October 29, 2002

8:00 a.m.

Goodson Room, Public Works, Delta Highway

APPROVED 12/4/02


Present:Bill Van Vactor, Rob Rockstroh, Bobby Green, Sr., Jan Clements, Cindy Weeldreyer, Ollie Snowden, Anna Morrison, Chuck Forster, Jim Gangle, Lisa Smith, Teresa Wilson, Tony Black, Peter Sorenson, Bill Dwyer, Alicia Hays, Melissa Zimmer, Recording Secretary




Van Vactor welcomed everyone.


2. Setting the Stage.


Van Vactor explained this is a convergence between a crisis and opportunity.He noted there are out-of-control personnel costs as a result of external factors (PERS, health care, retiree medical).Thoseincreasing costs outweigh the ability to maintain a current service level.He added it was also happening with the State of Oregon, which is in a worse situation.He noted Lane County delivers state services by and through County government, so when the state is in trouble, Lane County is in trouble.He said they know from the financial reality that Lane County has no capability of backfilling the losses from state government.He noted with out-of-control human resources costs, coupled with cuts from the state, it would make cuts more dramatic than what was forecast when they completed the budget in June.


Van Vactor reported there was also positive news.He stated Lane County has an adopted Strategic Plan which lays out what should be done to face these challenges.He noted this was a test of the Strategic Plan, as it lays out a process when confronted with reductions in service levels. He said they have management tools, and he hopes to make the Strategic Plan a living document.


Van Vactor commented that Lane County does not have the details of how the state agencies would work with County government.He said the dilemma is in timing reductions.He noted the reductions are coming in as a percentage of the biannual budget.He asked if Lane County should wait until February 1 to start the process, with layoffs to effectuate the cuts.He said if they try to get the numbers from the state and provide tentative notice in November and December, then people would know that at a certain date, employment might end.He said they know from experience that it leads to poor morale and loss of good employees.


Van Vactor stated there is a significant deficit in the County general fund, and the County is facing cuts.He asked the managers if they should look at each reduction in isolation or if they should take a more holistic view toward a more dramatic action in February, thereby stabilizing the service level instead of having unrelated incremental cuts.He said from their perspective, the sooner they could stabilize the organization and the service level the better off Lane County would be to keep and retain employees.


With regard to state cuts, Van Vactor recommended early notice, with managers given discretion to come back with larger cuts in fall and January in order to position the organization for reductions on June 30.


With regard to gain sharing and reduction criteria, Van Vactor said it isnít easy to come up with a rule that fits all departments.He said if the consensus is they like the recommendations of the two committees, he would ask for direction to finish the work, with the reduction criteria as part of the 03-04 budget process.


3.Strategic Plan Status Report.


Tanya Heaton, Senior Analyst, reported they are five years into planning for the Strategic Plan.She stated the plan was adopted in 2001, setting strategies and implementations.She noted the Strategic Plan has four major categories: service improvement, resource planning and allocation, performance management and revenue development.She added in the Strategic Plan itself, under remaining accountable for the Strategic Plan, eight items were identified as the highest priorities.She said once the Strategic Plan was adopted, they went back to the Leadership Team to prioritize what they wanted in the first year.She stated the priorities were to evaluate reorganization, develop plan for chief resources, refine countywide goals, strengthen analytical capabilities, develop balanced revenue strategies and identify and recover user fees and charges.


Heaton noted they have a chief resource plan, a plan for human resources, for information technology, land and facilities inventory. She added many departments began with a reorganization opportunity.She noted everyone was looking at revenue strategies, fees, charges and analytical capabilities.She commented the plan for chief resources is done, the communication plan is completed, and performance measures are ongoing with quarterly reports. She noted the departments were using rapid process improvement.


Heaton reported that in May there was an implementation review for all items the departments were working on.She added the Strategic Plan has 50 individual strategies.She stated it is an internal plan that guides Lane County as an organization and has nothing to do with outside factors and economics.She said there is a possibility that 300 employees could decide to retire in the next two years.She said the challenge is determining which employee and service needed to be replaced.


Heaton noted the Strategic Plan states that for every vacancy, they are going to review the position and have a succession-planning tool to identify performance and development training.She noted the position review is a management tool needed to meet challenges.She stated with changes in state government and the economy, it became apparent to focus on this category.She added they have budget process and reduction criteria under ďallocate resources strategically.Ē


4.State Cuts.


