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HomeMy WebLinkAbout2026-03-12 Budget Work SessionNEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MARCH 12, 2026 BOOK 36 PAGE 787 ASSEMBLY The New Hanover County Board of Commissioners met on March 12, 2026, at 11:11 a.m. for a Budget Work Session in Conference Rooms 137-139 at the New Hanover County Government Center, 230 Government Center Drive, Wilmington, North Carolina. Members present: Chair LeAnn Pierce; Vice Chair Dane Scalise; Commissioner Bill Rivenbark; Commissioner Stephanie A.C. Walker; and Commissioner Rob Zapple. Staff present: County Manager Chris Coudriet; Clerk to the Board Kymberleigh G. Crowell; and County Attorney K. Jordan Smith. Chair Pierce called the meeting to order, stating that the purpose of the meeting is for the Board to discuss budget priorities for the 2026-2027 fiscal year. FISCAL YEAR (FY) 2026-2027 BUDGET WORK SESSION PRIORITIES DISCUSSION Chief Financial Officer Eric Credle and Budget Officer Amanda Kostusiak shared the following information concerning the FY 2026-2027 budget: • FY 2026-2027 Budget Work Sessions 1 and 2: • Current economic conditions: NC Unemployment Rates by County Overall NC Unemployment Rate = 3.9% United States = 4.4% JV "C=1';� _Vw� 2% 3% a% S% 6% • Annual Growth Rates in real Growth Domestic Product (GDP) — North Carolina: 6% 7% 6% 5% 4% 3% 2% 1% 0% 2021 2022 2023 2024 2025- orecag 2026-Forecas ■ Real GDP Sayre -Na Gelatine Erawnic Eaeran-Wiwrvry W—C—i-CNrbne • Consumer Price Index (Inflation) - South Atlantic: 9 ma. hp 135%:13 mo. - 3�3% 135 UP 1.96% 130 Up 3.88% Dec 2025 125 Up5.6% March 2025 March 2024 120 March 2023 115 Up9. March 2022 Since March pt 2021 = 24% "0 105 March 2021 100 95 90 ati 0" i ti a tti iK ' 0"'/ a / 0",/ eye o l6 il6 a" a yh J ye 0", by • Federal Funds Interest Rate —Actual / Projected: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MARCH 12, 2026 BOOK 36 PAGE 788 00% - - 00% 00% 00% ,�a� 110" ,\ryo1y ,rotiti ,�� ,`4' ,N�� ,\voti� 1�otia 1notia ,ryotia ,�atia ,fop 1�p 05 N�~y Nab ,�oti� ,�oti� 1\ryotib ,hoti� / 5 � �il 5 e J 1 'J J 410 • Summary of economic factors: • Low unemployment • Healthy GDP growth • Low inflation • Declining interest rates: • Good for the economy but negatively impacts interest income • Economic factors appear healthy and solid heading into FY 2027 • FY 2025-2026 Current Year: • Adopted rate of 30.6 cents (51" lowest in the state) Counties Tax Rate 1 Carteret 0.225 2 Dare 0.2632 3 Macon O.27 4 Moore 0.295 S New Hanover 0.306 6 Jackson 0.31 7 Watauga 0.318 8 Brunswick 0.342 9 Madison O.36 10 Catawba 0.3985 11 Avery 0.4 12 Swain O.41 13 Transylvania 0.4105 14 Wilkes 0.42 15 Polk 0.4277 16 Clay 0.43 17 Henderson 0.431 18 Union 0.4342 19 Ashe 0.44 20 Craven 0.4448 21 Beaufort 0.445 22 Rutherford 0.454 r23rMecklenburg 0.4927 24 Alamance 0.494 25 lCaldwell 0.4975 • $8.4 million in fund balance used • Adopted budget reductions implemented • Year -to -Date (YTD) revenue and expenses are generally in line • The FY 2026-2027 Budget status: • All departments have now submitted budgets and budget analysts are reviewing • Capital Improvement Projects (CIP) requests have also been submitted • Observations: • Low level of enhancements requested (details follow) • Only one (1) new CIP project submitted (Masonboro Loop Trail) • Impact of HR 1 on Social Services Admin Cost Revenue is being analyzed • Mental Health Fund and Opioid Settlement Fund requests are being analyzed • School Bond: first year of impact expected to be FY 2027-2028 • FY 2026-2027 assumed tax rate of 30.6 County Manager Coudriet asked Ms. Kostusiak to explain H.R. 1's impact on food and nutrition programs. Ms. Kostusiak stated the County expects reduced revenue and greater administrative responsibility, including an estimated $1.7 million reduction in state funding. County Manager Coudriet clarified that the County will not assume the direct cost of program benefits or services, but will absorb a larger share of administrative costs for food and nutrition eligibility staff as the reimbursement ratio shifts from 75/25 to 50/50. He added that changes in recertification frequency and eligibility rules may affect workload and consumers, and confirmed that staff built the estimated reimbursement loss into the baseline budget to maintain current staffing levels rather than add positions. • Board priorities: greenspace, trails, public safety, and efficient government In response to questions about Sheriff's Office detention officer vacancies, Ms. Kostusiak stated that the