HomeMy WebLinkAboutMinutes - 20041115APPROVED 1/24/2005
MINUTES
BOARD OF COUNTY COMMISSIONERS
WORK SESSION
November 15, 2004
7:30 p.m.
The Orange County Board of Commissioners met for a work session on Monday, November 15,
2004 at 7:30 p.m. at the Government Services Center in Hillsborough, North Carolina.
COUNTY COMMISSIONERS PRESENT: Chair Barry Jacobs and Commissioners
Margaret Brown, Moses Carey, Jr., Alice M. Gordon, and Stephen Halkiotis
COUNTY COMMISSIONERS ABSENT:
COUNTY ATTORNEY PRESENT: Geoffrey Gledhill, Sean Borhanian
COUNTY STAFF PRESENT: County Manager John M. Link, Jr., Assistant County
Managers Rod Visser, Gwen Harvey, and Deputy Clerk to the Board David Hunt {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.
1. Sustainability Issues for Orange County Government
Chair Jacobs called the meeting to order at 7:3Q p.m.
John Link explained that this item was part two of looking at County operations in terms of
both capital and operating revenues and expenditures. He suggested addressing "Likely
School Construction Overruns" as the next to the last item prior to addressing the status of
overtime and temporary personnel expenditures.
John Link and Budget Director Donna Dean went over the handout on Fiscal Sustainability,
as shown below:
Fiscal Sustainability
Orange County, NC
November 15, 2004
Tapirs far Tonight's Discussion
^ What Is Meant By Sustainability?
^ Overview of Revenue Picture
^ Funding Initiatives
^ Short-Term {1 to 2 years)
^ Longer-Term {3 to 5 years}
^ Likely School Construction Overruns
^ Temporary Personnel and Overtime Update
What Is Meant By Sustainability?
^ Ability to
. Financially sustain existing critical services to citizens as new initiatives are considered
. Retain stable, qualified, competent, flexible work force
. Carefully correlate operating and capital expenditures for all initiatives or projects
. Put infrastructure in place to meet citizen expectations for service delivery
. Balance resources for all major functions such as education, public safety and human
services
All in context of County's organizational mission, legal responsibilities and available
resources
Revenue Picture
Property Taxes Remain Largest Single Source of Revenue ~'~
Property Tax Facts
^ Projected valuation for current fiscal year approximately $10.2 billion
^ Current year budget anticipates one cent on tax rate to generate $1,011,210
^ Average annual valuation increases
^ 4.5% in non-revaluation years
^ 24°~ in revaluation years
^ Upcoming fiscal year will be "revaluation year"
Approved Property Tax Rates t'}
Sales Taxes
Assessed Valuation ~za
About 15°~ of total budgeted General Fund revenues in current fiscal year
. Articles 39 {"One Cent") and 44 ("Third Half Cent") fund County's annual operating budget
. Article 44 is "newest" sales tax revenue for local governments
. Authorized by General Assembly in 2002 to replace reimbursements that State took
away from local governments during fiscal year 2001-02
. No sunset provision
. At that time, the State also authorized an additional one-half cent sales tax to directly
fund state operations
. Sunsets July 7, 2005
. By Board policy, Articles 40 & 42 ("First and Second Half Cents") dedicated to County
and School capital projects
Sales Tax Outlook
^ Economic slowdown since 9111 has resulted in less robust growth recently than that
experienced in mid-1990's
^ Collections in last two to three months are slightly higher than same period in last two years
Sales Tax Collections car
Intergovernmental Revenues ~'~
Recent Unfunded Mandates and StatelFederal Funding Cuts
^ At this time, County department cuts and unfunded mandates far current fiscal year total
$613,600
^ Examples include
. Revenue losses in OPT (State Rural Discretionary Funds) and Health (Smart Start funds
for Child Health Awareness Project}
. Rate increases to adult and group care homes (paid by DSS}
. Unfunded enforcement requirements related to sex offender and video poker
registrations, concealed weapon permits and domestic violence orders (Sheriff's
Department}
The impact of classroom size reductions in grades K through 3 {recently approved by the
State) are not included in the $613,600 amount above
Investment Income ~'~
Fees, Licenses and Permits
Use of Non-Recurring Funding
^ Due to state and federal funding cuts and implementation of unfunded mandates, local
governments have had to become "creative" in funding services
^ Examples of non-recurring sources
^ Borrowing from unspent capital projects
