2018-05-03 Agenda Review
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34
AGENDA REVIEW MEETING, MAY 3, 2018 PAGE 97
ASSEMBLY
The New Hanover County Board of Commissioners met for Agenda Review on Thursday, May 3, 2018 at
4:00 p.m. in the Harrell Conference Room at the New Hanover County Government Center, 230 Government Center
Drive, Wilmington, North Carolina.
Members present: Chairman Woody White; Vice-Chairman Skip Watkins; Commissioner Jonathan Barfield,
Jr.; and Commissioner Rob Zapple. Commissioner Patricia Kusek was absent.
Staff present: County Manager Chris Coudriet; Deputy County Attorney Sharon Huffman; and Clerk to the
Board Kymberleigh G. Crowell.
Chairman White called the Agenda Review meeting to order and announced that the purpose of the meeting
is to review and discuss the agenda items for the May 7, 2018 Regular Meeting with discussions as noted:
Consent Item 3. Adoption of State Road Resolutions.
A brief discussion was held regarding the temporary
cul-de-sac at Ervin’s Place Drive and if that was allowed. Planning Director Wayne Clark stated he assumed it was
temporary until there is connection to the road.
Consent Item 7. Adoption of a Resolution to Dispose of Surplus Property According to Procedures
Outlined in North Carolina General Statues – Chapter 160A, Article 12.
A brief discussion was held regarding
ways to share with the public and non-profit organizations the surplus property items that are available since this item
is listed on the consent agenda. The County has a system in place through the auction process to share what items are
available, as well as providing the information to the non-profit organizations. The main outlet used to disperse the
information is through an online notice. Staff will review the options and share with the Board the media release that
is sent to the public. In response to Board questions, Chief Financial Officer Lisa Wurtzbacher stated that the County
does not typically have problems disposing of the surplus property and the items are not retained very long. After the
public auction ends, remaining items are sent to the landfill. Many organizations already know that governments
dispose of surplus property regularly, but the County will make an effort to draw more attention to the notice.
Consent Item 10. Approval of 2017-2018 Board of Education Budget Amendment #6.
In response to
Board questions, New Hanover County Schools Chief Financial Officer (NHCS CFO) Mary Hazel Small stated that
the budget increase of $126,637 for classroom teachers’ salary is due to two reasons. First, there was a reduction in
the state fund for the payments for the North Carolina Virtual Public School (NCVPS) Online Learning because some
teaching positions were removed. Secondly, there was an increase through a transfer from another line item.
Regular Item 11. Consideration of Elder Abuse Awareness Month Proclamation.
Vice-Chairman
Watkins will read the proclamation.
Regular Item 12. Consideration of National Preservation Month Proclamation.
Chairman White stated
that Commissioner Kusek requested to read the proclamation.
Regular Item 13. Consideration of Foster Care Awareness Month Proclamation.
Commissioner Barfield
will read the proclamation.
Regular Item 14. Consideration of the New Hanover County Juvenile Crime Prevention Council
Funding Recommendation for Fiscal Year 2018-2019.
In response to Board questions regarding Teen Court
funding, Chief Strategy and Budget Officer Beth Schrader stated there is not a duplication in funding and it a
combination of two sources. The cash match is what Teen Court applies for through an outside agency and JCPC
provides the balance of the money to actually fund the resources that actually fund Teen Court itself. It was also noted
that Part III of page 14-1-6 is missing from the report due to a printing error. Staff will prepare the page and include
it in the agenda packet.
Regular Item 15. Presentation of FY18-19 Recommended Budget and FY19-23 Capital Improvement
Plan.
A brief discussion was held regarding how to proceed with reviewing the recommended budget. Chairman
th
White stated that County Manager Coudriet would present the budget at the Board Meeting on May 7 and each of
the Commissioners have already met with staff several times over the past two months. He stated that he understands
what the County Manager is recommending and he intends to support it as is. If any Commissioners have questions
or concerns about any items he encourages them to meet with the County Manager to discuss.
Commissioner Zapple stated that he has not met with NHCS Board of Education members and would like
more information regarding the NHCS funding request. Specifically, he would like to know why there is $15 million
of taxpayer money sitting in the NHCS fund balance and if some of that can be used for one-time capital or facilities
expenses. He would like to know what specifically changed in the state laws and what exactly is being directed by the
state as it appears to be another unfunded mandate for the local level to handle. Chairman White suggested
Commissioner Zapple contact the Board of Education members to speak directly with them. He explained he has been
doing this and each time has had his questions answered and NHCS CFO Mary Hazel Small is present today to answer
any questions. Chairman White stated they had answered his questions sufficiently enough to convince him to support
the County Manager’s recommendation to meet them at their ask of $2,800 and $3.6 million in capital. Regarding the
state law change, it was primarily an unfunded mandate and he believes the funding to that presupposes that that’s
actually the law. He feels that the school system is much more attune to what the state is most likely to do with their
funding than the Commissioners would be so he took them at their word for that, as has always been done.