current fiscal year includes an incentive program that will expire under its current timeline. She noted the proposed budget does not add jail staff, but does include personnel increases and supports continued evaluation of compensation and workforce needs. County Manager Coudriet added that the Sheriff's Office faces challenges with NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION, MARCH 12, 2026 PAGE 789 recruiting and retaining detention officers, with many leaving the profession rather than moving to other counties. He stated that staff is working with the Sheriff's Office to use incentives and workforce flexibility to retain current employees and attract new hires rather than add positions the office cannot yet fill. Discussion was held about nonprofit funding, workforce housing, and vendor status contracts. In response to questions, Ms. Kostusiak stated the proposed budget does not include funding for nonprofit or other non -county agencies. County Manager Coudriet added that approximately $1.6 million was provided through the Endowment in the current fiscal year, with the County serving as the pass -through agency for nonprofit organizations. He stated the funding is not included in the FY 2027 budget because the Board had previously directed the County to step away from that role and dissolved the outside agency committee. Ms. Kostusiak stated that nonprofit agencies are applying directly to the Endowment, although she has not received confirmation regarding future awards. County Manager Coudriet clarified that the County is not receiving Endowment revenue to continue the current year's pass - through arrangement and could not speak to what level of nonprofit funding the Endowment may provide directly. Commissioner Zapple stated he would like the Board to revisit the discussion of County support for nonprofit agencies and workforce/ affordable housing. County Manager Coudriet responded that such funding would not appear in staff's recommendation absent direction from a majority of the Board. In response to additional questions, Ms. Kostusiak stated that Continuum of Care funding was a separate contract that had ended, and County Manager Coudriet added that it was not included in the final approved budget, per Board policy. As to whether the Continuum of Care had requested County assistance and could still do so, County Manager Coudriet responded that any agency is free to apply for funding. However, staff will not include such support in the budget absent direction from a majority of the Board. He stated that staff understood the Board's prior action to reflect a policy decision to discontinue that funding. Ms. Kostusiak added that the County continues to fund its annual contract with the Council of Governments at the requested level, but the Continuum of Care funding was a separate item that ended with the contract term and was removed as part of the budget reductions. Chair Pierce stated that, before discussing whether to add specific items, she wanted to understand the overall budget picture, including any deficiencies, and where the County may ultimately land before considering additional funding requests. County Manager Coudriet stated that the budget is not currently balanced and remains several million dollars out of balance based on continuation needs and assumed revenues. However, staff is making progress and will address revenues later in the presentation. Vice Chair Scalise added that, while it was appropriate to raise issues for future discussion, he preferred to hear the full presentation and gain a clearer understanding of the overall budget before debating individual priorities. • Enhancements requested: • General Fund total - $2.3 million: • General Government: $190,000 • Public Safety: $1.9 million • Culture and Recreation: $227,000 • Environmental Fund: $770,000 • Fire Fund: $162,000 • Stormwater Fund: $23,000 • Total = $3.3 million • Compared to $16.8 million in FY 2025-2026 and $22.4 million in FY 2024-2025 • Property taxes —Tax base growth rate in non -revaluation years: 5.00% 4.50% 4.42% 4.00% Average All Years = 2.28% 3.50% Average Last 5 Years = 2.78% 3.00% 2.89% 3.009i FY26-27 Assumed: 2.50°h = 2.50% 2,4356 2.40% $6.3 million increase 2.05% 2.00% 1.69% 1.50% 1.00% 0.50% 0.10% 0.00% 2014 2015 2016 2017 2019 2020 2021 2023 2024 ■ G—th Rate In response to questions, Ms. Kostusiak stated that the value of one cent is $8.1 million. • Sales taxes: $140,000,000 $12Q000,000 $100,000.000 $80,000,900 $60p00,000 i40A00,000 $20p00,000 $0 $119,508,361 