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HomeMy WebLinkAboutMinutes - 19950209MINUTES 211 ORANGE COUNTY BOARD OF COMMISSIONERS CHAPEL HILL/CARRBORO SCHOOL BOARD AND ORANGE COUNTY SCHOOL BOARD FEBRUARY 9, 1995 WORKSESSION The Orange County Board of Commissioners, the Chapel Hill/Carrboro School Board and the Orange County School Board met on February 9, 1995 at 7:30 p.m. in the Government Services Center, 200 S. Cameron Street, Hillsborough, North Carolina, for a joint work session. COUNTY COMMISSIONERS PRESENT: Chair Moses Carey, Jr., and Commissioners Stephen H. Halkiotis, Alice M. Gordon, Don Willhoit and William L. Crowther. CHAPEL HILL/CARRBORO SCHOOL BOARD MEMBERS PRESENT: Chair Kenneth Touw, and members Sue Baker, Mary Bushnell, Mark Royster, Elizabth Carter and Superintendent Neil Pedersen. ORANGE COUNTY SCHOOL BOARD MEMBERS PRESENT: Chair Robert Bateman, and members Keith Cook, Susan Dovenberger, Larry Haverland, David Kolbinsky, Delores Simpson and Ralph Warren. Chair Moses Carey convened the meeting. He mentioned that the agenda includes all items suggested by both staff and elected officials. The meeting will be adjourned at 9:30 p.m. Items not covered will be considered at the next meeting of this group. 1995-1996 SCHOOL BUDGET FORMAT Ralph Warren made reference to the school budget and asked what caused the most confusion/concern to County staff and the Commissioners. Chair Carey indicated that definitions of the terms "continuation", "additional continuation" and "expansion" remain confusing and need further clarification. John Link said these terms were more clearly defined several years ago. The. definitions at that time were: Continuation - continuation of operations/programs from the previous year. Additional continuation - increase for expenses resulting from student increase. Expansion - new programs and initiatives. These definitions have been helpful by giving focus to the budget discussions. However, additional requests have been made for information about specific programs. It would be helpful to the budget process to know which programs have achieved their goals, etc. This would be an excellent time to review and make further improvements that would add clarity. The real issues are what has changed programmatically in each system and the expected outcome of that programmatic change. Larry Haverland indicated that adopting zero-based budgeting would require programs to be re-evaluated on a yearly basis, and would answer the questions surrounding "expected outcome". Mary Bushnell agreed and stated that the Chapel Hill/Carrboro School Board has also discussed zero-based budgeting. However, it is a radical change from the present system and will take much effort and continued planning to reach that goal. Neil Pedersen, Chapel Hill/Carrboro School Superintendent, stated that there is not sufficient information to put together a zero-based budget at this time. He indicated that he hoped to receive guidance about the fiscal picture for the County and what the school systems might expect in terms of funding for the upcoming year. 2i0 Mark Royster mentioned that zero-based budgeting does require accountability. The Chapel Hill/Carrboro system is currently moving toward "site-based" management. The School Board and administration are committed to moving at a pace that does not overwhelm the administration at the individual schools. The initial year for zero- based budgeting will be a stepping stone for subsequent years. This will be a gradual process. Larry Haverland indicated that the Orange County School Board and the Finance Office are also discussing the best way to move toward zero-based budgeting. Commissioner Gordon indicated that she would like to see the budget presented for each of the schools and the central office. She feels that the current categories are unwieldy and difficult to understand. Programmatic budgeting, with personnel costs, etc. assigned to each program, would be a step forward. More program differentiation needs to be given so that it is possible to understand the requests. Mark Royster indicated that Commissioner Gordon's suggestion is what zero-based budgeting will look like when it is fully implemented. Commissioner Willhoit commented that the rapid growth the Chapel Hill/Carrboro school system is experiencing makes significant expansion out of the question. He expressed concern that the motivation for requesting additional detail may be an attempt to second guess the school board about programs. Mark Royster suggested that an official economic forecast from the County would be extremely helpful for the School Boards in their preparation of the budget for the upcoming year. John Link indicated that County and School staffs do discuss what the upcoming year will look like in terms of possible funding implications and increases in student populations. Without looking at the start-up costs associated with the new schools, they are anticipating an increase of $850,000 in new pupil costs. Also the last $.04 on the $52 million dollar bond issue will cost $1.9 million. Commissioner Gordon indicated that increases usually are attached to new programs and a more differentiated budget would allow the Board of Commissioners to see how the new program fits into the overall plan. The Manager and Superintendents could work on creating a process which would take this into account. Also, it would be helpful if both school systems used the same format. .Commissioner Halkiotis suggested that a subcommittee be formed