Cloquet city councilors should be stingy with their 2022 budget requests due rising insurance costs that could result in as much as an 8% levy increase, City Administrator Tim Peterson said in June.
The council approved a total levy increase of approximately $87,800, or about 2.9%, in 2021, with approximately $43,000 of the operations levy covering expected increases in health insurance costs, as well as expected wage and contractual increases. However, the premium for the city's workers compensation insurance has doubled over the past year, according to Cloquet Finance Director Nancy Klassen, who said this is the main reason for budget concerns.
The insurance increase will likely affect years of budgeting, Klassen said. To offset the cost and avoid a major levy increase, the city plans to use a portion of their expected $1.27 million in American Rescue Plan Act funds to fill any deficits.
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In order to protect privacy rights of staff, Peterson would not comment on the reason for the insurance increase, other than to say it was not due to a rise in claims. The Pine Journal verified this statement through a data request, which revealed the number of claims decreased from 22 in 2019 to 13 in 2020.
The city did see a rise, however, in other post-employment benefit disability costs in 2020 due to an increased number of PTSD-related leaves taken by Cloquet police officers, according the audit report.
Another insurance increase in 2020 came when multiple staff members changed from single-person insurance to family insurance, resulting in street personal services being over budget by $63,400. However, the cost of supplies for the department came in under budget by $87,200.
Overall, the city's general fund balance increased in 2020 by $881,200 in 2020, with the undesignated portion increasing $954,000. The audit report for the 2021 budget is not yet available as it will not be completed until summer 2022.
Department heads within the city began planning their 2022 budgets earlier this summer, with the council set to review and approve the final budget in August.