Up3.8% . $120,758,949 $121,966,539 FV 202fi Adopted H2027Pre1lm—y *FY27 Preliminary recommendation to increase 1% NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MARCH 12, 2026 BOOK 36 PAGE 790 • Current year budget by function: Culture & Recreation 19,123,903 19,186,977 10,310,954 53.9% Debt Service 29,121,633 29,121,633 19,164,349 65.8% Economic & Physical 2,084,124 2,084,124 1,642,454 78.8% Development Education 122,480,584 131,703,277 79,401,668 64.8% Education Debt 29,666,078 29,666,078 24,813,758 83.6% General Government 75,222,796 80,898,862 59,381,269 78.9% Human Services 76,891,159 78,498,029 47,465,517 61.7% Public Safety 114,321,811 119,239,126 74,506,412 65.2% Total 468,912,088 490,398,106 273,321,925 67.5% • Environmental Management Fund (Recycling and Solid Waste): • Department specifics: • Department consists of five (5) divisions: Landfill, Household Hazardous Waste (HHW), Recycling, Litter Management, and Administration • 40/41 county employees (including one [1] benefits -eligible part-time EE) • Managed 3,540 tons of recyclables, 295 tons of HHW, 424,000 tons of municipal solid waste (MSW), and 3,985 tons of scrap tires • Award -winning compost, wastewater treatment, construction waste recycling, and household hazardous waste programs • Department disruptors: • Decreasing availability of permitted space will force relocation of key infrastructure over the next five (5) years • Tons disposed of in the landfill have increased by 108% since FY 2013, and traffic has increased by 165% during the same time period • Heavy equipment costs have risen by 30% since 2020, with similar increases in the cost of constructing new landfill cells or closing old cells. • The long-term liability for PFAS contamination is being gradually shifted to landfills • High inflation and capital needs • Historical tip fee: • Current Tip Fee: $52/ton (includes $2 State surcharge) • FY 2027 budget will need an increase in the Tip Fee • FY 2025-2026 budgeted Fund Balance appropriation = $3.8 million • Tip Fee history: Fiscal Year Tip Fee/Ton FY 2014 $59 FY 2015 $55 FY 2016 $52 FY 2017 $50 FY 2018 - FY 2022 $48 FY 2023 - FY 2026 $52* After WASTEC closure Tip fee declined *funded new Litter program and Capital needs • Neighboring counties: Brunswick ($59) and Pender ($78) Discussion ensued about the tip fee. In response to questions, Ms. Kostusiak clarified that the $3.8 million came from the Environmental Management Fund balance, not the General Fund. Regarding why the County had previously reduced tip fees rather than maintaining them at a more competitive level, County Manager Coudriet stated those reductions reflected prior Board policy choices to contain costs for residents and businesses, particularly after the County exited the waste -to -energy business. He added that maintaining current service levels will likely require a significant tip fee increase, although the Board may also evaluate service levels and operating costs as part of that decision. Regarding whether the proposed tip fee increase would begin funding the required closure and post -closure fund, Recycling and Solid Waste Director Joe Suleyman stated the County budgets approximately $1.158 million annually for that purpose. He explained that staff reevaluates the required post - closure amount every five years and expects it to continue increasing over time, and that staff works with engineers to manage long-term post -closure practices and costs. Mr. Suleyman stated his goal is to ensure sufficient post closure funds are available when the landfill closes so those costs do not fall to the General Fund. In response to a follow-up question, he reported that the closure and post -closure fund balance is currently zero because staff uses the annual appropriation for ongoing closure -related projects. Discussion continued regarding the potential impact of a tip fee increase on residential trash costs. Commissioners noted that private haulers generally did not reflect prior reductions in the County's tip fee in customer bills, while they likely would pass along any future increase. In response to questions, Mr. Suleyman stated the average family of three generates about four tons of waste per year, which would result in an estimated increase of approximately $36 annually, or about $3 per month, if haulers passed the increase through based on tonnage. He also noted that, following a prior increase from $48 to $52 per ton, some haulers attributed customer rate increases to the County's landfill fee. In response to further questions, County Manager Coudriet stated the County does not control rates charged by private haulers and noted that the City also pays a tip fee and accounts for approximately 50% of landfill volume, in addition to the beach towns. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MARCH 12, 2026 BOOK 36 PAGE 791 • Stormwater Services Fund: • FY 2026 performance: • Maintenance performed: • Preventative / proactive = 20 miles • Reactive = 106 work orders totaling five (5) miles of ditch and 1,900 pipe replacement; 350+ citizen calls year to date • 12 capital projects constructed: • Including—$500,000 outsourced project • Stormwater five (5) year CI update • Data collection: • Mapping: 600+ miles mapped to -date • Stream gauges— NC Flood Inundation Mapping and Alert Network • Watershed planning • Capacity building: • Professional services on -call • Staff development • Equipment • Renovated Stormwater Services building • FY 2027 Outlook: • Maintenance: • Preventative / proactive maintenance • Continued reactive maintenance / repairs • Capital projects: • Courtney Pines culvert —$1.50 million • Construction of 12 additional capital projects • Design development of 15 future projects • Motts Creek watershed study • Data collection: • Pages Creek streambank assessment via NC Land and Water Fund grant • Infrastructure condition assessments • Watershed planning: • Planning studies Ivy Woods and Rockhill Road • FY 2027 Budget Proposals / Requests: • Stormwater Fee ($6.14 per Equivalent Residential Unit [ERU]): no changes • Enhancements / Capital Improvement: • Courtney Pines culvert replacement • Hixon Place and Peters Lane culvert replacement • Two permanent Stormwater Maintenance Worker positions (replacing two contracted employees) • Utilize a portion of the Stormwater Fund Balance to support Courtney Pines culvert replacement In response to questions about stormwater utility staffing, Ms. Kostusiak stated that converting two temporary positions to full-time positions would result in only a slight net increase because the change would reduce contract service costs, with the net impact estimated at approximately $30,000. She added that the program has relied on temporary staffing since at least its start. In further discussion about the stormwater utility, Ms. Kostusiak noted that the County has mapped approximately two-thirds of the County, with about one-third remaining. Discussion followed on the existing stormwater plan, mapping progress, future needs, and the stormwater fee. In response to questions, Mr. Credle stated the County charges the fee on the property tax bill and noted that the current $6.14 equivalent residential unit rate increased from $5.65 two years ago with the intent to keep it in place for five years, making the upcoming year the third year of that plan. County Manager Coudriet explained that the County charges residential properties a flat ERU rate, charges commercial properties based on impervious surface, and does not charge undeveloped land. He stated staff believes the current plan and fee are adequate for the approved program and that staff is not recommending a fee increase at this time, but would return with a more detailed briefing on the stormwater strategy, current plan, CIP, mapping status, flood map considerations, and allowable uses of the fee if requested by the Board. He further explained that the County's stormwater utility is unusual among counties and focuses primarily on stormwater quantity and maintenance in unincorporated areas rather than the broader municipal systems cities operate. In response to earlier questions about vendor status contracts, Ms. Kostusiak reported that $390,000 was removed from the current year's budget. She stated that the affected contracts included Coastal Horizons, Domestic Violence Shelter, transportation, Family Promise of the Lower Cape Fear, and the Carousel Center, and noted she had a more detailed breakdown available if needed. BREAK: Chair Pierce called for a break from 12:20 p.m. to 12:45 p.m. • Fire Rescue Services Fund: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MARCH 12, 2026 BOOK 36 PAGE 792 • FY 2026 wrap-up: • Castle Hayne replacement complete • Gordon Road Station project with staffing complete CA>"� \ • Looking forward to FY 2027: • Insurance rating in 2027: Currently rated a Class 2 in the unincorporated county • Reaccreditation from Commission on Fire Accreditation International in Spring - Summer 2027 • 30th Anniversary • FY 2027 and beyond: • Capital for legacy facilities • Strategic staffing request • Fire