MINUTES OF THE INFORMAL MEETING OF THE JOHNSON COUNTY BOARD OF SUPERVISORS:
JUNE 17, 2009
TABLE OF CONTENTS
Page
Johnson County Strategic Plan.............................................................................................. 1
Budget Status and Planning....................................................................................... 1
Recommendation from the Finance Committee to Use a Portion of the Balance Available in the Capital Projects Fund to Pay Down the Bank Loan for Construction of the Health and Human Services Building 1
Chairperson Neuzil called the Johnson County Board of Supervisors to order in the Johnson County Administration Building at 9:01 a.m. Members present were: Pat Harney, Larry Meyers, Terrence Neuzil, Sally Stutsman, and Rod Sullivan.
Budget Coordinator Rich Claiborne updated the Board on the budget status as of June 10, 2009. He stated the figures will change as the year winds down. The expenses that are below the 100% forecast and the revenues that are above the amount that was originally budgeted create a surplus and add to the reserves. He said at the end of the year, he will prepare a report for the Board and will include the actual reserve balances. Sullivan asked if they should be at 8%, and Claiborne responded there is about 4 or 5% left at this time. He noted when the percentage is over 100% in the revenue column, the budget has been surpassed and is adding to the reserve. When there are funds remaining in the expenses, they also add to the reserve. He said the County needs to build up their reserves to help their credit rating, and it ties into number three on the agenda. He asked if he should move on to number three and the Board approved.
Claiborne said the Capital Projects Fund has a $5.9 million cash balance, of which $2.3 million is committed between Conservation and the Health and Human Services Building, leaving $3.2 million. The Finance Committee discussed suggesting to the Board leaving $200,000 cash in the account and committing $3 million to the bank note for the Health and Human Services Building. Originally the County had a $5,015,000.00 bank note. One payment was made leaving a balance of approximately $4 million. If $3 million is applied to the note, only about $1 million would remain on the five year note, which could easily be paid off in FY10. This would pay the note off ahead of schedule, which was the intention at the time.
Harney stated the County is going to need some cash if they plan to get anything started on the Justice Center or the jail, and he would like to see some money held in reserve. He added that they have not decided on the issue of the Iowa City Press-Citizen property, and whether they are going to tie that up for a future jail and Sheriff’s Office or if they going to try and do everything downtown. Stutsman asked if he is recommending putting money toward the jail versus paying off the note. Harney replied that they should keep some ready cash, maybe $1 million, and pay some on the note. Sullivan asked if there are any funds left in the overall annual County budget. Claiborne said that is allowed to accrue in reserves for budget amendments. The money in Capital Projects is used to pay debt and for property acquisition. He added that County Treasurer Tom Kriz would like to put the claim through this fiscal year. They are looking for a decision from the Board at the meeting on June 18, 2009, as to whether or not he should put $3 million on the bank note. He said they could put $2 million on the bank note, leaving $2 million left on the note to pay off in FY10 and still be ahead of schedule. They could then reach an agreement with the Iowa City Press-Citizen with $1 million to tie it up for a year. Harney said that Kriz indicated they could save approximately $70,000 in interest if they put $3 million on the bank note. He restated, however, that they will need to have some cash if they plan to get something started with the Justice Center or jail.
Kriz stated at the Finance Committee meeting, they did not have a good feel for putting money away for something that could be three to five years down the road. They also discussed why there is a hurry to get the funds out of this year’s budget. Timing is a little bit different this year, because there are six bargaining contracts opening up this year. Often, if there are any large balances, it is used against the County. Even if the County states they are going to use the funds for a specific purpose, the funds still show when the budget is opened up. They thought that was a weighing factor in this particular year to do something out of this year’s budget so it is clean and done. The Capital Project could be done at a later date. It just made it a little simpler in that respect. Another discussion at the Finance Committee meeting recognized that it had been a goal of the Board to reduce the debt or eliminate the debt on this new building as soon as possible. A question was asked regarding what happens to any carryover that comes in. It goes into the cash reserves. Until the end of the year, it is difficult for Claiborne to determine what that amount will be. There are some staggering accounts payables that are paid out of this year’s budget. So even a week out, there is no way to know what will show up in the Auditor’s Office for accounts payable.
