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HomeMy WebLinkAboutMinutes - 20090528 APPROVED 8/18/2009 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION May 28, 2009 7:00 p.m. The Orange County Board of Commissioners met for a Budget Work Session on Thursday, May 28, 2009 at 700 p.m. in the Southern Human Services Center in Chapel Hill, North Carolina. COUNTY COMMISSIONERS PRESENT: Chair Valerie P. Foushee, Vice-Chair Mike Nelson and Commissioners Alice Gordon, Pam Hemminger, Barry Jacobs, Bernadette Pelissier, and Steve Yuhasz COUNTY COMMISSIONERS ABSENT: COUNTY ATTORNEYS PRESENT: COUNTY STAFF PRESENT: County Manager Laura Blackmon, Assistant County Managers Willie Best and Gwen Harvey, and Clerk to the Board Donna S. Baker (All other staff members will be identified appropriately below) NOTE: ALL DOCUMENTS REFERRED TO IN THESE MINUTES ARE IN THE PERMANENT AGENDA FILE IN THE CLERK'S OFFICE. • Overview of Annual Operating Budget Revenues ➢ Financial Impacts of Reducing Tax Rate Below Revenue Neutral Laura Blackmon said that she wanted to review the budget revenues and the impacts of going lower than the revenue neutral tax rate. Donna Coffey made reference to the colored sheets at the Commissioners' places of budget impacts that are coming down from the State. Orange County, NC FY 2009-10 Manager's Recommended Budget Budget Work Session May 28, 2009 Southern Human Services Center, Chapel Hill, NC FY 2009-10 General Fund Revenues Recommended Budget Totals $177,589,039 (bar graph) FY 2009-10 Revenue Projections What Happened Between March and May 2009? •In March, impact of Revaluation was uncertain •March 2009 real property valuation estimates were fiscally conservative because Revaluation appeal filing process had not concluded •March 2009 revenue projections reflected activity for 8 months or less of fiscal year •Tax collection rates have improved since March 2009 •Currently on target or slightly higher than prior years' activities •Sales tax reimbursements from State have improved .Current projections are slightly higher than previous years •Departments had not completed final analysis of their particular revenues FY 2009-10 Revenue Projections Why are recommended General Fund Revenues $3.3 million more than anticipated in March 2009? •Property Taxes .$1.1 more in Manager's Recommended Budget than anticipated in March 2009 •Sales Taxes .$1.3 more in Manager's Recommended Budget than anticipated in March 2009 .Land Transfer and Construction Related Revenues .$400,000 more in Manager's Recommended budget than anticipated in March 2009 •Other Revenues .$500,000 more in Manager's Recommended Budget than anticipated in March 2009 Undesignated Fund Balance (bar graph) Undesignated Fund Balance as a Percentage of General Fund Expenditures (line graph) County and School Related Debt Service .Debt Service payments for FY 2009-10 total $25.7 million .Equivalent to 17.1 cents on FY 2009-10 ad valorem tax rate .14.5% of total General Fund .Compared to Board approved debt capacity limit of 15% .Debt service payments related to 2001 Bonds equates to about 3.4 cents on ad valorem tax rate .Total Debt Service payments for FY 2010-11 anticipated to increase by $2.5 million to $28.2 million .Mainly attributed to payments for April 2009 $30.9 million debt issuance .Financing included Library, Office, Gateway, Parks, Property Information System (PIMS) .First payments scheduled to begin in FY 2010-11 .FY 2010-11 payments total $3.9 million .Total increase offset by other existing debt payments reducing in FY 2010-11 .Anticipated tax rate impact of$2.5 million is between 1.5 and 1.6 cents on FY 2010-11 tax rate .It will take a General Fund budget of$188 million in FY 2010-11 in order for debt service payments not to exceed 15% of General Fund .$188 million * 15% = $28.2 million .Calculations do not take into account issuance of additional debt related to unfunded projects such as Carrboro High Arts Wing or Elementary#11 Debt Service Has Increased $10.3 Million Since FY 2006-07 (bar graph) Local Financial Support to CHCCS and OCS .Total Local Financial Support Equals $105.8 Million .Total General Fund Support equals $87.1 million .Equivalent of 58.9 cents on the ad valorem tax rate .$85.4 million General Fund support for current expense, capital, debt service and Fair Funding .48.1% of Total General Fund revenues .$1.7 million General Fund support for School Health Nurses, Social Workers and Resource Officers .Additional 1% of total General Fund revenues .School funding not reduced as a result of anticipated loss of Public School Building Funds .$1.2 to $1.4 million loss of revenue that offsets school related debt service .CHCCS receives additional $18.7 million from special district tax Local Financial Support to CHCCS and OCS (table) Scenarios For Possible Modifications to the FY 2009-10 Manager's Recommended Budget (table) Tax Rate Tax Rate Tax Rate Tax Rate Tax Rate Reduction Reduction of Reduction of Reduction of Reduction of of .5 1 cent 1.5 cents 2 cents 2.4 cents cents FY 2009-10 85.80 85.80 85.80 85.80 85.80 Recommended Tax Rate (this is the revenue neutral rate for the County; reflected in cents per$100 valuation Possible Tax .50 1.00 1.50 2.00 2.40 Rate Reduction (cents per$100 valuation) Total Dollar 85.30 84.80 84.30 83.80 83.40 Equivalent of Tax Rate Reductions Schools Share of $362,037 $724,074 $1,086,111 $1,448,149 $1,737,778 Reduction (48.1% of total recommended General Fund Budget County Share $390,639 $781,278 $1,171,917 $1,562,555 $1,875,066 (51.9% of total recommended General Fund Budget Commissioner Gordon made reference to the page, "County and School Related Debt Service," where it says, "FY 2010-11 payments total $3.9 million." Donna Coffey said that the payments would increase the debt service by $3.9 million. There will also be some other debt service payments that decrease next year. The net between those that are increasing and those that are decreasing is $2.5 million. Discussion ensued on how to go about applying and receiving stimulus money. Commissioner Gordon requested that the staff find out exactly how to get this money. Commissioner Nelson asked about the $1.4 million that is lost from the public schools building funds and where this is calculated into. Chair Foushee said that these were funds that were budgeted but that would not be received next year. This is still $1.4 million that the County cannot use for other things. He said that one could look at it as 48.1% plus this other loss. Chair Foushee reiterated that the Board would like to get any information on applying and use of stimulus money for perhaps funding the arts wing at Carrboro High School. Commissioner Hemminger asked about the debt for an arts wing without the stimulus money. Donna Coffey said that it depends on the size of the loan and the interest rates. The usual term is 15 or 20 years. Donna Coffey will bring this item back with more detailed information on the debt service scenarios. Commissioner Yuhasz requested information on the debt service numbers for the next 5 years if no new debt was added. Chair Foushee acknowledged Dr. Ingram from Durham Technical Community College • Chapel Hill Carrboro City and Orange County Schools CHCCS Board Chair Lisa Stuckey said that the schools met with the Board of County Commissioners a month ago with the operating and capital budget requests. She said that the schools are being squeezed from two directions as both the County and the State reduce funding. With each budget iteration out of Raleigh, the situation is worse for the schools. She asked that the County Commissioners do all they can for the schools, in particular allocating 48.4% to the schools as they did last year. She said that the school board amended its CIP last week to include the Carrboro High School arts wing in the "funded projects" category. The anticipated costs are $4.5 million. She said that she was with Congressman Price today and he asked how the school system would use the federal capital stimulus money and she said that they were not getting anything except this $5 million interest-free loan. She asked the Superintendent to be in contact with Congressman Price in case there are funds that might be accessed. She reiterated that the school board would like to complete the arts wing and begin Elementary#11. Superintendent Neil Pedersen gave an update on the presentation made in April. He compared the Manager's Recommendation with what was requested. The Manager's Recommendation is $1.2 million less than the request. There are a total of 14 positions lost. He made reference to the $2.5 million in reductions that the school system is going to have to make and said that he attributes these to the reductions in local funding. He continued going through the packet of information. The second to the last page had information on the difference in funding if the Board chose to fund the schools at 48.4%. This would result in another$327,000 for CHCCS. The last page was the letter sent to the Board of County Commissioners officially informing that the school board has moved the arts wing to funded projects. He said that it is possible for the school system to redirect$130,000 of Title I money and $400,000 of IDEA funds legally. Commissioner Hemminger asked about the school district tax and any suggestions to change this. Lisa Stuckey said that, with the revaluation, the Board of County Commissioners has the authority to fund the district up to 23 cents. Commissioner Jacobs said that the consequence of losing funding is bad, but it should not be all on the County Commissioners. Commissioner Jacobs asked how CHCCS was with its fund balance and how much it has tried to be creative with what to do with the fund balance. Neil Pedersen said that the State has not put a hold on it and it is at 5%. Discussion ensued on the increase in class size by two students. OCS Board Chair Steve Halkiotis said that the trend now seems that N.C. is starting to go backwards with its schools. He said that he is shell shocked to see some of the recommendations coming out of Raleigh. He said that Superintendent Patrick Rhodes told him today that he received a "Mandatory Legislative Request" regarding the fund balance. One of the questions is, "How many months of operating expenditures does this amount represent? If all funding sources went away, how long could you operate on the fund balance alone?" He said that the OCS fund balance is approximately $1,049,000. The school system could only operate nine days if it had to depend on fund balance. He said that he is looking to the County Commissioners to help the children of Orange County. He said that this budget is going to fall on the backs of the populations that can least afford it. The at-risk populations are going to suffer. He said that he has asked about the stimulus money and he cannot get any answers. Superintendent Patrick Rhodes said that it is important to know that the Board of County Commissioners