Loading...
HomeMy WebLinkAboutAgenda 01-26-2018 Attachment 1 - Long Term Budget ForecastManagement Partners Kevin Knutson, Regional Vice - President Francine Ramaglia, Senior Manager Robert Leland, Senior Advisor ORANGE COUNTY NO I -H CAROLINA of service exclusively to local governments successfully completed in 41 states including generalists and subject- matter experts in San Jose and Costa Mesa, CA and Cincinnati, OH Services • Operations Improvement • Strategic Planning • Service Sharing • Financial Planning /Budgeting • Organization Analysis • Organization Development • Performance Management • Process Improvement • Facilitation and Training • Executive Recruitment • Executive Coaching Construct a 10 -year financial forecast model for the County • Provide an impartial third -party projection of the County's finances • Work with staff to develop consensus on assumptions • Forecasting is a "best practice" Present areas for consideration in building budget strategies to address structural deficit • Interview the County's senior management team • Topics included wide range of both financial and operational areas including matters such as revenue enhancement, expenditure controls and cost shifts, service delivery changes, service reductions /elimination _W..'MA Management Partners has created a 10 -year budget model History for revenues and expenditures back to FY 2002 -03 Balances based on CAFR actuals through FY 2016 -17 Staff estimates used for FY 2017 -18 in lieu of Revised Budget Basis for future projections is 95% of FY 2017 -18 Revised Budget Applies to all department /programs except Transfers, Retiree Medical, Debt Service (where there are specific amounts), or Education (100% of budget) Growth rates for FY 2018 -19 and thereafter set by department /program Debt Service based on Davenport & Co. debt affordability analysis (1/9/18) Operating cost drivers: Health costs average 7.5% growth Salaries /benefits average 3.1% growth Education costs average 3.0% growth Non - personnel costs average 2.0% growth Debt service costs rise from current $26.7M to $39.2M in FY 2022 -23 Declines thereafter under Davenport analysis, but forecast assumes debt service remains at $35M, to meet future capital financing needs CIP- related operating costs included (costs rise to $3.2M by FY 2027 -28) Loss of impact fee revenues ($3.3M in FY 2017 -18 budget) Expenditure Total FY19 -FY28 = $2.55 Billion Capital/ Transfers Health Debt Svc 535M 1% $173M 7% $354M 14 % _ Operating/ Contractual _ Other $301M 12% Personnel $690M 27% Education O &M $999M 39% General Fund Budget (mil.) Revenue Expense $300 $280 $260 $240 $220 $200 $180 $160 $140 $120 04 06 08 10 12 14 16 18 20 22 24 26 28 $20 Annual Shortfall $10 $0 ($10) ($20) ($30) • If property tax rate remains at current level, operating cost trends, together with loss of impact fees and higher debt service, would create an average $11M annual structural imbalance that would require higher property tax rates and /or expenditure reductions to resolve 1 Recessions have occurred on average every 6.8 years since 1927 • Budget impacts often lag official recessions • Forecast assumes minor recessions in FY 2019 -20 (starting mid -2019) and FY 2026 -27 Key is timing and magnitude; model allows range of assumptions to be tested FY17 -18 Revenues Other, Intergovt, $8.OM, 4% $17.4M, 8% Fees, $12.OM, 5% Sales Tax, $25.9M, 12% Property Tax, $152.3M, 71% Revenues by Type (mil.) t Prop Tax Sales Tax - — Intergovt Fees Other $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 03 05 07 09 11 13 15 17 19 21 23 25 27 • Assumes property tax rate remains at current level regardless of assessed value growth 7 Assumes reappraisal on 4 -year cycle AV growth based on input from appraisal staff; includes recession and recovery impacts 1.200 1.000 0.800 0.600 0.400 Property Tax Rate per $100 AV 0.200 0000000000 ©oor.nti�r\nr,nr.r �,_, o M M o W W 00 w M W 00 W 00 r. rn rn rn rn rn r, rn r. r. n W er 0 LO o) Ln Ln on Ln Ln r` r__ r__ M M M M cn M M M M m M 00 0o M M M W 00 00 W 00 00 W 00 00 w CO 00 00 00 W 00 W X ao 0.000 : C��r�r�r�r�oaoor�r�r�r�r�r�r�oor�r�r�� 05 06 07 08 09 10 1112 13 14 15 16 17 18 19 20 2122 23 24 25 26 27 28 Assumes rate held constant regardless of AV growth Rates may be increased further as part of actions to balance budget long -term Trend FY03 -16 - - - -- Tread FY14 -16 Forecast Budget $250,000,000 $200,000,000 $150,000,000 - $100,000,000 $50,000,000 $0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15% — ro U 10% C= a 5% e� 4 t1k; M 17� �+% M 01 O R O ID M N 1� W 'i O "i �-! 