^ Freezing and delaying hiring
^ Using fund balance
Expenditure ReductionslSavings To-Date
^ With adoption of 2004-05 County budget, Board directed staff to identify $400,000 in
expenditure reductions to off-set additional decrease of .4 cent in the recommended tax rate
. Savings realized to date
. Lower than anticipated health insurance renewal rates - in the neighborhood of
$300,000
. Lower than anticipated debt service -around $85,000
. Hiring delays of vacant positions -between $350,000 and $400,000
Fund Balance
^ Largest influx of cash to local governments comes between November and January of each
year when the majority of property taxes are paid
^ Fund balance serves as "cash safety net" and enables entities to:
. "Pay the bills" during slower revenue collection periods and
. Meet unforeseen needs should they arise
Fund Balance Facts
^ Local Government Commission {LGC} strongly recommends that agencies maintain at least
8°~ of prior year expenditures in available fund balance to meet current obligations and
prevent unit from experiencing cash flow difficulties
^ County's current fund balance level is 9.59% of actual expenditures {$129.2 million)
. About $12.5 million
Available Fund Balance
County Trend Gompared to Statewide Average (9)
Short Term Funding Initiatives Affecting Sustainability
2004-05 Budget by Component
Original Budget Totaled $136.4 Million
Short Term School Funding Initiatives
^ Twentieth day student membership this fiscal year totals 17,762
^ CHCCS - 10,721 students
^ OCS - 6,670 students
^ Budgeted Charters for both districts - 371
^ Average annual increase in non-charter membership for current and previous fiscal year is
355 students
20t" Day Student Membership
Both Districts {'r
ZQth Day Student Membership
Chapel Hill Carrboro City Schools ~'~
ZOt'' Day Student Membership
Orange County Schools {'~
School Funding Summary
^ Based on average annual increase, cost to fund 355 new students at current per pupil
rate of $2623 would be approximately $931,00
^ Each $1 increase in per pupil would cost between $17,762 (based an current student
membership) and $18,117 (increase for new students)
o For example, the cast to increase the current per pupil by $50 {from $2,623 to
$2,673) for the current membership of 17,762 students would cast around
$sss,ooa
o Average annual increase in per pupil appropriation between 2000-01 and 2004-
05 is $73
Short-Term County Funding Initiatives
^ Debt service related to 2001 voter approved bands and alternative financing plan
^ Increase in requests for public assistance including Medicaid
^ Rising fuel and utility costs
^ Initiatives in Information TechnologylE-government, Recreation and Parks, and Mental
Health Reform
New facilities scheduled to open over next two years
Employee Retention
Rebuild Fund Balance
Longer-Term School and County Initiatives Affecting Sustainability
Longer Term Schaal Funding Initiatives
^ Increasing student membership in both districts
^ Funding equity
^ Start-up and ongoing cost of three new schools
^ Need for additional student capacity and renovation of older facilities
Langer Term County Funding Initiatives
^ Start-up and ongoing cost of new parks, Senior Centers, Orange County Satellite Campus of
DTCC and Justice Facility
^ Continued initiatives in Recreation and Parks, Mental Health Reform and Emergency
Communications interaperability
^ County space needs
^ Future bond and alternative financing
^ Continue efforts to rebuild fund balance to 12 to 15 percent of annual General Fund
expenditures
Commissioner Carey made reference to the half-cent sales tax and said that the NCACC is
looking at asking the legislature to take over the counties responsible for funding the Medicaid
program.
Regarding the class size reductions, Commissioner Gordon asked about the old class sizes
and CHCCS Assistant Superintendent Steve Scroggs said 1:23 in K-2, and 1:26 in grade 3.
The new class sizes are all 1:21.
Commissioner Halkiotis said that he was surprised about the unfunded mandate regarding
video poker machines. This is that the Sheriff's Department has to pay for the maintenance of
these machines. He thinks it is terrible to put some of this on the backs of the citizens of the
County.
Commissioner Gordon asked about the pie chart (2004-05 Budget by Component) and the
difference between County Operations and County Personnel Services. Donna Dean clarified.
Commissioner Carey asked that County Operations be designated as non-personnel so that it is
clear.