is the safety net for the employees and the at-risk children. He said that the State budget cuts will be devastating. For the OCS, they are looking at 11.3% reductions next year, or$4.4 million, and the following year 12.8% reductions, or$5.3 million. To break this down in human terms, this equates to a $33,000 reduction in at-risk funding; a $250,000 reduction in textbooks; larger class sizes; a loss of 30-40 teachers; less one-on-one help; loss of counselors and clerical support; loss of training funds; and a loss of transportation funding ($207,000). Regarding the supposed stimulus money, he thinks that the school system can capture back about 6.5 positions. He said that this is a bare bones budget and he has made a good faith effort to reduce expenditures on the local side. He urged the Board to go no lower than the Manager's Recommended Budget. Commissioner Jacobs asked if OCS has looked at whether year-round schools are cheaper or more expensive. Patrick Rhodes said that he has not looked at this, but there may be analyses out there. There are the same number of school days and the same number of teacher contract days. It is probably not much different. Commissioner Jacobs said that they are still operating schools with the same assumptions that they did in the 19th century. He said that he does want to cut money from the County budget and he does want to fund more for the schools, but no one could have imagined what the State is doing to public education in North Carolina. Commissioner Gordon said that what the State is doing to public education is unprecedented in her time. She wants to do as much as possible for the schools. • Durham Technical Community College Dr. Bill Ingram said that Durham Tech is glad to be partnered with Orange County and they are prepared to work within the proposed budget for next year. Orange County is responsible for paying for the operation of the Orange County Campus in the Waterstone development. Last year the budget request was for$580,000 and this has been reduced by 5%. He said that Durham Tech is facing the same challenges as the public schools and they expect a 6-7% reduction in funding next year. He said that he will spend every dollar wisely and serve the community. Commissioner Jacobs asked about stimulus money and training for"green"jobs. Dr. Ingram said that the stimulus money will come to Durham Tech in at least three different ways— through the community college system, Work Force Development for additional skills training, or increases in pell grants. • County Employee Pay and Compensation Orange County, NC FY 2009-10 Manager's Recommended Budget Pay and Benefits Budget Work Session May 28, 2009 Background •Challenging Task of Maintaining Pay and Benefits with Revenue Neutral Budget •Input from Organization •Employees Count •Recommended Budget Impacts All Employees Past Pay & Benefits Actions (table) Basically, there will be no COLA increase, no In-Range increase, and an increase in health insurance of 4%. Benefits Changes Recommended in FY 09-10 Budget •Health Care Plan •Retiree Health Care Plan •Dental Care Plan •401 (k) Plan Contribution Funding 4% Health Increase $275,000 —Calendar Year 2010 Trended @ 8% Increase —Options for Reduction will be Recommended in Fall Funding Archer Reclassifications $80,000 •Study Report Provided to Board 5/19/09 •Will be Reviewed in September `09 •Accept Job Descriptions •Accept Structure for Reviewing Positions .30 Positions Identified for Reclassification .25 Positions Receive Adjustment by Policy. Twelve-month Hiring Freeze $750,000 •Positions becoming Vacant after 7/1/09 are Frozen for 12 Months •Process Reviews All Positions for 12 Month Freeze •Positions Determined as Critical are Exempted •Frozen Positions evaluated for possible elimination Retirement Incentives $375,000 •Employees Eligible for Full Retirement provided incentive based on years of service •Policy Developed for Approval •Communication Process •Incentive Includes: •Lump sum payment from 6-16 weeks salary •Partial Longevity Pay •Vacation Paid up to 240 Hours •Health Care Provided based on Established Criteria Voluntary Unpaid Leave $100,000 •Employees may Request Unpaid Leave •Must be approved by Department Director and Manager Suspend non-LEO 401(k) $500,000 •Current County Contribution of$715 per year •Low amount for those providing Employee Contribution •Employees may still make voluntary contributions Benefits Not Recommended for Adjustment in FY 09-10 Budget .Life Insurance .Flex Comp Plan •Employee Assistance Program •Retirement •Annual Leave •Sick Leave •Holidays •Personal Leave Days •Petty Leave •SportsPlex Discount •Tuition Refund •Longevity Pay .401 (k) Sworn LEO Chair Foushee pointed out that the Towns offer up to three days of funeral leave and she asked if Orange County offers this. It does not accumulate. Donna Coffey said that funeral days are offered by Orange County and personal leave is in addition to other leave. Chair Foushee asked that funeral leave be listed on the sheet. Commissioner Jacobs asked about the 12-month hiring freeze and how critical positions were determined. Laura Blackmon said that this is a process where the department applies through Human Resources, which sends it to Budget, which makes a recommendation to the Manager. Commissioner Jacobs asked about the retirement incentives and what this saves. Donna Coffey said that the $375,000 is a net savings. Discussion ensued about the projections for the retirement incentives. The