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HomeMy WebLinkAboutAgenda - 10-21-2003-9aORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 21, 2003 Action Agenda Item No. ~ - A SUBJECT: Possible Options for the Future Operation of the Orange County Animal Shelter DEPARTMENT: County Manager's Office PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Attachment A -APS Letter dated September 13, 2003 Attachment B -County Staff Report on APS Budget Request INFORMATION CONTACT: John Link, County Manager, ext. 2300 Gwen Harvey, Assistant County Manager, ext. 2300 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To present information and possible options for the interim operation of the Animal Shelter while transition to a longer term governance structure is considered and implemented. BACKGROUND: APS FUNDING REQUEST The current contract extension with Animal Protection Society (APS) calls for both parties to provide written notice of intent to renew no later than 15 days prior to the end of each month. At the September 16th meeting of the Board of Commissioners, representatives of the APS Board of Directors appeared in support of their September 13 proposal to the BOCC in which they requested additional funding in the monthly amount of $10,636 (inclusive of the Emergency Animal Rescue Service known as EARS) as a condition for continuing to operate the Shelter for the period October 1, 2003 through January 31,2004. (Attachment A) APS stated in its proposal that it was willing to operate the Orange County Animal Shelter (OCAS) from October 1, 2003 through January 31, 2004, effective October 1, 2003, provided that the County met a set of conditions including "full" compensation for the costs of Shelter operations and a County decision related to the future role of the APS in managing and operating the Shelter no later than January 31, 2004. APS stated further: "If Orange County is unwilling to provide full funding for the Orange County Animal Shelter (OCAS) starting on October 1,.2003: The APS is willing to continue subsidizing management and operation of the OCAS under the current contract extension from October 1, 2003 through December 31, 2003 (provision of after-hours EARS services to Orange County would be terminated on September 30, 2003). During this period the APS will cooperate fully with Orange County in effecting an orderly transition of the responsibility for management and 2 operation of the OCAS. On or before December 31, 2003, the APS will transfer responsibility for the management and operation of the OCAS to Orange County or its designated agent." County Staff Review of APS Request The Board of Commissioners referred the APS request to the County Manager for review and recommendation. In effect, the APS Board -without County input ordiscussion -has decided to change the funding structure for the Shelter and the financial relationship that has existed between APS and County since 1979. Historically, the County has made a lump sum contribution to the APS as its partner agency in the operation of the Shelter. In typical contracts for service, the County identifies expectations for outcomes and does not make appropriations to outside agencies on a line item basis. The County Manager met briefly with the APS Executive Director and APS Board President to convey the necessity for a Budget and Finance site visit and review of APS finances made necessary by the APS Board proposal. He also stated that once the result was reported to the Board of Commissioners, and should the Board of Commissioners then decide to take positive action on an increase in funding to APS, that he would recommend it be made effective October 1. The APS understands that County staff is returning to the Board of Commissioners with its report and recommendation on October 21. The Budget and Finance Directors met on site with APS executive staff and an APS Board representative to review the budget revisions and related financial audits. The County staff report (Attachment B) includes a proposed amount the BOCC could grant to the APS for the duration of the agreed upon contract extension. This amount is deemed reasonable based upon the costs associated with the implementation of improvements associated with the Humane Society of the United States (HSUS) Final Report, but without consideration for other APS adjustments apparently implemented. This amount also does not include EARS, since it is not a statutory responsibility of the County and has never been funded by the County. Interim Options for Animal Shelter Operation Given the APS communication and the need to maintain operation of the Shelter on an interim basis while longer term governance decisions are made and implemented, the County Manager sees two possible interim options and recommends the Board consider these at this time. Interim Option A -Continue with APS with increased funding The Board of Commissioners could decide to continue the contract for the Shelter with the APS on a month-to-month basis (through December 2003 -January 2004) with an increased level of funding in an amount reflected as a result of the County staff review. Interim Option B -Seek Proposals for Interim Shelter Management and Operation The Purchasing and Central Services Director has worked with the Manager's Office, County Attorney, Personnel, and the Health Department to develop the key components of a Request for Proposal for Interim Management and Operation Services to be sent to interested parties, including the APS. The key components of the proposal are suggested as follows: 1. Identification of the proposed management team and their qualifications to operate the shelter. 