Neuzil asked, without considering paying off the building and the Press-Citizen issue, if the County spends the money now, will they later be in a position where there is not enough money to pay the bills. Kriz said their indication is that the County budget is solid. Claiborne added, based on the previous 10 years, the valuations have always grown. The County can count on the money from the previous budget, because it is going to grow 1 or 2%. $4.3 million is set aside for Capital Projects in FY10. Kriz stated that the funds could be textured either way. $2 million could be paid on the note and another irregular payment made later. The Hills Bank note does not have a prepayment penalty. Executive Assistant Andy Johnson stated the Auditor indicated at the Finance Committee meeting that he thought Claiborne’s estimates were conservative.
Claiborne said the difference is due to him operating on a cash basis and the Auditor's Office operating on an accrual basis. Sullivan asked if the $4.3 million is budgeted for the fiscal year that starts July 1, 2009, and Claiborne responded yes. Sullivan said if they wanted to tap into that, they could probably go to a local bank knowing that much will be generated this year and do a one year note. Harney asked how much of that money is committed for projects this year. Claiborne said he would have to look, but he recalls a $4.3 million figure. Neuzil referenced a chart prepared by Kriz. Kriz stated the chart is based on a calendar year. He explained principle payments were due on June 1, 2009. They made payments to Hills Bank in the amount of $950 plus interest, $740 to Hills Bank, and to US Bank for $680. Next year the Joint Communications payments kick in, and the other ones drop off. The second page shows the total amount that will be paid in principle on debt up through those periods in time. Claiborne added the document he prepared for budgetary reasons shows current bonds. For 2010 the numbers show a break down with valuations, principle payments, and the levy. In 2011 the top three payments will retire the bond; therefore, if the County does not issue any new debt, the debt levy will drop.
Neuzil asked if the two JECCs notes are paid from the General Supplemental fund. Kriz replied yes, and they will start next year. The last three items on the list have prepayment clauses. Neuzil asked if the group knows what they will receive, and Kriz responded yes. Meyers asked if they are talking about the three on the right side. Kriz said yes, the Joint Emergency Communications Center and Equipment and the Conservation Building are the three that had to go to national investors. In each case, there will be a levy yearly that is constant to cover those. Claiborne stated when it comes to a debt levy, it is better to let it ride out, because it will take care of itself. If General Basic money is used, then the General Basic taxpayer is actually paying twice. Kriz indicated that the only bond that does not have a debt levy is the Health and Human Services building.
Neuzil asked if the Board wants to get rid of that bank note. He added it would be advantageous to retire the note. He said that this does not mean they nix the idea of the Press-Citizen, but if the Board is going to consider an option of a Justice Center outside of downtown, they need to go through the whole community process again. Over two years have been spent doing a study with public input that determined the best location is downtown Iowa City. It seems advantageous to get the Health and Human Services building paid off.
Stutsman asked what the interest rate is on the bank note. Kriz responded that it varies, and this year it will be about 2.4% to 2.6%. But by paying $3 million, the County will save $70,000 in interest. Harney suggested they pay $2 million now, and if the decision is made that nothing is going to happen with the Justice Center, then they can pay the additional $1 million. Stutsman agreed and indicated they can apply any extra money to Capital Projects as they have done in the past. She said maybe the Board needs to have a discussion as to whether or not they want to be very aggressive and try to reduce a bond issue. It is going to be a terrible pill for the community to swallow if they go for $60 to $80 million.
