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2015-556-Minutes for Meeting December 15,2015 Recorded 12/31/2015 DESCHUTES NANCY BLANKENSHIP,PCOUNTY CLERK QS W 20�5�55� COMMISSIONERS' JOURNAL 12/31/2015 0812:04 AM k).t,∎4 IIUjIUIUIUIIIfl III III 20 - 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 DESCHUTES COUNTY BUDGET COMMITTEE MEETING TUESDAY, DECEMBER 15, 2015 Present were Commissioners Anthony DeBone, Tammy Baney and Alan Unger. Also present were Tom Anderson, County Administrator; Erik Kropp, Deputy County Administrator; Budget Committee Members Clay Higuchi, Mike Maier and Bruce Barrett; Wayne Lowry and Loni Burk, Finance; Danielle Fegley, Human Resources; Whitney Malkin, Communications; Timm Schimke, Solid Waste; and citizens James Wood and Jimm Burton. No representatives of the media were in attendance. Budget Committee Chair Bruce Barrett called the meeting to order at 1:30 p.m. 1) Opening Comments. Tom Anderson said things at the County are stable and healthy. They fortunately are not having to break in any new department directors at this time. They will discuss macro issues and revenue situations today, and some looming issues in department budgets, and an update from last May's meetings. One thing affecting all departments will be the impact of growth. This is going to be demonstrated by proposed budgets to address growth. It will be a consistent theme. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 1 of 13 There is a looming issue with PERS, and there will be some choices to deal. with this. From a departmental standpoint, 911 is a big issue with the ballot measure. Behavioral health is also a big issue, with the health environment changing. Goals and objectives will be addressed in January, to lay out priorities for service delivery. The quarterly reports are good, and they are preparing for next year. 2) County Financial Update. Wayne Lowry provided a PowerPoint presentation detailing the budget and actual through November 2015, the status of selected financial issues and budget assumptions for 2016-17. a) General Fund Between 2013-14, they put into place a plan to pay off the solid waste loan, which brought the total down. The Bethlehem Inn was also paid off in 2015. There have been some increases in revenue due to higher property values. The budget assumes that all positions will be filled, but this is not the same as actual. 22 positions were added to the last budget. They are doing some long-rage panning to figure out how sustainable some of the funds are. The general fund looks good in the future if assessed g g value stays healthy b) A/V & Property Taxes Market value is more volatile but is in a good trajectory at this time, not too extreme. The Sheriffs levy has grown slower in the unincorporated areas where property values do not increase as quickly. c) Development Activity Property taxes and collections have increased gradually. 911 is the only levy that is partly a local option levy. It is affected by compression and. does not grow as quickly. If it becomes a permanent rate, the dynamics will be different. Local option levies reduce first, and if there are none, all levies are affected at some level. Development revenues show some downward trends but this can be misleading. CDD is increasing overall. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 2 of 13 d) Room Tax Performance Room tax has increased and exceeded estimates. The budget assumed 7% increase and it is above 8% and could increase as much as 12 or 13%. Most of this is a decreased vacancy rate and the ability to increase the amount charged. It was steady even during the recession because many people stayed closer to home. Clay Higuchi asked about the revenue for tourism. Mr. Lowry said there are three different vintage of room taxes. The 6% is discretionary and funds the Sheriff. The added 1% and the recent 1% are 70/30 and some goes to the Fair & Expo The Sheriff is funded from this as is COVA and others, and some to the Fair & Expo for marketing. The balance goes towards a forgivable business loan program. Mr. Higuchi asked about COVA and whether they can bank the funds. The City has to spend it all. Mr. Anderson said there is nothing in the COVA agreement that requires them to set aside fuds However, they are reviewed by the County and have to report what they do with it. Commissioner Baney said that if the revenue does not increase, they also take the hit. So there is no safety net for them in that case. She would like to talk about this further as to what is reasonable capacity for COVA. e) PILT/Forest Receipts Federal Forest Receipts have increased after an extreme dip. PILT and the secure rural schools forest receipts never seem to be connected with each other, and they have not been dependable in the past, so this is considered in the budget. PILT is discretionary while forest receipts are for roads and schools. The extra revenue has been a big help to roads and with natural resources protection. f) Health Benefits Trust The health benefits trust fund continues to do well. The balance grew to over $14 million, and it is projected to $13.5. A policy indicates this should have one year's claims as a balance, but that seems to be excessive. A consultant is reviewing this to develop a rate for 2017, and address what the reserve should be. Claims leveled out when the DOC pharmacy was started, which stabilized costs. It is hard to know from year to year what to expect in the way of claims. EBAC continues to talk about how to shave costs without affected the plan too much. