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HomeMy WebLinkAbout2013-05-21 Budget Meeting Minutes - AM Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 1 of 25 Deschutes County Board of Commissioners 1300 NW Wall St., Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org MINUTES OF BUDGET COMMITTEE MEETING DESCHUTES COUNTY BOARD OF COMMISSIONERS TUESDAY, MAY 21, 2013 – A.M. ___________________________ Allen Room, Deschutes Services Building ___________________________ Present were Commissioners Alan Unger, Anthony DeBone and Tammy Baney. Also present were Tom Anderson, County Administrator; Erik Kropp, Deputy County Administrator; Jeanine Faria and Teri Maerki, Finance; Dave Inbody, Administration; Budget Committee members Clay Higuchi, Mike Maier and Bruce Barrett; and David Givans, Internal Auditor. For part of the meeting, present were Scott Johnson, DeAnn Carr, Sherri Pinner, Health Services; Hillary Saraceno, Debi Harr, Children & Families Commission; Beth Quinn, Cascade Peer & Self-Help Center; Ronda Conner, Benefits Coordinator; Dr. Danette Elliott-Mullens, Medical Director, and Linda Roth, RN, DOC Manager, Deschutes Onsite Clinic; David Givans, Internal Auditor; Judith Ure, Management Analyst. No representatives of the media were in attendance. The minutes were taken by Kathy Hirschman of Health Services. Bruce Barrett opened the meeting at 9:00 a.m. ___________________________ Health Services Scott Johnson began a PowerPoint presentation and introduced a new element to Health Services—Early Learning. The remaining work of the Children & Families Commission and regional transformation tied to State health and education reform will now become part Health Services. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 2 of 25 Much of the funding for public health and behavioral services comes from the Oregon Health Authority and from the Oregon Department of Human Services for Developmental Disability and safety net services. In 2014, we anticipate the Department of Education will also be a portal for funding. Medicaid funds in Oregon are managed by a Coordinated Care Organization with community governance oversight. The Central Oregon Health Council, chaired by Commissioner Baney, provides the community oversight. All the Medicaid funding for the region is managed by PacificSource Community Solutions. Medicaid funding for the region is over $100 million a year, helping about 35,000 of the 200,000 people in the region. Oregon Health Plan funding for behavioral health services comes through the Wellness & Education Board of Central Oregon. The three Central Oregon counties, through an intergovernmental agreement, coordinate a variety of services together through the Wellness & Education Board of Central Oregon, which consists of one Commissioner from each of the three counties. With education reform, the Wellness & Education Board of Central Oregon has now added representation from the Education Service District. Health Services also receives funds directly from the State of Oregon’s Public Health Division and Addictions & Mental Health Division. The overarching thing to know is the department is partnering and doing a lot more work with St. Charles Health System, Bend Memorial Clinic, and all the other providers in the area. Mosaic Medical is also a very important partner. A critical consideration is that with the Affordable Care Act, many more people will have access to the Oregon Health Plan and Cover Oregon, Oregon’s Health Insurance Exchange. The question for Oregon Health Plan providers is how to respond to a much larger need for services. In Deschutes County, there were about 10,000 Oregon Health Plan members in 2008, rising to 30,000 in 2013 and projected to be about 42,000 in 2016. Everyone involved in the health system is thinking about how they will respond to this increase. The question is what methods to use to try to help this growing population; Health Services will add some additional staffing as well as contract with a number of other community providers. Sherri Pinner reported highlights in fund 275, Behavioral Health. The proposed expansion of behavioral health services will use a combination of increased State Oregon Health Plan funds and $1.5 million from reserves. The County General Fund contribution has increased, primarily to cover the department’s Health Benefit Trust expense. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 3 of 25 Public Health Fund 259 proposes a reduced personnel package as the budget is $258,000 less. This amount does not reflect a reduction in State funding for services but is due to the loss of a one-time grant in FY 2013 that we are not assuming will be carried forward in FY 2014. In addition, there are federal grants that will carry forward but we do not know what those amounts will be, so we project estimates based on base levels without including the unknown carry forward amounts. Mr. Higuchi asked if the behavioral health expansion was due to the State sending more funds for behavioral health. The expansion is funded by a combination o f increased Oregon Health Plan revenue and reserves the department has not spent. There are additional funds coming from the State for people on the Oregon Health Plan. Senate Bill 823 debates whether the State will increase funding for the uninsured. The State is debating additional revenue and PERS reform. Because the department does not know where that will end up, they planned for the same level of State General Fund dollars. Mr. Higuchi asked if the department is asking for more County General Fund in Public Health because the grants have run out. The State Public Health revenues are either level or decreasing, and personnel and indirect costs to the department continue to increase. The request for an increase in County General Fund contribution is in order to maintain service levels in the face of increased operating costs. There is one specific grant coming into public health that is new monies for some new work related to early childhood. We have to remember in the budget discussion there are two situations: the behavioral health situation and the trajectory there and then there is the public health situation. Public health is much more challenging. In behavioral health we have a path forward primarily because of Medicaid expansion. Mr. Maier asked whether for any of the grants we have lost, the Department would continue the services with other dollars. Ms. Pinner explained that the grants were not tied to FTE and noted as an example that in FY 2013 the Department received one-time funds for immunizations specifically for that period that did not require the addition of staff to perform those services, so while those funds will go away, the staff remains the same. Mr. Maier asked whether the Department is looking at any major reduction when those built-up savings in behavioral health reserve are expended. Ms. Pinner explained that the Department has been conservative in budgeting and has historically received more behavioral health funding than budgeted for. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 4 of 25 Mr. Maier does not want see a trend of these increases that it could well be the County General Fund is not going to be able to sustain. Overall increase to General Fund from revenue is 4%. The increase to behavioral health from the County General Fund is 12% and the increase to public health is 17%. In the past, we have done increases in County General Fund transfers of 5%, 6% or 7%, now jumping up to 17%. The County General Fund cannot continue to do that. Mr. Johnson noted that in behavioral health the request for County General Fund is solely the 7% to cover increased Health Benefit Fund expense. In public health, the request is greater in order to cover the Health Benefit Fund expense and to maintain public health services. Commissioner Baney asked why the County General Fund contribution to public health is of such importance this year. Mr. Johnson explained that part of it is to try to manage the transition. We are in such a period of change with no blueprint to inform us what we are going through in a business sense. We do not know, and neither does the Oregon Health Authority, how this will play out, even the basic question of the County’s role in health services. The budget approach is to try to manage a difficult transition time by trying as much as possible to hold the line with reproductive health, emergency preparedness, environmental health, early childhood services while we come to understand how all of this is affected. Ms. Pinner showed a slide depicting what the additional 7% County General Fund contribution—$71,650 in public health and $153,490 in behavioral health —could purchase in direct services. Mr. Higuchi noted that this really brings it home that the County cannot continue to do this out of General Fund. Something has to be drastically changed or we will go down a slippery slope. Mr. Anderson noted that the timing of the increase in health care costs to departments was a two-step process. In initial budgets prepared in February there was an 8% increase built in. Later, with revised projections of health care costs, it was decided to increase the departments’ contribution to 15%. This was well after departments finalized their recommended budgets, so it was recommended that the General Fund pick up that additional 7% without having the departments cut their budgets in order to balance. Mr. Maier asked if this was being considered as a baseline for the future, or would it go back to the 8% next year; and it would be the departments’ responsibility to balance. While not having enough information to make a fully informed answer, Mr. Anderson does not believe it to be sustainable in future. At this time, he considers it a one-time increase and would go back to a starting point of 8% for the next budget. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 5 of 25 Public health does not contract for direct service. Behavioral health contracts out $6,075,249 to provider agencies and $2,334,200 to OHP panel providers in the community. The focus next year is to expand this network of services, contracting out when more cost effective and retaining specialty services when that makes more sense. Mr. Barrett asked whether these providers receive any State funds or whether these funds flow through the Department. Mr. Johnson explained that the providers receive State Oregon Health Plan funds via the Department and that many also bill private insurance. Ms. Pinner explained amounts budgeted in funds 270, Oregon Health Plan mental health, and 280, Oregon Health Plan chemical dependency funds. Line item ABHA closeout is our estimate of the final payout amount from ABHA. The budget also shows a pay down of reserves that have built up in these accounts. The goal is to keep $2 million in ending fund balance. Two key points: 1) with Oregon Health Plan expansion, there will be more revenue to serve the additional people; 2) these restricted reserves can be used only for Oregon Health Plan members and those needing medically necessary behavioral health services. The Department cannot rely on just these funds to be able to support their jail and crisis work and is trying to keep the right balance between putting as much service funding into play as possible but not so much that it puts us at risk. Hillary Saraceno explained that the 20-year legacy of the Children & Families Commission will be ending as we move forward with State transformation and policy changes. Deschutes County’s Children & Families Commission staff will merge into Health Services with the substance abuse prevention staff becoming a part of the Community Health team and two staff moving into regional Early Learning Hub work. Early learning plays an important role in education reform’s goals of kindergarten readiness, stable and supported families, and integrated and aligned services. The integration and alignment of services is where education ties closely to health—we are where the two systems are coming together. After the merge, there will still be 22 provider contracts formerly run by the Children & Families Commission. There may be five additional grants for youth development; we are not sure at th is time because the State is focusing on early learning and is moving more slowly on what they will be doing for youth and school age kids. These funds total approximately $1 million, including funds for administration, which will be managed by Health Services. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 6 of 25 Mr. Maier asked whether the funding for contracts is ongoing or has been built up over the years. Ms. Saraceno explained that, while it is a transformation period, the intergovernmental agreements in place lead us to believe that these existing agreements will be shifted to the Early Learning Hub when it is up and running. Mr. Maier asked how much of the work we are currently doing we think we will be doing in 2015. Ms. Saraceno explained that we do not know at this time ; it depends on decisions being made at the State. While this is moving forward, we are looking at a regional body to serve as the Early Learning Hub for Crook, Deschutes and Jefferson counties. The focus of the Hub is on 0-6 year olds at medium to high risk. There are approximately 15,000 children of this age in our region, with almost 12,000 in Deschutes County. We estimate about 6,000 regionally are at-risk based on the national definition of “at risk.” It is important to keep in mind as we move forward with other the coun ties that Deschutes County has the bulk of the population. Mr. Higuchi noted that this is about 40% of our young children who are defined as at risk and asked what the early learning work hopes to change for these children. Ms. Saraceno explained the early indicators emerging are: 1) all children screened to identify risk level by the age of three, 2) quality early learning programs, 3) reduce abuse, neglect and foster care, 4) reduce special education enrollment 5) decrease duplication of services in the health and education sectors, and 6) reduce wait lists. One regional example of how we are working toward improving these outcomes is the Maternal Child Health Initiative, using new funds from the State via the Central Oregon Health Council to fund home visiting nurses to help reduce low birth weight, reduce emergency room use, increase contraception use, screen and refer for maternal depression and family violence, and screen and refer for substance abuse treatment. These funds are new since the budget was submitted on March 1. There will be three nurses in the program; one of the employees who would have been laid off has accepted a position in this new program. The biggest question is what the financial resources will be. Six-month estimates were used in the proposed budget for Healthy Start and the relief nursery because we did not know what will happen with the programs . We just learned last week that relief nurseries will be contracted directly through the State, so we will not receive and manage those funds. We did get a 12-month contract for Healthy Start. Flex funds went down because the State will roll the flex funds into the Healthy Start and relief nursery contracts. These flex funds had been used to pay for 1.5 FTE in operations. Administrative funds available are $10,000 because we contract out the bulk of the $306,000 received. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 7 of 25 Another piece of the funding situation is that applicants for the Early Learning Hub will receive $250,000 for the biennium when awarded, although questions still remain. The State has no answers at this time. Applications will be submitted in August or September and may be awarded in January. We are confident we are positioned well with our application. The requested County General Fund investment of $125,000 is to keep all this in play while we see what the State will decide. When the decisions are made, we will have to do the math around what they will be asking us to do and what amount of funding they will provide to do it. County General Fund contribution to Children & Families Commission has been flat or declining since 2004; this is first time we have asked for additional resources since 2003. We are not asking for the long-term but for the short-term to bridge this transition period—to stabilize the organization and assets while developing and implementing the new Central Oregon Early Learning Hub. Mr. Higuchi asked whether this is a one-time request. Ms. Saraceno noted that a request for one-time bridge funds in the past actually ended up being awarded two more years after the request. Her hope and belief with this request is that we may not need as much but we will need something. DeAnn Carr reviewed behavioral health expansion efforts to date. The Access Team began operating two weeks ago to allow individuals to walk in with no appointment and get an assessment to access behavioral health services. In addition to increasing engagement and the convenience and comfort for individuals, this should also reduce no shows, which are expensive in terms of lost appointment time for clinicians. Other efforts include providing outpatient services across the age range, coordination of care with community partners, and specialty services for high-risk clients such as the mobile crisis team, Wraparound program for children, Assertive Community Treatment for high risk adults, the EASA early psychosis program, and supported employment. Priorities for the coming year are integration with physical health, improving service delivery structure and supervision, and increasing service options for those at high risk of hospitalization. Many of the position to be added are related to these priorities. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 8 of 25 The Department is planning to remodel the Annex building to provide a person centered primary care home with physical health and behavioral health services at one location. The proposed remodel will have the Mosaic Medical clinic, the “health home,” in the center of the building with everything flowing around it. Commissioner Baney asked how much this will increase service. Currently the doctor from Mosaic comes to the Annex one day a week and is seeing 75 individuals. We are hoping to increase to five days a week and a patient base of 300-400 individuals, including more individuals with developmental disabilities. Mr. Johnson described the six School Based Health Centers. It is notable that Mosaic Medical has assumed primary operations of the Center at Lynch Elementary School. This is the beginning of a process we hope to continue with Mosaic and with La Pine Community Health Clinic. As more people need care, we are looking to the School Based Health Centers to see many of these people, and the number of visits is increasing. The Sisters School Based Health Center is partnering with Advantage Dental to offer dental services. Any child or any family member in the neighborhood can get services at a School Based Health Center. We expect to complete a business plan for the School Based Health Centers this year. Mr. Higuchi asked about funding for the Centers. The funding comes from State Medicaid funds, billing for some other services, and County General Fund. The Department report back to the Committee how much of these funds are from the County General Fund. Mr. Barrett asked if the reason for the increase in use of the clinics is because of increased access to more people. Most of the growth in covered lives for the past several years has been children, and one of the ways they access services is the School Based Health Centers, particularly in remote locations such as Gilchrist. The Department provides staffing for the Gilchrist School Based Health Center through a contract with Klamath County. Commissioner Baney asked, with regard to the public health budget, whether any medications and vaccines could be purchased through the Deschutes Onsite Clinic Pharmacy to save money. David Inbody explained that public health does get a discounted rate because of the people we are serving, but this idea would be worth exploring. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 9 of 25 Commissioner Baney noted there is a lot of need and pressure on the General Fund right now. While it seems simple to have a one-time bridge fund, at the same time there are two other counties that are all supposed to be regional. We are all still trying to stand up our own organizations, but we cannot stand up three county organizations anymore because there is not an organization to stand up. It is changing to a regional hub. Ms. Saraceno noted that it is a difficult situation for the other two counties as well. The State is not ready to finance so we wanted to create some stability while the hub is being developed. Commissioner Baney made note of the costs associated with maintaining staff in three counties as we look at the regional piece. We have a structure that is s et up for the Wellness & Education Board of Central Oregon to take the staff to make the transition. Commissioner Baney believes Crook and Jefferson counties are retaining their staff who keeps the work until the change and worries that if the counties continue to fund, this transition will not happen. Ms. Saraceno explained that this is a reorganization for all three counties. The three counties are having dialog with the Wellness & Education Board and a lot of conversations about how to consolidate. The challenge is that looking at the expectations of the Hub is a big lift. There is a lot of work to be done to get to the Hub and a lot of opportunity to be centralized in the tri-county area. There is no blueprint; we are taking instruction as we get them and making it up as we go along. The Wellness & Education Board does not have the staff to do all this. Mr. Maier asked whether contingency funds could be used. Ms. Saraceno explained that these contingency reserves will be used in conjunction with the requested General Fund amount for stabilization over the next two years. At the end of the two years, there will be $65,000 in reserves. We do know that with the application we are expected to have skin in the game. The two other counties will also contribute and we are hoping the Education Service District will also contribute. Commissioner Baney noted that Deschutes County needs to determine what the County’s contribution will be. Mr. Maier wants to be sure the contribution is fair and that we are not subsidizing the other counties. Commissioner Unger reminded us that Deschutes County does have 80% of the population in the region. Mr. Johnson noted that historically contributions have been on a per capita basis. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 10 of 25 Using the EASA early psychosis work as an example, Mr. Barrett asked how the department identifies which service areas it will pursue. Ms. Carr explained that the Department looks at a variety of vulnerability points. Psychosis is very complex diagnosis that requires a high level of specialized care, and the community mental health provider is generally the provider that is going to be able to meet that need. Psychosis is highly expensive if not responded to, treated and supported appropriately. Mr. Barrett asked about the process that brings a particular need to the department’s attention. Ms. Carr explained that the department looks at who is coming in for treatment, who is hitting the different systems in the community, national trends and costs to communities. A focus on serious mental illness is not new. What is coming to the forefront now is preventive —how do we intervene earlier so people have better outcomes for less dollars. Mr. Barrett called a ten minute break at 10: 37 a.m. Mr. Johnson, Ms. Carr, Ms. Harr, Ms. Pinner, Ms. Quinn and Ms. Saraceno left. OTHER FUNDS Health Benefits & Trust Mr. Anderson started the discussion of the Health Benefits Trust. He referred back to the discussion in January about the increase in costs and the options of drawing down the fund balance versus charging departments an additional amount per employee. At that time, the Budget Committee expressed deep concern over the projected balance in the fund over time. That discussion led to an 8% increase in charge to the departments. Costs continued to increase over the next three months. The most recent projections are mathematical projections of cost increases with no attempt to factor in cost savings. Looking at this from a conservative standpoint, the fund balance, in particular in years 2016 and 2017, goes down to about two to three months in claim coverage. Based on those projections and discussions with each of the Commissioners, the decision was made to increase the charge to departments from 8% to 15%. Mr. Anderson also went to the Employee Benefits Advisory Committee (EBAC) to ask for employee reductions; they agreed on a reduction of coverage from 80% to 75%. With an 8% department charge, the fund gets down to a low in 2015 of six months’ claim coverage; the difference between the 8% department charge and 15% department charge begins to close that gap. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 11 of 25 The question becomes how realistic is the ability to continue to pay this amount versus suggesting some fundamental changes. Mr. Maier asked if there is any change to employee premium in the projections. Mr. Anderson explained that the employee payment remains at $65 and there is no final recommendation yet from the EBAC. Mr. Inbody and Ronda Conner explained the impacts of the Deschutes Onsite Clinic (DOC) and Pharmacy. The cost per visit at the DOC is driven by utilization—the mo re visits, the cheaper they get. We are projecting close to $1 million in savings since the DOC has been open. The percentage of visits is increasing; projected to be about 70% next year. In the Pharmacy, the generic medication rate of 82% has a significant impact because generic medications usually cost about 10% of what brand name medications cost. Trends show that use of medications to control high -cost conditions is increasing. Overall, 60% of plan members are spending less in the plan than two years ago. The top 20% of claims cost $700,000 this year. Large claims are getting bigger but, for the most part, the cost to the plan for those 60% of members who fall in the middle between high claims and low claims is less than it was two years ago. With the cost avoidance, overall the cost of investment is returning 18%. If we did not have the DOC and Pharmacy, costs would be higher and reserves would be lower. Health Risk Assessments have been done for three years in a row. The cost of treating those who are not tracking and managing their conditions is much higher. We can use the focus of the Health Risk Assessment to try to avoid those high claims costs. We have had overall reductions in high blood pressure, high glucose levels, high triglycerides and tobacco use. Almost 800 Health Risk Assessments were done, covering 70-75% of employees and close to 50% of employees and spouses. Commissioner Baney wondered if we know how many members in the high-cost 20% are accessing the DOC. Mr. Inbody answered that we do not know, but it would be good to know. With all the health care reform, really focusing on that 20% would be huge. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 12 of 25 High costs are another part of the equation. There were two very big accidents, each over $100,000, which would not be something controlled with the DOC or the Pharmacy. There were several cancer claims that would not necessarily be controllable with things we have put in place. It is important to look at which type of claims we can control through things we put in place and which we cannot control. Commissioner Unger noted that we have information with the plan where we can understand what our costs are and be proactive to do something about it. Mr. Inbody noted an advantage we have in that we were able to leverage the staff at the DOC to perform the Health Risk Assessments. There should be no limitation due to the cost or time off work to see a doctor. By removing the barriers we are making it easier to get that routine care. Mr. Maier pointed out it is difficult to get the data from a premium paid plan. We are very fortunate in the amount of data we have and can work with. Commissioner Unger wonders what premium increases other groups are seeing that they just have to accept. Ours looks big but maybe others are bigger. Commissioner Baney noted that we gambled when we implemented the DOC. She feels we are at a crossroads and would like to know what it would cost to go to the open market because she does not feel that what we have here is sustainable. She would like to see a cost analysis in order to have a discussion. Mr. Inbody recommends looking at the plan to see what might be changed. The EBAC is now thinking about these things—what does the plan look like, where could we see cost savings and what would be the impact of the changes. Ultimately, the idea is to use the data to find those things then driving behavior so people are doing the more cost effective behaviors. Ms. Conner noted that the premiums for other plans depend on what benefits they offer and what they charge the employees—anywhere from 10% to 24%. Everybody’s premiums are increasing with the Affordable Care Act because a lot of services are now required to be covered at 100%. It is very difficult to get apples to apples from insurance companies in order to make a comparison. Ms. Conner stated our employee premium structure of $65 should change to a tiered structure. This has been unpopular but would give the advantage of not having all comers in the plan. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 13 of 25 When the Affordable Care Act required us to cover all children up to age 26, we saw kids that had gone off the plan come back on. We really need to look at the whole plan—what benefits we offer and what employees are willing to buy into for the plan. We can do a lot of nimble things with our plan such as charging a tobacco rate or requiring employees to take the Health Risk Assessment so we know the health of our population and can target that. The top 20% had two spectacular claims that were clearly outliers. What does the core of our experience look like without those outliers? We really need a target for where is that middle goal of what we can afford to do and what we are required to offer. Mr. Higuchi stated that it is time to stop kicking the can down the road. When we charge $65 a month, we attract people to our insurance. It is economic common sense. We should tell the employees this year that we are not going to pay the 15% out of County services and that they will have to figure it out. This is not sustainable, and if we continue kicking the can down the road, it is going to crash. Commissioner Unger feels we have been listening during these different budget cycles and that we have created a strategy, part of which was to buy the Health Benefit Trust down from $17 million to a reasonable amount and to start having the discussions with employees to say we need to work together to solve the problem. Now we are working together. The EBAC came back with $200,000 in savings. With our unions we have gone from $65 per month to a goal of 9.5% of the County’s FTE costs to be borne by the employees. We cannot change things quickly but we are on the road to changing things over time. Mr. Higuchi feels it is time to bite the bullet. Look at all the options; go to a tiered system with a premium of $65 per month if single, and maybe $300 or something for a family of four. Pick an amount that still a good deal, and $300 per month for a family of four is a good deal. Make that leap to correct this so every year we are not having the same discussion. Commissioner Unger reminded us that we have six different unions with which we must negotiate. Erik Kropp stated that the unions are moving toward agreement on up to 9.5%, but right now one union contract does limit us to $65. That number is a couple years old, but we are in binding arbitration and will find out this summer if that will go up. Premium of 9.5% would be about $120-$130. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 14 of 25 Commissioner Baney would like to see the projections run with different percentages—8%, 12%, 15%. We are having the costs paid for out of services we should be providing to the public, and our departments are shouldering the costs. While she appreciates the tough conversations going on at the EBAC, we need about $2.5 million a year, not $200,000. We have done well because we have been conservative in our approach and would be served well to continue that approach of being conservative. We are seeing a significant increase this year, and our departments are asking for help from the general fund to avoid having to lay off employees. It would be beneficial to be able to tell the EBAC what the cost of our coverage would be to employees if we had to purchase it on the open market. She agrees that the plan needs an overhaul. If the costs were to go up $200,000 a year, every year we would be shouldering that cost onto our departments that are to be providing services. Commissioner Unger does not disagree. He is frustrated with the 15% this year. We have kept costs down low because we were buying the reserve down so we could have realistic discussions with employees without having them refer to the large reserve as a reason not to have the conversation. Now is the time to have that discussion so we can have a plan we can afford. We are calling it a reserve but it is there to pay claims; it is a claims account. We need to have that cushion because we are in the business of providing health care now for this many covered lives. Mr. Maier stated that in the past when we compared to the City of Bend, the school districts and the City of Redmond, we were consistently 20-30% lower in charge to employee. That data, which is clearly apples and apples, will give an indication of what we would get in the open market. He noted that it is difficult to get cost information from open market companies because they often give low numbers in order to get the business, then the rates go up a couple of years later. Mr. Higuchi suggested looking at the cost to the County if we went to a plan similar to what the City of Bend has. Ms. Conner reported that the City of Bend went to a high deductible health plan two years ago; they have a $2,500 deductible. The City does give funds in an account employees can access to pay the deductible, but it also builds over time. The City of Bend very much wants what we have in our DOC and Pharmacy. They see that we are taking charge of controlling the costs but they cannot get into it yet because they are not self- insured. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 15 of 25 Ms. Conner reiterated that she does not think there is only one answer. We should have an overall goal as far as what we are comfortable with in reserve. For most health plans that are self-insured, their reserve is really the run-out with a little cushion: 12 weeks of claims plus maybe a 20% margin. Our policy of holding one year’s claims in reserves is extremely conservative and it has bought us a lot of time. Ms. Conner has information from comparisons with other county plans and can get comparables from insurance companies as well. Ms. Conner and Mr. Inbody have found, in talking with their counterparts in other counties, that we are looked at as doing progressive work with the DOC and Pharmacy—managing health and providing convenient access to medical services and prescriptions. Ms. Conner does not want us to lose sight of the hard work the County has done with the DOC and pharmacy. It attracts good employees; we have to offer good benefits to attract good employees. Mr. Barrett noted his concern that we went into the health care business at the County because it was attractive financially at the time. But, over the past five years costs have doubled and, while it is a great opportunity that others are looking at, it is not sustainable. It really is not a viable business plan. To be able to make it affordable and viable we had to go into social engineering trying to control how people live their lives. In the long run he is not sure financially that it is a good business plan. At what point do we say it is not a viable opportunity for the County to operate? What we can do is say we have something less than $30,000 per person to spend and how can we best spend that to get health coverage for employees. Mr. Higuchi is not discounting the fact that we have saved $2.5 million because of the DOC and Pharmacy, but it is broken when you have to cut County services. Mr. Maier disagrees. Maybe it has to be tweaked so there is more money coming in from the employees, maybe benefits have to be adjusted; but it is not broken when there is $11 million in the bank. Mr. Inbody stated that we need a target to know where we are headed. We are not saying five years from now this is what the plan should look like, and what do we have to do between now and then to get there so that the plan is in balance, and is viable and a benefit to employees. The projection spreadsheet is a tool to use in arriving at that target. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 16 of 25 Mr. Anderson stated that his fundamental difficulty with the projection is that we had two massive claims this year, and he does not know whether this is the new normal or an anomaly. This projection takes the current year cost, with high care costs, makes the assumption that that is the new normal, and adds 15% on top of that. In the next year, we take that amount and add another 15%. If this year’s high cost is an anomaly and the high claims level off, the projections look radically different once you get into the out years. Mr. Maier noted the County’s history of premiums charged. We set a low base and now we are paying some of the price for freezing it in 2008-2009 when everyone else was going up 10-12%. Mr. Higuchi remembers that conversation and the decision not to charge more to bring up the reserve amount. B ecause you cannot control high claims and cost, build up the reserve. If we have too much money in the reserve, then we can stabilize the rates, especially in difficult times and when you get these big hits. Commissioner Unger feels we have stabilized the rates; we now have to decide to what level we buy down the reserves. What we are trying to do—reduce the cost to the plan of that 60% in the middle—is what the whole objective is. We are on the right path to ultimately keep our costs lower than other plans would have. Now we need to have the conversation with employees saying we have to make changes and we cannot take 15% away from departments and services to put into the health plan. He suggests an 8% charge to departments, let the reserve go down a bit more and the real hard conversation this year that the goal needs to be back up to a year’s claims, or whatever amount is reasonable, and that we have to make changes to the plan. Mr. Higuchi does not know how the Committee could vote on the budget if the County were to accept a 5% increase in charges to departments and asked the EBAC for the remainder but they came back with a lesser amount. Do we vote that if the EBAC gives you 4% and we need more, then the General Fund will be used to bridge the gap? Mr. Inbody stated part of it is setting the goal of where we want to be this time next year. From there, we look at use to guide us for the next year. It is going to adjust every year. If we are over, the cost to departments, or wherever it is going to come from, will be higher, and if we are under, than the cost will be lower. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 17 of 25 Commissioner Baney noted that we have policy of one year’s claims, which seems to be the target, and she wonders if the target may be off. Let’s start there with the self-inflicted wound. The beauty of the plan is that it is owned and supported by employees. At the same time, we need to give more direction to the EBAC. We may need to say something such as we need to see a structural overhaul and then allow them to give us a matrix of options that they would accept or recommend. Mr. Inbody noted it would be helpful i f we were able to quantify why we need a year in reserve when industry standard is four months. We need to be clear about why we need a year, if we need a year. It is difficult to go to the employees with $10 million and say we need more. Ms. Conner noted the industry standard is three to four months’ run out of claims and the rest is whatever cushion you are comfortable with. She noted that we went self-insured in August 2000 and had a rough year in our first year. We commissioned a study, called the Marsh Report, to look at the whole plan and make recommendations. We took hit in 2001, going from a $100 deductible and no co-pay to a $500 deductible and $10 co-pay. The Marsh Report did not address reserves because we were still building. Ms. Conner thinks it is time for an overall study of the plan’s history, benefits, union contracts, comfort level for reserve, and trends in order to look at the different options. Mr. Maier noted that our plan is unique with this plan and there are not many experts out there that know more than Mr. Inbody and Ms. Conner or the EBAC. We taught the Marsh consultants a lot when they reviewed the plan. Mr. Higuchi asked what the Committee is comfortable with for a payout reserve and suggested a recalculation based on this amount to see where the projection ends up. Mr. Maier noted that at a minimum they wanted to be able to cover the run out and then the reserve kept building. Having $17 million in reserve made it hard for negotiations. There has been a fundamental change at the EBAC in the past couple of years as they have watched the reserve go down and have stepped up to pay more in order to keep the plan sustainable. The idea the reserve was to be able to build up a surplus, knowing there will be peaks and valleys in plan, to be able to smooth out the bad years. We cannot do that with just enough in the fund to pay the run out; the more we have, the better positioned we are to respond to unpredictable spikes. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 18 of 25 Mr. Maier’s recommendation is not to let the reserve get down to just the run out; it is legitimate to justify having a large reserve to smooth out high costs to avoid having a 28% increase to the departments. Mr. Higuchi noted his concern with charging departments 15% and impacting County services. Commissioner Unger noted that taking the additional 7% above what departments budgeted out of General Fund is basically taking General Fund money and putting it in the reserve. He would rather keep the department charge it at 8% and let the reserve go down even further so we can figure out how to bring it back up to whatever level is decided to be appropriate. Commissioner DeBone noted the key point that we are doing our pivot three or five years after every one else had to, which really resonates. While we are talking about hard things, it is exciting we are able to have this discussion. We are debating right now about the level of the reserve; this is the work that needs to be done here at this table. Mr. Higuchi agrees and noted that if we agree on a reserve amount and determine the impact this year, we have to remember next year not to try to renegotiate that amount down. If it is another bad year, we will have to make other adjustments. Commissioner DeBone noted that we have huge variables; we do not know what is going to happen with all the things coming in January next year. We are just now starting to see how to analyze the data we have from the DOC a few years into operation. We have a great resource in the knowledge of our staff. In the negotiations at the represented level, we are getting to the point where everybody understands that we do need to do that pivot. Commissioner DeBone is not opposed to pulling the 15% back from departments at this point. Mr. Maier would not pull it back to 8% but maybe 12.5% and make sure the money is not spent on something else. Commissioner Baney noted that it goes back to the question of what is the end result we are trying to get to and what does 12% get us that 8% or 15% does not. Mr. Anderson that the reason it was at 15% is just in looking at the reserve balance in out years to minimize the damage, set revenue higher than expenses and eventually bring it back to a full year somewhere down the road. From that perspective, whether it is 12% or 15% is somewhat arbitrary. Also bear in mind that as costs increase by 8% each year in the out years, the target for full reserve increases each year as well, so a full year in reserve five years from now is $17 million, not $10 million. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 19 of 25 Commissioner Baney stated it begs the question of whether we are trying to get to a year or trying to get to six months. When it was set up for a year that was to allow us to buffer, but we were living pretty high on the hog at that point . Do we have an opportunity to adjust what that looks like so we are more mindful in our spend versus in our savings? Commissioner Unger stated that we need to ask that question, and we need to figure out our goal or target to know how to plan. Ms. Feria stated that in simple terms we want an ending fund balance we can live with, new money coming in to equal new money going out, and to grow a little bit each year for the next year’s reserve. Mr. Higuchi asked what a reasonable pay-out and reserve amount would be. Once we settle n a reasonable reserve, the union contracts need to be negotiated without capping the employee payment. If we have a very bad year and are capped on the employee premium then it is going to come out of General Fund again. Mr. Inbody pointed out that the plan could be changed. If employees cannot be charged more, we will have to take something away or reduce the benefit. Mr. Kropp pointed out that the monthly premium co-pay is a very small amount of revenue into the plan. There are other changes in managing the benefits that bring in a lot more revenue than changing the monthly premium amount. Commissioner Baney asked if we had not looked at a tiered approach a few years ago and what impact that would have on the plan. Ms. Conner noted that we have actuarial values for a tiered approach but it has been highly unpopular. Administratively, it is difficult but we can handle it. If we funded based on the tier right now, it would be a significant amount of money because we are funding composite almost equal to the family tier. We could strike a balance between the individual and the departments. Commissioner Unger suggested as we look at the plan and the budget a 10% or 12% department contribution to lessen the impact on the departments and let the reserve buy down a little bit more as we work on it this next year and come back with something that seems more sustainable. Mr. Higuchi thinks 10% to 12% to department is too high and would like to see 5%. Mr. Maier stated it would be helpful for the future to come up with a formula of what we want and how we want to approach it—at least a recommendation as to how much is the departments’ responsibility and how much within the contract is the employees’ responsibility. Mr. Kropp noted that we did that to some extent this year with the employees by saying with any increase 20% needs to come from employees and 80% from the County. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 20 of 25 Ms. Conner noted she and Mr. Inbody are working on a proposal for a more managed approach to prescriptions so that any prescription that is over $1,000 month will not be dispensed for more than 30 days. They are looking at some cap for categories of drugs that are easily converted to generic or over the counter; the plan would pay a maximum of $40 and if employees want the more expensive brand name drug they will have to pay the difference. Her guess is that this would save between $100,000 and $200,000. Mr. Higuchi at this moment cannot agree to 12% that the departments are going to have to put in. Commissioner Unger agrees and pointed out that we need to land on a number that is going to help as we try to adjust to get some equilibrium. Mr. Maier asked, if the Committee were to agree on 15%, if staff would get more information to make a judgment. Dr. Danette Elliott-Mullens stated the original question was how much an employee can expect to pay for reasonable insurance product. Recognize the other large employer in this city is St. Charles, which just had a huge revamp of their insurance for their employees. They had multiple different products, but in general the employee is probably spending $1,200 to $5,000 per year. What the County is offering employees is phenomenal. Your employees need to recognize the incredible benefit of working for you. She thinks when looking across the board at different premiums that employees are paying and the portion they are paying it is much higher than what the Committee’s expectations are. She acknowledges the union negotiations have limited the County on what can be asked of them but thinks we should push those limits. The cost of health care is only going up. Forcing employees to acknowledge some responsibility for their actions and their choices and the cost of health care is the way the future of medicine is going. It is the County’s obligation as their employer to ask that of them so the plan can stay sustainable. Commissioner Baney stated we have given the EBAC a number and they have always achieved the number, they have been very mindful, and had very difficult discussions. In the time she has been here, the benefit package had been the sacred cow. Asking for huge adjustments was perceived as not being committed to our staff. What they have had to go through to make adjustments is a huge commitment to the plan. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 21 of 25 Mr. Higuchi stated that he cannot agree right now that 12% is reasonable. We are downloading these health cost increases onto the departments, and departments have to ask for General Fund help or they are going to have to sacrifice services. For us to approach it in a proactive way, we have to say we’re going to go 5%. If we do not do this and cannot convince the employees it has to be done, we are just kicking it down the road. Commissioner DeBone noted that we just heard from Health Services with 200 some odd employees and the Sheriff with a couple hundred. This has been a great conversation and it will be a lot clearer after we hear from another couple large employee groups. Mr. Barrett adjourned the meeting for lunch at 12:14. ___________________________ Mr. Barrett opened the meeting at 12:33 p.m. Video Lottery Fund Mr. Anderson explained that the Board went through a process to allocate Video Lottery funds that we anticipate for next year. The County had received specific proposals from the City of La Pine to help fund a person down there for business recruitment. The City of Sisters also came to the County with a similar proposal to help with economic development. The board had decided in a general way to focus more Video Lottery funds toward traditional-and direct economic development uses. They gathered the different proposals, and asked EDCO to consider how they would target economic development, for individual cities and for other programs they administer, if they had more funds to work with. EDCO came back with a proposal, which we incorporated with the city proposals and other requests that we knew of based on an analysis of historical fund service partners. The Board reviewed the proposal over a couple of meetings and prioritized the requests. Judith Ure handed out a sheet showing the final outcome of all the discussions. According to the State, Video Lottery funds for 2014 will be about the same as this year. The first large category is Economic Development, and the line items in this category are all items proposed by EDCO. Not all the items proposed by EDCO received funding. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 22 of 25 They did receive an additional $100,000 so they have the base support that we have been giving them and then they have local capacity so Bend , Redmond, La Pine and Sisters each got a bit of an allocation. Entrepreneurship/Early Stages is the venture capitalist and Founder’s Pad. Mr. Higuchi asked whether EDCO will manage the Think Pad for the County. Ms. Ure explained that the County will give the money to EDCO and EDCO will support the Think Pad. Project Support is a new category for things the County would like to support with lottery funds but had not planned for. This is an exercise in looking ahead at what those items might be in the coming year. Public Transit Rural Service is funding mostly in the La Pine area to fill some gaps. Shop with a Cop has been funded for some time now with Video Lottery funds; we think of it as ongoing project support. Capacity Building is funding for local nonprofit organizations that are doing fundraising activities or leveraging the money in order to obtain more financial support for their organizations. Service Partners are organizations performing services that are required by law, providing a service the County would have to provide if the organization did not, or organization that the County helped to establish. They looked at which organizations were receiving funding and which organizations met the criteria and expanded it out there. Agencies in purple or red are new to the Service Partner category this year. Mr. Barrett asked if any of these organizations, such as Mountain Star, are on Health Services’ list of contractors. Commissioner Baney explained that Health Services is merely a pass-thru for State funds. The State will contract directly with Mountain Star. We do not have other County funds going to these organizations. Ms. Ure noted that one of the things they did in going through this exercise was to look at areas that were already receiving funds from the County and try to consolidate. The $75,000 going to United Way is to supplement the federal funding they get for emergency food and shelter programs. These funds will be distributed by United Way for emergency food and shelter. Applicants for community grants for emergency food and shelter will be steered to United Way, which will administrate those dollars. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 23 of 25 Discretionary grant allocation is $60,000 available for nonprofit organizations to request during the year for emergencies; each Commissioner has approximately $20,000 to recommendation for distribution. Community Grant Program total available is about $63,000. Emergency Food, Clothing and Shelter were moved into the United Way line in Service Partners category. Health, Mental Health and Addictions and Other Essential Services are each allocated 45% of the total and Arts and Culture is allocated the remaining 10%. One effort at better administration is to establish a certain number of grants—three grants at $10,000 apiece rather than 60 grants at $500 apiece in the larger categories and two grants at $3,000 apiece for Arts and Culture. The final piece is Juvenile Crime Prevention. In the past, a General Fund transfer was made into the Video Lottery grant fund and then grants were awarded out of the Video Lottery grant program. In future, these funds will go directly to the Children and Families Commission and they will administer the grants directly. Mr. Maier asked whether the funds for La Pine and Sisters are start-up or anticipated to be ongoing. Commissioner DeBone explained the intent is to match funds from the cities toward an economic director project. The funds are going through EDCO, and the cities will contract with EDCO for a half-time person. This is in support of regional coordination. Madras and Prineville each have a position on-line, and Bend and Redmond each have a position. This is to support the two other cities in Deschutes County to be team players. Ms. Ure explained that the funds will be administered by EDCO and there will be an agreement between EDCO and the cities, which should offer some consistency. Mr. Barrett noted that it looks there will not be any funds added to the EDCO Business Loan Fund, which has a current balance of $180,000. Is the idea that when they spend down the $180,000 it will not be replenished? Mr. Anderson explained such a decision has not been made. If the funds are exhausted before this time next year, the Board could elect to put more money in or if the funds are not exhausted they will have the opportunity to consider putting more money in. They didn’t elect, given the other priorities, to put it in there this year. Ms. Ure noted that there is currently some payback coming into the fund and some of the loans being repaid will go on for some time. She has heard from EDCO that they have several and that if everything came out they thought it would, that it could actually put a big dent in what is the available balance. Minutes of Budget Meeting Tuesday, May 21, 2013 - AM Page 24 of 25 Mr. Barrett’s understanding is that they were trying to get all the funds appropriated before the end of the budget cycle so they could start over again with a new allocation. Mr. Unger stated that is not what they have told the Board. They have not said anything about wanting continued support in future years by the County. They did have the opportunity to include the Business Loan Fund when they were making their proposal. Mr. Maier asked if the money from Bethlehem Inn a part of the payback to EDCO. Ms. Ure does not know as that is not part of this fund. Mr. Anderson noted that the Board did elect to help out with a pledge of $25,000 as local government support for the direct flight to Los Angeles as part of the general support of $100,000 for the tri-county area. The County also purchased tickets separate from this pledge. It is a big deal for Deschutes County that we have that direct flight to Los Angeles more than any other county because those flights really help support the growth of our destination resorts, which bring in more taxable income to the County than all the industrial commercial in Bend and Redmond combined. Judith Ure left the meeting. Bethlehem Inn Mr. Anderson stated that we are