Kriz said they would have to save a lot. The HHS Building was a lot, but the County was able to do that. The scope of the project is $15 million, and they are talking about four times that amount. None of the current elected officials will live long enough if it is put away little by little. Sullivan asked if Stutsman wants to save enough to pay for the project. She responded they need to have something saved so instead of $80 million it is only $60 million, because they have $20 million saved. She said it depends on the Board. If they want to continue to spend the way they have been spending, they will not be able to save. Harney said if they get money from the Federal Government for the Bridge Project, maybe they could use those funds. Meyers asked if they can move those funds, and Stutsman responded she does not believe they can. Harney asked if they could borrow against it. Meyers said if there is money left over because they received stimulus money, that would mean they would not have to appropriate money next year or the year after for those projects. Harney said they could borrow against it and then put it back after a period of time, like they have done in the past. Kriz said they could do internal moving of the funds, and there is merit to having some cash available. He gave a past example when the Sycamore Mall property was for sale. The County did not have cash available to consider purchasing the property at that time. He added they need to discuss the disposition of the old Health Building. If it is sold, the money would reduce the expense too. If the Board is going to do anything out of this year’s budget, the claim needs to be in the Auditor’s Office by 10:00 a.m. on June 19, 2009.
Claiborne asked if there was interest from the Board in the Press-Citizen property, because Harney said they are in no hurry to move. They could stay there for a year, and the County could tie the property up with a $1 million down payment at 2.4%. Kriz stated the Finance Committee did not consider the Press-Citizen building or any of that project at this time. The focus was on the funds available and how to reduce the debt.
Neuzil asked if, besides the union discussion coming up, there are disadvantages to having a large amount of money sitting in the budget, other than the governments cutting their budgets while the County has a surplus. Kriz indicated the union issue came up, because he visited with Human Resources. Neuzil said it is hard to go to the departments and elected officials and say there will be employee freezes with an extra $1 million in the budget. Kriz indicated some money could be committed now, and they could revisit the issue in the third or fourth quarter.
County Recorder Kim Painter asked if Moody’s was a fan of having large reserve balances. Kriz replied yes. They would like to see the County's cash reserve balance at 10 times the current level. The County earned the rating it has because it has been able to operate well without any problems. As Moody’s looks at the entire nation, Johnson County is fortunate to be in a stable position. Moody’s asked what Johnson County would do if they were in the situation that Cedar Rapids faced and needed $5 million quickly because Johnson County does not have those kinds of cash reserves. Meyers asked how much is currently in cash reserves. Kriz estimated that it is usually around $1.5 million. Claiborne added that it is around $2 million with an additional $3.2 million in Reservoir Roads funds that could be pledged as collateral if needed. Kriz stated that the true cash reserve is $2 million or less, but Moody’s thinks it should be $15-$18 million, which is not in the cards for Johnson County.
Claiborne said he explained to Moody’s that Johnson County has never really carried debt, because everything they have put money into is bricks and mortar and Moody's understood. He said that most people borrow for buildings and Johnson County always pays cash, which is one of the reasons the reserve is lower than other counties. Kriz stated that Moody's was OK with that, and the County earned a favorable rating. It was explained to them that the County’s goal is to try to increase that sum as the size of the community increases. He said that it does not make sense to have a cash reserve the same as it was 15 years ago, because the community continues to grow and the County offers more services.
Kriz said he has been contacted about a road project that is not on the horizon. The County would need to borrow approximately $2 million to fund the project. Claiborne added that the project would have to be in FY11, because it was not brought to his attention in time to be included in next year’s budget. Kriz said if the County decides to bond, it is bonding they do have on the horizon. Claiborne said if the County decides to bond on behalf of Shueyville, it could be done in FY11 and there would not be a spike. They could probably do a one or two year bond, get it paid for, and then set up a revenue stream in the General Basic Fund when Shueyville begins paying the County back. Meyers said Shueyville will not be able to start paying the County back until year 11 of the project. Claiborne said it is not advantageous for the County to borrow $2.2 or $2.3 million over 20 years. The County would be better off doing it short-term. Stutsman asked if the County would be better off paying for the project and then setting up a payment schedule. Kriz said the interest on $2 million over 20 years would be very high, approximately $5.5 to $6 million.
Meyers said although he liked the proposal that Shueyville presented, he is concerned that Shueyville may forget about the agreement by year 10 or 11 when it is time to start paying the County back. They may have a new Mayor and City Council at that time. Kriz said if the County decided to fund the project, the agreement would have to be spelled out clearly. Stutsman asked if the County can legally act as a bank for Shueyville. Kriz said he will have to check on that. Neuzil said the County has done this before on some road projects where cities have paid the County back. The Board needs to consider whether they want to start setting policy that they are going to pay for roads outside of the Rural Fund. That is a whole different discussion regarding whether or not Johnson County taxpayers should pay for a rural road project. Stutsman said not much of the Shueyville project is in the rural community. Neuzil said his point is whether or not the Board is going to start drawing money from the General Fund to pay for road projects as that has not been done in the past.
