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HomeMy WebLinkAboutMinutes - 20080925 APPROVED 11/6/2008 MINUTES WORK SESSION Orange County Commissioners Orange County Board Of Education Chapel HiII-Carrboro Board of Education September 25, 2008 7:30 p.m. The Orange County Board of Commissioners met for a joint session with the Chapel Hill—Carrboro Board of Education and the Orange County Board of Education on Thursday, September 25, 2008 at 7:30 p.m. at the Southern Human Services Center in Chapel Hill, North Carolina. COUNTY COMMISSIONERS PRESENT: Chair Barry Jacobs and Commissioners Moses Carey, Jr., Valerie P. Foushee, Alice M. Gordon, and Mike Nelson COUNTY ATTORNEY PRESENT: COUNTY COMMISSIONERS ABSENT: COUNTY STAFF PRESENT: County Manager Laura Blackmon, Assistant County Manager Willie Best, and Deputy Clerk to the Board David Hunt (All other staff members will be identified appropriately below) ORANGE COUNTY BOARD OF EDUCATION MEMBERS PRESENT: Chair Steve Halkiotis, Vice-Chair Tony McKnight, and Board members Debbie Piscitelli, Anne Medenbleck and Susan Hallman. Superintendent Patrick Rhodes was also present. ORANGE COUNTY BOARD OF EDUCATION MEMBERS ABSENT: Ted Triebel and Eddie Eubanks CHAPEL HILL-CARRBORO CITY SCHOOL BOARD OF EDUCATION MEMBERS PRESENT: Chair Pam Hemminger, Vice-Chair Lisa Stuckey, and Board Members Mia Day Burroughs, Jean Hamilton, Annetta Streater, Jamezetta Bedford, and Mike Kelley. Superintendent Neil Pedersen was also present. CHAPEL HILL-CARRBORO CITY SCHOOL BOARD OF EDUCATION MEMBERS ABSENT: Chair Jacobs called the meeting to order at 7:35 pm. Introductions were made. Steve Halkiotis expressed regrets for the members that were absent. Chair Jacobs made reference to the handouts at everyone's places —a handout related to item 2 from OCS, a handout related to item 1 from CHCCS, and a News and Observer article. 1. Preliminary FY 2009-10 General Fund Budget Outlook Laura Blackmon said that staff is looking to bring the budget to the Board of County Commissioners a little earlier this year. She would like to go over the preliminary budget drivers, which are shown on Attachment 1-a. The County is doing a revaluation this year, and the goal is to not have a tax increase over the revenue neutral rate. There is generally a 3% natural growth in real property annually. The projected revenue for next year is almost $4 million over the current budgeted projections. Regarding sales tax assumptions, this is the third year of the Medicaid Relief Sales Tax Swap with the State. This will be a $5 million decrease in revenue for the County with an offsetting expenditure reduction in Medicaid expenditures. There were no changes in the governmental funding. The licenses and permits also had no changes. The charge for services will be decreasing about$660,000 because of the loss of Chapel Hill-Carrboro City Schools School Construction Impact Fees related to the decline in new housing. There are no changes assumed in investment earnings and transfers to other funds. There is an expected decrease in the Projected General Fund Revenues of$3.7 million. Regarding General Fund Expenditure Assumptions, there is an expected increase in debt service of$1,891,000 for the County and $850,000 for the schools. Regarding education, there is a projected increase in 385 new students, which will result in an additional $1,232,000 ($3,200 per pupil) in education funding. Regarding Employee Pay and Benefits, the implementation of a classification study would be approximately $4.1 million, which is about 10% of total salaries. This is an estimate. Health and Dental increases will be about$500,000 (15%). There will be some new facilities opening next year, such as: Central Orange Senior Center, Northern Park, Fairview Park, Library, Emergency Services Facility @ Meadowlands, Hillsborough Commons and Office Building. The total for this is about $2.5 million. The Medicaid reduction in expenditures is $5.2 million. Next year, there could be an increase in expenditures of almost $6 million. The net result is a shortfall of$9.5 million. Laura Blackmon made reference to two newspaper articles about the current budget situation in the State. Chair Jacobs asked about one penny on the property tax and Donna Coffey said that it would still be about$1.27 million. It will go up a little with the revaluation. Superintendent Pedersen said that he put together this list, also realizing that it is going to be a difficult year. Salary increases are beyond the school system's control, but a 3% salary increase equates to about $1.2 million. Health insurance rates are expected to go up this year. There was an increase in students of 300+ this year and something similar to that is expected next year. There was an $800,000 grant this year, which enabled the school system to fund some things that it normally would not have been able to fund. Superintendent Rhodes said that OCS has some of the same increases as CHCCS. He does not know about health insurance increases or salary increases. There are a number of housing units coming online in the district. There are some