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 3 of 13 Mr. Higuchi asked what the consultant is doing, when the administrator could likely figure this out. Mr. Lowry said the consultant is looking at other things, as to how to handle part-time. Ms. Fegley said they look at what the cost would be to buy it from the open market. Generally you work with an underwriter and don't see a lot of differences. This person looks at the bigger picture of the cost of the insurance. There is no connection to any insurance company. Commissioner Baney said that this factors into other county business, having this big reserve. A year's claim was felt to be prudent at the time, but what should it be. Mr. Higuchi said that management needs to make the call. He does not think they need someone to figure this out. They need to look at the Cadillac plan and others. Mr. Lowry said not every government agency is self-insured. This is unique and metrics for this kind of plan are not everywhere. It operates like a private company's plan with some differences. Mr. Higuchi said it is not about formulas, but the bottom line. The metrics can be skewed. Mr. Lowry said they do not do it for financially benefit other than savings. The consultant has some expertise that the County does not have, to address the technical aspects. Mike Maier said this was breaking new ground, and most of the consultants in the past had ties to insurance companies. Mr. Anderson added that it is a complex mix of needs and benefits. g) PERS Rate Projections PERS is an issue and will remain as such. It was hoped that the increase would taper off. The legislature made changes that took out some unfunded liability. The PERS Board met this year to deal with most of the changes being overturned in the courts. The plan is much less funded now. There have been rate increases and will be more before it flattens out. It is unknown whether there will be legislative changes or other adjustments that improve this situation. Mr. Lowry feels that PERS will be a burden on local governments in the foreseeable future. It could be 25% of payroll. This is system-wide and every agency will have to deal with it in some fashion. Commissioners Baney said that the community needs the services and not all things can be privatized. Mr. Lowry stated that in ten years, it could be half of payroll, depending on the employee. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 4 of 13 3) Financial Issues Status a) Solid Waste Loan Repayment The humane society in Redmond still owes the County $535,000. They have asked for this loan to be restructured. The remaining balance will be paid off by a private trust but probably not until 2023. This is the last piece owed to Solid Waste. He would like to close this out with general fund. Commissioner Baney would like this tied to a department because it would be easier to ask for forgiveness form the general fund. She said they still don't have a viable business plan after all these years. b) Refinanced. Debt Some debt was refinanced to save money. Through a private bank placement, they saved $342,000. The rate is 1.99 and will go to 2.49%. c) North County Building Sale The Design Center in Redmond was purchased for $1.4 million in 2009. It sold in 2015 for $2.2 million. There was not much expense during that time. The County financed $1.7 million at 4.25%, with the cash flow handled through Fund 140, Projects and Debt Reserve, through 2035. It was determined not to be suitable to serve County clients. d) State Lease Extension on DCSB Most of the lease is to the State. The debt service is $750M a year, and the lease pays for most of this. DOJ is moving out and the State health people want to take the space over. The original lease agreement has ended, so they renegotiated another ten years. The amount is a little less, but this liability is now covered. Debt service ends in 2033. e) Finance/HR Software Project The process has been long and intensive, but they are close to making a selection from two finalists. Tyler is the likely winner. This should all be finalized in the spring and implementation will take most of the year. Finance will be done first, then HR. This will add efficiencies in many ways throughout the County. At this point, only Finance uses the system when others should be able to do so. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 5 of 13 There is an enormous amount of paper still being used. Much more could be done electronically. Data could be centralized and access would be more readily available. This is a big effort but they want to do all they can at once. It would mean big changes in HR. 4) Budget Assumptions for 2016/17 It is assumed that transfers will stay the same as last year, but those have to be justified. a) General Fund Support Some departments reside in the general fund, such as the Assessor, D.A. and others. b) Cost of Living The COLA came out today at .2%. Contracts are at .5%. but AFSCME negotiated 2%, others are at 1.5%. Some have yet to be negotiated but they are assuming this will be accurate. 0 0/o Mr. Higuchi asked why non represented are at 1.5% when others are at 2 . Mr. Anderson said that the AFSCME number is unique and part of overall negotiations. If they raised non represented to 2%, it would cause some ramifications. Mr. Maier asked if a salary study has been done as planned and whether non represented increased. Ms. Fegley said they will be doing a study for the non reps but were not able to do it this year. They have a new employee and RFP's in the works, but it is about six months off. Commissioner Baney said she had hoped to see this by this budget session. Ms. Fegley said they have had conflicting workloads. Mr. Kropp said the range may increase but the costs may not change overall. Mr. Anderson said that some of this will need to be customized. c) Health/Dental Insurance Rates Mr. Lowry stated this is a placeholder for a more precise number from the consultant. They estimate 5%. d) Assessed. Value — Countywide A 5% increase is estimated at this point. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 6 of 13 e) PERS Rates There was a small increase last year. The rates are set for two years so should remain the same in 2016. The County should increase the rates itself to bring up the balance, to help with future costs. The projected rates from PERS for 2017 are 24% for most and 29% for law enforcement. Raising the rates now will help smooth out future increases. This is a long- term management issue that means buying down the rate each year or other options. This is based on today's assumptions and rate of return or legislative action is not being considered. Commissioner Baney said that talk has been about another economic downturn in 2019. Mr. Lowry said that he is not considering any of these unknowns. 1) Internal Services There will be one more contribution to the software project, for $600M. That will put $1.8 in the project fund. The costs to departments could be stretched out for seven years. Commissioner Baney asked what past investments have happened in IT in the past. It is like they are trying to do it all at once. Mr. Lowry said he has talked with all department heads and none of them thought it would be free. They are grateful that this is long-term with a beneficial outcome. Mr. Anderson said this is about eight years overdue. The group took a break at this time. Clay Higuchi is leaving the Committee and was recognized for his years of service, with a letter, plaque and cake. Commissioner Baney said they have been through a lot of challenges and she appreciates his sometimes unfiltered recommendations. Mr. Higuchi said that he is not leaving because he did not enjoy it here. He said it has been fun and he hopes to keep up on what takes place. 5) Status of Budget Issues by Department Mr. Anderson said there were some big issues last year when the landfill had shortened hours and these were readjusted when the economy improved Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 7 of 13 Mr. Schimke said they get things going in the summer (handout). He explained the traffic and average counts. Sundays are not back up to where they once were. He assumes they should keep this in place in the warmer months. Commissioner Baney would like to see some outreach so people will know. Mr. Schimke said they increased the hours. He would like to go to 7 AM to 5 PM rather than staying open until 5:30. This will help with his shift workers. In the winter, they stay open until 4:30. Mr. Maier said that the net increase is negligible, but customer service is important. It may be hard to measure. He feels this is a service issue and the customers appreciate it. He asked if there is a line at 7 AM. Mr. Schimke said some are waiting if it is in the summer. Mr. Maier said that he is concerned about the person who gets home from work who wants to get to the landfill before 5:30. Mr. Schimke replied that there are always people who push the gate time. Mr. Maier asked if the y any surveys.an surve s. Mr. Schimke stated that no in aan e other town has