projection is that 25% of the eligible employees will take advantage of it. Commissioner Hemminger said that she has concerns about the longevity pay. She would like for it to stay on as an option to reduce. Laura Blackmon said that there are 344 employees out of 840 employees who get longevity pay and it is people on the upper end of their pay grade. There are some arguments about whether longevity pay is the way to go and whether merit increases would not be better. Commissioner Jacobs said that it was suggested to use language about postponing some of these benefits instead of just eliminating them. He said that there are adjustments that need to be made beyond the pay and classification plan. He wants to put pay and benefits in a category to revisit. He made reference to pages 42-44 and requested that the actual numbers be put in bold versus the equivalencies. Chair Foushee said that she would hope the Board could have this conversation in total and she does not want it to look like the County Commissioners are balancing the budget on the backs of employees. Laura Blackmon made reference to the last page of the abstract and the table with the green line at the bottom. This table shows different scenarios of achieving the targeted tax rate. She said that some of the revenues are guesstimates because there is no way to know what the State is going to do. There may have to be some mid-year adjustments. The items on the table for adjustment include a decrease in the safety net, postponement of the Comprehensive Plan and videostreaming/podcasting, suggested furloughs, and reducing longevity payments. Commissioner Yuhasz asked if there was a figure to keep all of the libraries open at their current level and adequately fund the new library. Laura Blackmon said that staff has been working with the figure $250,000, which is still a reduction in hours at the main library and keeping the branch libraries at their current levels. Staff will verify these numbers and provide figures for different scenarios for the main library. Commissioner Pelissier said that she does not know the extent to which staff has followed all of the details about everything that is happening. She wants to make sure that the employees know the big picture and not just how they are being impacted with the budget. She suggested that a letter be drafted on behalf of the County Commissioners to staff explaining what has been done and why. Laura Blackmon said that she has sent out information to employees, particularly what was in the recommended budget. She said that the employees are there to serve the public, and when they see cuts, they see an impact in the way that they can serve the public. Chair Foushee asked the Chair of the ERC to speak about how the employees feel about the budget. ERC Chair Glen Bowles said that the employees would appreciate anything the Board of County Commissioners could communicate to them. He said that the Manager has been communicating the generalities as she knows them to the employees. He said that as the Chair this year, there has not been a lot of agreement as to what ought to happen. He said that they would like to work with Human Resources on the retirement issue because there has been a lot of chatter on this issue. He would encourage the continued dialogue. Laura Blackmon said that there is a general perception among employees that every year the schools get everything they want and the County employees do not (funds, equipment, computers, staffing levels, new vehicles, etc). Commissioner Jacobs said that the Board wrote a letter in a previous year when it was a tough budget. He is glad Commissioner Pelissier brought this up. In 2007, 80.6% of the capital spending was going toward schools and now it is down to 72%. He said that this is because the space study was done and the County is trying to make a better work place for people. The trend has been that the County Commissioners show support for the staff. He hopes that they can keep doing this. Commissioner Jacobs said that the Board has not looked at the departmental programs for what might be cut or adjusted yet. He said that there should be more than this list. He would like to have a focused conversation on a list of things that can be considered. Discussion ensued about how the retirement was administered. Commissioner Gordon said that she would like to leave the branch libraries open and not go beyond the proposed 54 hours for the new library and then discuss this at the Assembly of Governments in the fall. The Board agreed. Regarding longevity pay, Commissioner Yuhasz suggested doing a percentage cut across the board rather than to cut a fixed number. Commissioner Jacobs asked for a list of who is in each pay grade for longevity pay. # Eligible Years of Total County Longevity Pay Employees Average Service (% of Salary) (All Funds) Payment 10 but less than 15 1.50% 149 $695 15 but less than 20 2.25% 65 $975 20 but less than 25 3.25% 72 $1,854 25 or more years 4.50% 59 $2,817 Total 345 $1,353 Estimated Savings FY 2009-10 Recommended Budget Reduce by Reduce by Reduce by (General Fund) .25% .50% .75% $379,375 $38,000 $76,000 $114,000 Chair Foushee said that she would like to look more at voluntary unpaid leave. Commissioner Hemminger said that she would like to see how much it would be to add the 48.4% for school funding. With no further items to address, the meeting was adjourned at 9:59:51 PM. Valerie Foushee, Chair Donna S. Baker, CMC Clerk to the Board