LANE COUNTY BUDGET
Monday December 17, 2007
Goodson Training Room Public Works
Present: Jeff Spartz, Lisa Smith, Anette Spickard, David Suchart, David Crowell, Bobby Green, Faye Stewart, Bill Dwyer, Bill Fleenor, Pete Sorenson, Warren Wong, Alicia Hays, Ollie Snowden, Doug Harcleroad, Tony Black, Chuck Forester, Russ Burger, Tony McCown, Scott Bartlett, Rob Rockstroh, Greta Utecht, Alice Kaseberg, Bill Van Vactor and Recording Secretary Melissa Zimmer.
1. Approve of Minutes: December 4, 2006,
MOTION: to approve the minutes of December 4, 2006
Harcleroad MOVED, Green SECONDED.
2. Comments from the new County Administrator
Jeff Spartz commented on the upcoming year.
3. Secure Rural Schools Update
Stewart reported that last week the energy bill was not passed. He said if they are not successful in getting Secure Rural Schools funding attending to another vehicle, they will start working on another on year extension.
4. BCC Service Priority Guidelines for Fy-08-09 Budget
Stewart recalled at last Tuesdayís meeting the Board gave direction to the budget staff that they wanted to change the service priority guidelines and have a goal setting session. He said the service sheets and guidelines they had used in the past didnít match up to how their budget worked out. He said they found it was important to collect property taxes and continue services that paid for themselves or generated revenue over what the programs cost.
Dave Garnick, Budget Financial Manager, explained that budget staff reviewed the priorities from last time. He said they were looking for services that actually generated revenue. He indicated the second priority guideline has been changed from emergency life health safety to emergency health and safety response. He noted it is where someoneís life is in jeopardy. He said they looked at the minimal level of state and federal mandates. He stated they are not doing everything they are supposed to do now because they donít have the funding. He said they need to address the problems with Assessment and Taxation and Elections. He said the question they need to discuss is what a minimal level of service means. He added that they have to achieve budget service goals by the Board of Commissioners. He said when the Board wasnít actually a part of the prioritization exercise they didnít have a chance to elevate some of the programs and services that should be brought up to a higher level. He said the Board would be coming back to identify what the goals are for the 08/09 process.
Fleenor indicated they also discussed the possibility of keeping the Veteranís Service, OSU Extension Service and the animal shelter programs operational.
Van Vactor said it was assumed that under number 4 in the goal setting process, they would set goals that would indicate that would be their desire.
Crowell asked if the departments were going to use the priorities.
Van Vactor indicated there would be a combination from the department directors and the Board.
Jennifer Inman, Budget Analyst, explained that these guidelines are part of the Strategic Plan the Board adopted in 2001 and the Leadership Team revised in 2005. She noted that this alters the policy guidelines to start the prioritization process for this fiscal year. She said they were looking at January 29 and Feb 5 for the next Leadership Team to give departments time to bring the specific information to build packages.
5. FY 08-09 Budget Process Impact of Various Scenarios on Financial Forecast
Garnick explained the first financial forecast. He indicated the base budget was good and
they moved Land Management out of general fund into its own enterprise fund. He noted the Board gave direction to increase the lapse from two to three percent and it generated $750,000 in revenue. He noted the health rate in the prior Fin Plan was projected at 12 percent for 08/09 and they dropped it to ten percent. He added there was a cash balance and they were able to drop the rate from 6.4 percent to 5 percent for payroll. He recalled that SB 808 was approved by the legislature that allowed them to transfer some national forest timber receipt money from the road fund to help pay for patrol activity. He discussed the bargaining unitsí adjustments. He said this base budget, (Budget #1 copy in file) reflects keeping Secure Rural Schools at the current level of 100 percent. He said if they had continuing funding without any interruptions, their budget would look good. He said if everything were to stay flat with Secure Rural Schools, their revenue would only grow by about 2.3 percent for the next five year forecast.
Garnick discussed the impact of lost Secure Rural Schools funding on the general fund.
(Copy in file).
With regard to Budget 1, Garnick said it matches the Wyden and DeFazio step down plan. He said they would be able to get through next year. He added they would be stable for 08/09 but would have to make adjustments after that. He said they would have to cut $21.6 million or 110 FTE over a five year period.