Rescue: • FY 2026 adopted budget - $29 million • 154 Positions • Nine (9) fire stations throughout the County • Provides fire protection and rescue services mainly in the unincorporated areas of the County • FY 2027 Budget: • Enhancements: one (1) new position • Recruitment and retention initiative • Capital outlay: $2 million (including a replacement engine) • FY 2027 Tax Rate: • No Change to Current Year Rate - 7.25 cents In response to questions, County Manager Coudriet stated Fire Rescue primarily serves the unincorporated areas of New Hanover County, although the County also responds in municipal areas through mutual aid and proximity -based response protocols. He noted the County remains ultimately responsible for unincorporated areas, including portions of Pleasure Island, even when another department provides the initial response. He stated the current fiscal year funded the positions needed for the Gordon Road station and confirmed the station's permanent four -firefighter staffing model. He added that the department is essentially fully staffed, with at most one or two firefighter vacancies, and is exploring retention strategies and secondary benefits while remaining competitive on salary. • Mental Health and Substance Use Disorder Plan: • Mental Health and Substance Use Disorder Fund: • Funded with $50 million hospital sale escrow • Funds 14 Mental Health and Substance Use Disorder programs • Five (5) providers, programs within 911, Health and Human Services, Human Resources, Office of Strategy, and Community Justice Services • FY 2026-2027 Recommended Budget - Mental Health Funding Plan: Program Adopted Eckel +Vaughn Outreach & Education/PSA Campaign $45,000 $45,000 Recommended $45,000 NHC HR' Critical Response & Readiness Training $25,000 $25,000 $25,000 Community Justice Services Veterans Treatment Court - $61,279 $61,279 MedNorth I/DD Family Support $166,891 $321,183 $166,891 NHC 911 Clinicians Embedded w/911 $552,325 $561,240 $561,240 NHC HHS' Getting Home Street Outreach $536,623 $591,870 $591,870 NHC HHS' School Mental Health Therapists $3,729,535 $3,825,000 $3,825,000 NHC HHS' School Nurses $3,700,000 $3,750,000 $3,750,000 NHC HR' NHC First Responder Assistance Program $135,132 $141,504 $141,504 Coastal Horizons Outpatient Treatment for Uninsured $125,000 $125,000 $125,000 Coastal Horizons Community Outreach Workers $56,516 $56,516 $56,516 LINC STAR Center - $124,155 - LINC Recovery Housing support $250,000 $250,000 $250,000 LINC Community Outreach Workers $71,742 $71,742 $71,742 New Hope CDC Community Outreach Workers $71,742 $71,742 $71,742 NHC Strategy* Psychiatric Nurse Practitioner Fellowship $100,000 $100,000 $100,000 NHC Strategy' Mental Health Scholarships $160,000 $160,000 $160,000 $9,725,506 $10,281,231 $10,002,784 In response to questions, Ms. Kostusiak stated agencies apply for funds via the County's Strategy department, which works with applicants to review enhancement requests, anticipated outcomes, return on investment, and available funding before staff evaluate requests. She also clarified that items marked with an asterisk identify internal County departments that administer those programs. Regarding the STAR Center, Ms. Kostusiak stated the request involved wraparound services and positions, but staff focused on the County's role in building the facility and serving as custodian rather than staffing it through a limited -duration fund. County Manager Coudriet added that the County's commitment was to build, own, and maintain the facility, and that County funding NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MARCH 12, 2026 BOOK 36 PAGE 793 for staffing was not part of that commitment. He further stated that the STAR Center is already operating and that the request represented an enhancement beyond current operations. In response to additional questions, Ms. Kostusiak stated staff reviews the mental health fund annually and that, once it is depleted, the Board will need to decide whether to support those services through the tax base or discontinue them. County Manager Coudriet added that the mental health fund, previously projected to last through 2029 or 2030, now may remain available until 2031. • Opioid settlements: • Result of Lawsuits by State and Local Governments vs. Responsible Parties: • Lawsuits began in 2014 and settlements began in 2021 • Distributors, pharmacies, manufacturers, consultants • NC allocation of settlement funds is 85% to local governments: • Only two other states have a percentage that high • Primarily distributed