Council Employment Committee Meeting Date: July 23, 2025
To: Members of the Council Employment Committee
From: Michelle Mahowald, Communications/Human Resources
Title
Gallagher presentation: Northfield’s transition to Minnesota Paid Leave effective January 1, 2026 and preparation for 2026 health insurance renewal.
Body
Action Requested:
Receive presentation and ask questions as we transition to Minnesota Paid Leave.
Summary Report:
Gallagher Benefits consultants Jessica Nikunen and Katie Reger will present an update on the 2026 employee benefits renewal and implementation of Paid Leave as approved in the 2025 legislative session.
2026 employee benefits renewal: In preparation for labor negotiations in 2024, a benefits analysis was prepared by Gallagher.
City Administrator Martig, Finance Director Angelstad, and Communications & Human Resources Director Mahowald had a meeting with Jessica and Katie in May. Staff received preliminary information on employee benefits and started the renewal process by completing Blue Cross Blue Shield’s pre-renewal verification form.
Jessica and Katie will not have the actual renewal in hand for this meeting. They will talk through the city’s health insurance claims and healthcare trend. The Blue Cross Blue Shield renewals will be expected around mid to late August and will be shared with the employee health insurance committee before another meeting with the Council Employment Policy Committee.
Paid Leave: The Northfield City Council approved Resolution 2018-128 Approving Paid Family and Parental Leave as a Council Administrative Policy December 4, 2018 and updated the policy in October 5, 2021 for the employee handbook which is now 8.36 paid family and parental leave. The current policy is included as an attachment in this agenda item.
The following tables show the number of approved requests with the reason since 2019:
Costs for paid family leave requests:
2019 $46,198.09
2020 $110,245.22
2021 $116,447.17
2022 $128,820.32
2023 $47,453.02
2024 $58,005.55
2025 (YTD) $56,352.48
In preparation for MN Paid Leave, City staff have:
• attended several webinars, conferences, and Minnesota Department of Labor presentation to Northfield businesses at Carleton College
• prepared a census for Gallagher to assist with a quote for a private plan
• surveyed employees who elect AFLAC. Voluntary short term disability plans are available for employee purchase each benefits renewal. AFLAC will meet with employee groups the week of August 18-22 to educate plan benefits before open enrollment to allow better decision making.
• prepared a cost estimate if the city council approves conversion to the state plan using the DOL website PFML calculator Premium rate and contributions / Minnesota Paid Leave <https://info.paidleave.mn.gov/employers/premiums/index.jsp>
• contacted Flaherty & Hood about policy review and advisement of any changes related to the Minnesota paid leave law.
Financial Impact:
The City currently budgeted $100,000 for 2025 for the City Voluntary Paid Family and Medical Leave. This is the same amount currently in the draft 2026 budget submitted by staff at the July budget worksession.
A. 100% Employer Option. The current estimated total cost with annual paid leave is $98,507.78 assuming 100% employer contribution. This would be about revenue neutral from the current preliminary proposed budget that staff submitted at the July worksession.
B. 50% Employer/50% Employee Option. State law does allow for up to 50% to be contributed by the employee. The current estimated total cost with annual paid leave is $49,253.89 assuming 50% employer contribution. This would result in about $50,746.11 reduction from the current 2025 budget and the same estimate used preliminarily on the 2026 budget.
The following information was used in the assumptions to determine the potential cost impact:
• 314 employees (highest employee count including election judges in 2024)
• 1st quarter 2025 wages submitted to unemployment: $2,717,006 x 4 quarters = $10,868,024 annual wage estimate.
• 2026 estimated wages with 3% COLA= $11,194,064
• Subtotal Estimated MN paid leave annual premium for City of Northfield if employer paid 100%: $98,507.78 for 2026.
The consultant is currently exploring market conditions for cost sharing with employees with other employers to come back with recommendations related to that issue. For now, these are the current estimated financial impacts.
Alternative Options:
None at this time. There will be a need in the future to determine if there will be any employee cost share. As noted in the agenda, there is a maximum of 50% cost share by employee per State law.
Tentative Timeline:
Renewal will come in mid to late August. This will be presented in greater detail with recommendations and alternative options to consider with the final renewal.