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HomeMy WebLinkAboutMinutes 04-11-2013 APPROVED 5/21/2013 MINUTES BOARD OF COMMISSIONERS BUDGET WORK SESSION April 11, 2013 7:00 p.m. The Orange County Board of Commissioners met for a Budget Work Session on Thursday, April 11, 2013 at 7:00 p.m. at the Southern Human Services Center in Chapel Hill, N.C. COUNTY COMMISSIONERS PRESENT: Chair Jacobs and Commissioners Alice M. Gordon, Barry Jacobs, Bernadette Pelissier, Renee Price and Penny Rich COUNTY COMMISSIONERS ABSENT: Earl McKee COUNTY ATTORNEYS PRESENT: COUNTY STAFF PRESENT: County Manager Frank Clifton, Assistant County Managers Michael Talbert, Clarence Grier and Clerk to the Board Donna 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. Chair Jacobs reviewed items at the County Commissioners' places: - Durham Tech presentation information - Salmon-colored sheet - regarding revision for health insurance - White sheet - History of health insurance cost increases - Copy of SAPFO information from March 19th agenda Chair Jacobs noted that Commissioner McKee would be late this evening. 1. Durham Technical Community College Presentation Dr. Bill Ingram, President of Durham Tech Community College (DTCC), recognized Penny Cluck, Executive Dean of Durham Tech — Orange County Campus and Robert Keeney, Vice President of Finance and Administrative Services. He said DTCC would be working with staff to finalize and submit a budget proposal for the Orange County Campus. He gave the new Board of County Commissioners some background on the good relationship between Orange County and Durham Tech. Durham Tech started classes in Orange County in the mid- 80's and have been working with Orange County for the past 10 years to open a free-standing Orange County campus. This was opened in 2008. Since then, Durham Tech has seen an increase in student enrollment. One of the classes unique to Orange County is the sustainability class. UNC Hospitals is building a facility across from the campus and lab classes will be added. There has also been growth in the EMS programs, medical coding, and ICD 10 coding. Durham Tech has a strong relationship with both school systems. There are opportunities for dual enrollment and high school students are able to take college courses tuition free. He said for the past five years they have seen their funding cut but they have been able to grow despite of that. He presented the County Commissioners with a preliminary budget that has a moderate increase. He said Commissioner Price has joined the Board of Trustees. Frank Clifton said Durham Tech is the primary component in industrial business recruitment from a training perspective. He said Durham Tech has worked closely with Economic Development Director Steve Brantley in reference to industrial business recruitment. Commissioner Dorosin made reference to the last page of the handout in the packet about funding needs and the last bullet point regarding a 2% increase for salary for security and maintenance. He asked if the positions funded by the County were being paid sufficiently and if the 2% increase should be given regardless of whether the State funding happens or not. Dr. Ingram said the employees are Durham Tech employees regardless of the source of funding. He said they try not to draw distinction among them as it relates to the funding of salaries. He said most of the employees funded by county funds are technical/paraprofessional in nature. He said they need to have funds to pay for the inequities that arise and they are mindful of these situations. 2. Employee Benefits Update, Preliminary Renewal Estimates Regarding Calendar Year 2014 Health Insurance, and Anticipated Health Care Reform Components Human Resources Director Nicole Clark and Mark Browder from Mark III made a PowerPoint presentation. Health insurance update 2013 Enrollment Highlights and 2012 Plan Performance/2014 Plan Year Preliminary Recommendations April 11, 2013 Work Session 2012 Summary - Year one with United Healthcare - Initial dissatisfaction with change in provider and plan structure - 2013 Plan design recommendations addressed concerns - Renewal cost less than projections - Enrollment process successful, no significant complaints Health Insurance Enrollment Comparison (chart) Optional Benefits New Enrollment Comparison (chart) Benefits Activities and Programs - ERC Meeting updates - Town Hall Meeting (December) - Health and Wellness website demonstration (January) - Know Your Numbers (February) - Health Care Cost Estimator (March) Health Insurance RFP Timeline th April 15 RFP solicitation published ,d May 3 Response deadline st May 31 Evaluations complete th June 11 Recommendations presented during the Work Session th June 18 Vendor and plan funding