to counties, with the City being one of 15 cities to receive settlement funds • Total settlements to County/City through FY 2039: $36.4 million • Settlements: • Wave 1 settlements: July 2021 (Approximately $20 million for County/City): • Primarily distributors: • McKesson, Cardinal Health, AmerisourceBergen • Payable over 18 years • Wave 2 settlements: December 2022 (approximately $15 million for the County/City): • Primarily pharmacies: • CVS, Walgreens, Walmart • Payable over 15 years • Additional settlements subject to Memorandum of Agreement (MOA): • Kroger ($1 million) • Mallinckrodt ($275,000) • Endo ($270,000) • Settlements not subject to MOA: McKinsey ($180,000) received in FY 2025 • Settlements that are pending court approval: • Purdue/Sackler ($3.7 million) • Secondary Manufacturing ($600,000) • Remnant Defendants ($100,000) • Expected receipts = $4.4 million over 15 years (average of $293,000 per year) • Payment schedules: FY23 E 2A19.018 $ 99.Ty2 $ z518a90 Total Payments Ma $ 5.121.989 4 211.2% $ 5,333,245 SUN.- m5 $ 2.863.668 $ 118.112 f 7581,780 M6 $ 2.914,979 $ - f z914,979 So,. too M7 $ 2.308,012 $ - $ z306.012 fV28 $ 1,]65.701 $ - f 1.765,701 me $ 2,446.731 $ - $ 2446331 $4,000.800 MO $ 2,541.351 $ - $ 2541,351 M $ 2,266.148 $ - $ z—J,18 53.Ooo,0o0 M $ 2,10z887 $ - $ 2.—,887 M3 ; ffYV3346 $ 1.933.059 E f 1.933,059 1,530.420 $ 1.530,40 S]0AOo.,- I ' I Y5 43].490 $ 13749I$143749$ 1,47491aoccM7 $ 1,166,]98 $ f 1,188.798 $ a 91098 $ - $ 859.098 Fy39 $ 859.098 $ - $ 859,098 S0 Total S 35,Sn S,936 S 429,140 S 36,425,075 H23 %2d FY25 FY36 FY27 F128 FY29 FY30 F131 FY32 FY33 FY31 FY35 FY36 H37 R38 FY39 BepWft In R26, City settlement Funds are —a depos0ed di—N wfh-County and are Included In Me County column i, the state dashboard. 38.000.00 S7.000 oB s6.o6o.00 $5.00o.00 $4.000 ao S,, s 1000.000 Opioid Settlement Cash Flow E 4 —s Ens F 7 En8 —Bece4rc —Ey»-- —E,,"C ash Balarce Cash Balance $2,471,562 $6,674.983 $7,590.053 $6,65B,583 $4,83Q361 $2,474,899 • FY 2026-2027 Recommended Budget in summary: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION, MARCH 12, 2026 PAGE 794 Education&Outreach Eckel +Vaughn Outreach &Education/PSA Campaign $45.000 $45,000 NHC Sheriff Naloxone Replacement EIId'Z $20000 $20,000 Wilmington Police Naloxone Replacement $14,000 $14,000 Wilmington Hre Naloxone Replacement $10,000 Access to Services & Novant Community Paramedic $292,000 $292,000 Treatment Coastal Horizons MAT at Detention $286,885 $363,956 Coastal Horizons/Opi Wearable Deulces $250,000 i250,PW MedNorth OUD Community Support $272,929 $272,929 Healing Place Operational Costs $1,186,250 $1.186.250 Face the Music Recovery Unplugged $160,000 $160,000 Coastal Horizons QRT/post Overdose Response Team $250,000 Tides Inc. Operational & Graduate Rental Assistance $445,000 $540,000 Coastal Horizons Recovery Housing Assistance $155.000 $155,000 Sustainable R,_ry& Coastal Horizons Outpatient Treatment for Uninsured E287,099 8287,099 Wellbeing UNC Employment Support Services $40,000 $48,000 Vadous Providers Wrap -Around Support Services $175,000 $175,000 Case Management Support $75,000 - Program Support NHC Strategy Program Support $92,000 $92,000 To Be Determined Strategy Development/Sunay $7%= $3,1106,163 $4,231i,234 • New Hanover County Schools (NHCS) and Average Daily Membership (ADM): • Most current state data available (FY 2022-2023): • FY 2022-2023 New Hanover County local supplement of $3,741(68% above average): • Ranks 10th in state out of 100 counties (average local ADM support = $2,226 per student) • NHCS enrollment continues to decline: • For FY 2025-2026, NHCS is down 839 students (857 including charter schools) • Demographic driven: fewer incoming students vs. graduates • The News & Observer noted that out of 115 school districts in North Carolina, 105 districts reported enrollment drops this fall compared to last year • NHCS enrollment by grade level FY 2026-2027: Best 1 of 2 Enrollment by Grade Level 2,500 z,124 z,osz 1,943 1,931 2,000 1,857 1,857 1,794 1,754 1,755 1,632 t,fifi1 1,707 1,693 1,500 1,000 500 0 �a`ec ca • ADM - Budget vs. Actual: FiscatYear County Budget Count State Reported Actual Difference ADM Rate Funding Variance 2017-18 27,672 27,435 237 $ 2,700 $ 639,900 2018-19 28,016 27,357 659 $ 2,800 $ 1,845,200 2019-20 27,990 27,251 739 $ 2,900 $ 2,143,100 2020-21 27,613 26,416 1,197 $ 3,011 $ 3,604,167 2021-22 26,796 26,515 281 $ 3,434 $ 964,954 2022-23 26,555 27,150 (595) $ 3,4,U $ (2,043,230) 2023-24 1 27,432 26,889 543 $ 3,434 $ 1,864,662 2024-25 1 26,889 26,682 207 $ 3,703 $ 766,521 2025-26 1 26,721 25,864 857 $ 3,872 $ 3,318,304 Includes Charter Schools NHCS operating funding - including Pre-K: $100.000.000 $9o.oa.00o $1nA497.221 $104.4 .221 $101896 ' ' f95.9T7.306 $92,866.956 $92.953,493 $83.374.975 $81.854372 $Bo.0a.0oo 178.825.692 $75,494056 $70.000.000 $60.0." $SO. M." 2018 2019 2020 2021 2022 2023 Does not Include nurses, therapists, deputies (SRO's) NHC operating contribution vs. ADM count: 120.000.o00 100,000,000 80.000.000 r 60,000,000 40.000.000 20.000.000 2018 2019 2020 2021 2022 2023 2024 2018-2025 Final reported ADM 2026 Best 1 of2ADM t♦Operatmg -ADM 2024 2025 2026 202] Preliminary 29,500 28,500 27,500 889fl2l.