1 ' 'i N N ri ei t[? _ ['e1 _ O T N N O 0% • At a constant property tax rate, property tax revenue will reflect increases as assessed value increases • Revenues will vary if tax rate is increased to cover: Loss of impact fees Increased debt service Ongoing operating cost increases (assuming continued FTE and health cost increases) Trend FY03 -16 - - - -- Tread FY14 -16 Forecast <✓ Budget $45,000,000 $40,000,000 $35,000,000 $30,000,000 -i $25,000,000 $20,000,000 - $15,000,000 - $10,000,000 $5,000,000 $0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 40% — - o o o a ° ° n._ ro 20% r c d� 3 a° a 3 a a a a O 01 N M le ,..FPS, W 0) r4 rq 1� N N u5 u9 P� O 3 U N O M vi ui M M [P w1 G C Q n r1 f —1 �1 r� =r 4 ci 2oio o -40 • Significant impact from last recession Assumes minor recessions in FY 2019 -20 and FY 2026 -27 Includes added revenue and incentive payments related to Wegman's (assumes $400K /year from FY 2020 -21 through FY 2024 -25) Projection consistent with short -term trend Trend FY03 -16 - -- -Trend FY14 -16 Forecast Budget $18,000,000 — $16,000,000 $14,000,000 $12,000,000 - ----- -- -- ------------ -tea, -- $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 — 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 y 40% - CID C � u 20 % r a a s a. a a. a a a. a. C ++ R N 01 ,� O a!1 rA 111 C7 L(1 h !� Nom; W 61 Lq cD N W C C e-I N K1 p O f/1 M N N N N N N Q U 0% d 8° a° a 4O rh 20 '^ v1 N m • Big drop in planning fees related to construction activity, due to last recession Projection builds on FY 2017- 18 budget estimate, which is in keeping with the trend of the prior 5 years Trend FY03 -16 - - ---Trend FY03 -16 Forecast 0 Budget $30,000,000 Adj. to Remove $4M Child Day Care $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 1$ 19 20 21 22 23 24 25 26 27 20 CV 40% 20% e a. * a. a. Z9 aW, a, a9 a. a. Oft CO tD 45 W CC OR OR ai 01 Gl ai q Gl C C rl W M N O N O e 4 N N N N a-1 e 4 ei a 4 ai 0% 20n/ N N N •Includes $4M drop in Social Service fees (child day care funding switch to state) with commensurate drop in expenses for child care $1.3M included for Lottery (was zero in original FY 2017 -18 budget) Trend FY03 -16 - - - -- Tread FY14 -16 Forecast O Budget $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 - - -- ($2,000,000) 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 200% — D DD D o 3 u 100% o o r4 o in N c c o rn ri r: ri m Q; +! It c in d N m 00 h 41 cD O cD -100% ^ r '" Ln '4 M P, • Includes Privilege Tax, Franchise Fee, Interest and Miscellaneous Revenue (excludes appropriated fund balance) • The large decrease in FY 2017 -18 is due to the reclassification of the State Hold Harmless Sales Tax revenues from Miscellaneous Revenues to the Sales Tax Revenues category Trend FY03 -16 - - -- -Trend FY14 -16 Forecast ':?Budget $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 ($1,000,000) ($2,000,000) 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a 200% m 100% ^' C9 iO L W 09 C +�+ o rl N co A lO OI 0 0 0 0 0 0 0 0 c c o /o a° a°. cq y -100% M P P P of N w 14 N 01 a a -I ri � -200% • Volatile source • Category mostly consisted of development impact fees Increase reflects $2 million in FY 2017 -18 per reimbursement resolution for capital projects The flat line from FY 2020 -21 reflects the elimination of Impact Fees. 17 Permanent FT FTE 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 Comm Services (a) 82.50 90.50 94.03 97.03 100.03 100.03 91.50 91.50 102.00 104.50 109.25 115.00 117.00 128.00 General Govt /Supt 154.40 154.40 158.40 144.50 166.00 166.00 133.80 134.70 137.70 144.70 148.70 157.70 158.70 154.70 Public Safety 203.50 203.50 