Page 29 - CityofSouthlakeFY27Budget

TABLE OF CONTENTS

New State Mandate, House Bill 4144. During the 2025 legislative session, the State enacted House Bill
4144, which requires Texas cities with at least 50 firefighters or 50 peace officers to provide a critical
illness benefit to eligible public safety retirees diagnosed with a qualifying condition, such as certain
cancers, heart attack, or stroke, within three years of retirement. The benefit is capped at $100,000 or
the retiree’s final annual salary, whichever is less, and applies to employees retiring on or after January 1,
2026. Because the legislation provides no funding to local governments, it is an unfunded mandate. To Budget Overview
meet this obligation predictably, the City proposes to purchase employer-paid critical illness coverage
through a partnership with the Texas Municipal League Intergovernmental Risk Pool at an estimated
first-year premium of $20,000, converting an unpredictable future liability into a fixed, known annual
cost.

Benefit Enhancements. Competitive pay and core benefits are only part of being an employer of choice.
In response to feedback from the 2025 Employee Benefits Survey, the FY 2027 budget introduces two
enhancements to the City’s benefits suite:

Vacation Accrual Flexibility. Employees will be able to accrue up to an additional 40 hours of vacation
leave above the current cap, for a maximum accrual of 280 hours. The separation payout cap remains at
240 hours, giving employees greater flexibility to manage their earned time off while keeping the fiscal
impact on the City manageable. This enhancement carries no direct budget impact.

Retiree Health Insurance. For the first time since the program was established in 1998, the City will
increase its monthly contribution toward retiree health insurance. Employees with fewer than ten
consecutive years of service retain the current contribution, while those with ten or more consecutive
years qualify for an inflation-adjusted contribution of $250 per month for retiree-only coverage and
$450 per month for retiree-plus-dependent coverage. The City is making this change deliberately, as an
initial and measured step within a broader benefits analysis strategy. Because retiree health insurance
is a long-term obligation, a dramatic expansion now could constrain the City’s future ability to fund
compensation and insurance for all employees. For that reason, the City will work with its actuary to
model the financial impact of potential future incremental adjustments to this benefit, so that each one
can be weighed in context with competing demands during each budget cycle.

Staffing Levels. Personnel is the City’s single largest investment, so it is worth explaining how
Southlake’s total staffing structure is funded. The City’s authorized workforce is an all-funds figure.
About 70 percent of those positions (305.6350 FTE) are supported by the General Fund. The remaining
30 percent, roughly 133 positions, are funded outside the property tax base: most staff amenities and
programs that residents specifically chose to establish and that many peer communities do not provide,
and the rest operate the City’s water and wastewater utility, an enterprise supported by user charges
rather than property taxes.

The largest of these is The Marq Southlake, the City’s recreation and event campus, whose 60.93
positions (about 14% of the workforce) are funded by the Community Enhancement and Development
Corporation through a voter-approved sales tax. Another 9.75 positions operate the City’s parks and
pickleball complex through the Southlake Parks Development Corporation, and 15.35 positions deliver
the School Resource Officer program through the Crime Control and Prevention District, both also
voter-approved sales tax. Because as much as 70 percent of that sales tax is paid by visitors from
FY 2027 City of Southlake | Budget Book 29