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HomeMy WebLinkAboutAgenda - 04-07-2011 - 3ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 7, 2011 Action Agenda Item No. 3 SUBJECT: Fiscal Year 2011-12 Budget Drivers DEPARTMENT: Financial Services PUBLIC HEARING: (YIN) No ATTACHMENT(S): INFORMATION CONTACT: Frank Clifton, 919-245-2306 Clarence Grier, 919-245-2453 PURPOSE: To receive information in regards to the budget drivers for the upcoming fiscal year 2011-12 General Fund Budget. BACKGROUND: At the first Budget Work Session in February 2011, we provided information on possible budget impacts, based on the information available at that time, while anticipating the affects on the upcoming FY2011-12 budget process. The information presented at this work session will update the previous information based on the budget requests submitted by each County department. Additionally, new information from the State and our Health Insurance provider has become available, which will impact the budget preparation. We currently anticipate the FY2011-12 General Fund budget to be approximately $176 million. Although this is the amount we anticipate the budget to be, several major budget dividers that will need to be addressed before we can finalize the budget have come to our attention. Possible known budget drivers for the FY2011-12 budget are as follows: • Employee and Retiree Health Insurance increases - up to 25% $1.7 million • Jail Fees -potential loss of revenues (Misdemeanants} 1.8 million • Misdemeanant expenses added • Total budget impact 1.6 million $5.1 million This represents 4.07 cents on the current property tax rate for the FY2011-12 budget. 2 Health Insurance Currently the County pays approximately $6.6 million for health insurance across all funds for employees ($5.5 million for the General Fund) each fiscal year. Additionally, the County pays approximately $1.4 million per year for all retiree health insurance related costs. For the upcoming budget year, the North Carolina Association of County Commissioners has informed us that they will no longer administer our health insurance plan as of December 31, 2011. Additionally, Mark III Benefits has informed us that we can expect up to a 25% increase in health insurance for employees and retirees for the calendar year ending December 31, 2012. We estimate the increase and the affect on the FY2011-12 budget to be as follows: • Employee health insurance • Retiree health insurance • Tota I $1.2 million .5 million $1.7 million Additionally, we anticipate based on past experience that our health insurance costs will increase by 15 to 20 percent per year as a result of claims paid in previous fiscal years. Annually, this would represent an increase of $1.1 million to $1.5 million per year in health insurance for current employees and retirees. We would recommend the Board of County Commissioners explore other options of funding the county's health insurance benefits to control the increasing insurance costs of the employees and retirees such as: • Self Insurance-The County pays all health insurance claims. • 80120 Plan -The County pays 80 percent of the costs of insurance and the employee pays 20 percent of their insurance. • 70130 Plan -The County pays 70 percent of the costs of insurance and the employee pays 30 percent of their insurance. State Misdemeanant Expenses As part of the current year budget deliberations and development, the General Assembly has proposed moving the misdemeanants currently housed in state prisons to the County jails. This would have a material negative effect on our FY2011-12 budget. Currently the jail houses 147 prisoners, 70 of which are Federal prisoners, which we are reimbursed an estimated $1.8 million per year for housing. If the State's budget is passed with the housing of misdemeanants placed on the County Jail, we can expect the following impact: 3 Number of Inmates Housed - A Potential number of days housed - B Current cost per day per inmate for FY2011-12 - C 70.00 365.00 $ 63.00 Total potential cost of housing State misdemeanants (AxBxC) $ 1,609,650 This would include medical and other related jail costs. This would not include any potential costs due to over crowding. FINANCIAL IMPACT: There no financial impact as a result of accepting this information. The financial impact will result from funding decisions made during the FY2011-12 budget process. RECOMMENDATION(S): The Manager recommends that the Board receive the information and provide guidance to staff in regards to preparing FY2011-12 budget.