- 26 25,81Ui26,500 25.500 24,500 23,500 2025 2026 2027 Preliminary NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MARCH 12, 2026 BOOK 36 PAGE 795 • ADM - Budget vs. Actual: FiscalYear County Budget Count State Reported Actual Difference ADM Rate Funding Variance 2017-18 27,672 27,435 237 $ 2,700 $ 639,900 2018-19 28,016 27,357 659 $ 2,800 $ 1,845,200 2019-20 27,990 27,251 739 $ 2,900 $ 2,143,100 2020-21 27,613 26,416 1,197 $ 3,011 $ 3,604,167 2021-22 26,796 26,515 281 $ 3,434 $ 964,954 2022-23 26,555 27,150 (595) $ 3,434 $ (2,043,230) 2023-24 27,4321 26,889 543 $ 3,434 $ 1,864,662 2024-25 26,889 26,682 N 1 3,703 $ 766,521 2025-26 26,721 25,8, 17 $ 3,872 $ 3,318,304 2026-27 Estimated 25,864 1 - - 1 $ 4,000 $ - Includes Charter Schools • For operational support, the ADM Rate for FY 2027 Budget increases to $4,000 per pupil In response to questions about declining school enrollment, Ms. Kostusiak stated the trend is statewide and not unique to New Hanover County, citing lower birth rates and smaller incoming elementary classes compared with the larger high school classes now graduating. She noted the County has lost roughly 800 students, or about the equivalent of one middle school, with the most consistent declines occurring in the elementary grades. In response to further questions, County Manager Coudriet stated staff does not believe vouchers account for the full enrollment decline, although they may be one factor, and said staff would obtain more specific information from the NC Department of Public Instruction. Ms. Kostusiak explained that the County funds local current expense based on projected student membership and does not claw back funds when actual enrollment falls below projections, resulting in an approximate cumulative difference of $13 million from FY 2018 through FY 2026. She confirmed the current adopted ADM rate is $3,872 per student, and County Manager Coudriet stated staff expects to recommend at least $4,000 per student for FY 2027 despite declining enrollment. In response to additional questions, Ms. Kostusiak stated the student membership total used for budgeting includes both traditional and charter school students. County Manager Coudriet clarified that charter schools receive ADM funding through the school system, although the County has not funded charter school capital needs. He also noted that County support for education extends beyond current expense funding and includes items such as school nurses, mental health therapists, school resource officers, and emergency school facility needs. Next steps: • Board direction for budget process: • Priorities • Continued budget process: • Enhancements • Capital planning • Upcoming Budget Work Sessions: • April 1: Enhancements and overall budget • April 30: Preliminary recommendation Budget timeline: Joint Department FY26-27 Budget Kickoff & Enhancement Review Department Request Febmary25 Balancing Budget work public Opens Decisions November 19 CIP Committee Review public -ate March Session III Engagementpublic Hearing June 1 February fi&February l3 Engagement Mri130 May March "In Budget Work Bud et Work Budget Work Board Meeting Request Periotl [loses Session ei g Sesill sion Y3 February l2 Session Y2 pp Lune is vetting and Review Begins March 12} Recommended January 23 ITGC Committee I Budget Review I May 18 February 19 We are here • Public engagement - Brewing Budgets: • Brewing Budget sessions - Informal times, Budget Staff is available to the community to answer questions and enjoy coffee: • March 6 - Northeast Library at 10:30 AM • March 9 - Senior Resource Center at 10:30 AM • March 11- Main Library at 11:00 AM • March 17 - Pine Valley Library at 10:30 AM • Taxpayer Receipt and a Budget Balancing Simulation is available on the County website to help residents learn and voice their priorities on the budget General Discussion In response to questions, County