Sullivan said Lone Tree asked the County to do something with the money that came in through Johnson County Council of Governments (JCCOG). There is a section of Devoe Street that is in the County, and they wanted the whole thing updated through town. Stutsman said they wanted to redo their main street. She said County Engineer Greg Parker said the County does not do that. The money is kept for the roads located in the unincorporated areas. Kriz said he brought up this issue for the Board to keep in mind as something they may need to address in the future.
Stutsman asked Kriz if the County is taxing for the Conservation Bond and if so, where is the money going. Kriz asked if Stutsman is referring to the $20 million bond issue, and she replied yes. Kriz said Conservation Director Harry Graves has located the property and wants the first million dollars. They will be working with Bonding Attorney Bob Josten. It is a new process for his department, and they will need to rely on bond counsel. Stutsman asked if that added to this fund too. Kriz said it is a separate levy. It is not noted on the chart, because they have not borrowed the money yet. Claiborne said the Conservation bond will be levied in FY10. Harney asked if Conservation has property they need $1 million for, does the County have to borrow that money and pay it back out of the levy. Kriz said yes they will be working with Piper Jaffray to borrow the money. Harney said they should pay the interest, not the County. Claiborne said the bond levy pays the interest. Harney said the cash available through the bond would be reduced over 20 years. Neuzil said that is not the case. The tax payers voted to pass the $20 million, and when the County has to borrow against it, the interest is in addition to the bond amount.
Stutsman asked if the money comes out of the bond. Neuzil said it comes from the levy, but it can extend beyond $20 million because of the interest. Kriz said now that something has been identified by Conservation, they can sit down with bond Counsel and work through the details. Claiborne said he asked Josten to prepare a summary sheet for the Board to explain how the Conservation bond works. The County cannot bond $1 million a year and let it accumulate in the bank. Conservation needs to have an actual property identified to be bonded. Neuzil said that is unfortunate, because it could create extremely high spikes in tax bills. Stutsman said legally, Graves could come in and request $20 million. Kriz agreed, and said they would borrow for the amount of the property and then tax for the same.
Neuzil asked if the items listed as ‘various’ on the chart are paid from the Debt Services fund. Kriz responded yes. It includes items like election machines and improvements to the Administration Building. Meyers asked if the County was supposed to receive a reimbursement from the State for the voting machines. Executive Assistant Andy Johnson said he has a meeting with County Auditor Tom Slockett and will ask about this issue.
Neuzil asked if the County has borrowed for insurance and if it is included in the ‘various’ items listed on the chart. Kriz said they have not done that for the last couple of years. The ‘various’ items were for SEATS, voting equipment, remodeling, and repairs. Meyers asked about the Governmental Accounting Standards Board (GASB) issue as it relates to setting money aside for future projects. Stutsman responded this issue is confusing. Some people say the money needs to be in the bank and others say it only needs to be acknowledged. Sullivan said the County just selected a company to advise them on this issue. Kriz said he will participate in a conference call at 2:00 p.m. on June 17, 2009 with Deputy Auditor Dana Aschenbrenner and Human Resources regarding long-term liabilities for the County. Claiborne’s understanding is that different Boards around the country can decide whether or not to acknowledge the liability, and it may come down to a Board decision.