222.00 222.00 232.00 232.00 235.00 245.00 256.00 265.50 269.50 271.00 275.00 282.00 Human Services 316.55 309.40 322.18 329.68 333.63 333.88 308.30 313.73 311.23 312.15 315.60 319.93 325.05 328.55 Total GF 756.95 757.80 796.60 793.20 831.65 831.90 768.60 784.93 806.93 826.85 843.05 863.63 875.75 893.25 FTE Change 125,046 127,044 131,123 132,386 133,801 138,550 138,330 139,694 141,596 141,704 143,593 145,507 % Change 1.17% 1.40% 1.03% 1.60% 3.21% 0.96% 1.07% 3.55% (0.16 %) 0.99% Community Services 8.00 3.53 3.00 3.00 0.00 (8.53) 0.00 10.50 2.50 4.75 5.75 2.00 11.00 General Govt /Support 0.00 4.00 (13.90) 21.50 0.00 (32.20) 0.90 3.00 7.00 4.00 9.00 1.00 Public Safety 0.00 18.50 0.00 10.00 0.00 3.00 10.00 11.00 9.50 4.00 1.50 4.00 7.00 Human Services 12.78 7.50 3.95 0.25 (25.58) 5.43 0.92 3.45 4.32 5.13 3.50 Total GF 0.85 38.80 (3.40) 38.45 0.25 (63.30) 16.33 22.00 19.93 16.20 20.58 12.13 17.50 0.11% 5.12% (0.43 %) 4.85% 0.03% (7.61%) 2.12% 2.80% 2.47% 1.96% 2.44% 1.40% 2.00% (a) includes library and animal services for consistency Average Last 13 yrs 1.33% Average Last 7 yrs Population 122,052 123,766 125,046 127,044 131,123 132,386 133,801 138,550 138,330 139,694 141,596 141,704 143,593 145,507 % Change 1.17% 1.40% 1.03% 1.60% 3.21% 0.96% 1.07% 3.55% (0.16 %) 0.99% 1.36% 0.08% 1.20% 1.20% Average Last 14 yrs F Average Last 7 yrs 1.17% 6% 5% 4% 3% 2% 1% 0% -1% Consumer Price Index South -Size Class A -Urban Consumers 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 • Consumer Price Index is used as general measure of inflationary pressures on wages and other costs • CPI relatively stable over past 20 years 20 -year average is 2.20% 10 -year average is 1.85% • Federal reserve's target goal is 2% • Forecast assumes 2% annual growth rate in inflation -Trend FY03 -16 $20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 - - -- -Trend FY14 -16 Forecast O Budget 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 W 4090 ho C M v 20% C 41 N O O l0 tG O1 M Ln -4 N rn M M M cn fi rq ri p1 M An en to M M M M l*1 Q u 090 14 14 14 14 W -20% SfT r o ❑ Revised Budget $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 ❑ Originals Budget 1-7 Actual T Dept Request Q 2014 -15 2015 -16 2016 -17 2017 -18 FY18 revised based on allocation of wage adjustments and vacancy savings per department's share of total GF personnel costs; FY18 actual based on non -use of budget per recent years" experience Growth varies by individual program, ranging from 0 -5 %, with net growth of 3.5% FY 2019 -20 through FY2027 -28; assumes solid waste contribution continues at $1.OM Zo ❑ Revised Budget $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 ❑ Original Budget ❑ Actual X Dept Request 2014 -15 2015 -16 2016 -17 2017 -18 FY18 revised based on allocation of wage adjustments and vacancy savings per department's share of total GF personnel costs; FY18 actual based on non -use of budget per recent years' experience • Average annual growth of 3.3% FY 2018 -19 through FY 2027 -28; close fit to long -term trend zi . ❑ Revised Budget $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 ❑ Original Budget ❑ Actual X Dept Request 2014 -15 2015 -16 2016 -17 2017 -18 FY18 revised based on allocation of wage adjustments and vacancy savings per department's share of total GF personnel costs; FY18 actual based on non -use of budget per recent years' experience • Average annual growth of 3.4% FY 2018 -19 through FY 2027 -28; 3.5% growth is in- between short and long- term trends zz Human Services -0 -A I Trend FY03 -16 - - -- -Trend FY14 -16 Forecast Budget $60,000,000 $50,000,000 $40,000,000 - ------------ $30,000,000 $20,000,000 $10,000,000 $0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 y 10% to C a° 3° �° 2°° a° 3° 3° N h h N Ct M1 O M ei q Cn 0 0 0 0 0 0 r1 U 00 �/1 u'! 