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34
AGENDA REVIEW MEETING, MAY 3, 2018 PAGE 98
Chairman White stated that on the fund balance, he has had many discussions over the last five years. It has
decreased from 8% to 6%, NHCS has taken some of the Board’s concerns to heart in his opinion, and have appropriated
more than they have in the past. Regarding the appropriate level of that fund balance, Chairman White thinks that is
for NHCS to decide in consultation with the County. They have been comfortable at 6%, which is 100% County
dollars, no state or federal dollars, but it’s still 6% of their overall budget. The question of whether that is too high or
not high enough is a reasonable question. However, for the purposes of the County budget, he is comfortable that
NHCS has used it sufficiently to this point to get us to where we are. He hopes over the next year that discussion
continues between their finance team and ours, to understand it better and to use the cash portions of it more efficiently.
The Board of Education is an elected body and he feels both boards work well together and always have. When there
is disagreement, it’s in a civil manner and its difficult territory to trespass on sometimes when they have an elected
office and a job to do. Chairman White stated he will make those comments at any time and has made them many
times in many places. He thinks it’s a huge increase year over year, but it’s a commitment that the County has made.
In response to Board questions, Ms. Small stated as to state salary and benefit changes for the two-year state
budget, the state has published next year’s salary schedules for teachers. For one of the first times, NHCS is not
estimating for teachers, unless the state changes their mind, but they already voted on it. There will be a 6% increase
and the goal has been to steadily try to increase the average teachers’ salary. Benefit rates have been set for next year
and are known. Again the state could change its mind, but it has been voted on and the amount is known. The $96 is
just for the state mandated raises and benefit increases. NHCS has also taken out items it would like to do locally in
addition to that and the only formal ask is $2,800.
Commissioner Zapple stated clear communication has resulted in good cooperation between the County and
the school system. Starting three years ago, there was a request to move from approximately $2,620 up to $2,700.
There were active discussions amongst the Commissioners of how to do it and it was able to get to $2,700 last year.
This year’s request seemed to come all of a sudden with an official ask of $100 in one year with little notification of
what was happening. He assumes internally there was more information that drove that, but he never heard it and
doesn’t know if other Commissioners were aware of it. A $100 increase in per pupil supplemental funding is a large
request and takes millions of dollars to make that happen. In reviewing the information, he understands why and if he
were in Ms. Small’s position, he would be advocating for as much extra money as possible. He does have concerns
about creating a fund balance when it’s not required. He has heard from individual administrators, classroom parents,
etc., that needs are not being met on a daily basis and when there is approximately $15 million sitting in fund balance,
he would like to know why is it that amount.
Commissioner Zapple further stated that he knows sometimes there are pay issues and there has been some
discussion among the staff that instead of doing every month, they wanted to request quarterly payments or a portion
at a time to help ease that out over the year. He said he thinks the system that currently exists by law would work, but
instead there is $15 million of taxpayer money that was dedicated by this Board to NHCS that is sitting in fund balance.
He would like to find every way to take as much as possible out of that fund and put it back into the classrooms. This
is his motivation behind asking about it and he does not doubt the need for $3.6 million in capital. He stands ready
and willing to appropriate the it. However, he would like for it to come with some type of agreement through the fund
balance.
In response, Ms. Small stated that as it relates to the fund balance, there are some concerns with cash flow of
state and federal money for salaries and this represents less than 1 month of salaries. Federal funds are not received
until October, so NHCS has to fund the Title I teachers for a couple of months and there are some cash flow issues.
There have been years at the Federal, State, and local levels where they had mid-year reductions. NHCS wants to be
comfortable that there is enough money to cover payroll for that next month if there is some kind of crisis. While
NHCS knows the County will always be able to help in the event of any kind of disaster, there were concerns if there
was any trouble with its state and federal funding, the fund balance would be available for use. The school system is
not allowed to have a federal and state fund balance; only a local one. For this reason, she recommended to the Board
of Education to have a fund balance and the Board is comfortable with 6%. There is no required amount. If there was
a specific percentage that the County wanted to recommended, the Board of Education would certainly consider it.