With regard to Budget 2, Garnick said it is a modified Wyden DeFazio plan, he said there would be a $3 million reduction in 08/09 and another $1.5 09/10. He added there is no reduction in 10/11, but in 11/12 the remaining funding is gone after the four year step down. He said under this scenario, they would have to cut $21.2 million.
With Budget 3, Garnick indicated that the funding is totally gone, and in 08/09, a reduction of about $10 million. He noted they would be getting some O & C revenue of about $2.5 million. He added there were be another cut of $8.8 million in 09/10. He noted the total reduction over the five year period is $21.8 million and 123.6 FTE. He stated that Budget 3 was the worst case scenario.
Dwyer commented that if they donít get Secure Rural Schools funding, they will have to change the way they do business. He indicated that unless the citizens understand how serious the situation is, they will never get to a level of understanding that there is a serious problem. He said they could possibly go to three days of week of providing services instead of being open five days a week.
Fleenor wanted a budget matrix based on flexibility. He said if there is revenue available they could extend the service window, but if there is no revenue, they have to reduce it. He said they will have to scale back programs.
Utecht said if they reduce hours, her concern is retaining employees. She added if people are forced to take cuts, they will leave. She said if good employees leave, it will be hard filling the positions. She indicated that would rather make cuts now and retain integrity and cohesiveness with what remains in order to build the organization back.
Sorenson thought they should increase the lapse rate and make the assumption they are not going to get the Secure Rural Schools money. He said they have to start now and not wait until later on to ramp down the expenditures so they go into the next fiscal year with a balanced budget.
Van Vactor explained that Option 2, was on the assumption they would know what the federal government four year step down would be. He explained that it was a vision to try to provide four years of stable service by taking a big hit early and then level off. He said since they donít know about Secure Rural Schools, he doesnít know if the rationale for Option 2 is there. With regard to being closed a couple of days a week, he recalled in the 80ís that issue was negotiated and it was a difficult negotiation. He said the Board had an order laying off 500 employees and after the order was executed, they negotiated with the collective bargaining units. He added the Board met in special session and appealed the order and they were able to save positions because of the furlough. He noted a problem with the furlough is that it would not get them the money they think they would. He noted that 65 percent of the general fund is in public safety and most of public safety is a 24/7 operation. He said it ends up being exempt from the furlough. He added that just a few people ended up on furlough. He recalled that it ended up being inequitable on how it was applied. He indicated that after public safety, departments that are left are Assessment and Taxation and Elections. He commented that if Assessment and Taxation is not open five days per week, they are going to get behind again and it would jeopardize the state grants and they would lose funding.
Fleenor thought if they cut programs, it would work in reverse. He wanted to live to fight another day approach. He said the goal is to survive with as many good working employees as possible.
Harcleroad stated he was present went they had the furloughs. He didnít want to take that approach. He agreed that good people they hired would leave. He added that it would be difficult to negotiate with the unions. He said he would prefer not to close during the week. He said they wonít have to cut 500 people. He recommended not starting the ramp down in January. but they should have a budget process ready in May if they donít get Secure Rural Schools.
Crowell commented that he sees the furlough option as a short term bridge to get to the other side where there is more money. He said the voters have said no. He thought the base case scenario would be to get four more years of funding on a ramp down and then it would be gone. He said for as tough as it is, the best thing for the organization is not to go through this exercise each year. He thought they should get an over the cliff budget and if Secure Rural Schools comes back, they would plug it back in. He thought they should accelerate hitting bottom so they know the certainty.
Dwyer asked at what level they have to fund services. He said they need to plan for the worst and hope for the best and start to prepare a budget.
Rockstroh didnít want to jeopardize losing employees. He thought they should be budgeting for no money coming in.
Sorenson thought they should look at a two year window to see how much they would have to reduce. He said they would have to start now. He wasnít in favor of cutting wages. He said if they drive up the lapse rate, it would be a way of saving money. He asked if that was a way to prepare for the next cycle and a realistic way of getting closer to a balanced budget.
Green asked what it would take for Lane County to be stable for another year.
Garnick responded that if Secure Rural Schools goes away, they will have to cut $10 million and have to start laying people off right away.