2. References from members of the animal shelter management industry that could attest to the successful previous professional experience of each member of the proposed management team. 3. The team's detailed proposal, which will include, but not be limited to the manner in which they propose to address: a. Staffing and supervision of the Shelter; b. Customer relations; c. Records management; d. Animal population control; e. Disease prevention; f. Reporting and communications with the County; g. Adoption and Reclamation Policies and Procedures; h. After-hours emergency response service. (Note: Veterinary services would be contracted directly by the County and would not be included in this proposal.) 4. Identification of any upfront costs for which the proposer expects the County to be responsible. This could include such items as capital equipment, supplies, or advance monthly payment to cover payroll. 5. Insurance costs covering all business exposures of the successful proposer, including worker's compensation coverage for employees. All policies would include Orange County as an additional insured. 6. Proposer would cite a lump sum monthly cost to perform the services contained in the proposal. 7. The term of the agreement approved with the successful proposer would be through June 30, 2004, with extension at the Board of Commissioners' discretion. Assuming that the County receives an acceptable proposal for management and operation of the Shelter through June 30, 2004, the resulting agreement would allow the County to accomplish the following objectives: To provide for a continuity of services, should the BOCC elect not to provide an increase in funding to the APS as the APS has requested, or should the APS elect not to continue the contract beyond December 31 at the level of funding approved by the BOCC. County management has stressed on several occasions a significant factor - it is not a simple or immediate task for the County to assume operation of as critical, or sensitive a public service as an animal shelter without proper planning and preparation. • To provide for a reasonable and responsible transition period for the Shelter to move from a function that the County contracts out to a function that is administered within County government. The time period projected by County staff as minimum for an orderly and effective transition is 4-6 months. 4 Longer Term Governance Both of the above options are provided as interim options while the County works toward a more permanent governance structure to have in place by July 1, 2004. If the Board's direction is that staff pursue a transition to a shelter operated and managed by County government, these options would allow time for that transition to occur. As part of that, the Board would need to decide whether the County administered operation would fall under the Health Department or under the direct authority of the County Manager's Office. Under either structure, the Manager's recommendation would be to couple Animal Control and the Animal Shelter together as an operating unit under the chosen departmental authority. Next Steps Therefore, County staff presents the following as a suggested sequence of events: October 21 BOCC Meeting 1. BOCC receives the County staff report and recommendation on the APS request for additional funding. The BOCC directs the County Manager to convey the BOCC decision to the APS. A written response by APS would be requested no later than November 5 in order to ensure and maintain concurrence on the continuity of services. 2. BOCC reviews and provides comment on the key components to be included in a Request for Proposal, which will be solicited on or about October 22, 2003. Any resulting agreement with the successful proposer is currently projected to begin no later than February 1, 2004. The Request for Proposal would be issued with responses due by November 4, in sufficient time for staff analysis and report back to the BOCC by the November 18 meeting. November 18 BOCC Meeting County staff further suggests that on November 18, the Board makes its determination whether or not to: o Amend the APS contract extension with an agreed upon increase in the monthly contract amount and for what time period. OR o Approve a bid award to a contractor for the interim management and operation of the Animal Shelter through the end of the fiscal year (June 30, 2004). (The BOCC may also decide to reject any and all bids.) o Authorize the County Manager to begin formalizing plans for County operation of the Animal Shelter, and determining the departmental authority and an effective date to begin County operation. o Direct the County Manager to work with designated Board members to develop a Task Force process including the composition of the task force, to address recommendations within the final HSUS report. This process will be brought back to the BOCC in December. FINANCIAL IMPACT: There is no financial impact to the consideration of the suggested scenario of events. There is an increased cost associated with the ,APS request for additional month-to-month funding for current Shelter operations, in the amount of $4,229, and there is a cost (yet to be determined by competitive bid) for a new contractor to run the Shelter on an interim basis through the end of the fiscal year. County staff has also already projected an initial figure exceeding $1 million for the first year operation of the Shelter under County auspices. RECOMMENDATION(S): The Manager recommends that the Board: 1. Deny the APS request for additional monthly funding in the amount of $10,636 through January 31, 2004 because: a) The line item approach for funding the APS is requesting is different from established practice with other non-profit partners b) A significant portion of the increase relates to personnel decisions made solely by the APS Board 2. Consider the analysis for additional funding and approval of additional funding in the amount of $4,229 to the APS on a monthly basis for December 2003 -January 2004, because it relates most directly to the desired operation of the Shelter as described by HSUS in their report. 