1Q M O n 7 st M e-1 N N N M M M M M M C C 0% Q -10% E Revised Budget $45,000,000 I $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 C7 Original Budget O Actual f: Dept Request 2014 -15 2015 -16 2016 -17 2017 -18 FY18 revised based on allocation of enrage adjustments and vacancy savings per department's share of total GF personnel costs; FY18 actual based on non -useof budget per recent years' experience • Ave. annual growth of 3.0% FY 2018 -19 through FY 2027 -28; State takeover of child day care in FY 2017 -18 reduces expenditure level $4M (also revenue, hence a wash); 3% growth projected in line with previous growth periods 2.3 Trend FY03 -16 - - -- -Trend FY14 -16 Forecast O Budget $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 / $0 1- TrTT�ITTT�TT 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15% 10% L r 5% ° ° 8° a°. C C N N 0 0 N cfi O O lD O5 t� O O 0 0 0 O O O O 0 /o r of 6 n o v .-4 io ui rri m m m eri m innn a • Average annual growth of 2.9% FY 2018 -19 through FY 2027 -28; assumes $3M in recurring capital funded through bonds instead of pay as you go funds; growth is consistent with short and long -term trends 24 -Trend FY03 -16 - - -- -Trend FY14 -16 Forecast O Budget $30,000,000 $25,000,000 $20,000,000 - $15,000,000 — $10,000,000 $5,000,000 $0 ($5,000,000) ($10,000,000) 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20% C ° 3° l � m �°. ca° m us �° �° a° 3° 3° a°. 3° a° �a r r r+ n C1 N � n V V u� ui Ii u1 ui Li vi a -C rn of o of .1 ro o •� 1 o f`4 f`�'lf`�' c c 0% 4 aR Q7 w!1 O �1 a -20% — ❑ Revised Budget $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 0 Original Budget ❑ ActuaI T Dept Request X a 2014 -15 2015 -16 2016 -17 2017 -18 FY18 revised based on allocation of swage adjustments and vacancy savings per department's share of total GF personnel costs; FY18 actual based on non -useof budget per recent years' experience • Original budget includes centralized costs for wage /benefit increases which are reallocated to departments after the budget is adopted. Those reallocations are reflected in the revised budget amount. Trend FY03 -16 - - -- -Trend FY14 -16 Forecast '? Budget $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a 20% ` `o rn tO L 1OO % O -C� �l �j vet 00 O O O O � CJ N N +� � W •i P a-I rl .-1 .-I O O O O C ++ 0% 4 v Ln Ln 3° y-10% r.i r rn m + rl� -20% Projection through FY 2022 -23 based on total of: Existing debt service "Proposed CIP and GO Referendum" per Davenport debt affordability analysis (1/9/18) Assumes no less than $35M starting FY 2023 -24 This allows for up to $200M in new bonds to fund both County and Education needs Trend FY03 -16 - - -- -Trend FY14 -16 Forecast Budget $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $o 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 � 150% °p c U 100% a a� 50% ° v a o 0 0 o d o 0 0 0 0 0 0 0 0 0 0 `D -° m m m m m m 0% Tied to analysis of current CIP by county staff ($1.7M through FY 2021 -22), including: Blackwood Farm Park (starts FY 2017 -18) 911 Center improvements /backup capability (starts FY 2017 -18) Cedar Grove Community Center (starts FY 2017 -18) Southern Branch Library (starts FY 2019 -20) Twin Creek Park (starts FY 2021 -22) Assumes continued growth for future projects Averaged $4.4M over previous 15 years Original budget in FY 2017 -18 was zero because County substituted pay -go with 2/3 bonds Long -term this amount is equal to the $1.3M in projected annual Lottery revenue Trend FY03 -16 - - -- -Trend FY14 -16 Forecast Budget $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 -- - - -- _ $1,000,000 $0 _ ($1,000,000) ($2,000,000) ($3,000,000) 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 600% 400% o 0 0 C C Q V 2QD � o 'N b' C-4 � -4 N - -1 Q/ o r Ma 0 N 0 N 4 rV 4 N 0 N 0 N a°., o W a M a 6 6 OQ N O OQ 6 rN rn o6 200% CA 00 yaa x, Amounts for County capital projects per CIP through FY 2021 -22, with 2% growth thereafter ($900K in FY 2022 -23, for pay as you go funds) Transfers to OPEB Trust account for high amounts ($3M in FY 2012 -13, $3M in FY 2013 -14, and $1.5M in FY 2014 -15) Assumes Efland Sewer ($145K) ends FY 2019 -20 Assumes Affordable Housing ($812K) continues at 2% growth Assumes Grant projects ($56K) continue at 2% growth Assumes Sportsplex ($168K) continues at 0% growth rid 31 $80 $60 $40 $20 $0 ($20) ($40) ($60) ($80) ($100) General Fund Balance (mil.) D Unassigned Reserved* 16% of