Neuzil said after 2011, if the Health and Human Services Building is paid off, then the only dollars the County is taxing are the U.S. Bank debt service. Kriz said the U.S. Bank arrangement was textured to be a heavier load on the front side and a smaller load on the back side. Neuzil said they could avoid the spike if they add more projects. It comes back to the questions the Board needs to consider before the next budget, which include whether or not they should build reserves, add more projects, or cut taxes. The Board cannot do all three. Stutsman agreed. She said it will be interesting to see what the tax bills look like this coming year with the Justice Center and the Conservation bond. Kriz said they will have the budget certified and know the tax dollars in about one month. Stutsman said she would support putting $2 million on the bank note and putting the rest into Capital Projects. Neuzil said this item will be on the agenda for the June 18, 2009 meeting. Meyers said he likes the idea of paying off the Health and Human Services Building as soon as possible in anticipation of something else coming up down the road. However, there is a lot to be said for only paying $2.2 million now and holding a million back, considering the possibility the Press-Citizen property may become an option. Six months from now, if that is no longer an option, the Board can always apply the additional million to the bank note. Sullivan said the million could potentially be used for binding arbitration.
Neuzil said it will be difficult to tell other elected officials and departments that they need to freeze everything if there is an extra million dollars just sitting there. Harney thinks they are going to know in a short period of time if they are going to do anything with the Press-Citizen property. Meyers said it is a decision that needs to be made reasonably soon because no one knows how long the building is going to remain unsold. Neuzil said they have spent almost two years in public meetings determining the best location is downtown. Harney does not think anyone ever said that was the best location, but just a preference. Sullivan said he agrees with Neuzil that it opens up the whole discussion again. Stutsman said for the amount of money being considered maybe they should open up the discussion again. Sullivan said the process will not happen quickly if they reopen the discussion. Kriz said the Board can pay $2 million now and intend to use the additional $1 million. If nothing else comes up during the next six months of the year, they can make another irregular payment on the bank note. Neuzil asked how much interest would be lost in the interim. Kriz said if they paid $3 million, they would save $70,000. So by paying $2 million, they would save about $45,000 to $50,000. Neuzil asked if it is worth $20,000 to wait six months.
Sullivan asked if there is money budgeted for the houses by the current jail. Neuzil said no. Kriz said they paid for three, and if they decide not to use them, the City of Iowa City has the first option to buy them back. The County has not budgeted additional money for any other acquisitions. Neuzil said there are big ticket items to consider, including a train that wants to come through. He said if they officially open up the Press-Citizen building as an option again, the Board should go through the same process as before. Kriz clarified if the Board pays $2 million on the bank note, the $20,000 lost in interest is over the course of a year. At three months, only a fourth is lost and at six months, it would be half. Stutsman asked how much will be left in Capital Projects if the Board pays $2.2 million on the bank note. Claiborne said if the Board pays $3 million on the bank note, there will be $200,000 remaining. If they pay $2 million on the bank note, there will be $1.2 million remaining. The $1 million is what could be used for the Press-Citizen. The Finance Committee wants to keep a few hundred thousand in that fund.
Neuzil asked if it seems reasonable to advise at the meeting on June 18, 2009 putting $2 million toward the bank note. It will leave $2 million remaining on the note, and $1.2 million can be held back for the Justice Center. Kriz said as long as these funds are earmarked, it will help as Human Resources Administrator Lora Shramek and Collective Bargaining Negotiator Judy Perkins go into negotiations with the union. Neuzil said it would be helpful if the Board would decide the location for the justice center, as it is difficult to work toward a justice center if the location is still undetermined. Stutsman said the Board does have an idea of how much they are going to have to spend for a justice center, regardless of the location. Neuzil said it is all based on phasing. Stutsman said even with phasing, the Board will have to come up with $10 to $12 million for the first phase. Neuzil said it could even be more like $25 to $30 million, and hopefully the Facilities group will discuss that as well. He asked if the Board is comfortable recommending that $2 million be applied to the bank note, with an additional $1 million that could be applied in the next three months. Kriz said the additional $1 million could be applied at any time. He needs to know once the Board votes so he can have the claim ready.
Sullivan left at 09:53 a.m. and returned at 9:55 a.m.
Johnson asked if the Board wants a presentation prepared for the meeting on June 18, 2009. Neuzil said a recap would be appropriate. Johnson asked if, procedurally, it is enough that the Board votes to reserve $1.2 million. Neuzil said Johnson needs the Board to give direction on transferring $2 million to the Hills Bank Health and Human Services Building note. Kriz said he would work with Johnson and the Auditor’s Office for the exact wording.