Tony Bieda, Intergovernmental Relations, reported if Ballot Measure 28 goes down (on February 1), there would have to be additional cuts to run programs in Lane County.He said the decline in state resources to operate local government is the potential impact of removing those resources.He said there are a lot of solutions.He said even if the ballot measure passes on January 28, it is only a one-time short term solution, it doesnít backfill the large deficit the state is facing in the next biennium on July 1.


Bieda explained that if all the cuts happened and the ballot measure fails on January, the County was looking at reduction in the resources from the state to Lane County of between $5.5 and $6 million.He added the programs that make up the bulk of the cuts are mental health services, services to developmentally disabled, Children and Families and SB 1145, and alcohol and drug treatment.He noted there was overlap with people in the community who derive benefits from the services.


Bieda noted when the legislature is done meeting, the governor will either sign, veto or let go into the law the work of the special session.He noted the governor did veto the phase-out of the state inheritance taxes.That restores $5.6 million in state revenues for this biennium.He said that $150 million would be borrowed against the Oregon tobacco settlement to help fill the hole in this biennium.He said the assumption is they would be using the money only once.


Bieda explained that HB 5100 was the master budget cut bill worth $43 million this biennium and those go into the next biennium with approximately $90 million in program cuts.He noted that Measure 28 (if approved) would be worth $215 million this biennium and $400 million in the next.He added it phases out after the next biennium.He said that HB 4063 was a compromise proposal from the third special session in June.He said it was formed to develop a tax restructure plan for the 03 session that reduces state general fund dependence on income taxes.


Bieda noted that within the next month Lane County would know who controls the house or the senate, who the next governor is, and the November/December first revenue forecast.†† He thought there would be an additional $2 million deficit.He added the governor, by statute, has to propose a balanced budget for the next biennium to be transmitted by December 1.


5.Management Tool Committee Reports


a.Budget Process.


Dave Garnick, Senior Budget Analyst, noted the Budget Process Committee met on several occasions and they had several different charges.He said the first charge was to look at the department issues that came up during the last budget process.He stated they worked through each step of the budget process.He said the committee thinks there should be direction to the Leadership Team to discuss the state and county budget together.With regard to the add package request from external sources, he noted they recommended that a specific form be created.†† He added they wanted to set up some review criteria in advance so they would know what types of questions they would need to answer.He said the only question they wanted the Budget Committee to consider when they review the add package is if they are buying a particular provider or a service.He said they wanted to recommend stricter cut-off dates for submitting funding requests from the outside.He noted if outside entities wanted to make a request they need to go through a review process, otherwise they donít have the same scrutiny that the department requests have.He added they thought they should schedule funding requests on a night when they have other public comment scheduled for discussion.


With regard to public comment, he said it was their experience to typically have public comment every budget meeting night so people who have a request from outside can speak four or five times before the Budget Committee, whereas the department heads have only one opportunity.That didnít seem like a good use of all of their time and resources.He suggested having the required public hearing up front, and another night, but not every night.He added it would allow them to get through all of the budget.He wanted public comment only at specific times.He said if people have add packages, then they should be discussed on the night they are scheduled instead of whenever they come in for public comment.He stated they had to schedule one night to discuss the scheduled budget cuts.He noted this was related to the 02/03-budget process


Garnick explained the second charge was to look at redesigning the budget with the possibility of going to a biennium budget process.He said they examined that, and although the state allows it, if the Board approved a resolution and ordinance, there are things that would have to be done in advance before changing the budget process.He thought it was not a good idea to do a biennium budget during times when projections for revenue are so uncertain. He stated they doníthave the capability to do multi-year projections for departments.He said the advantage of doing a biennium budget is doing the first year, then the second year there is less budget involvement, which allows more time do to performance measures.He said a more in-depth review is warranted, but they donít think they should do a biennium budget at this time.


Garnick noted they were also given a charge of making presentations to the Budget Committee.He said the group recommended that the analysts should give a department overview.Each department should be given at least 15 minutes, followed by question and answers.


Garnick reported there are four Budget Committee members who are going to have terms expiring December 31.According to state budget law, and the Budget Committee Bylaws, the terms are supposed to be staggered so they only have one-third leaving at a time.He noted this needs to go to Policies and Procedures to get Lane Manual changed.He added that out of the 25 active advisory committees, only Roads Advisory and the Budget Committee have personal appointments.He noted from personal experience there had been years when commissioners had a hard time finding someone to serve on the Budget Committee.He recommended going through the regular advertisement process for candidates to apply. He suggested having people apply by commissioner district, with the commissioner from that district reviewing those applications and forwarding the top three to the full Board.


