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2011-71-Minutes for Meeting January 06,2011 Recorded 3/7/2011DESCHUTES COUNTY OFFICIAL RECORDS CJ 7011'11 NANCY BLANKENSHIP, COUNTY CLERK COMMISSIONERS' JOURNAL 03/07/201108:13:06 AM ~uuui~W~ 201u72 Do not remove this page from original document. Deschutes County Clerk Certificate Page --i Deschutes County Board of Commissioners 1300 NW Wall St., Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - .www.deschutes.org MINUTES OF BUDGET COMMITTEE MEETING DESCHUTES COUNTY BUDGET COMMITTEE THURSDAY, JANUARY 6, 2011 DeArmond Room - Administration Building - 1300 NW Wall St., Bend Present were Committee Members: Commissioners Tammy Baney, Tony DeBone, and Alan Unger; Bruce Barrett, Clay Higuchi and Mike Maier. Also present were Dave Kanner, County Administrator; Erik Kropp, Dave Inbody and Anna Johnson, Deschutes County Administrative Services; Marty Wynne and Teri Maerki, Deschutes County Finance, Hillary Borrud, Bend Bulletin Reporter. Bruce Barrett, Deschutes County Budget Committee Chair, opened the meeting at 1: 34 p.m. 1. Current Fiscal Year Financial Operating Data. Marty Wynne presented the November 2010 Statements of Financial Operating Data to the Committee. He stated the General Fund's current year property tax collections are projected to be below budget, but prior year tax collections will exceed budget. Fiscal Year 2011 General Fund beginning net working capital is $1.4 million higher than budget due to prior year tax collections, the closure of the Redmond Urban Renewal, and other factors. Community Development Department year-to-date revenues compared to budget show a negative variance of $142,956 for 5 months. The aquatic center is estimated to bring in $300,000, but this is a one time project. Alan Unger added that even though the revenue for that project will not be there next fiscal year, County employees will be working on this project during next fiscal year. The Health Benefit Trust Fund report shows a positive net (resources less requirements) of $17,181,108 and a year end projection of $16,704,518 as of November 30, 2010. Claims paid this year through November are less than last year at November 30''. However, December was a hard hit month with claims Minutes of Deschutes County Budget Committee Meeting Thursday, January 6, 2011 Page 1 of 7 Pages paid amounting to $1.7 million. The ending net working capital will drop from $16,704,518 to $15,800,000. Year end projections on the statements are in line and there are no significant issues for departments other than those mentioned. By and large the financial situation for Deschutes County looks pretty good. 2. Opening Comments. Dave Kanner reviewed a document from the Department of Revenue covering pre-meeting topics that can be discussed prior to the first official meeting of the budget committee. He informed the committee this meeting was an official meeting, but specific funds or line items could not be deliberated on. The County received the GFOA Distinguished Budget Award for the third consecutive year. 3. Budget Assumptions. Dave Kanner indicated that the County is in for difficult times in the next couple of years with declining revenues and increasing costs. However, not all news is grim as shown by an increase in transient lodging tax revenue. For a tourism dependent county such as this, it is a positive measure of economic activity. The County is in a better position than most other jurisdictions. Other revenues that have been declining are flattening out. The taxable assessed value (TAV) is forecasted to decline by 2% in FY 2012. This is consistent with trends seen over the last three years. There was no recovery in real estate in 2010 and it seems likely a decline will be seen next year. It is anticipated there will be large cuts in state funding, particularly for behavioral health. There is a possibility the Oregon Commission on Children and Families will be eliminated entirely, saving the State about $45 million. Much of what Deschutes County's Children & Families Commission (CFC) does is funded by federal grants. The majority of state money CCF receives is passed through to non-profits. The County contributes general fund money to support about 1.6 FTEs of CCF's staff. Commissioner Tammy Baney added the County would be fine, but eventually the state system would be dismantled. Some of the state general fund support for public health may be cut, but large Minutes of Deschutes County Budget Committee Meeting Thursday, January 6, 2011 Page 2 of 7 Pages cuts for community corrections funding are not expected. Of greater concern is the possibility of the state shared revenues being cut. Some sources of shared revenues are taxes on cigarettes, liquor, and amusement devices. The County General Fund receives ap roximately $900,000 from shared revenues. Based on a long standing agreement between local governments and the State, local governments o not typically charge for these types of taxes due to the sharing of those reven es by the State. Video Lottery revenue is coming in 2-3% hi The County will be at the bargaining table with While it is not known what the unions will dem they are currently receiving. than budget this fiscal year. of the unions this spring. it is likely to be more than The County has had several consecutive bad years in its workers' compensation program. The bad years have not been budget busting years, but an actuarial valuation is expected soon recommending an increase in reserves for the workers' compensation area. Unemployment claims are also extremely over budget, and rates charging the departments will have to be increased for unemployment insurance. The County has been fortunate to hold the line on personnel increases for the last few years because of its ability to decrease Health Benefit Trust (HBT) and PERS charges. Salaries have grown nearly 20% between fiscal year 2007 and 2011. Marty Wynne explained the departments have 1 retirement benefits than the amount the County PERS Debt Service), and the difference has bee has occurred for several years. The reserve fun( increases that exceed the department charges. L unlikely the County can continue to decrease th the overall increase in personnel costs. ;en charged more for the tas had to pay to PERS (and on i placed in a reserve fund. This can absorb the PERS rate gyve Kanner pointed out it is se charges to hold the line on He stated that going forward, we must tune out he noise about what's going on in other jurisdictions and focus solely on what's going on in ours. Minutes of Deschutes County Budget Committee Meeting Thursday, January 6, 2011 Page 3 of 7 Pages Dave Kanner will propose no COLA for non-represented employees, but does not feel the County's employees are overpaid. Individuals in executive management positions are paid about 42% lower than their counterparts in