approved with the FY 13-14 budget process* *With the possibility of a new vendor and funding source, approval is needed to ensure timely implementation in preparation for Open Enrollment in October 2013. Medical Plan update 2012 Plan Performance/2014 Renewal Expectation (spreadsheets) Frank Clifton gave same background on the process. Chair Jacobs asked for an explanation of the difference between fully insured and self insured. Mark Browder said when you are fully insured you pay the premium to the insurer and they take all of the risks for the plan. When you are self funded, you hire an administrator to adjudicate your claims and you purchase stop loss insurance, which protects against catastrophic claims. Over the long haul, it is better for a larger entity such as the County to be self funded because there are lower expenses and fewer taxes. Mark Browder made reference to slide 8 and the numbers highlighted in yellow. He said the plan ran well in 2012. The target would be 85%, and Orange County might be getting money back from UnitedHealth because of the spread from 78.16% and 85%. He went over the health plans in detail and how the 80/20 plan works. Starting in 2014, the definition of"full-time employee" will be 30 hours under health care reform. Frank Clifton said a lot of the part-time employees have retired and then come back to Orange County and already have retiree insurance. Commissioner Rich asked if there was credit for wellness programs and Nicole Clark said not at this time. Commissioner Rich said BCBS has reductions in premiums for these types of programs. Frank Clifton said Orange County has tried to expand their wellness program in the last couple of years and they are making some strides. Commissioner Dorosin made reference to slide 11 and the fully insured calculation. He asked if the "2014 Expected Cost" was a $2 million drop as it appears. Mark Browder said they are looking for numbers coming in to be more competitive. Commissioner Dorosin said Orange County switched from Cigna to UHC in 2012 and now they are considering a change again. He asked for the motivation for getting bids. Frank Clifton said the motivation is to make sure Orange County gets competitive pricing on health insurance. Commissioner Dorosin said his opinion is that it is not easy to change plans. Mark Browder said they got direction from the Board last year to go out to bid in 2014. The dissatisfaction last year was the fact that the new plan with UHC was not as rich as the previous plan the County had for years. Commissioner Dorosin asked if the county had ever been self-funded and the answer was no; only with dental insurance. Chair Jacobs asked Mark Browder to articulate more on the advantage of being self- funded. He asked if there was more flexibility in self-funding. Mark Browder said every fully insured insurer files their plans with the state, and if you want to change parts of the plan and it is not in the state's plan design, it is difficult. If an entity is self-funded, it can change the plan without state approval. Chair Jacobs made reference to the revised salmon-colored sheet. Nicole Clark said the original one had a May 1 0th date and should have been May 3 d. This is the only revision. Commissioner Price asked if there was anything broken with the current system. Frank Clifton said they go through comparative bids on a regular basis to ensure employees are getting the best rates for insurance. 3. To Continue Review and Discussion of the Manager's Recommended FY 2013-18 Capital Investment Plan Paul Laughton said he wanted to present items on questions from their last meeting and they are bullet points on the first page of the abstract and shown below: - Attachment A reflects a comparison by Function of the Manager's Recommended 2013-18 CIP with the FY 2012-17 and FY 2011-16 Capital Investment Plan - Attachment B provides a summary of a proposed Agricultural, Environment, and Parks Center at Blackwood Farm Park, including a permanent Parks Operations Base, to be phased in over a three-year period (FY 2015-16 through FY 2017-18). See page 37 in the CIP document for a complete funding scenario for this building and park facilities. Chair Jacobs gave some review and direction about the process tonight. Paul Laughton said the intent was to bring information items back on the bulleted items and then a Triangle Sportsplex presentation on the new programs and expansion, and then they will move into the notebook and go through each project as needed. Paul Laughton made reference to Attachment B and the proposed Blackwood Farm Park Ag, Environment and Parks Center. It is proposed to be two phases. This is outlined on page 37 of the CIP notebook. The projected cost is $5,300,000. Chair Jacobs said