June 25 2024

Cost-Savings Double Play: City Manager's Office Presents First Budget Efficiency Report

At the Monday, June 24 City Council meeting, the City Manager's Office presented its first budget efficiency report highlighting City Council’s and staff's efforts to achieve substantial cost savings.

The report was a recommendation of the 2023 resident-led Finance Review Committee. Members expressed interest in a mechanism that identified and showcased opportunities for cost savings and efficiencies.

Monday’s report—the first in what will be an annual process going forward—was prepared and delivered by City Manager Joseph Gacioch and Assistant City Manager James Krizan. They focused on two case studies, underscoring both immediate and long-term financial benefits.

Case Study: New Plans Lead to the Retirement of Costly Legacy Healthcare

The first case highlighted the Human Resources Department's initiative to streamline retiree healthcare plans. It’s a cost that people often forget to consider in a budget like the City of Ferndale’s: post-retirement health benefits. While paid retiree healthcare was phased out of employee benefits packages in 2011, earlier retirees have continued to receive it—and costs are on the rise. The cost to deliver healthcare has increased by more than 6.5%--and as much as 13.3%--annually since 1999.

Over the past two years, HR staff have worked to consolidate 18 legacy healthcare plans into six Medicare Advantage plans, reducing the City’s legacy retiree healthcare costs by more than $800,000 between 2022 and 2024. This success was largely due to the dedicated efforts of Pension Specialist Emmanuel Robinson and HR Generalist Justin Giorlando, who established and built strong relationships with the City’s retirees and ensured that their needs were met under the new plans.

According to HR Director Dan Jacey, annual healthcare costs typically increase by ​7%. “Through this initiative, we have managed to mitigate significant future expenses and project increases to  be lower than average."

Case Study: Ferndale Fire Department's Cost-Savings Double Play

The second case study told the story of modernizing the City's fire fleet. Maintaining emergency response vehicles is traditionally one of the costliest and most critical investments. The cost of a typical fire truck has risen by 35% in the last five years, from $700,000 to $1.03 million, and to over $2 million to replace a ladder truck.

Ferndale established a long-term Capital Improvement Plan (CIP) about ten years ago. As part of this annual process, staff identified the need to replace a 2002 fire engine and a 2011 ladder truck over the next decade. Fire Chief Teresa Robinson proposed replacing the scheduled 2002 fire engine with a quintuple combination pumper, or "quint," which combines the functions of an engine and an aerial truck at a lower cost. The City could then sell the 2011 ladder truck and apply the proceeds as a down payment to reduce the net costs of the new quint.

By eliminating the ladder truck and replacing it with a more versatile quint, the City expects to cut $2 million in Fire Department capital costs over the next four years. Chief Robinson plans to present a purchase agreement for the quint by August to avoid anticipated price escalations, noting the 3-4-year delivery time for these vehicles.

During the presentation, Gacioch praised the staff's efforts. "These cost savings didn't happen overnight, our Fire Chief and HR Director used their industry expertise and vision of industry trends, professional networks, and knowledge of staff strengths to find these opportunities,” Gacioch said. “We may be small in Ferndale, but we always aim to punch above our weight class, and these efforts prove it."

“I really want to celebrate this, and let the residents know that we are working hard to find these savings where we can, so we can make the most of what we have,” said City Councilmember Donnie Johnson. “To the City Manager, Chief Robinson, and Emmanuel, Justin, and Dan from HR, you really are making incredible strides for cost efficiencies and savings—these are incredible things, not small amounts of money for a city like ours.”

More Information

These first case studies demonstrate the Council and staff's shared commitment to financial prudence and long-term planning, ensuring the City's resources are managed effectively and sustainably.

For more details on these case studies and other efficiency efforts, read the case-study report