Exp -- 8% of Exp ired reserve plus assigned for subsequent FY expense 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Assumes property tax rate remains at current $0.8377 (see below for key property tax assumptions) Before any corrective actions Results in structural shortfall leading to net deficit by FY 2022 -23 16% reserve is County policy, while 8% is Local Government Commission's minimum reserve requirement 32 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Tax Rate 0.8377 0.8377 0.8377 0.8377 0.8377 0.8377 0.8377 0.8377 0.8377 0.8377 Levy % Chng 1.70% 1.85% 0.43% 8.05% 2.07% 2.07% 1.70% 7.67% 1.69% 0.43% AV % Chng 1.85% 1.69% 0.43% 8.05% 2.07% 2.07% 1.70% 7.67% 1.69% 0.43% PT Rev Growth $2.6M $2.8M $0.8M $12.7M $3.6M $3.7M $3.1 M $13.8M $3.3M $1.OM 32 • Property Tax levy raised by $0.0576 in FY 2018 -19 (8.7% increase) and maintained at that same rate thereafter regardless of assessed valuation growth 8% increases in FY2O21 -22 and FY2O25 -26 due to reappraisal years Requires no reduction in expenditures Meets 16% reserve goal in out -years mostly with unassigned balance alone 33 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Tax Rate 0.8953 0.8953 0.8953 0.8953 0.8953 0.8953 0.8953 0.8953 0.8953 0.8953 Levy % Chng 8.70% 1.85% 0.43% 8.05% 2.07% 2.07% 1.70% 7.67% 1.69% 0.43% AV % Chng 1.85% 1.69% 0.43% 8.05% 2.07% 2.07% 1.70% 7.67% 1.69% 0.43% PT Rev Growth $13.1 M $3.OM $0.8M $13.6M $3.9M $3.9M $3.3M $14.8M $3.5M $1.1 M 33 Property tax levy increase of $0.0576 phased -in over a 3 -year period, with fixed rate thereafter Meets 16% reserve goal in near -term and out -years with combined state - required reserve and unassigned balance Potential expenditure reductions required in mid- 2020's to comply with County's 16% reserve policy 34 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Tax Rate 0.8569 0.8761 0.8953 0.8953 0.8953 0.8953 0.8953 0.8953 0.8953 0.8953 Levy % Chng 4.03% 4.13% 2.63% 8.05% 2.07% 2.07% 1.70% 7.67% 1.69% 0.43% AV % Chng 1.85% 1.69% 0.43% 8.05% 2.07% 2.07% 1.70% 7.67% 1.69% 0.43% PT Rev Growth $6.1 M $6.5M $4.4M $13.6M $3.9M $3.9M $3.3M $14.8M $3.5M $1.1 M 34 Sample Option C Alh Property tax levy increase of $0.0576 phased -in over a 3 -year period, with 2% tax levy growth thereafter (rate floats up or down based on assessed value changes, to net 2% revenue growth) No change in expenditure levels Property tax revenue is inadequate to prevent future deficits General Fund Balance (mil.) FY20 C� Unassigned Reserved* 16% of Exp - - - -- 8% of Exp $80 FY23 FY24 *state-required reserve plus assigned for subsequent FY expense FY26 FY27 $60 Tax Rate 0.8569 0.8761 0.8953 0.8451 0.8446 0.8440 0.8466 0.8020 0.8044 0.8170 Levy % Chng 4.03% $40 2.63% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% AV % Chng 1.85% 1.69% 0.43% 8.05% $20 2.07% 1.70% 7.67% 1.69% 0.43% PT Rev Growth $6.1 M $6.5M $4.4M $3.5M $3.5M $3.6M -- - -- — $3.7M t $3.9M $0 Li - ($20) ($40) ($60) D ($80) 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Property tax levy increase of $0.0576 phased -in over a 3 -year period, with 2% tax levy growth thereafter (rate floats up or down based on assessed value changes, to net 2% revenue growth) No change in expenditure levels Property tax revenue is inadequate to prevent future deficits 35 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Tax Rate 0.8569 0.8761 0.8953 0.8451 0.8446 0.8440 0.8466 0.8020 0.8044 0.8170 Levy % Chng 4.03% 4.13% 2.63% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% AV % Chng 1.85% 1.69% 0.43% 8.05% 2.07% 2.07% 1.70% 7.67% 1.69% 0.43% PT Rev Growth $6.1 M $6.5M $4.4M $3.5M $3.5M $3.6M $3.7M $3.7M $3.7M $3.9M 35 • Option D includes a series of expenditure reductions (eventual 6% total cut) to close the remaining revenue gap from Option C $10M reduction in FY 2021 -22 $2M reduction in FY 2023 -24 $3M reduction in FY 2025 -26 Total reductions of $15M are ongoing; assumes 2% annual growth in value of avoided costs 36 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Tax Rate 0.8569 0.8761 0.8953 0.8451 0.8446 0.8440 0.8466 0.8020 0.8044 0.8170 Levy % Chng 4.03% 