Neuzil asked what other issues the Board wants to address today. Johnson said it was his understanding that the Board wanted to talk about budget planning and setting priorities. He said he, Claiborne and Kriz are available for discussion. He asked Kriz if he has covered what he wanted to cover. Kriz said yes. He said it is nice for the Finance Committee to have a feel for the direction the Board is heading and how the committee should handle reserves or carryover from the end of year budget.
Sullivan said since 2001, there has been $1 million per year that has been taxed and has gone toward either prepaying debt or paying off loans. People have been paying that for 8 years and are used to paying it. He thought once that was paid off, this money could be put toward building reserve funds. He is not comfortable going as high as Moody’s suggested, but maybe $5 million would be a better amount. Neuzil said the outstanding obligations at this time are the Ambulance Building, future needs of the justice center, and the Shueyville road project. Kriz said he does not know enough about the Shueyville project to discuss it at this time. The small payments on the U.S. Bank note, where it tapers off, could be eliminated quickly. Three of the payments equal $500,000, and there is no prepayment penalty.
Stutsman asked if Graves is talking about any more buildings. Neuzil said he has been briefed by Graves on trail projects to be paid for out of the bond. He has not heard of any new buildings. Stutsman asked if Graves had mentioned expanding the Education Center. Kriz said he has not heard anything, but his office usually does not hear about it until the money is needed.
Stutsman asked if the Board, based on Kriz’s direction, wants to be aggressive in putting as much money into reserves as they can and what amount they should build it up to. Kriz said he agrees with Sullivan’s recommendation of $5 to $6 million. Based on discussions with Moody’s, if the Board increases from $2 million to $5 or $6 million, it is huge progress. He does not think it needs to be over that amount. Meyers asked if that money could be used for something or if it just stays there forever to negotiate better bond rates. Kriz said it could be used for budget amendments, disasters, or emergencies. Meyers asked if they would generally leave it there to keep the credit rating up. Kriz said it would be left there to show that Johnson County could take care of a minor disaster without having to scramble for the money. Meyers said the Board should be careful about accumulating a large amount of money. He said that taxpayers may question why they are being taxed if the County has a large sum of money in reserves. Sullivan said Iowa City was looking at cutbacks, but they have $40 million in the bank. He is one of the taxpayers who said they do not need to have $40 million sitting in the bank. Stutsman said tax payers may view that as a slush fund. Harney said there are a lot of factors that go into determining the amount of reserve.
Sullivan said it would be a good idea for the Board to build their reserve for a couple of years. Kriz agreed and said that $4 or $5 million would be good for meeting short term needs. Neuzil asked if they are talking about building the reserve fund after the bank note is paid off. Kriz responded yes. The goal is to pay the Health and Human Services building off. The next goal is to have a reasonable reserve for a community the size of Johnson County. Neuzil said there has been more than $1 million accumulating since 2001. After the bank note is paid off, the goal is to build a rainy day fund and fund additional projects out of the Debt Services Levy. An Ambulance facility, particularly if it is a two project facility, could be done for under $2.4 million. Kriz said he does not know how much that would cost, because the figures are not back yet. Stutsman said Ambulance Director Steve Spenler will bring a plan, and the Board will decide how much he needs. Neuzil they will have to dip into the reserve fund if it is more than $2.4 million. Sullivan said Spenler needs to talk to the City of Iowa City, because they may need a fire station or a new police headquarters. There may be an opportunity for sharing services.
Neuzil said he is hearing from the Board that there is an interest in putting additional dollars toward a rainy day/justice center/better interest rate/GASB issue fund after the bank note is paid off. Stutsman agreed and said the goal would be to have $4 to $5 million in reserve. Kriz said he agreed with Sullivan’s proposal. Stutsman said they could lower taxes. Neuzil said the question is whether to build reserves, cut taxes, or wait until the goal of $4 to $6 million is reached before making that decision. They also need to think about their strategy for the FY11 budget.
