LANE COUNTY LEADERSHIP TEAM
December 12, 2006
Present: Bill Dwyer, Lisa Smith, Russ Burger, Bill Van Vactor, Doug Harcleroad, Alicia Hays, Bill Fleenor, Rob Rockstroh, Jim Gangle, Peter Sorenson, Chuck Forster, Tony Black, Bobby Green, David Suchart, Greta Utecht, Ollie Snowden, Faye Stewart, Terry Wilson and Recording Secretary Melissa Zimmer. Anna Morrison was excused.
1. Approve of Minutes: January 10, 2006
MOTION: to approve the Leadership Team minutes of January 20, 2006.
Green MOVED, Stewart SECONDED.
2. Recognition of Outstanding Performance
Van Vactor recognized Doug Harcleroad for his hard work.
3. County Federal Payments Update
Tony Bieda, Intergovernmental Relations Manager, reported there are two identical bills: one in the House and one in the Senate reauthorizing the federal timber payments. He said they have been stalled for the past year to find a funding source. He indicated that Congress would finish their work and those bills would be rendered moot if they are not passed within the next couple of days. He noted any unresolved issues with regard to schools and timber payments to counties will have to be refiled in Congress. He added in the next few weeks Congress could get closure on bills and the hope is for them to get at least a one-year extension for Secure Rural Schools or they will pass a continued resolution that would fund the federal government at the current level through January or February. He thought there was a good chance of a getting a one year extension.
4. Income Tax Measure
Van Vactor reported that after the election results were known, the Board directed that they prepare an election analysis by precinct. He said they had a post election survey by Lindholm Research. He indicated that Bieda will prepare an analysis for the Board on December 13. He indicated the editorial board of The Register-Guard is urging the County to put the measure back out in a modified form. He stated that Lindholm did a tracking survey during the election that showed up until the advertising hit, the measure was only at 30 percent. He added that it went up every day while the advertising was in play. He thought what the political action committee did was a significant factor that should be considered. He said they will give consideration to putting out a similar measure in 2007.
Dwyer commented that strategically if they are going to be successful in any endeavor to pass a measure, they need to take the information to target particular areas. He noted the South Eugene area had always been strong on prevention. He said if they could have carried South Eugene, the measure would have passed. He commented that they need to do more direct targeting in addressing their shortfalls.
Smith stated she didnít think they did as good a job as they could have discussing the treatment aspects. She said the 32 beds in opening the pod in the Juvenile Justice Center was based on the long term residential treatment and it didnít come through.
Harcleroad stated they had to modify the measure. He added the timing of the measure was a concern. He said if they think about going out for another measure for May 15, they have to be completed by February 1. He added it takes money and time and there needs to be plan. He thought it could be difficult to run another campaign.
Sorenson said they needed to have a buy in from employees. He recalled that the successful measures in Eugene and Springfield had the neighbors backing it.
Dwyer thought they needed to do another survey. He stated the tweaks he would make would be to exempt all pensions or take the age 65 and exempt the first $40,000. He would lower the rate and not give property tax relief. He said he would be careful about the ballot language. He added he would cap the rate.
Green wanted all five commissioners in support of the measure. He commented when they go out to the public and there is no support by everyone of the measure, it sends the wrong message.
Dwyer said they have a responsibility to provide for a general purpose government. He indicated most services they provide are mandated services by the state. He commented that they could never balance the budget by eliminating services.
5. Fin Plan
Dave Garnick, Budget/Finance Manager, reported the Fin Plan (copy in file) is for a five year forecast for the general fund and assumes renewal of the Secure Rural Schools. He added it includes a $1.5 million of debt service payment for a public health building replacement. He indicated they donít have revenue to sustain their current level of surface. He said due to the projection for 07/08, they need to make a reduction of $3 million. He said the reductions are not as many as they initially thought. He said they reduced the PERS employment by three percent for Tier One and Tier Two employees. He indicated new people who come into the County are no longer on PERS, they are on the new retirement system and those employees are costing Lane County more over a five year period. He added the expectation is that PERS would grow at a slower rate. He noted with health benefits, the fee is only 6.1 percent this year. He indicated the new Mental Health Parity Act goes into effect next year, offering access without restrictions. He said they were expecting to allow another 2 percent growth rate to the benefits cost. He indicated he put in 12 percent for the next couple of years and then it would level off. He commented the out years were looking better but they are still looking at reductions.