he brought up two years ago the prospect of using a bond on a past project. He said in the past the County started putting together a bond package six months to a year before a project begins. He said this is a project that would be suitable for a bond project. This property was bought with bond funds. Frank Clifton said the time is approaching for that thought process of a potential bond to move forward. Commissioner Price said there is a recommendation to move offices from Revere Road to Blackwood Farm and she asked when this was decided. Department of Environment, Agriculture, Parks and Recreation (DEAPR) Director Dave Stancil said in the master plan there was a vision in it for a parks operation base but that pre- dated what there is now. There was an Ag Center Work Group that thought this was a good location for an Ag Center and he said their department has grown and so then there was a strong synergy to have all like departments to be in the same vicinity. He said no decision has been made yet. All of the agricultural agencies identified this as a suitable site for the offices. Chair Jacobs said there was a jump from mentioning this idea to a proposal in the CIP. He said the Board has not had a discussion yet. Frank Clifton said this is one of the few sites in Orange County that has water and sewer. He said the County Commissioners asked the staff to evaluate the prospect of a county fair. The thought is that this is a potential site. Chair Jacobs said there is not a smooth way to get things from staff conception to the CIP yet. Paul Laughton made reference to page 2 of the agenda abstract and the things being brought back from the March work session, and referenced the material in Attachment B that is related to the Science Wing at Culbreth Middle School. - Chapel Hill-Carrboro City Schools submitted as part of their unfunded new facilities projects a Science Wing Addition at Culbreth Middle School totaling $4,971,676. The majority of construction costs would occur in FY 2014-15, with an anticipated opening date of August 2015. Currently, this project is not included in the Manager's Recommended FY 2013-18 CIP. The impact of including this project in the CIP would increase annual debt payments by a total of$477,281 ($57,600 in FY 14-15, $427,388 in FY 15-16, and $477,281 starting in FY 16-17 and future years). Commissioner Gordon said she would like to direct staff to provide the Board of County Commissioners with a funding plan for the science wing, using the timeline provided by CHCCS and add it on to the CIP. She would like to see how that affects the budget. She thinks that there is enough room in the available debt capacity, and she cited the debt capacity numbers. Commissioner Dorosin asked how much would have to be taken out of the budget to fund this. Frank Clifton said the easiest thing would be to move Lands Legacy to years 6-10. Clarence Grier said in order to assume that debt, they would have to move $7.6 million worth of projects out to accommodate this. Frank Clifton said the south library could be moved to a later date also. Commissioner Dorosin wants to know the max number that can be kept in the CIP and the number that has to be removed to accommodate this science wing. Paul Laughton said CHCCS stated that if this wing was funded, it could defer middle school #5 for two years. Frank Clifton said no projects would have to be removed, but only moved around to later years. Chair Jacobs asked Paul Laughton to include these other factors along with Commissioner Gordon's request to answer the questions tonight. He also asked that Paul Laughton address pages 101-102 regarding debt capacity that is not totally committed. Paul Laughton made reference to the last two lines on page 102 and the debt the County has now and the new debt that will be added in 2012-13. The debt service is at 13.83%. The goal is to stay below 15%. To stay at the 15%, there is $2.1 million available to incur in 2012-13. The County will not get over the 15% debt service capacity until FY 2017-18. Chair Jacobs asked if there was "wiggle" room. Clarence Grier said it is only assumed "wiggle" room and is contingent on the budget each year. Commissioner Gordon said the staff could just run the numbers to see what happens if the science wing is added in. Clarence Grier said if the debt were issued, it would be issued all at once. Paul Laughton made reference to FY 17-18 and said the County would be over the 15% by $1.2 million. If the science wing were added, it would be more than a penny on the tax rate. Commissioner Gordon said the debt service capacity would only be over 15% if the middle school is built as scheduled. Paul Laughton said he would ask CHCCS about the two-year deferment and if it was correct. Commissioner