Garnick explained they discussed the pre-budget meetings for education and training.He said, since there will be four new budget committee members and a new commissioner, there were things they wanted to give the people.He said they have to cover state budget law and the Budget Committee responsibilities.He added they have to know the Strategic Plan to make sure they know what the priorities and criteria are so when they go into the budget process, they are prepared to make the decisions based upon service priorities.He suggested as part of the orientation that a schedule of tours of the departments be given for the Budget Committee members so they get out and meet with the people of the departments.


With regard to processing Budget Committee member questions, Garnick said they had to be clear on what the time frames and deadlines are to make sure the questions are in advance.


b.              Fund Projection.


Karen Artiaco, Management Services, reported that County-paid medical benefits are increasing in dollars and percentage of employee pay.She recalled that Lane County is self-insured through Regence Blue Cross Blue Shield.She noted at the end of the year, Regence Blue Cross considers actual expenses and, depending upon whether there is more than 85%, Lane County would have to pay the additional amount, or spend less than 85% and get money back. She noted that Lane County had received a refund for a number of years.She stated this past year Lane County paid the least amount in a number of years.She said they wrote a check to Regence for $242,000, which is 2.7%, instead of the full 15% they paid last year.She added Lane County still spent $10.2 million on medical, dental and vision insurance for current active employees, versus $9.1 million the prior year.


Artiaco said that Lane County medical benefits averaged a 15% increase over the last four years.She didnít expect much less than that over the next five to ten years.She said the dramatic increase in health care costs also means the cost of the retiree insurance is becoming a greater expense.The County can no longer finance this through interest earned from the employee benefits or the 15% gap between the amount Lane County might not have to pay for employee medical insurance.She noted if they choose to finance this by adding a percentage of payroll to the departments, over the next five years the cost could be 2.8 to 4.5% of payroll.She added the combined health care cost for active employees and retirees would be 34% of payroll by 2008.


Artiaco reported that PERS had an unfunded actuarial liability of $8.6 billion in 2000.She stated that employer rates would roughly double by 2007, or 57% of payroll.She added the biggest part of the statutory benefit is social security at 7.65% and it includes unemployment, workers compensation and long-term disability.She noted this is about 9.5% of payroll.She said there is an increase from approximately 39% of payroll in fiscal 2003 up to 68.8% over the next five years.She said in fiscal 2008 it would cost 69 cents for every dollar Lane County spends on regular employees.She said they are always looking for ways to save money in health care benefits, but health care costs are not decreasing.So, the only option is to educate employees to become better health care consumers and share in health care costs.


Kay Blackburn, Internal Auditor, stated her charge was to examine the large number of employee retirements.She explained that some employees will receive retirement health care coverage from retirement age to age 65.She added once they turn age 65, they would receive Medicare supplement coverage from age 65 to life.She said they donít know how much the benefits will go up, but the estimates are 15% per year over the next five years, then they will increase 10% percent per year for the next ten years.


Blackburn noted there are currently 391 eligible employees who have met their service requirement.She added there are 378 eligible employees who could conceivably get the full benefit but had not completed service requirements.She noted some would have to work to age 55.She said there are 182 retired employees who are receiving benefits and Medicare.She added there are 210 retirees who are over 65.She explained the annual cost would be $1,783,000.She added as more of these employees retire, it become an annual cost of $8 million until 2017.She said the current payroll percentage is 2.44, peaking in 2017 at 7.78%.


Blackburn said their recommendation was to establish a funding level charge of 4% of payroll now, instead of having a huge increase in 2017.


Garnick reported that the Budget for 2002/2003 was adopted with about $160,000 in reductions for 03/04.He thought Lane County had a few years to address the deficit before things got bad.He added the departments collected 97% of the revenue that was budgeted and didnít have as much money to carry forward.He said they also found that property tax revenue dropped by 23%. He said they anticipated that new construction would be between 15 and 20% per year for the next five years.He noted the annual average growth would be 1.7%, while all of the other costs are over 3% and that is the crux of the problem.


Garnick explained he did a preliminary revised forecast that includes a 15% health benefit increase and the projected PERS rate increase.He noted it raised the deficit in 03/04 to $526,000.He added retiree medical costs are higher than they are able to absorb, and that raised the deficit to $1.18 million for next year.He noted the current Fin Plan does not include a COLA because they couldnít continue to pay for medical, PERS and a raise.


