LEADERSHIP TEAM MEETING
9:00 a.m. – 12:00 noon
Lane County Fairgrounds, Room 1
Present: John Careccia, Anna Morrison, David Suchart, Warren Wong, Peter Sorenson, Chuck Forster, Lisa Smith, Dave Garnick, Bret Freeman, Ollie Snowden, Bill Dwyer, Tony Black, Terry Wilson, Bobby Green, Rob Rockstroh, Doug Harcleroad, Alicia Hays and Recording Secretary Melissa Zimmer
1. Welcome and Introductions.
Dwyer apologized that notice was sent to committees and the unions late.
2. Setting the Stage.
Dwyer said there are challenges ahead. He said Lane County has to have a balanced budget and there are only certain ways to raise revenue. He said Lane County could apply for more federal grants or cut the work force. He said when they reach a conclusion, there will be an understanding on how they reached their decision. He said they are developing strategies to work with revenue shortfalls in the future.
Garnick indicated there are a number of fiscal challenges. He said there would be state reductions that would have to take place this year. He added Lane County wouldn’t know about what they will be facing with the next fiscal year and the biennium. He noted the PERS litigation was a factor putting pressure on the County. He explained within the County they are now seeing retiree medical benefits and leave payouts. He noted they have been working with a series of management tools. He said they would be making recommendations today and planning another Leadership Team meeting in January. He added at that time they will give budget direction.
3. Context for Management Tools/Strategic Plan.
Heaton gave a presentation on the Strategic Planning Process. She noted that they came up with management tools out of the Strategic Plan.
4. Management Tools Update.
Garnick discussed the management tools. (Copy in file.)
5. Financial Overview and Update.
Blackburn explained there are a large number of employees nearing retirement age. She said they looked at the dollar amount of the commitment of health benefits for full health insurance when they retire. She said they have to make assumptions that there will be an increase of 15% for the next five years.
Judy Borgstahl, Health and Human Services, stated the AFLCIO was looking into group purchasing prescriptions, one of the significant costs of healthcare.
Dwyer stated they have to examine prescriptions to see what type of a model could be designed that could fit Lane County’s needs. He added they have to work collectively with other governments to further reduce the costs.
Borgstahl commented they have to look at educating their members. She said employees should be told about less expensive medicines to keep the costs down.
Blackburn explained there are currently 182 retirees who will get Medicare. She said the total annual cost for 2003 is projected to be $1.783 million with Lane County’s liability in year 2017 peeking at $8 million. She noted there is currently no funding for this.
Karen Artiaco, Management Services, noted that Lane County’s employees are using the insurance benefit at a higher rate. She said that employees’ benefits were going up at a rate of about 15% per year and by year 2008 would be almost 30% of payroll cost just to fund health insurance. She added at the end of year 2000, PERS had been projecting an unfunded liability of $8 million and currently they expect it to double to $16 billion at the end of 2002. She noted that the County also pays for Social Security, disability and unemployment. She projected the costs going up 10% over the next few years. She noted within the next 30 years, the benefits would become 70% of payroll.
Chuck Hartley, LCPOA, asked if there were any type of incentive programs to offer employees if they don’t use benefits. He suggested that by not using all of the benefits that it could help draw down costs.
Artiaco said they looked at coming up with a menu of health care options, including cash back with some options.
Garnick reviewed the Federal Timber Act money. (Copy in file.) He said the timber money helped fill the deficit the County was anticipating. He said the real problem is that the revenue is growing slowly at 1.9%, and expenses are expected to go up at least 3% or more.
Garnick stated he would be receiving the PERS rate on December 10. He added they have actuarials reviewing the retiree medical policies to see if costs could be brought down. He noted at the end of June, they were projecting a $160,000 deficit for 03/04 and they didn’t think the big deficit would come until 04/05. He stated when they put in all the costs, the projected October deficit for 03/04 had grown to $500,000. He added when they add in the retiree medical, the deficit is projected to over $1 million. He said he would do a new forecast for the January Leadership Team meeting.
Dwyer requested that Garnick put in the revenue Lane County would receive from state managed land based on the projections from the state forester. He said the amount would be $1.9 million, from September 1, 2002 to September 2, 2003.
Garnick responded the money Lane County receives in timber money is split in a variety of ways. He noted Lane County receives ten percent off the top. He added a projection is given based on what they think the cuts would be. He said there was no guarantee that all the trees would be cut. He said they have to be conservative but he would include that amount as part of the forecasted revenue.