Green thought the solution lied within the Board of Commissioners. He said they need to have a long strategy to move beyond the doom and gloom and let people know what they are going to do. He said they need to provide certainty to people. He wanted to have a discussion on what can they do within their means and move forward. He said he was willing to take a hard hit to know they could survive on their own.
Inman reported that the organization was reduced by 49 FTE for the current fiscal year. She said 18 of those were in the road fund. She noted the remaining 31 FTE came from general fund services. She noted some of the cuts were already made. She explained that the people versus materials and services make a difference as does the type of positions that are cut. She said it was only a guide of what they might be looking at.
Spartz asked how many people could take voluntary retirement over the next 30 months.
Utecht responded that there are between 15 and 20 employees who could retire.
Karen Artiaco, Human Resources, noted that there are 12 people who were thinking of retiring in the next six months. She added they saw an increase in retirements from last year.
Harcleroad said he wanted to work with the list and priorities and not cut across the Board. He said he could manage a two percent additional lapse rate. He didnít think they could save enough money in six months to make a significant impact on a $10 million hit.
Spickard commented that a lapse is difficult for the public as it isnít very strategic. She added that no one knows what cut is made or how it came to be. She said to do something dramatic in the last six months without discussion wouldnít help. She thought this should drive public discussions.
Burger stated that a furlough is not a good idea. He thought as a strategy, they could have part time positions and accomplish what they need. He said as Secure Rural Schools become clear, they could plan for future layoffs. He commented that with every program there is support. He stated that citizens donít want to pay for services and then they have to cut expenses. He said they have to decide whether to stay a general purpose government or to start cutting programs.
Utecht thought taking large cuts in the beginning is better in the long run. She said if they need to cut 100 positions in two years, it tells the employees their jobs are in jeopardy and the morale remains mad. She stated it is better to make cuts in the beginning and then move forward.
Black said when they talk about budgets like they did last year, it creates an atmosphere of uncertainty and they have to deal with the impact on employee morale. He said he lost 20 percent of his staff in that environment. He added it is hard to refill positions. He encouraged everyone to create a good plan and stick with it or donít talk about it in public until they have stability and they look at the organizational health including retaining people with institutional knowledge.
Smith stated that furloughs wonít save money as Youth Services, the Sheriff and Jail are run 24/7. She commented that as they go forward with the budget they have to involve the public information officer to get out to the public what they are doing. She stated as painful as cutting may be, it is necessary to look at a bigger cut to bring certainty. She said it will impact morale, but waiting is creating distrust between staff, management and employees.
Stewart appreciated the fact that the County should be run like a business, but they are not a business and they operate with different requirements. He said they are in the business to provide services for the citizens that they pay for. He commented that it is not their job to put money aside and guarantee services for the next 20 years. He said if they have the money, they need to provide the services for the citizens and do it the best as they can for as long as they can. He wanted to figure out what the budget needs to be without Secure Rural Schools. He said the Board needs to tell staff what services they are going to provide with the money. He thought whatever money comes in, they could add back the services and provide them for that yearís worth of services.
Dwyer thought they had to go with Budget 3, leveraging all the principles. He said they donít want to cut just for the sake of cutting. He said they need to give direction that there is no certainty in the budget. He wanted to be as efficient as possible to provide services.
Fleenor said they need to look at government as any other business. He said they need to identify what services they are going to provide to determine staffing. He said if they step down things, they are going to reach a critical mass where they are going to have to have program closures.
Bartlett commented that Lane County is already lean and it does a great job with inadequate resources in stretching a dollar. He thought they should be careful about elimination of programs as opposed to cutting back. He suggested talking about reduction of FTEís within programs instead of eliminating them.
McCown, stated that furloughs are not the best for morale or cost savings. He thought they could look into positions that could be provided at half-time. He said it gets around the issue of hourly versus full time employees and making the cuts noticeable. He thought they should provide access not on the ability but based on need. He thought they should limit access to cutting into the core of people they provide services to. He added they shouldnít limit looking at services one way. He said it was important that they administer services as opposed to being a business. He thought filling duties to jobs was the wrong way of looking at it. He said they should look at positions as services to the community.
