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1997-06-12 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, JUNE 12, 1997 BOOK 25 PAGE 1061 ASSEMBLY The New Hanover County Board of Commissioners held a Budget Work Session on Thursday, June 12, 1997, at 10:30 AM. in Room 501 of the New Hanover County Administration Building, 320 Chestnut Street, Wilmington, North Carolina. Members present were: Commissioners Buzz Birzenieks; Ted Davis, Jr.; Charles R. Howell; Vice-Chairman William A Caster; Chairman Robert G. Greer; County Manager, Allen O'Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell. Chairman Greer called the meeting to order and stated the purpose of the Work Session was to make adjustments to the FY 1997-98 Budget. Discussion of County Funding for the New Hanover County School District Commissioner Birzenieks expressed concern for requesting the School District to use a portion of its fund balance to absorb the $1,000,000 reduction in County funding to reduce the proposed 4-cent tax increase to 2 cents. He asked if the Board should consider other options such as using the County's fund balance or allowing the tax rate to remain at four cents? County Manager O'Neal advised the following options could be considered: (1) appropriate $1,000,000 from the County's fund balance; (2) reduce the County's contribution to the School District with the District adjusting its budget to absorb the reduction; (3) increase the tax rate to four cents; or (4) reduce the County's contribution to the School District with the District using its fund balance to absorb the reduction. After a review by Staff, it was felt that since the School District was not under the same cash flow constraints as the County, it was better for the School District to use its fund balance. Deputy County Manager, Andrew 1. Atkinson, explained in the past, County funding to the School District was disbursed on a quarterly basis; however, this procedure has been changed and funding is disbursed on a more routine basis which allows the School District to replace its fund balance. In reality, the School District's fund balance is County funding that has been disbursed to them over a period of time but has not been expended. If the Board decides to reduce the school funding appropriation, and this requires the School District to use its fund balance, the County can disburse funding on a monthly basis to avoid a cash shortfall. Discussion followed on whether the County could require the School District to use its fund balance. Budget Director, Cam Griffin, advised the Board should decide on the funding contribution and allow the School District to decide on whether to use its fund balance or reduce operating expenses to replace the funding shortfall. County Manager 0 'Neal advised that after discussion with Ms. Mary Hazel Small, the Finance Director for the School District, there was some resistance to using the fund balance, but not a refusal to consider this option. Commissioner Birzenieks asked the County Manager if he would be comfortable with requesting the School District to use its fund balance? County Manager O'Neal responded that removal of these funds from the fund balance would not jeopardize the school operation. A lengthy discussion followed on maintenance of schools. Commissioner Howell expressed concern for reducing the County funding contribution to the School District with replacement of these funds from the monies that have been budgeted for maintenance and renovations. Budget Director Griffin reported after another review of the proposed budget, she felt the school contribution could be reduced by $500,000 with the remaining $500,000 coming from other sources. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, JUNE 12, 1997 BOOK 25 PAGE 1062 Consensus: After further discussion, it was the consensus of the Board to reduce the funding contribution to the School District in the amount of $500,000 and authorize the Chairman to write a letter requesting the Board of Education to budget the shortfall from its fund balance. Discussion of Reducing County Contribution to the Old School Pension Fund County Manager O'Neal explained when the School District decided to participate in the State Teachers' & State Employees' Retirement System, some employees remained on the old pension system because it was not monetarily beneficial for them to change systems. During the years, the number of retired persons receiving checks has decreased, and there are only a few teachers who will be added to the old pension system. Eventually this system will be eliminated; therefore, the proposed reduction of $200,000 would not jeopardize the old pension system or negatively impact persons receiving retirement checks. Deputy County Manager Atkinson commented on accrual projections and stated he would not be surprised if the old pension fund was overfunded when the fund is eventually eliminated. He advised there would be no harm in delaying funding for one or two years. Motion: After further discussion, it was the consensus of the Board to reduce the County contribution to the old School Pension Fund by $200,000. Discussion of Reducing Funding to EMS County Manager O'Neal reported since the County will be receiving $2 million from New Hanover Regional Medical Center to operate Emergency Medical Services for FY 1997-98, the EMS budget can be reduced by $100,600 with no adverse effect on the service. He