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HomeMy WebLinkAboutMinutes - 20030610APPROVED 912103 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION June 10, 2003 The Board of County Commissioners met for a Budget Work Session on Tuesday, June 10, 2003 at 7:30 p. m. at the Southern Human Services Center in Chapel Hill, North Carolina. COMMISSIONERS PRESENT: Chair Margaret W. Brown, and Commissioners Alice M. Gordon, Stephen H. Halkiotis, Barry Jacobs COMMISSIONERS ABSENT: Moses Carey, Jr. COUNTY STAFF PRESENT: County Manager John Link, Assistant County Managers Rod Visser and Gwen Harvey and Clerk to the Board Donna S. Baker (All other county staff will be appropriately identified below). NOTE: ALL DOCUMENTS REFERRED TO IN THESE MINUTES ARE IN THE PERMANENT AGENDA FILE IN THE CLERK'S OFFICE. Commissioner Carey was out of town and could nat attend the meeting. 1. Chair Review of Schedule and Topics Chair Brawn opened the meeting. 2. School Budgets and CIP • Caunty Manager Comments John Link referred to the yellow sheet, which is the mathematical equations for per pupil funding for school systems in the State. The blue sheet is the Chapel Hill-Carrboro City Schools and Orange County Schools focal requests. He briefly explained the yellow sheet. He said that, by State law, the Caunty Commissioners appropriate money on a per pupil basis. He pointed aut that the Caunty Commissioners do not make any decisions on the specific programs that the board of education ultimately decides. Secondly, the County Commissioners have no latitude in changing the budget after it is adopted. He said that the increase in $50 per pupil equates to balancing the entire County budget, school expense, and funding versus the operations of the rest of County government. The target for funding of schools is 48.1 % of the entire County budget. The recommended budget is 48.3%. He made reference to the public comments that the County Commissioners fund the schools at full funding. Full funding would equate to another four cents on the tax rate, assuming the rest of the budget is approved by the County Commissioners. He made reference to the gap in the percentages of requested funds for each school system and said that UCS asked fora 25% increase and CHCCS asked fora 7% increase. He reiterated that the boards of education ultimately make the decisions on which of the line items are funded. • OCS Superintendent and Board of Education Presentation Mike Williams, OCS Interim Superintendent, gave a PowerPoint presentation. He said that the budget outlook for 2003-2004 presents a challenge to those who believe in a strong public school system. There are declining revenues at the State level, increasing student numbers at the local level, and a declining fund balance. He said that they chose the title of the report, "Budget Development Status Report" because the development of their budget is an ongoing project. He explained the six major funds that the school systems operate under -State Public School Fund, Local Current Expense Fund, Federal Grant Fund, Capital outlay Fund, Child Nutrition Fund, and Enterprise Fund (childcare}. For the current year the OCS budget in the six areas totals $55,873,230. The Local Current Expense Fund constitutes 35% of their operating budget. This fund supplements State and Federal funding in some areas and is the sole source of funding for many critical areas. This year, they budgeted $19,593,944 in the Local Current Expense Fund. The projected increase for 2003-2004 is $605,294 (3% increase) and totals $20,199,238. The increase is due to projected personnel cost increases (salaries, insurance, retirement) and projected student enrollment increases. He spoke about the fund balance history. There was a significant increase in expenditures this year along with a significant decrease in revenues, which forced them to appropriate$1.7 million from the fund balance. The expansion budget includes $1.4 million in human resources and $422,000 in curriculum and instruction. These requests added to the continuation request totals $20,266,703. The Manager's recommended budget leaves the OCS with a shortfall of $1.2 million in current expense continuation. When coupled with the expansion needs, they are $3 million short of being able to fund the continuation and expansion needs. He then spoke about the history of recurring capital outlay funding. The capital outlay request for 2003-2004 is $1.2 million and the recommended appropriation is $742,072. The shortfall is $488, 678. Regarding the State Public School Fund, in the Governor's Budget, they would be reduced by $398,431; in the House Budget, the planning allotments would be reduced by $347,351; and in the Senate Budget, the planning allotments would be reduced by $447,325. These three budgets are now being considered by a conference committee. In summary, they are facing shortfalls and reductions in all four areas - $1.2 million in current expense continuation; $1.8 million in expansion needs; slightly less than $500,000 in recurring capital outlay; and approximately $400,000 in the State Public School Fund. This represents a total shortfall of almost $4 million. He said that the challenge of the Board of Education is to develop a plan to address these shortfalls. He reiterated that this was an ongoing process. ^ OCS and County Dialogue Commissioner Gordon said that she was intrigued about the mention of revenue enhancements and she asked if they have talked about the district tax. Mike Williams said that the Board of Education is anon-taxing entity and they are only looking at fee increases at their facilities. He said that there is no discussion about the district