4.13% 2.63% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% AV % Chng 1.85% 1.69% 0.43% 8.05% 2.07% 2.07% 1.70% 7.67% 1.69% 0.43% PT Rev Growth $6.1 M $6.5M $4.4M $3.5M $3.5M $3.6M $3.7M $3.7M $3.7M $3.9M 36 Observations Structurally balanced budget Financial forecasting Limited use of one -time resources Established reserves Debt Issuance Employee compensation Fees and charges Capital Improvement Projects G ra nts Performance Measures 38 New and /or enhanced revenues Ongoing continuous improvement process Expansion or revision of current practices Opportunities for operational efficiencies Opportunities to increase efficiencies through update of existing policies /elimination of redundancies Suggestions from and involvement of all departments Role of Functional Leadership Teams Link strategic plan to budget (countywide and at dept level) Clear priorities &service levels: Core or mandated services Education & Economic development Areas /populations served Budget direction Ranking process, return on investment, and customer served Expectations on goals and service delivery Dashboards & reporting platforms for transparency Clear linkage to strategic plan and budget on agenda items Family of measures to evaluate projects /programs: Workload Efficiency /effectiveness Outcomes Process to monitor & report progress: Executive /Policy level Manager level Partnerships L 4Ai UNC and other partner organizations Interlocal agreements with cities, schools & other agencies (fee recovery, cost sharing for services, use of facilities, etc) Shared service delivery and regionalization Community programming through not - for - profits School Systems 42 Formal policy for fees and cost recovery (internally and externally) Underlying cost of services &targeted recovery General Fund subsidy levels, regardless of fund providing service (example: solid waste; Sportsplex) Other governmental and related agencies Comprehensive fee studies on regular schedule: annual internal update /bi- annual external study Inflationary increases Benchmark to other agencies &private providers Desired level of competition, if any Audit significant revenue streams Explore all statutorily allowable revenue sources Economic development and code revisions Update existing revenue policies & ordinances Expand use of naming rights Seek additional sponsorships & grant funding and aggressively use fundraising ability of 3rd party organizations Legislative Efforts Local option gas tax dedicated to capital projects Support for additional /separate school tax Excise Tax (roughly $2 million annually not updated since 1980's) Technology Maxing out existing technology— mandated use & greater training; seeking opportunities for new technology (example: increase mobility and encourage more on -line services in every dept) Improve technology to better leverage staff resources (example: automate, motion sensors for energy efficiency, etc.) Business Process Review /Redesign Conduct workload studies and process map major service delivery areas to identify process improvements, staff utilization & cross training and desired customer service Evaluate opportunities for co- location and consider centralized cost centers where practicable and shared resources /services to eliminate duplication Evaluate staffing levels and consider leveraging third party services /resources where practicable Best management practices Require departments to research and identify best practices in their fields Studies in process (examples: Fleet, facilities, solar energy, transfer station /recycling, P &R, etc) Enterprises self supporting (include Sportsplex and any other similar contractual arrangements) Purchasing: Updated purchasing policies and procedures Increased competitive selections (RFP) and take a more pro - active purchasing approach to test market; participate in cooperative purchasing agreements Use of P3s and performance contracts Kevin Knutson kknutson @managementpartners.com Robert Leland rleland @managementpartners.com Francine Ramaglia framaglia @managementpartners.com http://www.managementrnrtners.com Thank you!