Sorenson said Budget 3 requires them to take 105 FTE out of the organization and Budget 2 requires 27 FTE eliminated over the next 30 months. He was in favor of doing both Budget 2 and Budget 3 under the current adopted budget criteria. He said they have to be thinking about an emphasis toward serving the public, customer service, constituent service, and emphasizing that they are doing the best job they can with the money they have and have greater outreach to show people what it is Lane County is doing with their tax dollars. He said they need to bring in other funding other than taxes. He wanted to see emphasis on customer service outreach as well as development of other funding.
Fleenor favored Budgets 2 and 3. He wanted to see Budget 3 step down for the first two years as soon as possible so they can start to provide certainty to employees. He said they need to recognize they are in a sea of distrust within the constituency. He said they have to ask how relevant Lane County is in the bigger picture. He asked how they could increase the public trust in the process.
The union representatives from AFSCME, Admin Pro and 626 said they would rather keep jobs with living wages than to cut salaries of employees.
Stewart supported a base budget because he thought that would be more of a reality. He was more in favor of a Budget 3 and adding back services as they get the money.
Crowell wanted to have a Budget 2 b, taking the two years of cuts in Budget 2 and cutting 26.5 FTE to have stability, with no cuts in 09/10 and 10/11. He said if they donít get the money then get the worst of the cuts behind them next spring so they have minimal cuts and they provide some stability.
Dwyer stated on June 30 they need to have a balanced budget and they have to maximize the decisions based on what is at hand. He said if they get no money from the federal government, they have to do the best they can with taking the hit and add back if it allows. He added otherwise they wonít get the message out to the people that there is a problem. He said they need to maximize the amount of revenue when they can and if it is grant driven, it goes away when the grant goes away. He said they need to go with Budget 2 and 2b. He was not opposed to a 3b.
Burger commented that the FTE estimation is low in Budget 2 and 3.
Inman said they have an order to be approved that documents using priority service guidelines and which budgets to develop.
Harcleroad said if they donít have solid numbers on the amount of money they are getting, he was not in favor of doing this. He didnít want 2 or 2b. He said he could back Budget 3 or 3 b. as that is what they know. He added if they get the money the County could move back to a status quo budget and that would work.
Sorenson thought they should take this information and write up their version of the board order on what they have discussed and they could get the Board to approve it. He thought it would give direction to the County Administrator. He thought they needed to be planning on Budget 2 and Budget 3.
Utecht said once they prioritize services, it gives them an idea where the positions need to be cut. She said they canít do any planning until the meetings are completed. She commented that as difficult as it is to tell people they are on the cut list, if you give it too far in advance, it could be just as difficult. She added they could offer trainings and support for people who think they might be impacted. She didnít want to wait until the last minute
MOTION: to direct staff to pursue Budget 3 with an accelerated step down, combining projected years 08/09 and 09/10 into one year, using the alternative prioritized services one through seven with the caveat that they will also develop Budget 2b, the accelerated step down contingent upon having a firm revenue number from the federal government.
Fleenor MOVED, Dwyer SECONDED.
Sorenson thought it would be better for staff put together a plan and board order that is more comprehensive.
Dwyer commented that staff is smart enough to give them options and directions. He said it didnít need a formal motion.
Inman said they need to have the clarity for the budgets. She didnít hear clear direction from the commissioners to be able to figure out what to put in the order.
Fleenor commented that Budget 2 would be effective if they had a firm number from the federal government.
Sorenson agreed with the motion but didnít want to vote for it because it puts the people in the meeting in an odd situation.
Stewart wanted a 3 b budget and he would prefer to prepare a Budget 1 with the ability that it is prioritized and they could back down the services. He thought they should have a stable budget for four years.
Sorenson wanted two budgets.
Dwyer didnít want to plan for four or five years in the future. He wanted to do it one year at a time. He liked Budget 2b.
Fleenor withdrew his motion and Dwyer withdrew his second.
There was consensus to give staff direction to prepare a 2b and 3b Budget. On January 29 and February 5 the Board will have a work session on prioritizing services.
Crowell recommended to the Budget Committee that the chair of the Board and he, along with department staff work on recommended questions that the Budget Committee wants from the departments over the next month and take input from department directors and what they would like to share with the Budget Committee.
Adjourned 11:50 a.m.