Sullivan asked if the Board is going to discuss the issues that were discussed with Shramek. Stutsman asked Johnson if he got all the questionnaires tabulated. Johnson said he was missing one and thought the results would be skewed without it. Sullivan said he noticed several things that would need to be negotiated when he looked at the questionnaires. He divided the issues into those that have to be negotiated and those that can be handled unilaterally. Stutsman said the items only involved cutbacks in the area of employees and Human Resources and asked if that will be the Board’s sole focus. Meyers said the area of employee benefits and compensation is a significant part of the total budget, but there are probably other areas to look at too. Claiborne said there is a lot of fat in the regular budget. Sullivan said the things they can do without negotiation are the types of things they did this year. Unless the department can prove that a position will save the County a lot of money, there will be no new positions. This sort of thing can be done without going to the table. He said Shramek mentioned the Medicare carve out. The Board can decide that issue without negotiations. There are two actions to consider. One is giving a list of issues to Shramek and Perkins to focus on. The other involves the Board handling certain issues. Stutsman asked if the Board should take this up at the next Strategic Planning meeting when all of the results are available. Neuzil said yes. Johnson said because he has not been through the budget process before he can have Claiborne put together a document similar to Shramek’s.
Neuzil said they discussed asking department heads and elected officials to give a scenario regarding what they would do if they had to cut 3%. He said it would be great if they were in the same situation now that they were in at this time last year. He said they could have the departments hold the line on operating expenses as best they can, and the Board will try to cover the employee issues. He asked which departments received an exception to this rule last year. Claiborne replied SEATS and the Medical Examiner’s Office received additional employees. Sullivan said SEATS Director Tom Brase is determined to show that his new hire will save money. Stutsman asked if the Board is going to follow up on that. Sullivan said he and Meyers have indicated to Brase that he needs to let the Board know if this new hire will work out. Stutsman said she was puzzled about Medical Examiner Administrator Mike Hensch talking about working 70 hours per week. She thought the Board allowed for a position upgrade in his department so he could reduce his overtime hours. Neuzil said Medical Examiner Investigator Guy Sommers has been working extensive overtime. He will be on the agenda for the June 18, 2009 meeting to discuss eliminating his overtime with an upgrade of his position to save money.
Meyers said when Hensch gives his monthly reports, the deaths and cremations continue to increase. Sullivan said the County population has increased by 30,000 in the last 10 years, which means it is going to cost more to run government. Meyers added that Hensch’s department needs to be available 24 hours a day, which contributes to their overtime. Harney said the State also requires more from the department. Neuzil said the Board has provided additional employees and will continue to do so. Harney said the County needs to monitor the personnel and be cautious of who is hired and replaced. He said Claiborne is an employee they need to rely on to point out the fat in the budgets. Kriz said they are trying to get the Finance Committee organized so they can help Claiborne with these issues. Neuzil said it will be harder for departments to spend money on extra items if the Board continues to hold the line on the operating expenses. The Treasurer’s Office and Recorder’s Office have been able to maintain their budget levels for the past several years and are an example for other departments to follow.
Neuzil said the Board needs to have a Human Resources contingency plan in place. He asked if the Board should tell departments and elected officials to hold the line on operating expenses again, and the Board will handle employee issues. Requests for additional employees will be scrutinized. Sullivan said those items are on the list, and the Board needs to prioritize them. Claiborne said when the FY10 budget was developed, departments and elected officials were asked to keep the budget level, with the exception of postage and gas expenses.
Kriz said asking the departments how they would cut 3% makes them examine their budgets. Sullivan said the other benefit is that one department may implement a program that saves money, and the Board might learn something and share it with other departments. Painter said people need to make adjustments due to living in times that require a more interventionist outlook on budgets. Department heads and elected officials need to realize the budgets are everyone’s business and are always the taxpayer’s business. The Recorder’s Office worked to cut operating expenses and will give some money back. It is not that they padded their budget but rather deliberately trimmed expenses. Stutsman said maybe the Board should have exit interviews with each department at the end of the year and have them explain why they have extra revenues.