3. Should the Board decide to grant an increase in monthly funding to APS - as referenced above -the Manager recommends that the increase be effective October 1, 2003. 4. Direct the County Manager to convey the Board's decision on additional funding to the APS and request formal written response no later than November 5, 2003. 5. Approve the key components of the Request for Proposal, far Interim Animal Shelter Management and Operation Services (Identified as 1-7 on page 3), with any modifications or alterations as may be desired. 6. Provide further direction to the County Manager at the Board meeting on November 18. ~"~'GC~ Witt-~~' .N IMAL PROTECTION SOCIETY OF ORANGE COUNTY AN ` ~' 1 081 AIRPORT ROAD CHAPEL HILL, NORTH CAROLINA 2751 4 ~,. ;: TELEPHONE 91 9-967-7363 FAX 91 9-967-7517 September 13, 2003 Orange County Board of Commissioners 200 South Cameron Street Post Office Box 8181 Hillsborough, North Carolina 27278 Dear Commissioners: The current extension of the contract between Orange County and the Animal Protection Society of Orange County (APS) for operation of the Orange County Animal Shelter (OCAS) is for a term that ends September 30, 2003, after which amonth-to-month contract extension could become effective if desired by both parties. The current contract extension requires each party to provide the other with a written notice of intent to renew by no later than fifteen days prior to September 30, 2003. This letter provides the required written notice by the APS regarding our. intentions and conditional willingness to renew the current contract extension for. operation. of the OCAS. This letter also.. provides an explanation of the APS Board's decision in this matter. We would be pleased to meet with you or your staffto further clarify the bases for our decision. Perspective of the APS Board ,~ First and foremost, the APS intends to continue providing programs and services that promote animal welfare and protection within the community whether or not we have a future role in the management and operation ofthe OCAS. Decisions regarding the future role of the APS in managing and operating the OCAS are clearly not in our hands alone. However, we want to advise you that the APS Board has formally decided that it wishes o continue to operate the OCAS over the long term. We believe that the APS is in the best position to work in strategic partnership with the County to address and implement the recommendations made by the HSUS and to successfully and effectively operate the OCAS. In this regard, regardless of whether APS continues to operate the OCAS, the APS Board: • Believes that the establishment of a true strategic partnership between Orange County, the APS and other community stakeholders is essential. • Supports the Task Force approach recommended by the HSUS and wants to be a participant in any Task Force (or any other equivalent body or committee) established by Orange County to address the recommendations of the HSUS. • Recognizes that implementation of the HSUS recommendations will take time, effort and financial resources. Will support any reasonable method of OCAS Oversight proposed by Orange ~7 County, whether short-term or long-term in nature. • Believes that, in the interest of all concerned, the Orange County BOC should make a decision regarding the future role of the APS in managing and operating ,--= the OCAS by no later than January 31, 2004. If the Orange County BOC decides to transfer responsibility for the management and operation of the OCAS: The APS will continue to provide most, if not all, of its current non-OCAS-related programs and services and will seek to define other ways to proactively promote animal welfare and protection in the community. To the maximum extent practicable, the APS will do so in strategic partnership with the County and with other community stakeholders. The APS will work with Orange County to effect an orderly transition, within the limits of our time and resources. Regardless of the BOC's decision relating to long-term responsibility for the management and operation of the OCAS, the APS Board has decided that it is no longer in a financial position to continue subsidizing the management and operation of the OCAS. • For many years, APS has financially subsidized the operation of the OCAS at levels of approximately $70,000 to $90,000 per year. This has significantly affected our cash reserves. • Our revised 2003-2004 budget for the OCAS projects the need for approximately '' $138,000 ofAPS subsidies, not including costs associated with implementing the vast majority of the HSUS recommendations. Acopy of this revised budget is included in the attached letter to Mr. John Link. • The continuing controversy over APS management and operation of the OCAS and associated distractions have significantly affected our ability to obtain funding from other sources. It is also important to recognize that the long-term under-funding of the OCAS by Orange County has contributed to the quality of OCAS operations and has affected our ability to expand APS programs and services to