Pelissier said the numbers need to be run several different ways. The school boards also need to see this. Commissioner Gordon said to be sure and look at the SAPFO to make sure all the projects comport with that. At this time, John Stock, General Manager of the Triangle Sportsplex made a PowerPoint presentation. Orange County Sportsplex: Situation Analysis - Under RFP management, the Sportsplex has grown revenues 75% over 6.5 years......sustainable annual growth of 10%. - Annual operating costs have been controlled at the same levels they were at the contract inception in 2005. RFP has a proven record of leveraging its staff and management to support significant growth. - Over the contract term Sportsplex financial performance has improved from annual losses of ($800,000) prior to RFP, to consistent annual net operating results of $400,000. A $1,200,000 improvement! - Sportsplex currently has a $1,100,000 Funds Balance - But.....Because of growth we lack space for rapidly growing programs for children, adults and seniors. - RFP can meet growth needs and achieve similar incremental financial results through a four stage physical expansion of the existing Sportsplex facility. What is needed to make Vision a Reality (Schematic Design) ❑ Four Phase Renovation/Expansion • Lobby (+ $110,000) • Fitness Mezzanine over Pool ($950,000) • Multi-use Turf ($1,900,000) • Versatile Court ($900,000) Lobby Renovation - Addition of 1,843 sq. ft. of Group X and Specialty training space. Modest cost and 18- month year payback. - Movable wall design divides the main Group X room into 5 distinct venues — significant program flexibility and Kidsplex space. - FY12/13 CIP includes $165,000 for Lobby cosmetic facelift. (Flooring, Paint, Lighting). - Design review revealed opportunity to add 1,843 sq. ft. of programmable Group X and Specialty training space at a modest incremental cost of$110,000. - A movable wall design can divide the main Group X room into 5 distinct venues — facilitates significant program flexibility, lobby events and Kidsplex space. - This investment results in incremental programming and membership revenue growth of$312,000 in the first year after completion. - Leveraging staff and overhead, results in $200K annual contributions to the Fund Balance - (18 month payback) Pool Fitness Mezzanine (overlooking pool) - Highly cost effective mezzanine construction process resulting in high return on investment. - 5,400 sq. ft. - Cardio for Adults - Senior Programs - Member lockers - Weight loss room - Therapeutic Massage Fitness Mezzanine - 5,400 additional sq. ft. connected to existing ice rink mezzanine - Private member change area compatible with Fitness Club projected to grow to 6,000 Members - Dedicated rooms for Spin/Row/Therapeutic Massage plus 1,800 sq. ft. for recumbent equipment, low intensity/impact strength area for older adults and seniors - No Change in CIP Funds for FY14/15 ( $950,000) - 670 additional members annually - Five year revenue generation of$1,694,00 and $1,250,000 contribution to Fund Balance - (3.5 year payback) Revenue/Income Generation from Turf Addition Annual Member Growth $184,250 Five Year membership growth $921,250 Programming Revenue Growth over 5 years $3,600,000 Total Five Year Revenue Growth $4,521,250 Five Year Contribution to Fund Balance $1,750,000 Approx. 5 '/2 Year Payback Revenue/Income Generation from Court Addition Annual Member Growth $184,250 Five Year membership growth $921,250 Programming Revenue Growth over 5 years $836,000 5 Year Incremental Revenue $1,757,250 Five Year Contribution to Fund Balance $900,000 Five Year Payback Summary: - By leveraging RFP resources, the combined net contribution to the Funds Balance over the 5 year CIP period is $3,130,000, however including FY18/19, the total contribution to the Funds Balance is $4,100,000, which fully pays back the $3,860,000 CIP costs within a true five year fiscal horizon. - Sportsplex membership will grow from 4,000 to 5,740 (43.5%). Combined with significant new programming revenue, these projects will generate $6,100,000 in incremental revenues over the 5 year CIP planning period. - Together with existing programming annual Sportsplex revenues will be $5,000,000 and Annual contributions to the Fund Balance of$1,400,000 can be re-invested in Orange County recreation and wellness. - State of the Art Recreation, Sport and Fitness Venue featuring Ice, Pools, Turf, Court, Fitness and Child Development/Care. - Multigenerational community meeting and gathering facility for kids, families and specialized resources for aging adults and seniors, with 60,000 monthly customer visits stimulating health, wellness and activity. - Creation of a world class private/public partnership model for multi-generational