The very significant and main reason that drives it is payroll and payroll is 86% of the budget.
Commissioner Zapple thanked Ms. Small for the information. During the budget process is when the most
impact can be made and the funds are going to good work within our educational system. He would appreciate knowing
Chairman White’s point of view as it represents a large part of his views as well. However, he still questions having
that amount of money set aside when there are specific needs within the classroom.
Chairman White stated that while he does not disagree with anything Commissioner Zapple has stated and
are many of the things he has said for years. He feels that that the two percent decrease is meaningful and he knows
some of it was committed to capital last year. By asking the same questions, the information technology cycle has
gone from an eight-year cycle to a six-year cycle. They are looking at going to 5 ½ or 5 years. He thinks they are using
$1.7 million of the fund balance this year in this new upcoming budget. He does share Commissioner Zapple’s
concerns about the fund balance, but also recognizes they are a sovereign body. It is money the Board allocates, but
NHCS is in a better position to decide what that should be. Some counties do different things and it is an arbitrary
thing. His personal view is that NHCS is better positioned to make that decision.
Chairman White further stated that over time the way the Commissioners discuss it does affect how NHCS
deploys it and he thinks staff has given them suggestions on how they can deploy it in the future a little more
efficiently. Ultimately, it is their decision, as long as the County knows what it is and as long as the County is always
a part of that conversation, as it always has been. He wishes it were a lower amount as he does not think it fair that the
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34
AGENDA REVIEW MEETING, MAY 3, 2018 PAGE 99
county taxpayer holds 100% of the risk of those dollars for state and federal payroll. He understands that and has said
that, but the Commissioners do not have any jurisdiction to change that unless it just does not appropriate for them. It
is not an irrelevant question, but for his personal vote that is how he felt comfortable at 6%. Then visit it year over
year because things change.
Commissioner Zapple stated that regarding the communication aspect, three weeks ago the Board of
Education announced this increase. It was information NHCS was aware of internally but the information did not
arrive at the County until three weeks ago. It goes to credibility as these are two large institutions that want to get
along and indeed seem to get along well. Commissioner Zapple pointed out that, as Chairman White stated, the
Commissioners have done a great job of keeping the County’s own fund balance and creating a strong policy that
allows for funds to be available if the school needs it. He thinks there are internal controls that could be used to help
the school board smooth out payments, again, by going with block payments instead of every month. In regard to the
amount of money, percentage-wise it does not sound like very much, but as this school system grows, as the county
grows, the amount of money is going to increase the fund balance.
Commissioner Zapple further stated that his final thought is how that fund balance grows. The amount of
money allocated to the school system, in good faith, from the Commissioners, from the taxpayers that they represent,
goes in it. When that money is not fully spent by the end of the year, it gets moved over to a fund balance. It would
be different if the unspent funds could be returned to the County and there was a request for money to be set aside for
a fund balance, and to have this kind of a discussion. NHCS could bring that forward and say it needs 2%, 3%, etc.
for these specific reasons. Then the two groups could isolate that and have that discussion, but that is not what happens.
He feels there is an over ask so the Board of Education can build its fund balance. He’s not sure that’s fair to the
taxpayers as he does not think they fully understand that.
In response, Ms. Small stated that she does not think this is an over ask. The budget is set based on positions,
and they budget tightly, so a lot of it is salary lag, not just with the local money, but also with the state positions. The
savings are captured locally, so there is no reversion to the state. When looking at the total budget with 4,000
employees, there are some savings. The fear is if they do not do that and do not have the vacancies, they do not want
to come up short. Efforts are made to keep it stable so there is not growth and it use to be transferred to capital outlay,
but the Local Government Commission (LGC) no longer allows that. This is in part how Anderson Elementary was
built, with a fund balance transfer. As that is no longer allowed, NHCS is trying to keep it lower since it is not being
saved for capital purposes. While computers could probably be purchased with, it cannot do building items because
those are not allowed. It is not an intentional over request, only an estimate. The Board of Education makes a
determination of how much to appropriate in the next budget. Before things were cut in the late 2000s, NHCS used to
appropriate a certain amount automatically in the budget. While that is not done quite as much any longer, the amount
needed to balance is still done. When the economy was tight, there was a lot of fear, so there was not as much turnover.
There was no salary savings and there was a shortage. They got out of the habit of doing that and it’s a different time
now, so they might be able to go back to doing that if it’s the County’s wish.