include additional proactive initiatives. Therefore, APS is no longer able or willing to subsidize the management and operation of the OCAS. Our ability and willingness to manage and operate the t)CAS beyond September 30, 2003 is contingent upon obtaining full funding for the OCAS from Orange County. We understand that the timing of the communication of our decision is not good and that it will no doubt result in a barrage of criticism from those who will choose to misinterpret the underlying reasons. The fact of the matter is that our financial condition dictates no other choice. APS Notification of Intent The APS is willing to operate the OCAS under contract to Orange County on a month-to- month basis from October 1, 2003 through January 31, 2004 provided that: '' 1. Effective October 1, 2003, the APS is fully compensated by Orange County for the costs of operating the OCAS ~ . 2. The Orange County BOC makes a decision related to the future role of the APS in managing and operating the OCAS by no later than January 31, 2004. 3. If the Orange County BOC decides to continue to contract with APS for long-term operation of the OCAS beyond January 31, 2004, a new contract to that effect will be established prior to February 1, 2004. 4. The APS is included in any Task Force (or any other equivalent body or committee) established by Orange County to address the recommendations of the HSUS. 5. Funding by Orange County for the implementation of any HSUS recommendations by the APS will be provided through a separate contract. 6. The current contract is appropriately modified to provide increased clarity regarding the adoption of animals from the OCAS. In the event that the BOC does not agree with the conditions identified above, the APS intends to proceed as follows: If Orange Count is unwilling to provide full funding for the OCAS starting on October 1, 2003: The APS is willing to continue subsidizing management and operation of the OCAS under the current contract extension from October 1,...2003-through December 31, 20032. During this period the APS will cooperate fully with Orange County in effecting an ~ orderly transition of the responsibility for management and operation of the OCAS. On or before December 31, 2003, the APS will transfer responsibility for the management and operation of the OCAS to Orange County or its designated agent. If the Orange County BOC either has not made a decision by January 31 2004 re~ardin~ the long term future role of the APS in operating the OCAS or has decided that the APS will have no future role in operating the OCAS: The APS is willing to continue operation of the OCAS on a month-to-month basis from February 1, 2004 through June 30, 2004 in order to support an orderly transition of responsibility for management and operation of the OCAS, provided that Orange County has fully funded the OCAS starting on October 1, 2003. On or before June 30, 2004, the APS will transfer responsibility for the management and operation of the OCAS to Orange County or its designated agent. ' If the BOC wants the APS to provide after-hours Emergency Animal Rescue Services (EARs) to Orange County, the monthly payment installment will need to increase by $10,636 to $46,371. Ifthe BOC does not wish to fund after-hours EARS for Orange County, the monthly payment installment will need to increase `y' by $9,427 to $45,162. In the latter case, APS will cease to provide after-hours EARS to Orange County on September 30, 2003. z Provision of after-hours EARS services to Orange County would be terminated on September 30, 2003. 3 O Clarification of the Current Contract The current contract does not specifically address the responsibilities and the rights of the APS with respect to the adoption of animals from the OCAS. Retention of animal adoption fees by APS to help defray the costs of adoptions and other shelter operations is an important element of the funding for the OCAS. Accordingly, APS proposes that the following provision be added to Article 2 (Responsibilities of Society) of the contract: "Establish and implement appropriate criteria and procedures for the adoption of animals from the shelter by people seeking pets. Society shall also take appropriate actions to promote the adoption of animals from the shelter. Society may retain adoption fees to help defray the costs associated with adoptions and other shelter operations." On behalf of the APS Board and staff, I would like to express our hope that the APS will be able to continue serving the community by managing and operating the OCAS over the long term. If you determine that is not in the best interests of the community, we will seek to fmd other ways for APS to work with Orange County and other stakeholders in strategic partnership for the benefit, welfare and protection of the animals in our community. Sincerely, Pat Beyle APS President .