Garnick explained Attachment G (copy in file) with different scenarios. He indicated if it looked like they were not going to get the full implement of Secure Rural Schools, the worst case scenario would be an overall reduction of $18.7 million. He added if Title II and Title III money goes away, there would be another $3.36 million in reductions. He commented that if they have nothing to replace Secure Rural Schools in the general fund, they would need to make an overall reduction of about $22 million. He said Management Team recommended they prepare two budgets: one budget would be based upon the $3 million reduction and a budget taking all of the rest of Secure Rural Schools funding out.
Garnick indicated that with Secure Rural Schools funding, it also includes road funds and schools funds. He stated if the worst case scenario should happen; there would also be $20.6 million in the road fund that would go away and another $6.9 million in the school fund. He commented that it was more of a $51 million reduction overall.
6. PERS Reserve
Karen Artiaco, Human Resources, explained that in 2002/2003 with the City of Eugene v. PERS, Lane County received a seven percent increase in its employer PERS rate. She recalled at that time they knew there were going to be court challenges. She said they decided not to spend the money but to give the departments a two percent rate they were paying on their employee cost. She said they continue to accrue 4.66 percent as the PERS Reform Reserve. She indicated the reserve is about $6.5 million and it could be $6.7 million with interest at the end of the fiscal year. She indicated that most legal challenges have been resolved. She recalled in 2001 they issued $70 million in pension bonds to pay off their unfunded actuarial liability with PERS. She said they issued the pension bonds at a fixed rate of interest. She added there was about $8 million of callable bonds. She indicated that as of July 1, 2007, they could pay off those bonds and not have to pay interest on it. She explained that by paying the bond off, Lane County would save about $7.6 million over the next 18 years. She noted it would save about a half percent per year across the board. She thought the $6.5 million could be used in some way during the next fiscal year to possibly prevent layoffs. She added that was one-time money. She said they could pay off the PERS pension bond, transferring money to the retiree medical trust or a combination. She indicated that they have an unfunded actuarial liability with PERS and they could use that money to pay PERS down.
Dwyer asked for Artiacoís recommendation.
Artiaco responded that she liked the long term financial benefit and any time the County could spend $6 million to save $7 million is a good idea.
7. FY07-08 Budget Process
Garnick discussed Attachment F. He thought it was risky to have one assumption if Secure Rural Schools was renewed for one year. He said it would mean they would still have a $3 million reduction proposed to the general fund. He recommended having a cut off point by June 1, where if Congress hasnít acted, they have to go ahead with a larger reduction. He thought they had to have the $20 million worth of budget cuts on the side. He added there was a discussion about the Board referring a modified income tax measure to the voters.
Garnick indicated the second scenario was to assume that County federal payments would either be renewed or the income tax would pass to replace it. He said the assumption is building the $3 million budget and that is proposed from the county administrator. With regard to Attachment G (copy in file), he said Management Team recommended for the $3 million cut that they do a modified across the board approach. He added they recommended modifying it somewhat because the Assessorís Office is on a three year plan to get back into compliance and the attempt for the plan was to try to get all the records caught up to date and that it could generate additional property tax revenue.
Garnick reported that in January the department directors will meet to begin work on a series of reductions that assumes the modified income tax is not approved and Congress does not extend the federal payments before June 30. He said they are recommending they donít do a mid year correction this year because if they do get the tax, they donít want to be reducing this year and then having to ramp up again. He commented that it would be a disruption to the organization.
Snowden asked that as they go forward with reductions to the road fund, when the Board would want to entertain suggestions for fee increases that could bring more money back into the road fund. He thought it could backfill some of the loss. He indicated they would be doing a service priority model identifying all the services funded by the road fund including the Sheriff.
Stewart asked if they could use the reserves for Public Works, if they could keep road funds whole.
Snowden indicated they have a $30 million fund balance but if Secure Rural Schools doesnít come through, it is a $20 million hit. He said they could use the road fund to avoid reducing road maintenance services through the summer season. He commented that it would come at the expense of their engineering section with the capital projects because they would have to gut the CIP.
Van Vactor reported that today the departments know they are going to have to prepare a budget with a $3 million deficit. He said if they have to do reductions with this magnitude, instead of discussing what is cut, they would need to discuss what they want to buy because they would be left with few services.
Green asked how consistent they are going to be with the Strategic Plan.