still kind of in limbo with that structure. It is in the budget showing as a liability against the fund to prompt us to figure something out long-term with that rather than perhaps being overlooked if we consider it as just another County asset. The way it is shown in the budget certainly points out that it needs to be addressed. Bethlehem’s Executive Director recognizes that something needs to be done. She met with Mr. Anderson and Mr. Kropp recently and talked at length about their desire to have a more specific long-term plan for the property including improvements and addressing the long-term lease relationship currently with the County with an eye toward the eventual transfer or purchase of that asset by them. Mr. Maier asked if there is coverage in the event of a fire or loss. Mr. Kropp explained that the facility is listed on the County’s property insurance and the lease requires them to have general liability insurance. Mr. Anderson stated that the facility is fully code compliant. It was permitted originally as a hotel, and then improvements were made before Bethlehem Inn took occupancy to make the facility fully commercially legal. Mr. Kropp noted that they call us with facility issues and we look at the lease to see if it is their responsibility or ours then work with them to get it taken care of. Mr. Higuchi asked about the cash impact to the County if we write down the $2.7 million owed. Ms. Faria explained that there is no cash impact. The County has spent the money; the facility is not reported as a capital assets because the County is not using it for County activities. We transfen·ed title from the City of Bend to Deschutes County so it is in our name but it is not a County asset. We did not buy it for our intended use. There was supposed to be a Federal grant and we would have been zeroed out of the deal. We were, and are still, an interim lending agent. We used our money; it is now titled in our name. If we sell it we will have to record that. Mr. Kropp noted that these are good conversations to have as Bethlehem Inn engages in discussions with County about the lease and the conversations should be held in executive session because it is real property negotiations. General Fund The group passed on this item at this time. The group then broke for lunch prior to the afternoon session. These minutes were taken by Kathy Hirschman ofHealth Services. DATED this lq~ Day of ~ 2013 for the Deschutes County Board of CommissionefS: ma-Ur- Alan Unger, Chair Tam~Chair ATTEST SIGNATURES: Anthony DeB one, Co~issioner ~~ Recording Secretary Minutes of Budget Meeting Tuesday, May 21, 2013 -AM Page 25 of25 C , I BUDGET COMMITTEE AGENDA Tuesday, May 21st, 2013 '. (,; 9:00 AM 9:00 -10:00 AM 10:00 -10:30 AM • Reconvene the Deschutes County budget meeting • • Health Services (Public Health & Behavioral Health} Introductions Budget discussion • • Children and Families Commission Introductions Budget discussion -Regional Early Learning Hub -Substance Abuse Prevention Break Other Funds Health Benefits Trust (including DOC, DOC Pharmacy, and Wellness) PERS Reserve Economic Development Fund Video Lottery Bethlehem Inn General Fund Lunch ­Discussion • • Communitl:': DeveloRment Introductions Budget discussion Service Partners • Economic Development of Central Oregon (EDCO) • Central Oregon Visitors Association (COV A) Break • • District Attorney's Office Introductions Budget discussion Program Budget Tab/Page 5/180 10:30 -10:45 AM 10:45 -Noon Noon -1:00 PM 1:00 -2:00 PM 2:00 -2:30 PM 2:30 -3:00 PM 3:00 -3:15 PM 3:15 -4:15 PM , 5/197 5/200 6/240 6/261 6/249 6/254 6/251 6/231 4/130 3/84 Page 1 3/93 , BUDGET COMMITTEE AGENDA Tuesday, May 21 S \ 2013 4:15 -4:45 PM 4:45 -5:00 PM • • Justice Court Introductions Budget discussion Public Comment Continue the Deschutes County budget meeting to Wednesday, May 22nd , at 9:00 AM Program Budget Tab/Page Page 2 o N ~-, ~ ~~ ............,.-------------t----­ c ~: (.­-<U ·S' }:: ~ ·et : lI·-, ~, <U ~. ,S!! ~ "C ~i::I al I ...... o Health Benefits Trust -Fund 675 Budget and Four Year Forecast FY 2014 through FY 2018 Projections FY 2013 Revenues: Insurance Premiums -Interfund Charges Additional Premiums -Part-time employees Employee Monthly Co-Pay COIC Retiree I COBRA Health Insurance Medical Services and Rx Rebates HBT Recommendations -Increase in revenues Interest $12,871,238 33,000 638,000 1,400,000 930,000 67,499 73,000 $ 13,497,868 40,000 880,000 1,454,250 875,000 50,493 60,000 $ 14,172,761 42,000 924,000 1,526,963 918,750 50,493 200,000 60,000 $ 14,881,399 $ 44,100 970,200 1,603,311 964,688 50,493 __200,000 60,000 15,625,469 $ 16,406,743 46,305 48,620 1,018,710 1,069,646 1,683,476 1 ,767,650 1,012,922 1,063,568 50,493 50,493 ~OO , OOO 2 00,000 60,000 60,000 Total Revenues 16,012,737 16,857,611 17,894,967 18,774,190 19,697,375 20,666,719 Appropriations 219,256 228,026 237,147 246,633 Materials & Services Claims Paid (EBMS) Deschutes On-Site Clinic DOC Pharmacy Other Materials & Services (inc'l. Well ness) Materials & Services Total Appropriations 14,651,688 842,432 1,933,223 1,148,415 18,575,758 15,512,015 963,580 1,800,893 1,166,928 19,043,416 20,566,889 22,212,240 23,989,220 ~908,357 18,776,530 19,254,239 20,786,145 22,440,267 24,226,367 26,154,990 Increase I (Decrease) in NWC (2,763,793) (2,396,628) (2,891,179) (3,666,076) (4,528,992) (5,488,271 ) Beginning Net Working Capital 14,551,028 11,700,000 9,303,372 6,412,193 2,746,117 (1,782,875) Ending Net Working Capital $11,787,235 $ 9,303,372 $ 6,412,193 $ 2,746,117 $ (1,782,875) $ (7,271,146) 85% 87.55% 86.09% 83.66% 81.31% 79.02% Annual increase in Personnel Appropriations Annual increase in Materials & Services Health Benefits Trust -Fund 675 Budget and Four Year Forecast, FY 2014 through FY 2018 Projections FY 2013 Revenues: Insurance Premiums -Interfund Charges Additional Premiums -Part-time employees Employee Monthly Co-Pay COIC Retiree I COBRA Health Insurance Medical Services and Rx Rebates HBT .B~commendatlo~-Increase In revenues Interest $12,871,238 33,000 638,000 1,400,000 930,000 67,499 73,000 Total Revenues 16.012,737 17.309.814 18.885.760 20.371.781 21.976.684 23 1709.980 Appropriations 219,256 228,026 237,147 246,633 Materials & Services Claims Paid (EBMS) 14,651,688 15,512,015 Deschutes On-Site Clinic 842,432 963,580 DOC Pharmacy 1,933,223 1,800,893 Other Materials & Services (inc'i. Wellness) 1,148,415 1,166,928 Materials & Services 18,575,758 19,043,416 20,566,889 22,212,240 23,989,220 25,908,357 $ 13,883,521 40,000 880,000 1,495,800 900,000 50,493 60,000 $ 14,994,203 43,200 950,400 1,615,464 972,000 __50,493 200,000 60,000 $ 16,193,739 $ 46,656 1,026,432 1,744,701 1,049,760 50,493 200,000 60,000 17,489,238 $ 18,888,377 50,388 54,420 1,108,547 1,197,230 1,884,277 2,035,019 1,133,741 1,224,440 50,493 50,493 200,000 200,000 60,000 60,000 Total Appropriations 18.776.530 19.254.239 20.786.145 22.440.267 24.226.367 26.154.990 Increase I (Decrease) in NWC (2.763.793) (1.944,425) (1.900.385) (2.068,485) (2.249.683) (2.445.011 ) Beginning Net Working Capital 14,551,028 11,700,000 9,755,575 7,855,190 5,786,704 3,537 ,022 Ending Net Working Capital $11.787.235 $ 9.755.575 $ 7,855,190 $ 5,786,704 $ 3.537,022 $ 1.092,011 7 .35 5.63 4.20 2.87 1.62 85% 90.86% 90.78% 90.71% Annual increase in Personnel Appropriations Annual increase in Materials & Services Health Benefits Trust -Fund 675 Budget and Four Year Forecast FY 2014 through FY 2018 '1 Projections FY 2013 Revenues: Insurance Premiums -Interfund Charges Additional Premiums -Part-time employees Employee Monthly Co-Pay COIC Retiree / COBRA Health Insurance Medical Services and Rx Rebates HBT Recommendations -Increase In revenues Interest $12,871,238 33,000 638,000 1,400,000 930,000 67,499 73,000 $ 14,140,623 40,000 880,000 1,523,500 916,667 50,493 60,000 $ 15,554,686 44,000 968,000 1,675,850 1,008,333 50,493 ~OO 60,000 $ 17,110,154 $ 48,400 1,064,800 1,843,435 1,109,167 ~493 200,000 60,000 18,821,170 $ 20,703,287 53,240 58,564 1,171,280 1,288,408 2,027,779 2,230,556 1,220,083 1,342,092 50,493 50,493 200,000 20.Q..000 60,000 60,000 Total Revenues 16,012,737 17,611,283 19,561,362 21,486,449 23,604,045 25,933,400 Appropriations 219,256 228,026 237,147 246,633 Materials & Services Claims Paid (EBMS) Deschutes On-Site Clinic DOC Pharmacy Other Materials & Services (inc'l. Weliness) Materials & Services 14,651,688 15,512,015 842,432 963,580 1,933,223 1,800,893 1,148,415 1,166,928 18,575,758 19,043,416 20,566,889 22,212,240 23,989,220 25,908,357 Total Appropriations 18,776,530 19,254,239 20,786,145 22,440,267 24,226,367 26,154,990 Increase I (Decrease) in NWC (2,763,793) (1,642,956) (1,224,783) (953,818) (622,322) (221,591 ) Beginning Net Working Capital 14,551,028 11,700,000 10,057,044 8,832,261 7,878,443 7,256,121 Ending Net Working Capital $11,787,235 $ 10,057,044 $ 8,832,261 $ 7,878,443 $ 7,256,121 $ 7,034,530 Annual increase in Personnel Appropriations Annual increase In Materials & Services 7.35 5.81 4.72 94.11% 3.90 3.33 95.75% 97.43% Health Benefits Trust -Fund 675 Budget and Four Year Forecast FY 2014 through FY 2018 Projections FY 2013 Proposed II Budget (12%) FY 2014 FY 2015 1 Annual Forecast FY 2016 1 FY 2017 1 FY 2018 Revenues: Insurance Premiums -Interfund Charges Additional Premiums -Part-time employees Employee Monthly Co-Pay COIC Retiree I COBRA Health Insurance Medical Services and Rx Rebates HBT Recom menda tions -Increase in revenues Interest $12,871,238 33,000 638,000 1,400,000 930,000 67,499 73,000 $ 14,397,726 40,000 880,000 1,551,200 933,333 50,493 60,000 $ 16,125,453 44,800 985,600 1,737,344 1,045,333 50,493 200 ,000 60,000 $ 18,060,507 $ 50,176 1,103,872 1,945,825 1,170,773 50,493 200,000 _ 60 ,000 20,227,768 $ 22,655,100 56 ,197 62,941 1,236,337 1,384,697 2,179,324 2,440,843 1,311,266 1,468,618 50,493 50,493 