consisting of members from each of the School Boards and the Board of County Commissioners. This committee could get a clear overview of expenditures and make suggestions for improvements. Chair Carey stated that the goal of zero-based budgeting is one that needs to continue to be addressed by both school boards. There is no unanimity on either board on what should be the interim step for the upcoming year to improve clarity in the budget. He suggested that the Manager and Superintendents develop a proposal to be returned to each of the Boards for their consideration during the upcoming budget process. After that process is completed a subcommittee of elected officials could be formed to discuss this issue. FISCAL CHALLENGES: Start-Up Costs For New Schools - Impacts for 1995-1996, 1996-1997, and beyond: John Link indicated that unanticipated sales tax revenue was used for start-up costs for McDougal Middle School and the same will be used for Stanback. That is a short-range and insufficient remedy for the remainder of the new schools being planned. Another method of paying the start-up costs needs to be established for the remainder of the schools. Present policies regarding the use of property tax revenue vs. sales tax revenue may need to be reviewed. Commissioner Willhoit indicated that the policy of including start-up costs as i a part of the project costs is an appropriate one. However, the budget implication is that there is not enough money to implement that policy. The issue is how to channel sufficient money to cover all of these costs. The policy needs to be for the total start-up costs to be part of the initial project cost. John Link agreed that all start-up costs should be included in either the Bond or Sales Tax revenue on the Capital side of the budget. There are still new operating costs that have to be picked up through current expense. The issue is to be clear about which expenses fit each catagory. The definition of start-up costs in terms of equipment and supplies is fairly liberal. Textbooks, media center, and computers could be included in start-up costs. Neil Pedersen indicated that support staff does not transfer from the old school to the new school. These add up to very significant expenses. The new High School was too far along in the process for start-up costs to have been included in the project costs. However, the project costs for the elementary school did include the start-up costs. The only unbudgeted start-up costs for the elementary school relate to staff development and administrative staff hired in advance of opening. Chairman Carey indicated that he felt there was consensus in the group that start-up cost need to be included in the project cost, wherever possible. He noted that the Board of Commissioners' policy on how to allocate the 1/2 cent sales tax could again be readdressed. Commissioner Willhoit indicated that the 1/2 cent sales tax money is committed to the Court project for the short term. John Link concurred that the 1/2 cent sales tax money was already committed for the next several years. He suggested that one element of this discussion could be whether or not to continue to fund recurring Capital out of property tax or to consider some other means, such as the District Tax. Robert Batemen indicated that the County Commissioners are charged with financing the schools and he felt that it was inappropriate for the school Boards to tell the Commissioners how to do that. He opposes a District Tax in Orange County. Ken Touw pointed out that because the growth is occurring in southern Orange it places an undue burden on the northern orange residents who will be asked to help pay for schools being built in southern Orange. Using the District Tax would resolve that inequity. Commissioner Willhoit mentioned that several years ago the tax rate was increased for a two year period at which time the tax was eliminated. That method could be used for school costs. Commissioner Halkiotis asked that both systems consider reusing floor plans for new schools in order to achieve a savings. John Link mentioned that the County will begin to pay less on its indebtedness starting in the 1996-1997 fiscal year. The Board of Commissioners could decide to use that savings for start-up costs or recurring capital, etc. Larry Kolbinsky indicated that the Orange County School Board will make a commitment this year to reexamine all expenditures and hold down costs. Susan Dovenbarger suggested that both School Boards lobby State Legislators to commission and pay for architectural drawings for new elementary and high schools to be used by local systems. Commissioner Willhoit indicated that he felt the Manager could look at the school capital projections and report back to the Board. He suggested that the report encompass the entire County rather than by districts. He mentioned that a citizen contacted him recently and requested that the impact fee be raised to $3,000. Commissioner Gordon agreed that there were reasons to create county wide projections. However, in the short term Chapel Hill/Carrboro anticipates a much larger growth than the Orange County system. She mentioned that issues of funding equity standards for both operating and capital needs to be discussed. 