advised the $2 million was more than adequate to cover the cost of operation. Consensus: It was the consensus of the Board to reduce the EMS budget by $100,600. Discussion of Market Adjustment and Merit Increase for County Employees Commissioner Birzenieks advised the County Manager had recommended a 2% market adjustment and 2% merit increase in the recommended budget for County employees; however, at the last Budget Work Session, the Board had basically agreed to eliminate the 2% market adjustment and include a 3 % merit increase in the FY 1997-98 Budget. He expressed concern for the 1 % reduction and asked if the morale of County employees would be injured? Director of Human Resources, Andre' Mallette, responded that employees would suffer a loss with removal of the 2% market adjustment. He advised the purpose of the market adjustment was for the County to remain competitive in beginning salary ranges so qualified persons could be recruited. Commissioner Birzenieks asked the following questions: (1) What is the goal for New Hanover County? Should the County be at the 50 or 75 percentile of the salary market? (2) What criteria is used to develop the percentile? County Manager O'Neal responded it was inappropriate for a local government to be in the top salary range; however, the County should be competitive and remain in the 75 percentile of the salary market. As technology advances, more skills are required of the County employees. This has created a need for training, which has become costly. If an employee leaves the County after receiving training because of higher pay, a loss of revenue has occurred. Commissioner Birzenieks commented on the need to remain competitive and asked what criteria was used to determine a competitive salary? Director Mallette responded the meaning of competitive was to match New Hanover County salaries with other local governments. A broad comparison has to be made depending upon the job. New Hanover County cannot compete with Mecklenburg County or Guilford NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, JUNE 12, 1997 BOOK 25 PAGE 1063 County, but the salary ranges should be competitive enough to encourage persons to apply for vacancies in New Hanover County. Further discussion was held on the cost ofliving in New Hanover County. County Manager O'Neal advised the cost of housing was comparable to the Triangle Area, which has to be taken into consideration when developing salary ranges. Commissioner Birzenieks recommended establishing a data base of comparable counties in size, population, and other factors. He asked how a 2% market adjustment would impact salary ranges? Director Mallette reported the current salary data from comparable counties indicates that New Hanover County would remain competitive with a 2% market adjustment. Commissioner Davis commented on County employees receiving excellent benefits as well as job security and stated, in his opinion, this was a tremendous asset. Chairman Greer agreed and advised that a 3 % increase over no increase should be considered a benefit by the County employees. A lengthy discussion was held on the need for the County to remain competitive in the job market and avoid employee turnover. Commissioner Birzenieks advised the Commissioners should establish salary goals with adjustments made to meet those goals. Vice-Chairman Caster recommended including a 3% merit increase for employees in the FY 1997-98 Budget. He also suggested using the $250,000 received from federally forfeited property as a revenue source when balancing the budget. Consensus: After further discussion, it was the consensus of the Board to reduce the salary adjustment by $326,627 and use federally forfeited property receipts in the amount of$250,000 as a revenue source. Discussion was held on the salary vacancy factor (salary lag). Commissioner Birzenieks commented on the $50,000 of additional funding from this item and recommended increasing this figure to $54,373. County Manager 0 'Neal reported when budgeting more closely on the salary vacancy factor, the amount of funds rolled over in the fund balance at the end of the year would be reduced. Consensus: After further discussion, it was the consensus of the Board to increase the salary vacancy factor county-wide to $54,373. Discussion of 911 Surcharge Vice-Chairman Caster asked if$300,000 could be removed from the 911 Surcharge without negatively impacting the 911 Center? Budget Director Griffin responded that $300,000 could be used from the 911 Surcharge; however, this would not provide future funding for the purchase of operating equipment. Chairman Greer commented on the expenses that will be involved with removing the 911 Center and stated some money should be left in this account to pay for future equipment. Budget Director Griffin advised that $70,000 per month was collected from the 911 Surcharge. She stated $300,000 could be removed from this fund with no negative impact on the 911 Center. Consensus: It was the consensus of the Board to appropriate $300,000 from the 911 Surcharge receipts. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, JUNE 12, 1997 BOOK 25 PAGE 1064 Discussion of Funding Requests for Outside Agencies Discussion was held on the outside agencies and County Departments that appeared before the Board on June 2, 1997, to request additional funding. Consensus: After discussion, the Board agreed to provide additional funding to the following agencIes: Cape Fear Resource Conservation and Development Child Advocacy Commission Big Buddy Program $ 325 $12,000 $ 2,500 Vice-Chairman Caster expressed concern for funding the National Guard Armory and Senior Tarheel Legislator. He recommended no funding to these agencies. Consensus: It was the consensus of the Board to eliminate funding for the following agencies: National Guard Armory Senior Tar Heel Legislator $ 8,000 $ 500 Discussion of Northeast Branch Library County Manager O'Neal advised that $30,000 had been included in the FY 1997-98 Budget for architectural services to replace the Plaza East Branch Library. He reported the space at Plaza East was too small, but the lease could be renewed annually until a new branch was constructed. During the past week, the Northeast Library Action Committee has requested the County to approach Hannaford, Inc. about using the vacant building that was formerly the Wilson Supermarket in the Landfall Shopping Center. Also, the County has purchased property in NorthChase to provide a branch library for the Castle Hayne area. He requested the Board to provide direction on how to proceed with construction of a branch library. Commissioner Davis stated he felt the Plaza East location was to small and recommended providing a larger space. A lengthy discussion occurred on the need to decide if the Military Cutoff Road site should be used for construction of a new branch library, or if the former Wilson Supermarket building should be considered. Further discussion was held on the need to provide a branch library on the NorthChase site for residents living in the Castle Hayne area. Commissioner Birzenieks advised the Board must discuss future planning for library services before making a decision of this type. He recommended removing the $30,000 from the FY 1997-98 Budget with this money being removed from contingencies ifthe Board decides to move forward with design of a building during the next fiscal year. Consensus: It was the consensus of the Board to remove the $30,000 from the FY 1997-98 Budget and use next year as a planning year to determine where the branch library should be located. If design fees are needed during the next fiscal year, funds will be removed from the contingencies account. Discussion was held on County funding for the City Transportation Planner. County Manager O'Neal advised the City was more involved with transportation issues and requested the Board to continue funding $14,600 for the position. Consensus: It was the consensus of the Board to continue funding $14,600 for the City Transportation Planner position. Vice-Chairman Caster objected to funding the Art's Council, St. John's Museum of Art, and Friends of Public Radio when there are agencies desperately in need of funding to provide services to children, the homeless, elderly, and hungry. He stated the Board leans toward funding cultural agencies who in many instances should be able to raise funds through private donations and fund raisers. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, JUNE 12, 1997 BOOK 25 PAGE 1065 Commissioner Birzenieks reported this was a philosophical issue. He recommended beginning the next budget process early and deciding which agencies should be funded. He advised the Board may wish to decrease funding by a percentage per year until the funding is totally eliminated. This approach would allow time for the agencies to prepare for future budget reductions. County Manager O'Neal agreed and stated this approach was the only way to prepare the agencies for future budget reductions. Vice-Chairman Caster agreed with the process and stated the Board must determine the fundamental principals of government when spending money collected from the taxpayers. It was generally agreed to hold a Work Session early in the fiscal year to discuss County government expenditures and where reductions can be made without impacting services. Also, guidelines should be provided to the Human Services Allocation Advisory Committee to use when reviewing funding for outside agencies. County Manager O'Neal recommended scheduling a meeting in early fall with the Human Services Allocation Advisory Committee to discuss how funding is distributed among the outside agencIes. Consensus: It was the consensus of the Board to balance the FY 1997-98 Budget with an increase in the tax rate of two cents to cover the 1993 School and Cape Fear Community College Bond Issues with the following adjustments: Expenditure Adjustments: Reduce Contribution to the old School Pension Fund Reduce EMS expenses Increase Salary Vacancy Factor County-wide Reduce Contribution to School District Increase contribution to Child Advocacy Commission Increase contribution to Big Buddy Program Increase contribution to Cape Fear RC&D Eliminate contribution to the National Guard Armory Eliminate contribution to Senior Tar Heel Legislator Reduce Salary Adjustment for County Employees by 1 % Revenue Adjustments: Budget receipts from 911 Surcharge Budget receipts from Federally Forfeited Property Budget Fund Balance $200,000 $100,600 $ 54,373 $500,000 $ 12,000 $ 2,500 $ 325 $ 8,000 $ 500 $326,627 $300,000 $250,000 $156,325 ADJOURNMENT Chairman Greer commented on the Budget Work Session being beneficial and expressed appreciation to the Commissioners for holding the tax rate down to two cents. He adjourned the meeting at 12:20 P.M. Respectfully submitted, Lucie F. Harrell Clerk to the Board