~ Cc: John Link, Orange County Manager Laura Walters, APS Executive Director Attachment: As Stated A+~a~ ~ Orange County Finance Department Committed to Fisca/ Erce/%nce 208 South Cameron Street Post Office Box 8181 Hillsborough, NC 27278 ORANGE COUNTY ~00~ NORTH CAROLINA Ceceaan~rt:vc s5o Yeaxs Kenneth T. Chavious, Finance Director MEMORANDUM TO: John Link, County Manager FROM: Ken Chavious, Finance Director DATE: October 14, 2003 SUBJECT: Review of APS Financial Information Tel (919) 245-2450 Fax (919) 644-3324 www.co.orange.nc.us As you requested, Donna Dean and I met with officials of the Animal Protection Society on October 6, 2003, for the purpose of reviewing/analyzing financial information accompanying the Society's request for additional funds. This request was included in the September 13, 2003 letter written to you by Pat Beyle, APS President. The amount of analysis we were able to perform was limited due to time constraints expressed by APS staff. In addition, certain information required for an in depth comprehensive analysis of operations and overall financial condition were not made available to us. We were provided documents by shelter staff entitled "FY 2002 -2003 OCAS Budget/Financial Performance Explanation" and "FY 2003-2004 OCAS Budget Explanation" These documents can be provided upon request. Shelter staff was cooperative in answering questions related to the documents and numbers provided. These documents and previous audited financial statements we had on file are the basis for, what I will call from this point on, our review. Observations • In fiscal year 2002-2003 financial reports the APS implemented changes in the accounting and allocation of expenses that they acknowledged in the letter mentioned above. The reallocation of these expenses significantly impacted shelter costs. There were no details provided in the letter or in the documents provided by Shelter staff that highlighted actual numbers. There are some percentages mentioned but no actual dollar amounts that explain the dollar value of the reallocation of costs. In FY 2002 the Shelter financial statements reflected $34,000 in support from the APS. The APS support reflected for 2002-2003 and projected for $2003-2004 is in excess of $100,000. l~ An Equal Opportunity/Affirmative Action Employer • Changes in operational practices, many related to implementation to the HSUS recommendations, have also created increases. One of the most significant increases in this area is related to utility costs that increased by $5,482 annually, most of which is related to the ventilation and air conditioning repairs. • APS reported in the September 13 letter to the manager that overall personnel costs increased an average of 3%. When reviewing the numbers provided by APS the salary portion of personnel costs went from $342,364 in 2002-2003 to $365,904 in 2003-2004 (23,540). This represents an increase of approximately 7%. • There was an increase of $5,114 in the administrative cost area related mainly to the CPA expenses which I assume are attributed to the annual audit. For the last two years the shelter did not have a comprehensive audit The CPA performed a review, which involves little auditing and is more of a compilation of numbers. Conclusion have attached a spreadsheet comparing the 2002-2003 actual expenditures to the 2003- 2004 projections that are the basis for the APS request. I have also included a spreadsheet containing a 6-year history of Shelter expenses and APS contributions. The County and the APS have operated the Shelter as a partnership for many years with both parties contributing. The APS contributions to Shelter operations averaged 10.78% during the 5-year period 1999 and 2003. As reflected on the spreadsheet, the dollar amounts fluctuate from year to year. If we apply an average of 10% to the APS 2004 request the APS contribution would be $77,511. Since the County has no input in decisions related to salary increases initiated by APS, the shortfall should be adjusted by that amount ($23,540). Were the BOCC to consider funding the $139,115 shortfall reflected in the APS 2004 projections the following formula could be applied. APS Projected Shortfall $139,115 Less APS Contribution 77,511 Less Increase in Salary Costs 23,540 Potential Additional County funding $ 38,064 Monthly amount effective 10/1/03 $ 4,229 This appears to be sufficient to cover the costs associated with HSUS issues as well as increased audit cost and other shelter operating costs, but does not address increases in salary costs. In addition, this scenario maintains an APS contribution at a lesser amount than projected. This is one of many possible scenarios that could be used in assessing the APS request for additional funds and I'm sure that someone could and indeed will disagree with the methodology. The provision of more detailed information and more time to analyze all aspects of shelter operations, including the APS financial statements, would yield a much better product. This product does, however; continue the Shelter operation as a partnership and not the sole funding responsibility of the County. !a APS EXPENDITURES FY 2003 COMPARED TO FY 2004 EXPENDITURE CATEGORY 2002-2003 2003-2004 Projected Emergency Animal Rescue 36,490 37,199 Adoption Costs * 190,617 175,041 Animal Reclaim 1,613 1,617 Evidence Animal Cost 1,244 1,255 Rabies Clinic Costs 1,450 1,450 General Shelter Operating Costs 24,334 27,845 Euthanasia Costs 4,000 4,000 Administration Cost 8,869 14,257 Personnel Costs 421,532 446,789 Miscellaneous Personnel Costs 5,164 5,198 Liability Insurance Cost 601 650 Operating Permit Cost 335 400 Veterinary Support Costs'` 4,371 17,844 Utility Costs 36,084 41,566 TOTAL 736,704 775,111 REVENUE 635,996 635,996 APS CONTRIBUTION 100,708 139,115 Adjustment for increase in Salaries 23,540 APS Contribution has averaged 10.78% 1999 through 2003 projections. 10% of projected 2004 Expenditures 77,511 County Amount to Make up Difference 38,064 Monthly Amount Beginning October 1, 2003 4,229 Increase/ (decrease) 709 (15,576) 4 11 3,511 5,388 25,257 34 49 65 13,473 5,482 38,407 * Amounts for veterinary expenses were reclassified. i3 APS Contrib Shelter Exp APS °~° 1998-99 101,742 532,145 19.12% 1999-00 44,389 604,036 7.35% 2000-01 49,393 595,680 8.29% 2001-02 34,014 623,786 5.45% 2002-2003 Unaudited 100,708 736,704 13.67% 2003-2004 Projected 139,115 775,111 Average 10.78%