that money will go toward building a road. Mayor Ruggiere In 2006 when I first came here we had very little money and negative drains on what we had. We had old vehicles and no vehicle replacement fund. This year we are already spending down the fund balance and we have a vehicle replacement fund to keep us from having to replace all vehicles at once and take a big chunk of money at once. If we have spent down our fund balance on operational expenses then there is nothing to do other than issue debt or have dilapidated vehicles. We are not putting money into vehicle replacement this year so we are spending down some of our fund balances. I spoke to the other three mayors previously regarding the Emergency Management Coordinator Position in the fire department. The others are not interested this year and that is a potential salary savings. The library reacted to our thoughts regarding funding with surprise and concern. I explained to them that council is giving serious consideration to the way that we fund the library. Councilmember Amason Half of the money we are spending with the library we could use for something else. Councilmember Gibbons I have thought long and hard about this and I say give the library six months' time and then pull out. I have not talked to one person who has a card or even uses it more than once every three years. Councilmember Mayfield I want to see if Global Spheres has anyway they could mesh with what we would like to do as a community. The NCTC library is not really a useable library for us. Councilmember Johnson I agree with Randy that we give them six months to figure something out. Councilmember Gibbons There are so many other alternatives. Mayor Ruggiere With our demographic, if they want a book they will buy it or download it. So do we agree on the six months or one quarter? Councilmember Amason - One quarter.

5 Page 5 Councilmember Gibbons If we did go that direction we would probably want the attorney to draw up an official letter. Jim Berzina, City Manager Check with other mayors to see what they think. It will be a black eye on us. Councilmember Harrison What does the library contract say? Debra Drayovitch, City Attorney It is a new 12 month contract that expires September 30, Mayor Ruggiere If we pay two quarters, we need to make a letter with a termination clause saying if it fizzles in the first quarter we are not responsible for the second. Now, what questions do we have on the revenue side? Councilmember Harrison We have 3 or 4 avenues. We have advertised tax rate including the 1/2 cent increase. To eliminate the 1/2 cent tax increase it takes $71,448. The council budget can be reduced by $25,000 then have $46,448 to make up. If we go to the effective tax rate we have to make up $211,914, I proposed the other day the tax rate from last year. We can maintain last year's rate. I think the 1/2 cent tax increase is going to be so important even at 1/2 cent in the future when we get into the big dollar expenditures. Councilmember Amason We have the savings on the library. Mayor Ruggiere And we have the savings on the Emergency Management position. So we are over a hundred thousand there. Councilmember Johnson We could only cut $20,000 from the council budget and fund the over time for fire department and the clothing allowance for detectives. Councilmember Amason We should look into the frozen step plans in fire and police, too. Guadalupe Ruiz, HR Manager The Compensation study only addresses the salary compression. Mayor Ruggiere Have we examined the salary compression dollar amount? Guadalupe Ruiz, HR Manager No, but we can. Mayor Ruggiere For future meeting or future analysis. Guadalupe Ruiz, HR Manager We would look at everybody's date of higher and see where they fall. Councilmember Harrison If we adopt the Compensation study, are we leaving it as it is for the year or will we start amending it immediately? Jim Berzina, City Manager The key would be to adopt and maintain. That will be done on a n annual basis. Guadalupe Ruiz, HR Manager There may be emergency cases. Debra Drayovitch, City Attorney When you adopt, you should include a clause or policy and procedure for those changes.

6 Page 6 Councilmember Harrison - What is the advertising cost for posting the tax rate in the Denton Record Chronicle? Chris Rodriguez, Bond and Debt Manager It cost us $11, Guadalupe Ruiz, HR Manager We need to discuss education pay, how much vacation accrual we can carry over, it is now 1.5 times annual accrual and we propose 2 times, we also need to talk about how vacation time calculates into overtime. I am looking for direction regarding what to bring to the council meeting for approval. Mayor Ruggiere We pay for the degree not the hours leading to the degree. The consensus seems to be to include vacation time into the calculation of overtime. Max vacation accrual should be 2 times, and max sick time of 280 hours. Do we pay sick time when someone leaves? Guadalupe Ruiz, HR Manager Yes, we pay sick time and vacation time. We are wanting to put a cap on the sick time that can be paid out when someone leaves. The group also agreed to not have a maximum statutory for TMRS. I will also bring all the medical to the meeting next week so we can start working on the training of employees. Mayor Ruggiere recessed the regular meeting at 9:00 P.M. See Executive Session. EXECUTIVE SESSION: If, during the course of the meeting, any discussion of any item on the agenda should need to be held in executive or closed session for the City Council to seek advice from the City Attorney as to the posted subject matter of this City Council Meeting, the City Council will convene in such executive or closed session, in accordance with the provisions of the Government Code, Title 5, Subchapter D Chapter 551, to consider one or more matters pursuant to the following: Section Private consultation with its attorney to seek advice about pending or contemplated litigation; and/or settlement offer; (2) and/or a matter in which the duty of the attorney to the government body under the Texas Disciplinary Rules of Professional Conduct of the State of Texas clearly conflicts with chapter 551. Consider legal advice relating to the City supplemental 457 and 401(a) retirement plans. Council met in Executive Session from 9:10 PM 9:50 PM. Section To deliberate the purchase, exchange, lease or value of real property if deliberation in an open meeting would have a detrimental effect on the position of the governmental body in negotiations with a third person. Section To deliberate the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of a public officer or employee; or to hear a complaint or charge against an officer or employee. Section To deliberate or discuss regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or to deliberate the offer of a financial or other incentive to a business prospect. After discussion of any matters in executive session, any final action or vote taken will be in public by the City Council. City Council shall have the right at any time to seek legal advice in Executive Session from its Attorney on any agenda item, whether posted for Executive Session or not.

7 Page 7 RECONVENE IN OPEN SESSION TO TAKE ACTION, IF NECESSARY, ON EXECUTIVE SESSION ITEMS: Mayor Ruggiere reconvened the Workshop Session at 9:51 P.M. ADJOURN: Mayor Ruggiere adjourned the Workshop Session at 9:52 P.M. t Kimberly Penc, ity Secretary City of Corinth, texas