200,000 200,000 60,000 60,000 Total Revenues 16,012,737 17,9121752 20,249,023 22,641,647 25,321,385 28,322,692 Appropriations 219,256 228,026 237,147 246,633 Materials & Services Claims Paid (EBMS) Deschutes On-Site Clinic DOC Pharmacy Other Materials & Services (inc'l. Wellness) Materials & Services 14,651,688 15,512,015 842,432 963,580 1,933,223 1,800,893 1,148,415 1,166,928 18,575,758 19,043,416 20,566,889 22,212,240 23,989,220 25,908,357 Total Appropriations 18,776,530 19,254,239 20,786,145 22,440,267 24,226,367 26,154,990 Increase I (Decrease) in NWC (2,763,793) (1,341,487) (537,122) 201,380 1,095,018 2,167,702 Beginning Net Working Capital 14,551,028 11,700,000 10,358,513 9,821,391 10,022,771 11,117,789 Ending Net Working Capital $11,787,235 $ 10,358,513 $ 9,821,391 $ 10,022,771 $ 11,117,789 $ 13,285,491 Annual Charge to Departments per FTE 15,086 16,896 18,924 21,195 23,738 26,587 # of Months of Next Year's Appropriations in Ending Net Working Capital 7.35 5.98 5.25 4.96 5.10 5.65 Percentage of Expenditures covered by Revenues 85% 93.03% 97.42% 100.90% 104.52% 108.29% I ~~su~~ons for FY 2015 ~ugh FY 2018 : ~AnnuallnGUWe.In.Cha!'Qe.PAm to.,Q!lRiulrnents 12'% Annual increase in Personnel Appropriations 4% Annual increase in Materials & Services 8% Health Benefits Trust -Fund 675 Budget and Four Year Forecast FY 2014 through FY 2018 Proposed Projections Budget (15%) FY 2013 FY 2014 FY 2015 Annual Forecast I I FY 2016 I FY 2017 I FY 2018 I Revenues: Insurance Premiums -Interfund Charges Additional Premiums -Part-time employees Employee Monthly Co-Pay COIC Retiree / COBRA Health Insurance Medical Services and Rx Rebates HI:JJ Recommendations -increase in revenues Interest $12,871,238 33,000 638,000 1,400,000 930,000 67,499 73,000 $ 14,783,379 40,000 880,000 1,592,750 958,333 50,493 60,000 $ 17,000,886 46,000 1,012,000 1,831,663 1,102,083 50 ~493 _ 200,000 60,000 $ 19,551,019 $ 52,900 1,163,800 2,106,412 1,267,396 50,493 200 ,000 60,000 22,483,672 $ 25,856,222 60,835 69,960 1,338,370 1,539,126 2,422,374 2,785,730 1,457,505 1,676,131 50,493 50,493 200.009-_ 200,0QQ. 60,000 60,000 Total Revenues 16,012,737 181364,955 21,303,125 24,452,019 28,073,248 32,237,662 Appropriations 219,256 228,026 237,147 246,633 Materials & Services Claims Paid (EBMS) Deschutes On-Site Clinic DOC Pharmacy Other Materials & Services (inc'l. Weilness) Materials & Services 14,651,688 15,512,015 842,432 963,580 1,933,223 1,148,415 1,800,893 1,166,928 18,575,758 19,043,416 20,566,889 22,212,240 23,989,220 25,908,357 Total Appropriations 18,776,530 19,254,239 20,786,145 22,440,267 24,226,367 26,154,990 Increase I (Decrease) in NWC (2,763,793) (889,284) 516,979 2,011,753 3,846,882 6,082,671 Beginning Net Working Capital 14,551,028 11,700,000 10,810,716 11,327,696 13,339,449 17,186,330 Ending Net Working Capital $11,787,235 $ 10,810,716 $ 11,327,696 $ 13,339,449 $ 17,186,330 $ 23,269,002 Annual Charge to Departments per FTE 15,086 17,349 19,951 22,944 26,386 30,344 # of Months of Next Year's Appropriations in Ending Net Working Capital 7.35 6.24 6.06 6.61 7.89 9.89 Percentage of Expenditures covered by Revenues 85% 95.38% 102.49% 108.96% 115.88% 123.26% Assumptions for FY 2015 through FY 2018: Annual increase in Charge per FTE to Departments 15% Annual increase in Personnel Appropriations 4% Annual increase in Materials & Services 8% Deschutes County Annual Premium per FTE Requested and Proposed Budgets FY2014 Charge per HE General Fund Assessor 460,120 496,933 515,324 529,145 Clerk 120,435 130,071 134,885 138,503 BaPTA 7,794 8,418 8,730 8,964 District Attorney 629,836 680,228 705,403 724,321 Tax 72,412 78,206 81,100 83,275 Veterans' 45,258 48,879 50,688 52,047 Property & Facilities 25,646 27,698 28,723 29,493 Grant 15,086 16,293 16,896 17,349 Total General Fund 1,376,588 1,486,726 1,541,749 1,583,097 Behavioral Health 2,167 ,841 2,341,286 2,427,936 2,493,052 Public Health 982,846 1,061,481 1,100,766 1,130,289 Juvenile 727,140 785,317 814,381 836,223 Adult 487,274 526,260 545,737 560,373 COD 437,491 472,494 489,981 503,121 F&E 133,883 144,595 149,946 153,968 CFC 82,973 89,611 92,927 95,420 Justice Court 75,429 81,464 84,479 86,745 Victims' Assistance 60,344 65,172 67,584 69,396 Dog licenSing 15,388 16.619 17,234 17,349 Total wI GF Support 5,170,609 5,584,299 5,790,973 5.945,936 Internal Service Funds Building Services 359,045 387,771 402,122 412,906 Admin 96,549 104,274 108,133 111,034 BaCC 45,258 48.879 SO,688 52,047 Finance 109,976 118,775 123.171 126,474 Legal 90,515 97,757 101,375 104,094 Personnel 88,252 95,313 98.841 101,492 IT 251,934 272,091 282,161 289,728 TotaiiSF 1,041,529 1,124,860 1,166,491 1,197,775 Sheriffs Fund 3,281,180 3,543.701 3,674,853 3,773,407 Road 792,009 855.376 887.033 910,823 DC 911 656,236 708.740 734.970 754,682 Solid Waste 316,803 342,150 354.813 364,329 Risk 49,029 52.952 54.912 56,384 GIS 42,240 45,620 47,308 48,577 Extension 36,457 39,374 40,831 41,927 HBT 28,663 30,956 32,102 32,963 Annual Fair 16,976 18.334 19,013 19,522 Natural Resource 15,086 16,293 16,896 17,696 Healthy Start 9,052 9,776 10,138 10,409 Law Library 7,543 8,146 8,447 8,675 sa Communication 7,543 8.146 8.447 8,675 TRTlWelcome Center 5,884 6,355 6,590 6,767 Video Lottery 1,508 1,629 1,689 1,735 Total 5,266,209 5,687,548 5,898,043 6,056.571 Total Premium 12,854,936 ,256 14,783,379 Each increase of 1% -$128,562 A. Charges to departments for FY 2014 FTE at FY 2013 rates B. Charges to departments with an 8% increase. Requested Budget C. Charges to departments with a 10% increase . D. Charges to departments with a 12% increase. E. Charges to departments with a 15% increase. Proposed Budget Health Benefits Trust· Fund 675 Revenues, Expenditures and Change in Fund Balance Actual: FY 2008 through FY 2012, Projections FY 2013 Revenues: Insurance Premiums -Interfund Charges Additional Premiums -Part-time employees COIC Retiree' COBRA Health Insurance Medical Services and Rx Rebates Interest Total Revenues Personnel Services -all departments Materials & Services Claims Paid (EBMS) Deschutes On-Site Clinic DOC Other Materials 8. Services (inc'l. Wellness) Materials 8. Services Total Increase I {Decreasel in NWC Actual Actual Actual FY 2008 II FY 2009 II FY 2010 II FY 2011 II FY 2012 12,361,420 12,742,412 10,523,568 11,452,737 337,117 347,028 340,983 488,710 925,921 1,197,050 1,135,675 1,418,895 547,314 624,646 614,039 732,526 42,898 35,068 42,066 94,970 12,101,392 602,405 1,230,390 835,024 127,653 103,326 108,328 103,742 127,664 9,809,151 11,307,987 12,804,507 14,003,337 399,169 739,245 912,136 859,375 910,273 10,548,396 12,220,123 13,667,841 15,420,948 10,651,722 12,328,451 13,771,584 15,548,612 142,448 14,005,475 913,605 140,439 1,072,026 16,283,702 16,426,150 Projections FY 2013 $12,871,238 33,000 638,000 1,400,000 930,000 67,499 200,772 14,651,688 842,432 1,933,223 1,148,415 18,575,758 18,776,530 14,551,028 covered 17.894,797 $ 15,829,888 14.47 15.59 10.86 9.57 8.89 7.35 93% 92% 85% over 13.96% 15.74% 11.71% 12.90% 5.64% 14.31% GENERAL FliND Statement of Financial Operating Data Ten Months Ended April 30, 2013 Year to Date FY 2013 Year End $ Actual Variance Budget Projection Variance RESOURCES: Beg. Net Working Capital $ 8,700,000 $ 9,059,394 $ 359,394 100% 104% $8,700,000 $9,059,394 $ 359,394 Revenues Tax Revenues -Current 16,826,300 19,800,722 2,974,422 83% 98% 20,191,560 20,774,199 582,639 Tax Revenues -Prior 566,667 1,008,137 441,470 83% 148% 680,000 1,008,137 328,137 Gen. Rev. -excl. Taxes 1,989,443 2,312,829 323,386 83% 97% a) 2,387,331 2,687,331 300,000 Assessor 623,855 833,554 209,699 83% 111% b) 748,626 833,626 85,000 County Clerk 1,150,019 1,315,137 165,118 83% 95% 1,380,023 1,620,023 240,000 BOPTA 10,332 16,419 6,087 83% 132% b) 12,398 16,419 4,021 District Attorney 153,912 132,809 (21,103) 83% 72% 184,694 184,694 FinancelTax 165,750 248,736 82,986 83% 125% b) 198,900 288,736 89,836 Veterans 57,000 55,836 (1,164) 83% 82% c) 68,400 68,400 Property Management 82,703 78,537 (4,166) 83% 79% 99,244 99,244 Grant Projects 1,667 1,667 {O} 83% 83% 2,000 2,000 Total Revenues 21,627,648 25,804,382 4,176,734 83% 99% 25,953,176 27,582,809 1,629,633 TOTAL RESOURCES 30,327,648 34,863,776 4,536,128 83% 101% 34,653,176 36,642,203 1,989,027 REQUIREMENTS: 1 Exp. %1 Expenditures Assessor 2,973,127 2,832,496 140,631 83% 79% 3,567,752 3,467,752 100,000 County Clerk 1,223,032 1,058,555 164,477 83% 72% 1,467,638 1,361,638 106,000 BOPTA 60,321 50,394 9,927 83% 70% 72,385 72,385 District Attorney 4,395,556 4,162,435 233,121 83% 79% 5,274,667 5,074,667 200,000 FinancelTax 694,888 652,528 42,360 83% 78% 833,865 833,865 Veterans 217,493 207,635 9,858 83% 80% 260,992 260,992 Property Management 226,689 229,853 (3,164) 83% 84% 272,027 272,027 Grant Projects 101,958 102,262 (304) 83% 84% 122,349 122,349 Non-Departmental 1,428,893 813,555 615,338 83% 47% d) 1,714,671 1,414,671 300,000 Contingency 5,045,440 5,045,440 83% n/a 6,054,528 6,054,528 16,367,397 10,109,713 6,257,684 83% 51% 19,640,874 12,880,346 6,760,528 Transfers Out 11,581,377 11,609,971 (28,594} 83% 84% 13,897,652 13,897,652 TOTAL REQUIREMENTS 27,948,774 21,719,684 6,229,090 83% 65% 33,538,526 26,777,998 6,760,528 NET (Resources -Requirements) 2,378,875 13,144,093 10,765,219 e) 1,114,650 9,864,205 8,749,555 Beginning Net Working Capital per Proposed Budget 9,500,000 I a) Includes annual payments: PIL T $730,983. FY 2012 PILT was $471,723 b) A & T Grant received quarterly. YTO includes three quarters -July, October & January c) State payment received quarterly. YTO includes one quarter d) Budget includes $576,736 payment to LEO#2. Will not be expended until June 2013 and is projected to be $300,000 less than budgeted due to available Transient Room Tax revenues e) Appropriation Transfers (authority to expend): County School Fund $360,000, Grant Fund $10,000 Page 1