With regard to PERS, Garnick believed the most likely scenario is that Lane Countyís increase would go up about 4.5%, raising the PERS rate to 17.67%, or a 34% increase.He noted the estimate on the impact of the entire general fund is $1.8 million and $3.5 million for all funds.He said the question was whether to go ahead and build in a cost of living adjustment on top of everything else.He noted another question was whether they should make a big reduction in the coming year so they might have a couple of more years of stability.He added a $2.6 million reduction would be required for next yearís budget


Snowden explained that in the early 90ís the road fund had a cash balance that was over $50 million.He said they are currently at about $45 million with the total road fund budget of about $85 million. He added about 40% of that is capital expenditures that are in the CIP that is programmed for $13 million.He noted the city-county road partnership is $2.5 million, but capital partnership payments to other agencies are beyond Lane Countyís control as to when they spend the money.He said what is likely to happen with the cash balance is that it would be drawn down, as they are starting to pay out money on capital project partnerships. (Broadway for $1.6 million).He said the message is that when they get to 06/07, there isnít enough money in the cash balance to build projects in the last two years of the CIP.


c.Succession Planning.


Craig Starr, Public Works, reported there was a projection that one-third of all County employees would be eligible to retire within five years.He added the numbers in management and supervision are about half.He said they had workshops facilitated by Human Resources and developed a plan for their department that is the basis for the draft plan.He took the department plan and put a countywide focus on it.He noted the succession plan that they developed has three elements.He said that they should be looking at considering organizational redevelopment when they have opportunities to do so including process improvement, reorganization or other changes.He noted that as a result, that decisions might be made that when a vacancy occurs there is no need to refill the vacancy.He explained in the process they look at the key leadership positions and identify the qualities of the people that need to be replaced.He said recruitment from outside of the organization looks at the qualities and characteristics positioning for the future and it helps identify candidates from outside the organization.He said there needs to be a commitment that succession planning is really connected to the Strategic Plan.He added that criteria for reduction was also related to succession planning.He noted a critical component to the succession plan is to identify, project and plan for potential vacancies and to analyze the operations and the potential for organizational changes or process improvement.He said they proposed that the organization identify and review the key leadership positions and to determine what those positions are and the quality and the characteristics they would need for the future.


With regard to the internal organizational development, Starr said they focused on identifying and training the internal candidates and adding tools to monitor and track individualsí development.He added they need to provide on-the-job experience.He noted in the draft plan they are sending positive messages about the organization and taking advantage of some of the positives of the local area when they are recruiting.


Starr indicated the second part is an action plan that identifies parts of the organization responsible for certain activities they would propose for the lead role.He said because they had some recent recruitment of directors, things in the action plan are ongoing.He said using professional recruiters might have merit. He said an effective succession plan is an important adjunct of an effective strategic plan.He said it would allow for planning and minimizing the impact of the loss of people in key leadership positions.He added it would be effective in leading the organization into the future.


d.Position Review.


Rockstroh reported the governor proposed a state-hiring freeze on June 10.He said the committee was charged with developing guidelines to look at how they would review processes, vacant positions and how they would work smarter.He added they were also charged with developing guidelines for a review committee.


Rockstroh noted the first recommendation was to clean up the personnel records.He said there is not an integrated information system when it comes to budgeting and personnel.He said the issue was getting it automated so there is an accurate record of County employees.


Rockstroh said the second item was part-time employees, of which there are two issues. He stated there is concern about combining an employee who is job sharing and paying less in benefits.He said the other issue is changing the benefit package for part-time employees.He said it was an equity argument.He noted they pay more in benefits for married families.


Rockstroh explained they work with IS to develop a report that makes sure the process is automated and successful.


With regard to the Vacancy Review Committee, Rockstroh said that one representative should be from a department from general funds, another department that is an enterprise, one from a department other than general fund based and one member from IS.He said it is a review for all positions and funds around discretionary money in the general fund.


On organization design, Rockstroh said they have to decide if they should reconstruct and consolidate.He said, assuming there is no organizational redesign, the concern is about limited duration funding.†† He said they are looking at positions with exception criteria around positions that are essential.He added they were looking at state general fund and lottery funds.They were also looking for flexible money, as opposed to spending a lot of time on designated funding from the federal government, with the exception of things that affect health, welfare and safety.He noted there are some outstanding state lawsuits that might affect what they cut.


e.Performance Measures.