pressures in the Exceptional Children division. He said that OCS is working hard to moderate the energy and fuel costs as aggressively as possible. Steve Halkiotis said that he heard on the news this evening that anticipated health insurance costs are growing by about 5%. He is worried about the Governor's pronouncements of 2% cuts. He said that three of the OCS Board members, including himself, just came on in July and he has been impressed with Superintendent Rhodes' ability to redesign, realign, and reassign. He appreciates the ability and willingness to do this. He said that the revenue stream from the impact fee source is holding steady at this time. Commissioner Nelson asked the school board members if there was any reaction to the County's budget numbers. The next few months will be difficult from a financial standpoint. The main issue that he wants to put out is the credit issue. If the credit situation is the same or worse in February when the County has to borrow money for Elementary School #11, then it might not be able to borrow money or the terms might be a lot more expensive. He thinks that it would be wise to have an early conversation about how to handle that situation. Jean Hamilton asked what would happen if there were a credit problem in February. Pam Hemminger said that the SAPFO numbers show that the school is needed in 2010. The collaboration group has talked about postponing it to 2011. There is a capital lease program that can be investigated further. Lisa Stuckey said that in February the school board will be before the Town going through the approval process. Chair Jacobs said that he read where one of the candidates for Governor wants to mandate one school system per county. Lisa Stuckey made reference to the Medicaid Sales Tax Swap and said that it was supposed to be revenue neutral for the counties, but it is not for Orange County. She asked if this was because Orange County has less sales tax generally than other counties. Laura Blackmon said that there is an additional amount that the State has been given to try and balance this. Donna Coffey explained this in detail. She said that sales taxes have not grown and there will be further reductions in 2010-11 based on all of this. The ones who are truly held harmless are the cities and towns. Part of the County's sales tax money is going to hold the cities and towns harmless. There are lots of gray areas regarding the ins and outs of sales tax distribution. 2. Education Facilities Impact Fee Reports Planning Director Craig Benedict said that this concerns the update to the educational facilities impact fees. The last time the County conducted a study was in 2000-2001. In 2001, the County Commissioners adopted the current fees. This resulted in single-family rates for CHCCS of$4,400 per single-family home, and in OCS about$3,000. The study found the maximum supportable impact fee. The present fees are about 56-60% of the maximum supportable impact fee. Construction costs have increased dramatically since 2000 as has the student generation rate. There is a compounding type of factor in play. He made reference to page 4 of the abstract, which shows that the maximum supportable impact fee for single-family detached in CHCC would be $19,000 and in OCS would be over$9,000. The process before the Board of County Commissioners is to set a public hearing to discuss the material in this report that was done by Tischler and Associates, the same consultant that did the work in 2001. This would come back after October 21st and the Board would deliberate on what percentage of the maximum supportable impact fee might be desirable. The Board would then ask the staff to prepare a modification to the Education Facilities Impact Fee Ordinance, which would set the new rates and the effective date. Commissioner Nelson asked for an explanation of the 56-60% numbers. Craig Benedict said that his recollection was that the Orange County School board thought that a rate of$3,000 for a single-family impact fee in its district might be something that would not dramatically affect the cost of housing. The $3,000 limit was around 56-60% of the maximum supportable impact fee. Commissioner Nelson asked if the County staff was going to bring a recommended impact fee and Craig Benedict said that a chart would be given to show the different percentages. Laura Blackmon said that the staff could give some background. The decision will be based on what the community can support. Commissioner Nelson asked if this would be taken to the Affordable Housing Advisory Board for input. It was answered no. Commissioner Nelson said that he has heard about the potential increase for manufactured homes, and this is an issue that the AHAB reported to the Board a couple of weeks ago. Chair Jacobs said that last time the manufactured housing was separated out. Chair Jacobs said that there is no easy way to talk about this. He said that if the public is going to be told that the costs have risen dramatically, he would like to have some numbers. If there is going to be a case to the public, the whole idea is to tie it