complained about just Knott Landfill being open on Sundays. They have not had a lot of time to evaluate the day and time change, so wants to see a whole six-month stretch to evaluate. Commissioner Unger and Mike Maier both said they would like to see some way to get feedback from the customers. Mr. Anderson said that efforts are being made to investigate energy use and other issues at the landfill, as well as recycling efforts overall. This will be discussed further at the upcoming budget meetings. Mr. Anderson said Sunriver is interested in a recycling depot there, but the cost would be borne by the franchisee and the SROA would oversee it. Mr. Schimke said that those in other locations have been unmanned and did not work well. Sisters wanted to do state of the art. Sunriver's is not working well for them so needs improvement. The County participated by providing funding so these locations could be manned. Black Butte Ranch serves only the Ranch and. Sunriver may want to do this as well. However, it should be open to people outside of the Sunriver as well. The franchise collector is to service the depot. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 8 of 13 The Assessor's Office was given two new positions but they may need more with the change in the economy. It is the same situation for the Clerk, volume is up. Voter participation is a big issue. The Sheriff's Office increased the levy amount this year and they got more from the room tax. Demands on their services are also up. Nursing positions for the jail were added. The Sheriff retired as did his business analyst, so there is a new Sheriff and business analyst. Administration is looking at evaluating lobbyist services and an internal option. As part of the room tax increase, the business loan program is subject to reauthorization each year. The 30% of the new 1% room tax was felt to be a reasonable place to fund this from, but this can go up or down. Discussion has occurred about getting a management intern, subject to budgeting and need. The District Attorney's office added a position to Victims' Assistance, in part due to increased revenue. The previous position was split with Juvenile. I.T. support is uncertain in this department, whether the current D.A. wants to maintain separate systems. Mr. Kropp said that County I.T. is working with them more. Justice Court is moving to a new location with Redmond City Hall next year, along with. CDD. They will have to pay rent there. Sustainability long-term is always a concern but things are better since citations are coming in from Redmond and the Sheriff's Office. They also increased their civil caseload. It is close but does provide a needed service. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 9 of 13 The Health Department always has big things going on, especially with Behavioral Health. Funding is handled much differently with the CCO and. WEBCO. There could be less funding. They will know more in the next few months. WEBCO has been the management part but it is uncertain how this will work out. SBHC are always an issue and they don't really pay for themselves. This is due to some work being done at County facilities to the school clinics. This is still evolving. DDI is expanding with new locations. They made good progress in showing how general fund is used across the department to stabilize services. Fair & Expo is marketing heavily and it has paid off. The funds from the new TRT tax have resulted in increased bookings. They intend to ratchet things up. Related to that, there is an idea of a sports complex at the Fairgrounds to market to the groups that hold tournaments and other sports-related events. It is a growing business and high demand. Tourism would benefit from this. They are doing a two-phased approach with the city of Redmond, Visit Bend and COVA. The Parks Districts are also involved. The RV Park is breaking even. The Road Department has been able to make some improvements, such as the roundabout to Neff/PBH, and other projects. They are maintaining their PMI at 80 or better, which is important to saving money. It will be increasingly difficult to maintain unless there is a gas tax increase at the state level. Chris Doty has decreased staff and experimented with this, but believes he is now under where he should be and may want to add back one or two positions. Community Development is doing well but things are less hectic than before the previous bust. They have been cautious about adding back positions,s, but had to add some mid-year this year to get the work done. He does not know if they will ask for more, but it depends on the pace of business, which would pay for it. They are building back their reserves. They did a fee study and some adjustments will be recommended. The Board has to decide on the level of service desired. He does not increase drastic fee increases this coming year, so it should be done over time. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 10 of 13 Mr. Maier stated that they need to be prepared for the next downturn. He thinks there should be a policy to pay back general funds when they are used to cover these expenses. After reserves are built up, he would like to see a repayment of general fund rather than building up long-term planning. Mr. Anderson said this issue has not gone away. First they build back reserves. Mr. Maier does not want to see another crisis. Chair DeBone said that they need to look at ten years, and what they can do now if this comes around again. Mr. Maier would like to see this in place so whoever is around then will know what to do. Commissioner Unger said that fees should increase per the cost of living. Commissioner Baney said they did ask for some long-range planning during that time, while keeping up normal services. Chair DeBone wants to see them right-sized, and this is a challenge. Building cycles will do this. Regarding Community Justice, the Justice Reinvestment Program has granted more funds, but this means a larger workload due to shrinking state prison populations. Most of this has come about because larger counties are contributin g prisoners system.risoners to the s stem. The allocation could shrink depending on what the legislature does. Juvenile uses general fund dollars as well. There is a new tenant in the Juvenile detention Center who is paying rent. Property and Facilities is looking at long-term capital needs that need to be considered. This includes a courthouse expansion. The State does not cover this except through a competitive allocation program where the funds usually end up in the valley. Additional judges are also needed, but the requests have not gone through. Veterans' Services has a new position, and this has helped meet their service level. 9-1-1 has approval and support from all the cities for the levy, and the consultant's report show this is doable if the message is properly crafted. It is 36 cents per thousand now and they are going for 43.5 cents. This is critical for the new radio system and stable funding. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 11 of 13 Legal Counsel is experimenting with staffing and tiered salaries might be requested. Room tax funding allocations will be discussed in relation to COVA, business loans and the Sheriff. Extension/4-H staff has been transferred to the State and the funds collected go to OSU. The Law Library is at the Deschutes County Library now, for better customer service. Many of the books went to a county that had a flood and to a few other agencies. Mr. Barrett asked about the bigger legal issues at the Sheriff's Office. Mr. Anderson said they will have an impact on insurance costs. Both big issues are still pending. 6) Departmental Presentation Format Mr. Lowry asked if the Committee wants any changes to the presentation format. Mr. Anderson said there will be a new budget committee member and it would be helpful to get this person up to speed ahead of time. 7) Budget Calendar Mr. Lowry said the budget calendar has been distributed, but much will take place with departments only until May. 8) Other Being no further discussion, the session ended at 4:15 p.m. Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 12 of 13 DATED this ? Day of / ' 2015 for the Deschutes County Board of Commissioners. atoe,46,,_ Anthony DeBone, Chair atti_ Alan Unger, Vice Chair ATTEST: 1,10.4AL Sat Al Tammy ,aney, C issioner Recording Secretary Minutes of Budget Committee Meeting Tuesday, December 15, 2015 Page 13 of 13 0 i , r+ I .... 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O Q v v, Qj E ' 4 , 1 I I L z o a 1 v no I ro I 1 d Deschutes County Budget Committee Meeting December 15, 2015 1:30 p.m. — 4:00 p.m. 1) Opening Comments — Tom Anderson 2) County Financial Update — Wayne Lowry a) General Fund b) A/V & Property Taxes c) Development Activity d) Room Tax Performance e) PILT/Forest Receipts f) Health Benefits Trust g) PERS Rate Projections 3) Financial Issue Status — Wayne Lowry a) Solid Waste Loan Repayment b) Refinanced Debt c) North County Building Sale d) State Lease Extension on DCSB e) Finance HR Software Project 4) Budget Assumptions for 2016/17 — Wayne Lowry a) General Fund Support b) Cost of Living c) Health/Dental Insurance Rates d) Assessed Value - Countywide e) PERS Rates f) Internal Services 5) Status of Budget Issues by Department — Tom Anderson, Erik Kropp 6) Departmental Presentation Format 7) Budget Calendar 8) Other Revised 12/14/2015 1 ...,:: „:„::::::::•::.::, ,,,,•4•,,,:1,,•,,I,,:••••„:::,,••••••:‘,,,?,,.„,:i•,0.110::::, ,,•■•••1',",;•','....,!•:•„•,::::::::;,":::',....;„•••,,,,,,:,.:9•••;:••:1":•••••!1•••:!1•!f,,.;:••••,:•,1„.••°":".;'••••••,,•°:'''1,;•,,,'::,:1,!„:•■•••.,,,,,:,,,,■•• ,, .:.,,: . . 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