Karen Gaffney, Health and Human Services, stated their charge was performance measures.She reported this was an early initiative from the Strategic Plan to provide management tools to line staff, supervisors, managers and policy makers so they could track how their programs were doing.She said they wanted to develop a system to make sure what they are doing is making a difference.She said the Strategic Plan calls for development of a performance measures system.In the initial six months of the committee they examined models that were being done in other areas so they could efficiently implement a system in Lane County.She said they completed that research and have been working to develop a model that will work in Lane County.


Gaffney reported they developed pilot projects and initiated their first training with the pilot project staff.The results from the pilot projects are due back in the middle of November.She said they would take whatever they learn from that effort and train people in the system.


f.Process Improvement.


Lisa Smith, Department of Youth Services, explained the process improvement strategic tools committee is related to the original process improvement committee that was a subcommittee of the Strategic Plan Steering Committee.She said their charge was to review the different process improvement initiatives to develop a recommendation for standard process improvement for the County.She said they came to consensus that rapid process improvement would be what they would recommend for most County process improvement initiatives.She noted the Strategic Tools Committeeís charge of process improvement is how to solicit input from the departments to select projects for cross departmental and countywide process improvement.She said they developed a form for suggestions for process improvement.They decided to solicit input from all Lane County employees to be available by hard copy and e-mail.She noted the Strategic Tools Process Improvement Committee offered to be the standing committee to review the suggestions for process improvement.She explained the criteria by which they would be reviewed is project countywide versus department wide.She noted that department-wide have the initiative, and departments are making the choices.She said the committee would review, prioritize and make recommendations to the Board.


g.Gain Sharing.


Black reported the Gain Sharing Committee met three times and developed the question on if they adopt gain sharing and if so, what it looks like.He said the Strategic Plan supports it, but he doesnít think process improvement is all encompassing and not for gain sharing.†† He noted if all managers donít spend their entire budget by the end of the fiscal year, three things happen.They lose the money they saved or earned, they get less next year, and they get chastised for requesting too much the previous year.He said this results in a rush to spend all the funds late in the fiscal year.He commented allowing departments to keep their savings eliminates the rush to spend the money before the fiscal year and encourages saving, with the idea it is their money.He reported his committee investigated many gain sharing models.He learned they could manipulate the numbers in any way they want to project for five years.


Black explained the advantages of gain sharing, (aligned with the Countyís Strategic Plan) is incentive for managers to save and make money.He added it contributes to the mission driven processes, encourages creativity, spending the line item limits, alignment of the budget with long range goals and plans and reduces the number of add packages.


Black said the potential downfall of gain sharing is the Budget Committee having the capability to redirect those funds, which could undermine the program.On the department side, revenue projections could be manipulated to increase lapse and some departments could generate lapse or increase revenue.


Black said the committee recommendation is to share 50/50 the collection of increased revenue and funds generated through savings programs with the general fund.He added the departmentís share would be utilized to fund long term capital projects, process improvement and enhancement to goods and services. He stated if gain sharing was adopted they would take direction to work on it more.


h.Reduction Criteria.


Rick Schulz, Sheriffís Office, reported their committee charge was to extract criteria from the Strategic Plan to apply to the budget reduction process.He added they were looking for an objective process to measure. He said they would have to determine the four priorities from the Strategic Plan.He said they addressed the possibilities to redirect revenue.He asked why LCOG received money that Lane County had never seen. He added they wanted to take the reduction process from the Strategic Plan and apply it to the service information sheet, getting information sheets ranked by department head.


Schulz stated the second charge was to develop a process that would give departments credit for prior reductions as successful process improvement savings.He said those departments have the opportunity to identify for the Budget Committee the prior reductions that they had already made, the process improvement and the improved service delivery.




Sorenson asked about a plan to involve employees in the decisions Lane County would be making regarding cuts.


Van Vactor responded the employees are involved in the collective bargaining strategy.He added there would be process improvement forms where any employee could fill out forms and present suggestions.


Harcleroad said when they figure out budget cuts, he talks to employees in his office.He thought there would be discussions in other departments about delivering the most service for the best price.


Greta Utecht, Management Services, reported that over several months there were brown bag lunch information sessions about benefits, PERS and different impacts to the budget.She added people had the opportunity to ask questions.She said there had been an effort to keep employees aware of these issues on an informal basis.