and diverse programming all under one roof. Paul Laughton suggested having staff answer specific questions about County projects. Chair Jacobs said he would like to see the cost of a southern library if it was smaller. He said this is not a firm number. Similarly, the Blackwood Farm has a large amount of money in the second year, and the Board has not discussed this as being a higher priority. He suggested moving the Whitted Building up in the CIP. The Board also needs to discuss whether this should be a meeting space and a potential multi-use space. Commissioner Pelissier said she does not know when the cultural center would have the funds available for the upfit. If the County is going to upfit it for a meeting space, it might not be done at the same time. Frank Clifton said most of the upgrades would be for the County and the additional items could come in between meeting dates, etc. Commissioner Dorosin made reference to the sewer infrastructure for Rogers Road and it is not in the CIP. He said there is commitment to do this and it ought to be figured in the CIP somewhere. Commissioner Rich asked about the sewer district and if it would be able to borrow money. Frank Clifton said it is probably a year from now before the financing aspect comes up for consideration. Chair Jacobs said he would like to keep a running list of things they may want to put on a bond and this may be one of them. Commissioner Dorosin made reference to the Whitted Building and the Board needs to discuss whether it wants to use it as a meeting space at all or a multi- use space/shared space. There are several options. He said he is not clear that there is a consensus from the Board to use this as a meeting space yet. Chair Jacobs said the County Commissioners need to have this conversation sometime during the CIP Process. He said he knows that Commissioner Gordon has objections to it because she thinks the meeting room should be built on the downtown Hillsborough county campus; but he thought the others seemed interested. Commissioner Rich said she feels that the conversation on the Whitted Building is not complete but there were some real concerns from the neighbors about the kind of functions that would happen. She said the Board needs to have this conversation. She does think it should be used as a multi-use space. Commissioner Gordon said if the Board wants to use this space for meeting space then that is fine; but down on the main campus they are putting in geothermal wells that may prevent them from putting in future facilities. She would like to ask staff not to put any more wells down until there is an updated facility report/study. Jeff Thompson said there is a potential bid award for the project, but there is no commitment yet for construction of geothermal wells. Chair Jacobs asked that there be no construction until the Board has reviewed the facility report/study. Chair Jacobs asked the staff for permutations of where Whitted will go in the CIP. Paul Laughton said the project is not scheduled for funding until year 3 at this time. Commissioner Price asked about the Northern Human Services Center and said she would like to have an investigation on this. She would like to have another look at this building. The citizens are concerned that this is a historical landmark in the community. Paul Laughton said there is $2 million scheduled for year 2. Frank Clifton said the architects have discussed the options for this building. The limitations of the building are related to the utility capacity. Commissioner Price said she wants to revisit this for the community. Chair Jacobs said it may be useful for staff to meet with Commissioner Price before the April 16th work session about the Northern Human Services Center. Commissioner Price asked about page 23 and affordable housing. She would like to include this in the bond and Chair Jacobs said this could be considered. Commissioner Gordon asked for an explanation for the need for classroom space at Cedar Ridge because according to SAPFO there is no need for new OCS high school space for 10 years. Paul Laughton said it was in the CIP last year and there was a memo about the growth in Mebane and how that affects the OCS because Mebane is not included in the SAPFO. Discussion ensued on the needs of OCS according to the SAPFO. Chair Jacobs said staff could reconcile the numbers and get back to the Board. 4. Fiscal Year 2013-2014 Budget Process Clarence Grier said the staff just wanted to provide an overview in the abstract of the budget process and important dates of upcoming meetings. A motion was made by Commissioner Price, seconded by Commissioner Rich to adjourn the meeting at 10:01 PM. VOTE: UNANIMOUS Barry Jacobs, Chair Donna S. Baker, CMC Clerk to the Board