Becky Koble, Management Services, discussed what funds Lane County has to spend. She noted there were significant limitations on what the County could spend. She said the County manages large amounts of money that is not part of the budget as they act as agent for other agencies. She noted that as of June 30, 2002, Lane County had a balance of $113 million of which approximately $4 million had restrictions. She added a variety of state and federal monies were dedicated to Health and Human Services. She said the County has to maintain a prudent person reserve.
6. State Cuts.
Rockstroh passed out a report on budget cuts. (Copy in file.) He noted that $126 million in cuts need to be made between now and June 30. He stated that the July 1 cuts are proposed to be bigger than expected.
Karen Gaffney, Health and Human Services, said when the Emergency Board met, instead of taking a complete package for proposed cuts, they created another $18 million shortfall in the Department of Human Services. She added the Emergency Board changed the Oregon Health Plan coverage. She said in shifting the Oregon Health Plan into two different plans (an OHP standard and OHP plus), they are shifting people to a benefits plan that doesn’t include mental health or chemical dependency coverage. She noted people starting in March will only receive medical benefits; they will not get dental, chemical dependency or mental health coverage.
Dwyer asked how many people would be affected in Lane County and how many less would receive treatment.
Gaffney responded that much of that was still left to be determined. She said in Mental Health, their proposal is to stop supporting the crisis center and they will send clients to Sacred Heart. She added it might affect the methadone patients by setting up flat fees with them. She noted they had identified 23 positions that would be eliminated. She said this is impacting many people.
Rockstroh stated the state would recommend preparing a plan for drug forfeiture money. He said he would rather hold onto the money. He didn’t think the County would backfill any positions.
Captain Freeman, Sheriff’s Department, reported there was a $126 million shortfall that represents a $30 million cut to the Department of Corrections. He added before January 28, 2003, $750,000 in community corrections money would have to be made up. He noted the Board appointed a supervisory team and their charge will be to identify how any CCA money will be disbursed and where the cuts will come from. He said the approach that the Sheriff is taking in CCA money, state money and the projected general fund reductions was to project them over a biennium period so the cuts that would be needed to be made in March could be sustained throughout the next biennium. He added the Sheriff wasn’t sure where the cuts would be but there would be an impact to corrections.
Doug Harcleroad, District Attorney, explained the impacts to the District Attorney includes cuts of $25,000 in witness fees. He added they would lose $22,000 for victim services. He noted with the Child Advocacy Center, cuts will take place but no determination on exactly what those cuts will be. He added if HB 5100 goes into effect, they will lose Deputy District Attorney supplement money of $70,000 per year. He said his department could manage all the cuts this year. With regard to the justice system, he said the Courts had already announced they are closing one day per week and everyone will take a ten percent pay cut and work four days of nine hours instead of five days of eight hours. He added they announced that at some point in time they would quit processing non-violent misdemeanor cases. He said they have several thousand of those in Lane County. He added discussions have included no jury trials in civil cases. He noted a significant impact is the indigent defense ($160 million per two years of state money) projected to run out of money on April 1. He noted if cuts in HB 5100 go into effect on the corrections side on a statewide basis, 3,400 inmates will be released and five out of twelve penitentiaries would be closed.
Dwyer stated the recommendation is that they utilize the holistic approach and consider all the state and county cuts together since they don’t know what the total ramifications will be regarding the cuts and choices.
MOTION: to take the holistic approach and consider the magnitude of the state and county cuts together.
Green MOVED, Morrison SECONDED.
7. Reduction Criteria.
Rick Schulz, Sheriff’s Department, passed out a memorandum (copy in file). He noted their charge was to develop criteria and a plan for the reduction process that ties to the Strategic Plan and to develop a process to give departments credit for prior reductions and successful process improvements. He noted everything they did came out of the Strategic Plan except for the discussion of the service information sheets. He stated the Strategic Plan refers specifically to reductions in the general fund but should apply to all funds. He said they took the Strategic Plan and broke it down into principles: to the extent possible, across-the-board reductions will be avoided, the County will consider elimination of entire services before considering incremental cuts, emphasis will be placed on quality and if the County finds that funds are not sufficient to provide a quality of service, then the service may be terminated. He added the County would limit the number of recipients of the service instead of cutting the quality of the service provided to the remaining recipients. He said that every effort would be made to appropriately fund infrastructure, maintenance and replacement. He added the County would strive for balance in administrative/operational support services and services directly delivered to Lane County’s citizens. He stated the County would continually examine perceived redundancies in administrative and professional services in the context of the impact on the effectiveness and efficiency of service delivered to Lane County citizens. He added they want to make service level reductions on a case-by-case basis where there is discretionary general fund support. He noted there is a reference to rewarding those departments and programs that come up with innovative ways to save money. He added that no service would be reduced below that that places the safety of citizens or putting County employees at risk. He reviewed the service information sheets. (Copy in file.)