tax at this time. Chair Brawn asked about the start-up costs of Cedar Ridge High School and Mike Williams said that it was about $1 million. Chair Brawn said that this is a chilling view coming from the State level. Mike Williams said that the State would say what cuts must be made for about half of it and the board of education is responsible to reduce the additional amount from the budget. Commissioner Jacobs asked for Mike Williams to transmit to the County Commissioners the exact start-up costs for Cedar Ridge. Chair Brawn asked about the student numbers for Orange High School and Mike Williams said that Orange High served in excess of 1,100 students this year and it will drop to around 900 with the move of the senior class to Cedar Ridge. Commissioner Jacobs said that they have started a new initiative to have a nurse in each school over afour-year period. There is $173,000 in the Manager's budget for this in the Health Department. He said that if this were put into per pupil allocations instead of into nurses, the Orange County system would get $67,000 more. He asked if they had a preference in this allocation. Mike Williams said that the placement of a nurse in all schools has been an on-going goal of the board of education. The final answer would have to come from the board of education. Commissioner Halkiotis asked John Link about the mandates listed by CHCCS and the mandates for the OCS and said that they are not the same. He asked if the Manager and the superintendents have discussed what a mandate is. John Link said that they have not had discussions on this in the past year. He said that he has a severe definition of a mandate, and that is if you do not comply, the State takes away money or puts you in jail or threatens to do either one. Boards of education have their own expectations in terms of service. John Link said that this has not been agreed upon by definition, but they would all agree that salary increases for existing teachers and health insurance for these teachers would be a top priority and would be a mandate compared to other line items. Commissioner Halkiotis said that the Board might want to consider a more specific definition of "mandate". He asked John Link when he recommends monies for mandates and the State does not follow through if the County took the money back. John Link said that the money stays with the school systems and if the State gives money back to the school system then there is no recourse to adjust the school or County budget. Commissioner Halkiotis asked Mike Williams about his response and Mike Williams said that the two systems have a different approach to mandates. OCS listed as mandates those things, which, if not funded, would be either unreasonable or irresponsible. Commissioner Halkiotis said that in the future as things get more financially tight, we need to tie down the issue of mandates and there needs to be consistency. He suggested that both school systems meet with the Manager and discuss the definition of a mandate. John Link said that there is a proposal in the House or the Senate that would pursue reduction in classroom size and would send money to school districts but would take money away from the vocational side. The expectation is that the County Commissioners would fund the portion taken away from vocational services. All three governing bodies need to be alert to this. Commissioner Gordon said that both school systems need to say what the State mandates for class size and what are the current class sizes for each of the grades. Chair Brawn made reference to the fund balance and asked if OCS was going to use the $1,064,000 to balance the budget. Mike Williams said no, but that several years ago the school district targeted $1 million to keep in the fund balance that is not appropriated. Commissioner Jacobs made reference to mandates about class sizes and he heard that few school districts in the State actually follow the mandates for class size reduction if they did not have the money. He would be interested in knowing how many school systems are actually following what the State says that it is funding if they cannot come up with the local funding to match it. ^ Operating Budget ^ Long Range Capital Plans {CIP) Mike Williams referred to the CIP document, which lists the needs and the projected revenue stream. They find themselves with a $600,000 deficit between what they would like to do and the projected revenue stream. They will have to make adjustments in the budget. The only request they would make of the County Commissioners is to continue to look at the revenue streams and enhance and protect them as much as possible. Commissioner Jacobs asked Finance Director Ken Chavious to clarify the fund balance. Ken Chavious said that each fund is a separate accounting entity. The 2.7% applies to the local current expense fund only. Commissioner Halkiotis asked that the information that Commissioner Jacobs asked for regarding class sizes be provided as soon as possible {tomorrow morning) and get it faxed to all County Commissioners because it is important in the decision making process. Brenda Stephens echoed what Mike Williams said that their opportunity during the budget season is going to be challenging at best. Mike Williams said that it has been his pleasure to serve as the interim superintendent these past 10 months. He thanked the board of education and the County Commissioners for the opportunity to do this. It is his observation that Orange County takes the lead in terms of respect and support far the public schools. He commended Orange County for this. Commissioner Jacobs said that he thinks that it is scandalous that there are counties