A significant portion of the meeting was dedicated to evaluating the retirement options available to city employees. The council compared the potential benefits of the Florida Retirement System (FRS) and Social Security. It was noted that long-term employees might prefer sticking with their current retirement plans, while newer employees might find switching to FRS or Social Security beneficial due to the fixed monthly payments provided. Concerns were raised about the initial motivations behind leaving the previous retirement system, with remarks on the anticipated large retirement fund growth, which did not always meet expectations. The FRS and Social Security were argued to offer more financial stability for staff members upon retirement, outweighing their disadvantages.

The council also addressed the city’s healthcare benefits, noting that Destin pays more for healthcare benefits than neighboring municipalities such as Fort Walton Beach and Niceville. The city covers 66 and 2/3 percent of family premiums, a figure considered high compared to peers who typically cover 100 percent for employees but offer less for family members. With healthcare costs rising annually by 5 to 15 percent, there was a call to realign the city’s benefits structure to remain competitive without affecting employee wages or service quality. A proposal was put forward to decrease the city’s contribution to family coverage from 66 and 2/3 percent to 50 percent, which would still be higher than many competitors.

Potential cost-saving measures were discussed, including a new initiative involving a “difference card” to reduce costs for employees and the city. The need for fiscal prudence was emphasized, given that the city spends over $10 million on employee wages and benefits. There was also a mention of forming a senior staff committee to comprehensively assess the FRS options. The committee’s goal would be to ensure that employees have the necessary information to make informed decisions regarding their retirement plans.

An employee satisfaction survey revealed a split preference among staff regarding retirement systems. Approximately half of the employees wished to remain in the existing system, mainly long-term staff with vested interests, while the other half, particularly newer employees, showed interest in transitioning to the FRS. Discussions were held about whether employees were adequately informed about the implications of switching plans. Small group sessions had been conducted to communicate with employees about their preferences and concerns.

In addition to retirement and benefits discussions, the council reviewed the preliminary operating budget for fiscal year 2026. The proposed budget of $27.3 million reflects a 2% increase from the previous year’s $26.88 million budget. A modest 3% increase in staff wages was proposed, including adjustments for the cost of living and merit increases. There is a notable 17% increase in taxes and benefits, attributed to calculations involving social security and the FRS. Operating expenses are suggested to decrease by 3%, while debt service and grants are expected to rise by 1%.

The city manager highlighted that the increase in personnel costs results from a 7% increase in overall personnel expenditures, with only 3% attributed to wages and the remaining 17% linked to benefits. Concerns were voiced about including the FRS in the budget without comprehensive understanding and discussion in prior meetings. However, there was recognition of the potential benefits of the FRS, with a council member reflecting on previous positive experiences with the system and its potential to offer excellent long-term benefits for employees.

A dialogue unfolded regarding the implications of the FRS for employees, particularly concerning vesting and the financial security it could provide. It was emphasized that if an employee does not reach the vesting period, they would still receive their contributions and any growth accrued. A council member noted that the decision to opt out in the past might have been a mistake.

The city manager outlined the next steps, which involve receiving certified values from the property appraiser, followed by a second workshop focused on capital projects. The process will culminate in adopting a tentative millage rate and detailed budget hearings in September. The conversation invited a collaborative approach to ensuring that council members received the necessary information and resources to make informed decisions regarding the budget and proposed changes to the retirement system.