Van Vactor stated they were close but not direct. He indicated in the Strategic Plan they prioritize services with the number one being life safety. He said an alternative they discussed as a Management Team was going back to the list and going up until they reach $3 million. He indicated the list is outdated and the numbers have changed. He added there was some discomfort with some of the programs that were at the bottom. He stated they would need new service information sheets and another session reviewing the services. He said the Sheriffís Office thought they should follow the prioritization process with the Strategic Plan.
Wilson indicated the Management Team took into account the impact on citizens. She said they think they have the responsibility to deliver services to citizens to the best of their ability. She said they donít want to start reducing services to citizens today if something comes through. She indicated their plan is to continue the service to the citizens as best they can for as long as they can. She said they want to have a plan in place to be enacted by election time in May.
Utecht commented that a $40 million cut was enormous to employees. She said they have to be careful of the clarity of the message. She said they are trying to craft a plan that takes them as far as they can without the drastic cuts but have something to put in place if they have to. She wanted to avoid every department in the County in an upheaval. She commented that when they process layoffs (and even if the end result is one position) the work that goes into who is affected generates fear and angst. She said they donít want to lose employees if they donít need to.
Smith asked if Van Vactor recommended one budget or both for consideration.
Van Vactor responded that they wonít submit a proposed budget until April. He said they would submit a budget that was most likely at that point in time. He added if they are down to April and they donít have anything from Secure Rural Schools, he would probably have to recommend the doomsday budget. He said if he were to summarize the Management Teamís recommendation, he would hope for the best but prepare for the worst.
Green asked what would happen with Parole and Probation if they gave back 1145 funds to the state.
Burger indicated that they currently do not have that option under state law. He stated the amount of funding has to drop below a certain level before they can opt out. He added that they set the level above the threshold.
Bartlett asked if it was better to do away with whole departments or to make cuts across the Board.
Dwyer said they need to determine what services they as a county could provide for where they could charge more. He said they have to be careful about the threat that the government will always find the money at the last minute. He wanted to figure out a scenario to keep systems in place instead of cutting services. He said they are going to have to show the citizens if it comes to the point where they have to make bad choices, they are not responsible for those choices; they are responsible for what the people allocate and are willing to spend. He commented if they are not willing to spend any more, the burden goes back on the people.
Van Vactor commented that some reductions might work on a temporary business, but he didnít think it was a good long term cost savings strategy.
Gangle stated a furlough could by a short-term solution to a problem, but the problem is Lane Countyís funding for the long-term. He recalled in the 80ís a furlough didnít work. He thought they needed to prioritize and make reductions.
Stewart asked how much time was needed to produce two different budgets.
Garnick said the kick off would be the third week in January. He noted that departments have three weeks to prepare a budget. He said preparing a dual track budget would be a challenge. He said they want to give budget direction to start as early as they can in January.
Stewart wanted to work off what was known. He said they need to realize they need to make cuts and they need to find solutions. He wanted a solution for the public safety system. He wanted to step up and let everyone know that they donít have Secure Rural Schools and they have a $3 million in cuts. He asked the union leaders what they preferred.
Brad Rusow, Union Rep, stated their position is that they would prefer to have good quality family wage jobs with good benefits instead of breaking it down to minimum wage jobs with no benefits. He said they would rather cut the workforce than cut benefits.
With regard to Attachment J (copy in file), Garnick explained they built in the reductions of $3 million. He said the departments would receive their discretionary general fund target allocations. He said additional reductions would depend upon the loss of the federal county payments. He asked if they should establish a public safety fund so that part could be built in. He said if the income tax measure is not approved or if Congress doesnít extend the county general payments by some date, there would have to be a cutoff where they would need to make the full $50 million in reductions.
Utecht indicated they needed at least 45 days to implement total cuts.
Garnick noted Attachment H (copy in file), would remain as is until some decisions are made. He added that service information sheets might not be used. He added that no add packages will be considered unless the add is totally self-funded. He indicated that Land Management would move out of the general fund into its own revenue fund starting July 1.
Denis Hijmans, Budget Committee Member, thought a question to the department heads should be what process did they use for the $30 million cut to arrive at the budget they are proposing. He wanted to focus on the process.
Dwyer wanted to know what programs they are required to provide by the state. He thought Lane County was required to provide more services than what they have the money for.
Smith commented with the doomsday budget, they had been using performance measures as part of their budget development plan. She suggested using that process.
MOTION: to approve Attachment J.
Green MOVED, Stewart SECONDED.
There being no further business, Commissioner Dwyer adjourned the meeting at 11:30 a.m.