Dwyer asked what the recommendation was.
Schulz said this needed to be continued to be examined. He said the Board could make a decision that the County was out of balance and they would have to increase administrative services.
Harcleroad commented it gives the Board an analysis of how the services fit against the Strategic Plan. He thought the Board should adopt this.
Sorenson concurred that there should be a criteria for doing this. He thinks other groups’ input should be taken before the Board makes a decision on the reduction criteria.
Dwyer stated the people affected need to send comments to the Board and at the January 21 meeting, they will take a formal action on direction.
Verna Brown, Budget Committee, commented that if the public makes comment, they should be familiar with the Strategic Plan. She noted it was a total concept that they bought into and approved.
Harcleroad suggested that anyone who was present that had a question or comment, the committee members will take comments and have them made available for the next Leadership Team meeting. He added they could also ask the union presidents to e-mail any questions they might have.
8. Gain Sharing.
Black explained the Gain Sharing Committee did more research. He said they discussed how gain sharing aligns with the Strategic Plan. He thought the ability to carry over a portion of the budget into the next year would provide some incentive. He stated it discouraged wasting money and spending the line item limits. He noted it allowed for the alignment of a departmental budget with long-term goals, missions and capital plans.
Dwyer asked if they have examined the entities that were self-supporting with fees and services as opposed to the way other departments are funded. He saw that incentive for Land Management generates a surplus to carry forward because it was totally fee generated. He added in other areas that get different monies, he didn’t see that there was the same incentive.
Black responded there were differences within the County across departments where business is different. He added that it would be more applicable on increased revenue from fees in one department over another. He noted another department might have to think about lapse or carryover in the sense of how much they would save by doing it differently. He said he discussed the increased revenue from fees or other business processes that are undertaken.
Dwyer noted that runs directly against the prioritizing of what it is they do as a county. He said if someone through innovation should happen to gain in a service that isn’t a priority, he didn’t want the money used to perpetuate something that is not important. He wanted the Board to make the decision as well as the Budget Committee. He added he wanted to make sure that positions that are funded and unfilled don’t mean that it is the department’s money. He said it becomes part of the lapse. He stated they need to develop a system whereby if that money is not used within a period of time, it reverts back to the general fund before the next budget so it is not used to create a lapse or to move money around.
Black said the money wouldn’t be available to spend without a program like gain sharing because there is no incentive for a manager to save it.
Green stated if the objective is to encourage innovation, then they should try this approach because the tried and true method they had been using is not working. He didn’t think they were allowing department managers to be innovative with their budgets. He hoped they would try something different.
Morrison concurred with Green that they need to give flexibility to the department managers to allow this happen. She was in support of moving this forward.
Dwyer said a department shouldn’t be able to gain through unfilled positions because it is not being innovative. He said there should be exclusions from gain sharing, and what is not included as a gain share.
Sorenson thought if there was flexibility, that there would be more innovation. He added that a lack of flexibility is the hallmark of most dying institutions.
Dwyer had no problem with this going ahead, but wanted gain sharing to be differentiated from gain share and when the money should not be shared. He didn’t think it was in good faith.
Black said they could go back to the committee to discuss the various percentages of what would happen under different circumstances. He noted last time, Verna Brown had mentioned that this would be a good project on a pilot basis for a couple of years and adjusting it if it is needed. He stated his committee was in support of this.
Dwyer asked Black to go back to committee, refine it, and bring it back to the next Leadership Team Meeting.
Dale Wendt, Public Works, noted that they talked about percentages. He said they discussed a 50/50 split, with 50% staying in the department of the gain share and 50% would go into the general fund.
Black recalled that he would get back into committee and address some of the concerns that were raised. He noted that Schulz had drafted a board order, which they will bring to the Board. He wanted to make sure the Board was with them to go ahead with this.
Dwyer stated that Black has the approval of the Board. He wanted Black to come back with recommendations on where the most innovation would occur.
9. Approval of Minutes:
January 22, 2002, Leadership Team Meeting, 9:00 a.m.
October 29, 2002, Leadership Team Meeting, 8:00 a.m.
MOTION: to approve the Minutes of the Leadership Team Meeting of January 22,
2002 and October 29, 2002.
Morrison MOVED, Green SECONDED.
10. Next Steps.
a. January Leadership Team Meeting – Budget Direction:
January 21, 2003, 9:00 a.m. - 12:00 noon, location to be announced.
There being no further business, Commissioner Dwyer adjourned the meeting at 12:30 p.m.