214 John Link mentioned that both systems will receive $242,000 for unanticipated middle school start-up costs. Each system must absorb the remainder of the cost for capital needs. Chair Carey stated that he was hearing several different suggestions for funding. Funds could be raised on a countywide basis, a district wide basis and/or through the use of the impact fee. The inference is that the Board of Commissioners should be the ones to figure out how to raise the start-up costs without a sense of consensus from this group. He suggested that the Orange County School Board explore what the current feeling is in the community regarding a district tax. Keith Cook indicated that his concern is that a process be developed so that money will be available when it is needed. If that requires a tax, then he would support that idea. Commissioner Halkiotis mentioned that a Public Hearing on the Impact Fee is scheduled on March 21st. IMPACT FEE: Commissioner Gordon stated that there is a need to have an impact fee. Residential development should pay a portion of the cost of new schools. Residential development generates new capacity for residents which in turn leads to more students. The other reason for the Impact Fee is to generate pay-as-you-go-funds. For those two reasons, she feels that the Impact Fee is the correct way to go. Keith Cook indicated that he agreed with most of Commissioner Gordon's comments. However, he felt that those residents who move within the County should not have to pay the Impact Fee twice. Mary Bushnell stated that the Towns of Chapel Hill and Carrboro have been asked to include the schools in courtesy reviews for new housing development so that the ramifications of new development for the school system can be anticipated. Commissioner Halkiotis stated that he felt that setting the impact fee at $750.00 was a good, first time effort. However, he would like to see it increased, possibly with a sliding scale, so that it is more equitable. Commissioner Willhoit mentioned that the Board of Commissioners have voted to ask the towns to do an impact analysis for new developments. One of the flexible options that is being considered is affordable housing. This option would mean that when a subdivision is being planned, it would be required to include a certain number of small homes of approximately 1000 sq. ft. The sliding scale for the Impact Fee looks like a good idea, however, it involves an incredible amount of work. If considered, it would need to be phased in so that the Planning Staff could handle the increased work load. Mark Royster suggested that the issue of equity could be addressed by allowing residents to request exemptions from an Impact Tax based on income. Commissioner Willhoit indicated that allowing exemptions would create a hardship for the-,County because the tax would have to be collected from everyone and the subsidy would then have to come from the County's general fund. Bob Bateman indicated that the Orange County School Board will discuss the Impact Fee and send a letter to be read into the record at the Public Hearing on the 21st. Susan Dovenbarger commented that the impact of a new dwelling needs to be the determining factor which is best addressed through a tax. She also mentioned a concern for long term residents who move to another part of the County and do not increase the impact on the schools. That needs to be addressed within this system. Geof Gledhill indicated that an impact fee is considered to be a development exaction. The courts have said that there must be a rational nexus between the impact of the development and the fee that is being charged. There must also be 215 proportionality. This means that there must be a linkage between the ability to charge the fee and the amount of the fee. That linkage is the impact the fee has on a service that is being paid for by the fee. When a developer puts up a house, he can be charged for the cost of water and sewer, line charges, and school development costs. Traditionally, this has been done through the development of a trust fund so those fees will be used for specific purposes. That is how the County's ordinance is worded. Fees that are collected in the Orange County school system go into the Orange County trust fund and the same is true for Chapel Hill/Carrboro. The Impact tax can be adjusted but the Impact fee cannot. The County has tried to get authorization to pass a tax and may continue to pursue that option but the County is not in a position to adjust the fee. It is possible to include a portion of the impact fee in the buyers costs. Commissioner Halkiotis mentioned that both of the systems are incurring substantial costs in meeting the needs of individual children with special needs. This is an issue that needs to be kept in mind while discussing funding. He suggested adding "additional costs school systems face" as a future agenda item. Commissioner Willhoit asked if the school systems were discussing how to assure that similar courses are being offered to students in both systems. Mary Bushnell indicated that because of overcrowding in the Chapel Hill/Carrboro System, the exchange of students between school systems has been mostly those with special needs. They anticipate more cross-over of students when the new high school is completed. Commissioner Willhoit asked if the next meeting would be prior to the budget process. He requested a report from the school systems on the technology programs and where they are with that issue. It was decided by the three Boards to meet again prior to the beginning of the budget process. Chair Carey will discuss possible dates with the Chairs of the School Boards and notify all members of the time and date. The meeting was adjourned. Moses Carey, Jr., Chair Kathy Baker, Deputy Clerk