Commissioner Halkiotis made reference to the DPI projections and highlighted that far
CHCCS, the County funded based on 10,869 and 10,721 was the number. He said that
CHCCS got some extra money. The OCS was projected by DPI to have 6,576 and they ended
up with 6,670, so they were short-changed. He thinks it is important to let people know this
because some people think the County is short-changing everybody. He asked about these
figures and Rod Visser said that CHCCS got $388,000 and OCS lost just under $250,000.
Chair Jacobs suggested looking at the five-year history to see the trend.
Commissioner Halkiotis said that the State model is terrible and that the County should be
free to develop its awn numbers.
Jahn Link spoke at length about the issue of raising taxes.
Commissioner Halkiotis said that it is important to explain to people what County
government does and what it is responsible for.
Commissioner Brown asked about the debt service. Rod Visser said that when the County
is finished selling all of the 2002 bonds in a couple of years, the cumulative increase will be less
than anticipated. Commissioner Brown painted out the alternative financing, which is $37
million that the public did not approve. This would be 3.5 to 4 cents.
Commissioner Halkiotis made reference to the chart, "Overview of Currently Programmed
County and School Capital Projects Coming On-Line," and suggested adding another column
because there is nothing regarding an expanded 911 center, an animal shelter, and other things
that have been discussed. This needs to be part of the information package.
Commissioner Halkiotis asked about the psychology behind rebuilding the fund balance.
Finance Director Ken Chavious said that they look at fund balance as a savings account.
Commissioner Halkiotis said that there needs to be another discussion about this subject of the
school systems having such a large fund balance.
Discussion ensued on how other smaller counties have larger fund balances because they
have not been successful with band issues like Orange County.
Commissioner Brown asked John Link how much he would like to see the fund balance and
he said that he would like to see it back to 12%.
Chair Jacobs would like to see a report on how neighboring counties and municipalities treat
their fund balances and show a clear picture of what makes Orange County different.
Ken Chavious said that at the end of 2003, Orange County had 12.2°rb, Alamance County
had 16.5°l0, Durham County had 11.5%, Wake County had 12.9%, Person County had 28.4°l0,
and Chatham County had 29°!o fund balance.
Commissioner Brown made reference to the cost of growth and said that she would like to
discuss this. She would like to have some balance.
John Link said that one tangible example of this was adding four positions in the Planning
Department to reduce the inspections backlog. This directly relates to growth.
Chair Jacobs said that Orange County has decided to provide money for parks and
affordable housing, and these are not mandates, but they are consequences of having more
citizens. This makes the cost of growth a more complicated equation.
Rod Visser continued with the presentation.
Likely School Construction Overruns
Rod Visser said that there was the possibility that Elementary School #10 for the CHCCS,
which is currently programmed in the CIP for 2047, could be pushed back a few years. He said
that they are going to try and set up a meeting of the technical staff of the County, towns, and
the school systems by the end of this month. He said that it is important that the public know
that there is a mechanism that drives when new school facilities are to be provided. It is the
County Commissioners' intention to ensure that the funding for new school facilities is available
in time to bring the schools online. He said that the overruns are just estimates and could be
higher or lower.
Commissioner Gordon pointed out that, because the State has reduced class size in grades
K-3, the State has therefore effectively changed the building capacities for schools and this
change needs to be addressed within the SAPFO. It might be necessary to build more
classrooms.
Commissioner Halkiotis would like to know how other counties are dealing with the issues of
unfunded mandates in North Carolina.
Commissioner Carey made reference to mandates and asked about the penalty if a school
system does not reduce class size in K-3. He asked representatives from the school systems to
comment on this. He also asked about bid timing.
Rod Visser said that it is his understanding that the bids for the OCS Middle School #3
construction are due an December 2"d. The County Commissioners probably will need to
decide haw much money they will put forward to cover the bid at the December 14t" meeting.
Steve Scroggs said that they would like to have funding solidified for CHCCS High School
#3 before it is even sent out to bid.
John Link said that it looks like Elementary School #10 can be delayed until 2008-2009
according to the preliminary projections. If this is true, then the County can, in the short term,
use the debt funding available from #10 to address the overruns for the two schools. This
would not affect SAPFO at all. This would be a win-win scenario.