in this state that only provide $600 per pupil. He is amazed that the legislature in Raleigh is taking small steps and claims that they are actually addressing the inequities in the education system. • CHCCS Superintendent and Board of Education Presentation Superintendent Neil Pedersen and Vice Chair of the CHCCS Board of Education Gloria Foley made this presentation. Gloria Foley said that their Chair, Valerie Foushee, was unable to attend tonight due to a family illness. She said that they are concerned that the Manager's budget will cause a shortfall with meeting some very pressing needs - opening a new school, dealing with the growth of students, and maintaining the quality of service. She said that the public hearings were held on nights that the CHCCS had other functions. She pointed out the people in the audience who were in support of the CHCCS budget. Neil Pedersen gave a PowerPoint presentation and expressed his gratitude to the County Commissioners. He said that they did submit a conservative budget with only an 8% increase in a year in which they are opening a new school. The identified needs include meeting the demands of student growth, eliminating the achievement gap, serving limited English proficiency students {goal of 1 20 teacher to student ratio), subsidizing meals for students, and start-up casts for Rashkis Elementary. Regarding Child Nutrition Services, this is aself-supporting budget. They have concluded that unless they raise lunch prices or lower hourly wages then they will need to make a local contribution to the Child Nutrition Services budget. They would like to make a contribution of $76,000. He explained the reasoning behind the requested special district tax increase of two cents, which was because of the increase in costs of opening Rashkis Elementary. The Manager's proposed budget includes $2.4 million. There is a decrease in projected revenue of $82,358, which leaves them with $2.3 million. The budget priorities that are not funded by this proposal include local supplement for 11 new State teachers, teacher assistants, one ESL teacher, middle school co-curricular support, local share of Japanese Language grant, coordinator of student enrollment, employee assistance program, school crossing guards, after school transportation, dual language program transportation, student AP exams, world language teachers, and child nutrition subsidy. The grand total of unfunded priorities is $936,989 and the budget available is $27,144. If the district tax were increased by two cents, the shortfall would only be $161,182. The recommended district tax increase of .8 cents would leave a shortfall of $909,845. If all of it were addressed through a per pupil appropriation, it would require an increase of $86 per pupil. Regarding the CHCCS Local Undesignated Fund Balance, they are appropriating $1.5 million from this. This would leave them with an undesignated fund balance of $1.3 million, which would be 3.13% of their general fund local expenditures. This is less than the recommended 5.5%, but they think it is reasonable in these tight financial times. He mentioned that the State reductions are estimated at $700-800,000. They are not asking the County to make up this difference. He attended a meeting yesterday in Raleigh and the State revenue is being reduced again but there is federal assistance available to make up far the shortfall. In order to replace the State reductions, they may have to do some or all of the following: reduce number of middle school SR~s (school resource officers), reduce number of clerical positions in elementary schools, reduce central office administrative travel and supply budgets, and reduce number of days State-paid teacher assistants work. Neil Pedersen said that in regards to recurring capital, they do support the Manager's recommendation. Gloria Foley said that they believe that they presented the Board with a good proposal for the third high school. This is in the right location at the right time. Neil Pedersen said that at the last Board of County Commissioners work session attended by the boards of education, they were asked to prioritize their unfunded capital projects. The priorities are, in order: Elementary School #10; Middle School #5; new central office; Lincoln Center conversion; Elementary School # 11; Culbreth Science Labs; and McDougle Auditorium. He then listed the 2003-2004 funded CIP projects. Regarding the third high school, Neil Pederson said that in February, the board of education was clear in stating that its desire for the third high school was to build it in the southern end of the district with the capacity of 1,000 students and core facilities for 1,500 students. As they proceeded in developing a budget for this, they tried to make it work so they could move forward. They scaled back the plan to 1,000 students and core facilities for 1,000. If funds were available, they would prefer to eventually have a school for 1,500 students. He said that all of the $4 million overage from the County standards is attributable to the higher land and site development costs because of typography. They would like to open this school in 2006. ^ CHCCS and County Dialogue Chair Brawn asked about expansion of sports and Neil Pedersen said that the sports that they have added are male and female lacrosse and female field hockey at four middle schools. Chair Brawn asked for specifics on the after school transportation and Neil Pedersen said that at the middle school they provide after school buses Monday thru Thursday for after school programs with no fees. At the elementary level, they have afee-based transportation program that is not related to after school. All