to the cost of building the buildings. Steve Halkiotis said that he remembers the debate that took place on this issue with the OCS Board, and it was rather heated at times. He said that OCS has been fortunate in that the revenue stream has been pretty steady with regard to impact fees. He asked the County Commissioners to please keep the OCS Board posted on this. He was under the assumption that the County Commissioners had already discussed this. Commissioner Gordon said that the school boards should know that the County Commissioners are going to collaborate and join with the school boards to figure this out. The Board of County Commissioners has every intention of consulting with the school boards on the impact fees. She said that it seems that there are two different decisions on this. She thinks that the Board should sign off on the student generation rates before it decides whether to levy the impact fees. She also asked that there be a little bit of preparation so that the public understands what this is all about. Also, on December 1, 2008, it says, "BOCC adopts updated impact fee levels." She said that this might not be a good date because it is the date that the new Board of County Commissioners comes online. Jean Hamilton said that the impact fee could affect the demand for new construction. She suggested looking at the impact fee in this larger sense of controlling growth. Anne Medenblik said that, even though there are impact fees, the markets have been very volatile. This also leaves a section of the population without the ability to purchase homes. Mike Kelley said that he is struck by the fact that in CHCCS, the growth has continued despite the fact that the number of housing starts are going down. The growth is continuing outside the realm of the marketplace of housing. Chair Jacobs said that it would also seem that an indirect consequence of an adverse impact on new housing would be a positive impact upon the existing housing because there is a limited housing stock, and therefore, one affect would be that those that own housing would see an increase in the demand. Pam Hemminger pointed out that about a third of CHCCS students live in apartments, which are not included in school impact fees. Commissioner Nelson made reference to the process and agreed with Chair Jacobs that the County Commissioners need facts and evidence and a consistent philosophy about why this is important. He also asked why this could not be done every year and the impact fee could be based on inflation, etc. so that people are not getting a huge increase all at once. He said that an impact tax is much fairer to people than an impact fee, and he would like to revisit this issue. 3. Draft School Districts Local Current Expense Fund Balance Policy Donna Coffey said that for a couple of years now, the School Collaboration Work Group has worked on the fund balance policy, and she thinks that there is a draft that everyone seems to be pleased with. The policy sets the recommended fund balance at 5.5% of budgeted expenditures for the CHCCS and 3% for OCS. These are targeted amounts. There was also language added about the extraordinary emergency needs, should an occasion arise, such as a roof blowing off of a school, etc. Steve Halkiotis said that Ted Triebel brought him up to speed on these deliberations. He said that the collaboration meetings are going very well. There is language about a policy review every 18 months. Some of the minute by minute details were removed. He made reference to the Regional North Carolina School Board Association meeting and said that he is concerned that a charter school is suing Charlotte-Mecklenburg Schools and was successful in the first lawsuit and is now going after the school system's fund balance. He finds it incredible that non-public schools would be going after the public schools' fund balance. He said that the school board is very happy with the draft policy. Superintendent Rhodes said that he learned a lot about fund balance over the past ten months. He appreciates the work that has been done. Lisa Stuckey said that there were a couple of words that were changed in 3.2 at the collaboration meeting. This is regarding an accumulating fund balance. The policy says, "The respective boards of education will have a plan in place," but when this was discussed, the group agreed that the wording would be changed to, "the respective boards of education will develop a plan for spending and then share it with the County Commissioners." Everyone agreed. Item 4 has this language as well. The draft fund balance policy will be taken back to both boards of education for approval. 