Page 28 - CityofSouthlakeFY27Budget

TABLE OF CONTENTS

voluntary turnover held at 10.6%, and the average time to fill a vacant position improved to 54 days.
These outcomes are the practical measure of an employer of choice, a workforce that is engaged, stable,
and able to sustain the service levels residents expect.

FY 2027 Compensation Adjustments.
Cost-of-Living Adjustment. The FY 2027 budget funds a 3% cost-of-living adjustment (COLA) for all
eligible employees. This adjustment is informed by external benchmarks for both wages and inflation.
On wages, the U.S. Bureau of Labor Statistics Employment Cost Index reported a 3.4% increase for
civilian workers and a 3.5% increase for state and local government workers as of March 2026. To gauge
local cost-of-living growth, the City also monitors the Consumer Price Index for the Dallas-Fort Worth
area, which based on year-to-date trends is projected to end the fiscal year at approximately 2.5%.
Budget Overview
Together, these measures support a 3% adjustment that keeps employee pay aligned with both the
labor market and local inflation.

Market Adjustment. The City’s adopted compensation system establishes specific market-position
targets, and each year the City evaluates its pay ranges against the market to confirm those targets
are being met. For FY 2027, that review indicated a 2% adjustment to pay ranges for both sworn public
safety and general government positions. Because this movement is consistent with the funded cost-
of-living adjustment, it is absorbed within the 3% COLA rather than requiring separate funding, allowing
the City to stay aligned with its adopted market goals through the annual adjustment.

Budget Impact. These compensation changes total approximately $974,556 in the General Fund and
$275,153 across all other funds. These amounts reflect not only the direct pay adjustments but also the
associated benefit costs that move with compensation, such as TMRS retirement and payroll-related
taxes.

Benefit Program and Cost Management. Benefits remain a cornerstone of the City’s competitiveness.
For FY 2027, the City renewed its medical, dental, and vision contracts with Cigna under favorable
terms. The renewal includes an overall health rate increase of 4% (estimated additional cost $139,000),
with no rate increase for dental or vision, each of which remains within a continuing multi-year rate
guarantee, and no plan design changes to any of the plans. To keep dependent coverage sustainable,
monthly premiums for the LocalPlus and Buy-Up plans will increase modestly, while the High Deductible
Health Plan maintains current rates. The estimated additional cost of dependent health insurance to the
City is approximately $106,000.

Rather than comparing each benefit in isolation, Southlake evaluates total benefit cost as a percentage
of compensation, a method consistent with U.S. Bureau of Labor Statistics practice. The March 2026
BLS report places the average benefits load for state and local workers at 38.5% of compensation. The
FY 2027 budget includes Southlake’s benefit cost at 30.55% of payroll, relatively flat when compared to
the prior year.

The City also provides retirement benefits through the Texas Municipal Retirement System (TMRS). The
required contribution rate effective January 1, 2027, is 13.43%. Consistent with longstanding practice, the
City proposes to contribute above the required rate, at 13.85%, to further reduce its amortization period
and strengthen the plan’s funded position. As of December 31, 2025, the plan was 90.6% funded with
an amortization period of 18.1 years and supported 365 active members and 222 retirees.
28 FY 2027 City of Southlake | Budget Book FY 2027 City of Southlake | Budget Book 29