Commissioner Zapple thanked Ms. Small for the information. In regards to facilities and capital outlay, he
questioned why there are literally hundreds of empty desks in some schools. There is a sense the goal is to try to buy
a way out of this without fully recognizing how to most efficiently use and distribute the student body throughout the
County to make use of those desks. He hoped Ms. Small could carry this concern back to the Board of Education.
Commissioner Barfield stated he understood the rationale. The same thing has been done in the Department
of Social Services (DSS) through the last several budgets. DSS was carrying a higher than needed balance and over
the last couple of years, the budget has been reduced by approximately $4 million in total. In the end, he thinks it was
a better use of taxpayer resources to make sure the funds were being put in the right place. He feels the Board of
Education should really look at their historic numbers, as DSS did even though it’s one of the bigger agencies with
300 plus employees and a $30 million+ budget, which is nothing like the school system. Over two years, Ms. Schrader,
Ms. Wurtzbacher, and County Manager Coudriet were able to move roughly $4 million back into the general fund. It
would be prudent to look at lean principles within the school system as we do in county government, to make sure
there is not any waste. The County partnered with the hospital to learn the lean principles and utilized the techniques
with the Health Department and DSS to find ways to improve processes, create better quality, and to increase
profitability. The hospital had a $52 million profit a couple of years ago, mainly because of lean principals. He thinks
NHCS should look system wide and partner with the hospital, as the County did, to find ways to be more efficient
when there are limited dollars moving forward. He understands the need for a fund balance but at the same time he
thinks it would be good for the school system to take a look its historic numbers and make sure it’s not holding more
than its needs. He believes this is a conversation for the budget and finance departments to have where they could
review things in detail.
County Manager Coudriet stated that he passed out the recommended budget which would be officially
presented at the Board Meeting on Monday and staff is available for any questions.
Commissioner Zapple expressed concerns with the budgeting for Cape Fear Community College (CFCC).
He suggested another review be done at reducing the general administration and other expenses that the County is not
obligated to fund, which is a total of about $300,104 for full time support personnel and portions of the administrative
expenses. He understands most of the funds going to CFCC are state mandated. These expenses are not and have not
been reviewed in a while and he feels it is time to look at those line items. He would appreciate another review being
done on this by the Commissioners and staff.
Chairman White stated that in 2013, he had asked the same question and incurred no small amount of wrath
for posing the question. It was a reasonable question. His view of it right now, he has not revisited it since then, is that
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34
AGENDA REVIEW MEETING, MAY 3, 2018 PAGE 100
it’s not unlike the County funding 698 NHCS positions. The County does not have to do that, but it does because it
affects favorably the quality of education, improvement in retention, and the County is at or above our peer counties
because of the investment that we make in education on the public side. The same argument can be made about CFCC.
He had the same questions and still does. He thinks there are reasons its static, one of which is because four years ago
the CFCC Board of Trustees started requiring that the institutional funds be listed out on a sheet of paper and
accounting for it month after month. It was about $6.3 million in fund balance. What was being presented was a one-
line balance of institutional funds of $6.3 million. What was not seen was the 35 categories of the accounts and what
they were for such as parking, books, vending, etc. As a result of that scrutiny, setting aside the legalities of some of
it and the tough decisions that were made there, is a more transparent budget that has now stabilized and has year over
year stayed at $10.9 million with zero capital. That is a consequence of asking those tough questions and taking what
comes with asking those questions. The budget is now static this year. He does not think in any way is it objectionable
to ask the County Manager to look at that particular number again. We really should ask the question every year and
we should ask about the fund balance for the school system every year. These questions need to be perpetual, in his
view, for the very reasons that he, Commissioner Barfield, Commissioner Zapple, and others have asked about over
the years. He does agree that the County Manager Coudriet needs to look at it and ask. If County Manager Coudriet
comes back with a recommendation of less, CFCC and the Commissioners would need to know why.
Planning items:
Vice-Chairman Watkins stated that it would be helpful to have any traffic impacts and the
level of service on the roads involved in the planning items. Commissioner Zapple requested that someone, such as a
NCDOT representative, be present to discuss the traffic issues. Planning Director Wayne Clark stated that staff would
be prepared to answer general questions relating to the trip generations and there would be outside people to answer
questions about the roads.
ADJOURNMENT
There being no further business, Chairman White adjourned the meeting at 4:40 p.m.
Respectfully submitted,
Kymberleigh G. Crowell
Clerk to the Board
Please note that the above minutes are not a verbatim of the New Hanover County Board of Commissioners meeting.