Chair Jacobs asked each superintendent to respond to the question about the mandates.
Superintendent Shirley Carraway said that they follow the mandates related to class size
reduction. She said that the ratio is not calculated per individual classroom, but the average
has to be 1:21.
Superintendent Neal Pedersen said that there is no waiver available for exceeding the ratio.
There can be a waiver for an individual classroom being over the State maximum. He does not
know what the penalty is.
Commissioner Carey would like to get information about the penalties for not adhering to the
mandates.
John Link said that the Attorney General has to give specific information. He said that if a
County does not pay the warrant bill from the State on Medicaid, they will withhold another
source of revenue due that county.
John Link said that the target would be to come back with as much information as possible,
including the bids on the middle school. The Board would need to make a decision on
December 14t"
Chair Jacobs said that one of the main costs related to constructian is steel. He asked if
there was any way for people to work together, because the middle school and the senior center
are supposed to open the same year in 2006 and the high school is supposed to open in 2007.
There may be an opportunity for cost savings.
The Board asked far more specific information an the constructian overruns.
Commissioner Brown asked if any of the elementary schools in Chapel Hill were over capacity
and Steve Scroggs said that there are a couple of schools slightly over 100% capacity.
Rod Visser made reference to the middle school and said that the price OCS paid for the
land was about a quarter of a million dollars more than what was in the project budget for land.
The other thing is that the project budget does not include the cost of running water and sewer
to the property. The sewer will be addressed with the grant money, but the cast of running
water is going to be around $500,000 and there is no money to address this yet.
Commissioner Halkiatis asked if the County Engineer was working on the scenario where
the costs of bringing water to the site would be shared by others that would profit from water
coming to the site, including the soccer complex and any economic development activities. Rod
Visser said that this is an option, but nothing has been decided.
Chair Jacobs made reference to the letter from OCS with the questions and suggested
having a meeting with the chairs and vice-chairs to talk about the questions and the
p0551bllltles.
Chair Jacobs asked if the Board was interested in having the staff do a review of the design
of the schools. The Board agreed not to discuss cutting back the size of the structures, but to
look at the cause of the cost overruns.
Personnel Director Elaine Holmes continued with the presentation.
Temporary Personnel and Overtime Update
^ During budget work sessions last spring, Board directed staff to report on County's recent
experience with overtime and temporary personnel expenditures
^ Specific areas included:
. Needs/issues leading to use of overtime and temporary wages
. How costs are justified and approved
. Reasons for increases
. Comparison to other staffing approaches
Overtime Expenditures
All Funds (chart}
Temporary Wage Expenditures
All Funds (chart}
Reasons for Increases
^ Most of increase in 2003-04 attributed to transfer of Emergency Transportation function from
Orange County Rescue Squad to County's Emergency Management Department effective
July 1, 2003
^ Accounted for about 80°~ of temporary wage increase
^ And about 50% of overtime increase
^ Prior to transfer, Emergency Transportation expenditures budgeted and paid through contract
with Rescue Squad
^ Expenditures for Emergency Transportation in 2003-04 were within the amount budgeted
. Total Budgeted $999,770
. Total Expended $947,292
Other increases listed and described in report
Staffing Approaches
^ Overtime and temporary reports describe impacts of these staffing approaches.
^ Believe this is an area we need to explore further within the context of sustainability
^ This relates to sustainability in terms of whether we have the necessary staffing in place and
the right types of staffing to sustain operations, programs and initiatives
Chair Jacobs asked if it was possible to pay people enough so that they become an exempt
position. One of the problems is with telecommunicators because there is a lot of turnover and
there is also a lot of overtime. He said that the salary could be increased so that it was an
unusually attractive position.
Elaine Holmes said that the test far exemptions is based an duties and responsibilities. The
money cannot be used by itself.
Chair Jacobs asked how often the living wage is reviewed. Elaine Holmes said that it is
reviewed during the budget process each year.
Discussion ensued on when temporary positions are made permanent and when vacant
positions are sunset.
John Link said that leaving a position open without an effort to fill it should not be rewarded.
A motion was made by Commissioner Halkiotis, seconded by Commissioner Brown to
adjourn the meeting at 10:03 p.m.
Barry Jacobs, Chair
Donna 5. Baker
Clerk to the Board