the private sector. Dave Kanner plans on recommending to the Board of County Commissioners that non-salary forms of compensation be established. He is concerned the non-represented employees have not been receiving COLAs as the represented employees have. There are no plans to budget for a COLA for represented employees, except for Deschutes County Sheriff Employees Association represented employees. What happens with the unions is a matter of negotiation. The County must, as an organization, start thinking in terms of non-salary forms of compensation. Dave Kanner feels the Budget Committee recognized this when it approved a deferred compensation contribution for the County's elected officials in the current fiscal year. Deferred compensation, though not free has significantly lesser budgetary impacts, while at the same time putting money in employees' pockets; but doing so at retirement rather than at the present time. Holding steady puts pressure on the internal service funds and they tend to be dominated by non-represented employees, most of whom are at the top step. Tammy Baney requested information on how much a freeze on step increases for non-represented employees would save next year. The health benefits will include a 5% increase which can be changed. The PERS rates will be left at the same levels they are in the current fiscal year. The PERS Reserve Fund will finish the fiscal year with $12 to $13 million. Dave Kanner believes the fund has enough resources to draw down on for the next three to four years. Alan Unger pointed out that last year the County raised the health benefit rates and lowered the PERS rates for the County departments. COIC, who participates in the County's health benefit program, did not get the benefit of the lower PERS rates. Marty Wynne explained the 1.72% component of the PERS rates is to cover debt service on the bonds issued for about $12 million in 2002 and 2004. Dave Minutes of Deschutes County Budget Committee Meeting Thursday, January 6, 2011 Page 4 of 7 Pages Kanner referred to a PERS worksheet detailing the estimated decrease in the PERS Reserve Fund with the lower PERS rates in effect. Clay Higuchi would like to see an increase in the employees' monthly health insurance deduction from $50 to $65. Dave Kanner indicated $65 per month is the maximum allowed under the Deschutes County Sheriff's Employee Association contract and while some of the contracts allow for a greater employee deduction for health coverage, most have language limiting the rate to what other employee groups are charged. The Board makes the determination on adjusting the employee contribution. Dave Kanner discussed providing an incentive for Deschutes Onsite Clinic (DOC) participants to identify health conditions before they become chronic and indicated there is a six to one return on investment with an onsite clinic. He shared that EBAC is opposed to increasing premiums and risk assessment incentives. There is data identifying services that cost the County excess amounts and are a result of employee making poor health care choices. Coverage on those services could be adjusted to have the employee pay a higher amount for those choices and services. A description of the DOC benefits and cost savings to the County was described. Erik Kropp stated unemployment charges have increased and explained those charges are allocated based on the calculated payroll and not on experience. Part of the actual pay outs for unemployment are due to lay offs, but some are poor hiring choices. If an employee is on probation and let go, they will in most cases receive unemployment benefits. The system is heavily weighted toward the employee. 4. Capital Projects. A brief update on the capital projects was presented. • The Bethlehem Inn is prepared to sign a two year lease with the County for the use of the building. • The bond measure for the jail expansion project failed and the project will not proceed. Deschutes County 911 moved out of the Sheriff's building and the Sheriff s Office has taken over the vacated space. The Sheriff has about $900,000 to expand the existing building and wants to move forward with that project. Minutes of Deschutes County Budget Committee Meeting Thursday, January 6, 2011 Page 5 of 7 Pages • There is funding in the General County Projects Fund for the North County Campus project in Redmond and the County should be able to pay for this project in cash. A prospective piece of property has been identified and there are a number of potential partners looking for space that would be available with this project. The County would be able to sell the Unger Building. • The OSPI911 building came in under budget. It is 911's expectation to apply the remaining project money to the debt service. • The Secure Treatment Facility was completed and occupied by Telecare in December. 5. Departmental Presentations. Dave Kanner inquired about possible improvements for department budget presentations at the May meetings. The Budget Committee indicated that while less paper was desirable, it was important for them to receive any necessary handouts prior to the meetings. The Committee reiterated the departments should not repeat the information in the budget document, but use their time to enhance the information presented in the budget document. Last year the departments stumbled a little on goal review and the performance measures should be more specific. The Budget Committee wants to have enough time for questions and answers with each department. A period of time between presentations for committee discussion was also requested. 6. Budget Calendar. The budget schedule was presented and meeting dates were reviewed. The schedule for the May meetings is currently set for Monday through Thursday. A request to reserve Friday morning was made in case additional time was needed. 7. Deschutes Onsite Clinic and Health Risk Assessments. Details of the benefits, incentives, processes and confidentiality surrounding the Deschutes Onsite Clinic and health risk assessments were discussed. Minutes of Deschutes County Budget Committee Meeting Thursday, January 6, 2011 Page 6 of 7 Pages The Commissioners agreed to sign a letter promoting the health risk assessments, but were not ready to support an incentive to employees for participating in them at this time. 8. Adjourned. Bruce Barrett, County Budget Committee Chair, adjourned the meeting at 3:37 p.m., Thursday, January 61n DATED this 18th Day of February 2011 for the Deschutes County Budget Committee. Respe fully submitted, Teri Maerki, D schutes County Finance Department DATED this Day of 2011. BOARD OF COUNTY COMMISSIONERS OF DESC IUTES COUNTY, REGON TA Y B NEY, Cha; ANTHONY DEBONE, Commi inner ALAN UNGER, Commissioner TEST: - .Recording Secretary Minutes of Deschutes County Budget Committee Meeting Thursday, January 6, 2011 Page 7 of 7 Pages