Manager Coudriet stated the General Fund remains approximately $4 million out of balance, while the other funds discussed are effectively balanced as proposed. He explained that staff continues to evaluate available budget levers to close that gap without adjusting the ad valorem tax rate. Ms. Kostusiak added that the discussion was intended to highlight trends in sales tax and other revenues so staff could return at the next work session with an updated estimate of the gap and options to close it. County Manager Coudriet clarified that staff is not recommending a tax increase. In further discussion, he identified the current -year health benefits shortfall as one factor affecting the budget, but stated staff continues to evaluate proposed enhancements, NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION, MARCH 12, 2026 PAGE 796 outside agency requests, and other options in order to present the Board with the best balanced budget possible, which staff hopes to provide by early April. Ms. Kostusiak reported staff remain on schedule and noted March is still early in the process, as the state has not finalized retirement rates and other items may remain unresolved until April. County Manager Coudriet added that early revenue estimates show slower growth in sales tax, reduced interest earnings, and revaluation appeals trending in favor of property owners, which may leave less organic revenue in FY 2027 than in FY 2026. During discussion, Vice Chair Scalise stated he wanted the budget balanced before the Board considered possible additions and noted the County appears to be in a stronger position than it was at the same point last year. County Manager Coudriet agreed, stating the County was approximately $20 million out of balance at this point in the prior year, compared with approximately $4 million currently, and added that staff expects to close the remaining gap through smaller, incremental adjustments rather than large-scale reductions. Regarding the Flossie Bryan tract, County Manager Coudriet stated that staff did not include potential revenue in the budget outlook because the County is unlikely to receive it for about three fiscal years. He added that, if the County does receive it, staff would likely recommend placing it in Fund Balance. Regarding questions about available revenue and remaining budget flexibility, County Manager Coudriet stated that one penny on the tax rate is estimated at about $8.1 million. Commissioner Walker stated her desire to restore the six pre-K classrooms reduced in the prior year at an estimated cost of about $1 million and noted the school system had covered the prior reduction by shifting Title I funds. Chair Pierce commented on the possibility of the Endowment considering pre-K expansion and expressed appreciation for staff's progress in narrowing the budget gap at this stage of the process. In response to questions about the school system's request, County Manager Coudriet stated the County had not yet received the formal budget transmittal, but staff expects a request above the current appropriation. He noted the transmittal is technically due May 151", although the NHCS superintendent committed to providing it earlier. In response to questions, Mr. Credle reviewed revenue and expenditure pressures affecting the FY 2027 budget. He stated that projected growth in property tax and sales tax revenue is being offset by the loss of prior - year fund balance support, reduced DSS revenue, increased medical costs, cost -of -living adjustments, pension increases, inflationary pressures, and other operating expenses. He also advised that staff is likely to propose borrowing for capital outlay, including vehicles, to help close the gap. He stated that, even with those factors, staff remains in the range of a $4 million to $5 million deficit. He further confirmed that staff would prepare an updated budget tool like the one used in the prior year once figures are further developed. County Manager Coudriet added that staff is not yet ready to provide that tool because the budget is not fully balanced, but stated he remains confident staff will present the Board with a balanced budget at the current 30.6-cent tax rate. ADJOURNMENT There being no further discussion, Chair Pierce adjourned the meeting at 1:50 p.m. Respectfully submitted, Kymberleigh G. Crowell Clerk to the Board Please note that the above minutes are not a verbatim record of the New Hanover County Board of Commissioners meeting. The entire proceedings are available online at www.nhcgov.com.