of the high schools have after school transportation similar to the middle school. Due to other costs of transporting all students, they no longer can appropriate the money out of their transportation budget. Chair Brawn asked if this was an expansion and Neil Pedersen said that this is not an expansion of services, but something that they have not budgeted far. They have been absorbing the cast and they can no longer do this. Chair Brown asked about the crossing guards that the Town of Chapel Hill is not paying for. Neil Pedersen said that there are several crossing guards at different schools. An example is Ephesus Church Road. The Town will continue to hire, supervise, train, and pay the crossing guards, but they are billing the school district for the payroll costs. Chair Brown asked about the $75,000 for AP exams and why there could not be a sliding scale. She does not understand why the County taxpayers should subsidize people who can pay for AP tests. Gloria Faley said that the AP exams are a good case of the haves and have-Hots and being able to take AP. The college boards define the cost and the school board does not define the cost of the exam. Chair Brown asked about a sliding scale for those who could afford to pay for it. Neil Pedersen said that the State might give money and the board wrestled with this as far as a sliding scale. Commissioner Halkiotis asked about subsidizing meals. He asked for information to the Board on how the arrangement that CHCCS has works and the benefits that the employees receive. He said that he has mixed feelings because if the County is going to be subsidizing one school system, then it should be subsidizing both systems or none at all. Commissioner Halkiotis asked about AP exams and what happens to a student if they do not take the exam but still take an AP course. Neil Pedersen said that 90% are willing to take the exam. The way they handled it this year was that for those that did not take it they submitted an incomplete exam for them. However, by the time the exam is scored it is too late and the AP exam has no impact on their grade. Commissioner Halkiotis said that he feels that if there was astudent-based need then he would support this but not if the students are blessed with the financial means of paying for their exams. Commissioner Halkiotis asked the Manager about temporary federal assistance and where the money is coming from. John Link said that he believes that most of it is relief provided to states for Medicaid. Orange County is supposed to receive as much as $300-400,000 in reduced county costs. Commissioner Jacobs said that the State House budget appropriates that money for other purposes besides Medicaid anyway, including their fund balance. Commissioner Jacobs said that Elementary School #10 is budgeted $1.5 million more than Rashkis three years later. He asked where they got a half million-dollar increase per year in the cost. He asked for this information in writing. Neil Pedersen said this is probably inflationary. Commissioner Jacobs asked about the proposed football stadium with the new high school and said that he is not sure if this can be done for $660,000. He would like to see an itemization of this amount. He said that, before we build a football stadium, he would like to see how much we are spending per female and per male athlete and how much money is being spent for football as opposed to other sports. He would be interested in finding out about the equity of sports in both school systems. Commissioner Jacobs agreed about the funding of AP classes and that it should be paid for those who cannot afford it and not for everyone across the board. Commissioner Jacobs asked about the nursing positions and if the CHCCS school board would prefer to receive the extra $107,000 in per pupil allocations or to leave it in the nursing budget. Gloria Faley said that they have many situations that their nurses cover. The board has not discussed this option, but her general feeling is that it should be left in the nursing budget. Commissioner Jacobs asked about the difference between the contingency fund and the undesignated fund balance and Neil Pedersen said that contingency is a line item in their budget. If they do not spend contingency at the end of the year, then it rolls into the fund balance. Commissioner Jacobs encouraged the school board to look into this. If the contingency counts toward the undesignated fund balance, then there might be more flexibility in what the undesignated fund balance might be. Commissioner Jacobs made reference to the collaborative effort with the McDougle Library. He said that the Friends of the Carrboro Library have come to both public hearings to request more hours for the Carrboro Branch Library. He said that representatives of the school district were very specific that they do not want any more hours at McDougle Library and do not want it open on Saturdays. He asked if this was the position of the school system. Neil Pedersen said that they have been operating without an agreement between the County and the school system for this library for three years and they would like to complete an agreement. There have been some problems with shelf space. Their only concern is the usage and the cost of usage and that it is appropriated fairly (community use and school use}. Commissioner Gordon reiterated that the school boards would give the same information about the State standards for class size and what the class sizes are for each grade level. A motion was made by Commissioner Halkiotis, seconded by Commissioner Jacobs to adjourn at 9:35 p. m. VOTE; UNANIMOUS Margaret Brown, Chair Donna S. Baker Clerk to the Board