4. Municipal Requirements Impacting Schools' Capital Projects including Cost Implications Chair Jacobs said that this item was for information purposes to give the County Commissioners some idea of expenses related to school construction but were not necessarily anticipated as part of school construction. There has also been discussion about the cost of installing a mobile unit in both systems. Steve Halkiotis said that this is an opportunity to educate everyone. He said that the costs of setting up a mobile unit are much more expensive in CHCCS because of codes, etc. Lisa Stuckey said that it takes like a year for approval of a mobile unit in the Town. Pam Hemminger said that CHCCS has been striving to make energy efficient buildings, and this can take more money up front, but the benefits are reaped later in lower energy costs. There is a lot of give and take to keep these energy efficient items in. 5. Discussion of Possible Topics for Collaboration Work Group Chair Jacobs said that the County Commissioners identified two things—technologies and looking at working together better, and drought-resistant and low energy using landscaping design. Commissioner Nelson asked if the collaboration group could discuss the issue about credit. Chair Jacobs said that the group could talk about it because it meets again in early November. Commissioner Nelson wants to make sure that the options are discussed in case there is a bad situation in February. Lisa Stuckey said that there was an issue of students beginning the school year without proper immunizations. Some students that do not have the immunizations will have to miss up to three weeks of school. There was a case of chicken pox in the district. The CHCCS Board would like to see the date pushed back to the first day of school. The collaboration group might be able to address this. Lisa Stuckey said that she went to Ann Arbor with the group and there was a lot of discussion about economic development and how Ann Arbor is working to attract businesses, especially aggressive businesses that have a connection to the University. She would like the collaboration group to get a report on the County's economic development zones and whether infrastructure is in place. She would like to know how the County is addressing economic development. Anne Medenbleck asked if the County had collaborated with Mebane to try and get them on board with SAPFO. Chair Jacobs said that there was a meeting about three years ago with the Mayor, Planning Director, and Manager and there was a conversation about this. When the Manager, the Vice-Chair, and he met with the Mayor and the Manager of Mebane within the last year, he raised the issue. He thinks that some members of the board might be receptive, but it has so far been a willingness to send the numbers. He does not want to give up on it. Commissioner Foushee said that there was not an elaborate response and there was not a formal discussion. Chair Jacobs suggested making a presentation at the Mebane City Council meeting. Donna Coffey said that Orange County is receiving impact fees for new housing construction in Mebane. Anetta Streater suggested that the collaboration group discuss the difference in impact tax versus impact fee. She would like to hear more about this difference and if school boards would be part of the process of lobbying politicians to consider this. Also, she would like to have a conversation about whether it is worthwhile to begin talking about non-traditional schools in terms of models. This could make a difference in terms of construction costs. Chair Jacobs made reference to the impact fee versus impact tax and said that one area of collaboration might be to meet with the legislators together rather than separately. A common message might be more effective. Regarding the models, he said that the school construction standards need to be teased out more. Steve Halkiotis said that Ted Triebel expressed an interest with respect to having a much stronger voice if the County Commissioners and the two school boards spoke together to the legislature. He asked if CHCCS had presentations by the Planning Directors about hot growth areas. He suggested that there be a presentation from the three Planning Directors at the next collaboration meeting. Pam Hemminger suggested discussing how the school systems interface with the new community college satellite campus. Another suggestion was to have a combined conversation about the Communities in Schools Middle School Afterschool programs. Commissioner Foushee suggested including the Performance Learning Centers also. Jamezetta Bedford said that the CHCCS Board is concerned because at the November State School Board Association meeting, they want to talk and see how the delegates should vote. It appeared in the district meeting that the Association was going after the fines and forfeitures to the detriment of all of the other legislative action items. The delegation has been supporting the school calendar and the sales tax refund. She spoke with Ted Triebel about this and both school boards will be discussing this to see how to change the lobbyists' actions. Chair Jacobs suggested that the first thing on the agenda for the next collaboration meeting is to put the discussion items in priority order and then the work plan will be communicated to the respective boards. Pam Hemminger said that the CHCCS used its lottery money to refurbish the Phoenix Academy building. The meeting was adjourned at 9:06:00 PM. Barry Jacobs, Chair Donna S. Baker, CMC Clerk to the Board