Sorenson stated Lane County had to be more inclusive in getting the leaders of the employee groups at this table.He said if employee involvement is shut off where they donít receive information first hand, then they will get sandbagged at the end of the process.


Van Vactor suggested they could expand the Leadership Team as it is the Boardís call. Rockstroh said the unions rely on him to give them information for his department.


Morrison noted that Melinda Kletzok Public Information Officer, has articles inFastLane alerting people as to what is happening.With regard to the budget cuts from the state, Morrison said information had been given out.She said there had been many opportunities for employees to know what is going on.


Dwyer thought it would be easier for the employees to understand what Lane Countyís challenges are if they would attend the meetings.


Harcleroad asked who these employees are.


Dwyer responded the union presidents should be invited.


Sorenson thought they should get more active in getting citizens in the advisory committees exposed to this information. He said they should broaden the committee in union leadership and the citizens who take time to pursue membership on various County committees.


Tom Lininger, commissioner-elect, asked for an update on PERS.


Van Vactor explained that at the last governorís task force on PERS, he announced the formation of a negotiation team.He said there was a slight possibility of a negotiated settlement.He didnít see any change in the foreseeable future.He said the other problem is that any times PERS makes a decision, there is a year long process to recalculate.


7.Action Items


a.Strategy Regarding State Cuts


Sorenson asked if there was going to be a meeting between the Board and the legislators.


Dwyer responded once they understand what the impact of the budget cuts would be, they have to transmit the impacts to Lane Countyís counterparts in the legislature.This would give them an understanding of how their decisions are affecting Lane County and how they could alleviate some of the impacts.


Sorenson asked how the Budget Committee could provide additional opportunities for citizens to comment or be educated about the proposed budget without testimony intruding upon the decision-making at the budget committee meetings.He wanted a more aggressive outreach to inform the public.


Garnick responded that in the past two years they had prepared the budget documents weeks in advance.He said it is made available and there is time for public comment.


Dwyer asked if they should make a one-time change to get through to June 30 or do it incrementally, and if so, how should it be dealt with.


Van Vactor noted the recommendation is that when managers make their cutsthey are forwarded to the Board to either address what is in front of them, or the broader more holistic view of looking into 03/04 budget.


b.Referral of Budget Process to Policies and Procedures


Green said this might generate broader interest.


Garnick noted they wanted to look at the process to see if it could be improved and to address diversity issues.He said the terms need to be staggered.


Dwyer wanted to choose his own Budget Committee member.He didnít want to give it to a committee.


Brown was concerned about the time that should be spent with the Budget Committee members.She added the Budget Committee members should know the Strategic Plan and have extra time to get questions answered.She noted that had not happened and had been a problem because they werenít doing as good a job as they should.


Green said this was going to Policies and Procedures.He asked what should come back


Dwyer wanted a report back with a statutory fix that would allow for staggered terms.He had no problem with the appointment process they were currently using.


Van Vactor noted the managers have broader discretion when they bring forth reductions. He noted the second part of the decision was to implement the cuts for February 1.


Clements agreed to have the process geared up sooner to make radical changes in how they do business to preserve the greatest amount of services.He thought they could move forward to engage the PSCC subcommittee.He wanted to make sure before they went forward that the cuts were not just across the board.


c.Position Review.


Van Vactor noted the Position Review Committee recommended a process for each vacancy.


Van Vactor noted the work of the committee is initially complete.He stated the recommendation to the Management Team is that it be implemented, starting with vacancies today.He added the committee wanted more time to refine their work.


Clements proposed a refinement plan to go back to the committee.He recommended studying programs or service area reviews on some of the large areas like jail security or road maintenance where they are talking about a service reduction.He recommended when they have large groups of people that occupy the same classification and same position, that they review the entire program or service area.


d.Reduction Criteria (continued development for possible use in 03/04 budget).


Van Vactor noted this came to the committee in draft form.


Greta Utecht, Human Resources, asked what the selection process would be for the people on the Vacancy Review Committee.


Van Vactor suggested that Utecht work with the different departments and bring the committee names to the Management Team.He added if they canít reach group consensus, they will take it to the Board for their decision.


Sorenson asked how much staff time that this would take.


Van Vactor explained this was supplemental to the existing service information sheet.He added it was developed before they had a Strategic Plan.He said it was important to stay focused on the Strategic Plan and apply the criterion in the matrix.


Wilson noted the message sent to the departments is one the Board and the Leadership Team value about the Strategic Plan and how they intend to use it.She noted the view of the Reduction Criteria Subcommittee was that if they were going to do reductions and not use the Strategic Plan then it would be a waste.


e.Gain Sharing.


Green wanted to make sure they conveyed the correct message because gain sharing could be reconfigured to meet anyoneís concern.He asked about the impact on the budget with departments keeping all or part of gain sharing.


Black responded that with last yearís lapse they were at .21% across the general fund lapse with a target of 2%.He said they were looking at a shortfall for next year. He explained the concept behind gain sharing is to promote creativity and leadership to develop funds for capital projects.He added by providing incentive they are projecting more of a lapse.


Dwyer didnít think that gain sharing would benefit the public because they hadnít defined what the gain was.He said they need to be flexible with the money. He stated that the money needed to revert back into the general fund.


Clements noted they are talking about empowering employees.He said they would have to develop a model that addresses incentive, productivity and profit making.He said the profit goes to the service line as opposed to the dollar line.He said it would have to empower managers to be entrepreneurs.


Gangle reported the group spent time studying different methods of creating incentives.He said they ended up with a 50-50 split.He said they wanted something that would create an incentive to departments that would provide some of that money over into the next year to smooth out some of the issues they are facing with the budget.


Weeldreyer was concerned because some members of the Board would not give employees and management staff opportunities to take a few risks and be entrepreneurial by finding ways to generate additional revenue.She wanted to reward departments for using money wisely.She hoped gain sharing issomething the whole Board could champion in the future.


Schulz explained that if a department runs a deficit, it is passed to the next year.He noted the revenue gains would be for one year.With regard to vacant positions, he thought departments were making a service choice on filling it right away.He said if the positions donít count, then the incentives were not in the right place.


Dwyer doesnít believe that unfilled positions should be part of gain sharing.He thinks that unfilled positions should be put into a reserve account in the general fund instead of in the departments.He wanted to run the County like a business.


Harcleroad commented the gains would be in a budgeted line item for the department that made the savings.He added the Budget Committee would still have the authority to deal with that money. He said it would be in a designated reserve account so the department head would make the recommendations.Hethought this was to give each manager an incentive to plan for the future instead of one year ahead.


Green said there was enough interest for the committee to refine some of the questions.He thought incentives would help the budget process. He stated if the department was working smarter and creating efficiencies they should be rewarded.He thought gain sharing had merit and should be considered.


Verna Brown, Budget Committee, thought that using incentives was a good idea.She suggested a three-year pilot program to see if it works.


Dwyer wanted to see how gain sharing complies with budget law.


Wilson explained that the budget process allows for reserves.She noted with gain sharing, they would need to identify what reserve they would be putting the funds into.She added they would also have to decide when it would be appropriate to move it into an appropriation category they would manage on a regular basis.


Clements commented that if they have gain sharing and it is installed as a model, it could unleash creativity, imagination and prudent risk taking.He said it could improve the bottom line.


Dwyer said the committee needs to work more on the definition of what qualifies as being gain sharing and to denote when the pilot project will take place and how long before it is implemented.


Schulz said he would take it back to the committee and would include bringing it to the Finance and Audit Committee


f.Next Leadership Meeting (December or January)


Van Vactor asked the Board who should be invited to the next meeting.He heard that union representatives and advisory committee members should be invited.He viewed them as being present in an observational role so they could get the same information.


Dwyer said if people could see what the Leadership Team was going through they would have a greater understanding of the challenges.


Sorenson requested that Tony Bieda discuss the preparation of the state budget at the time of the revenue forecast.He recommended a December post release of the revenue information.He thought the Management Team and the Board of Commissioners should attend the next Leadership Team Meeting.He recommended broadening the attendance to hear presentations.He thought the Budget Committee members and members of the various advisory committees should be informed when the meeting would take place.


Van Vactor noted the next meeting would be more focused on budget direction.


Weeldreyer recommended that as a result of the meeting today, they have something summarized to the Intranet for employees.She added that by no later than the end of November, they have a button on the County website for people wanting to know the budget cut impacts to find out the most recent information.


Van Vactor suggested putting the minutes of the meeting onto the Intranet.


Van Vactor recommended the next Leadership Team Meeting take place on December 3.


There being no further business, Commissioner Dwyer adjourned the meeting at 12:00 p.m.



Melissa Zimmer

Recording Secretary