Claiborne mentioned maybe they can do what Scott County does and have a panel of department heads to review other department budgets. This offers an interactive way to look at each other’s budgets without criticism. Neuzil said Scott County is unique in the sense that they have a weak Board of Supervisors form of government. Claiborne said they have a County Manager. Sullivan said he likes the idea of departments going through their budgets thoroughly with the Board. His concern with the Scott County approach is that it could create tension that does not need exist. It would be better for the Board, Executive Assistant, and Budget Coordinator to take the heat than to have department heads mad at each other because they are questioning each other’s budgets. Painter said she likes the idea of an exit interview, because they spend time talking to each other at the beginning of the process but do not follow up at the end of the year. Johnson asked if that would be a role for liaisons. Sullivan said they would need to add more meetings to accommodate budget reviews. Meyers said it would be better to have those discussions with the entire Board present so nothing gets lost during the translation from the liaisons. Stutsman said maybe they could schedule an entire day to meet with the departments. They could start by meeting with departments who have turned in a larger percentage of their budget, but she would rather talk to all of the departments to see how they have cut costs.
Harney said if the Board starts jumping on a department because they have money to turn in, they are going to start spending that money. When he was at the City, the City Manager would take away whatever looked like extra money or percentage increases. Stutsman said that is basically what the Board would be doing. Meyers asked if it is necessarily a bad thing to have money left over that comes back to the General Fund. Stutsman responded it is not, but it is a bad thing when a department does it year after year. The County is taxing for those funds. She said some people budget very conservatively. but there needs to be a way to show that everyone has to budget as accurately as possible and not waste money, but yet have enough money to run the departments. Painter said there could be budgets that are spent to 99% every year, and she could ask why they are doing that all of the time. They do not need to spend all of the money. They are only spending it because it is there. Neuzil said maybe they held money back on another initiative, because they knew they needed some dollars at the end of the year. The Board has to be careful not to reward those who are able to generate revenue versus those who do not generate revenue. He said it is becoming a habit that because a department generated revenue, they are given another employee. Departments who do not generate revenue are at a disadvantage.
Kriz added departments who have set revenue are impacted as well. Harney said sometimes departments set their budgets and then do not spend the money in a particular area because something has changed. Kris said one thing that came out of the Finance Committee and has come up here a couple of times is trust. If the Board went through the budget and took out all of the open positions, there would be a huge amount of dollars. There are two Clerk II positions open in the Treasurer’s Department. If his department had to take on additional services that required additional staff, he would need to trust that he would be able to hire a new employee in a short amount of time. Sullivan said the Board probably does not do a good enough job of saying thank you to those who are doing a good job. Kriz said there are pros and cons to running government like a business. Businesses have to reinvent themselves to stay productive. This is an aspect that government needs to consider. They have to be able to reinvent themselves, look at how they do business, and consider how they want to do business in the future. There are 30,000 more people in the County, and plans need to be made regarding how to handle that. He said in order to survive, GM and Chrysler are going to have to change how they have done things for the last 75 years. Government needs to constantly look at how they do business and how they are going to adapt to a changing environment. These are the same questions the Board should ask the departments and elected officials.
Neuzil said the Board has a priority issue. For example, is emergency response a priority over the SEATS Department. Eventually policy makers have to make that call, which adds another element to funding a non-mandated human services agency versus adding an additional Ambulance employee. Those are the decisions that will become more difficult. The Board needs to know their current obligations and contracts. What are the mandated and non-mandated issues within the departments. It is easier to stop a non-mandated project than to cut a mandated project. What is the expectation in regard to level of service. Stutsman said she gets nervous about charging more fees, because then the taxpayers ask what they are paying for already. They get taxed for all of this, and then the Board turns around and raises the fees. The County needs to think of different ways of doing things. It seems like sometimes they do things by rote, just because that is the way it has always been done. Case in point, the insurance company gave Parker $20,000, to replace a damaged truck, however it will cost $120,000. If he is over in his budget and cannot put gravel on roads or mow roadways, why would the Board say ok and replace the truck. It should not be replaced unless he can present a good argument that it will create a drastic reduction in service not to have a new one. Harney said another question to ask is if the trucks need to be as big as they are.
Kriz restated that it is important to readapt, because things are not the same as they were in 1990 or 2000. Sullivan asked what the Board wants to ask Johnson and Claiborne to prepare for next month. Stutsman said they should prioritize the list and asked if the Board wants to start scheduling exit interviews for departments at the end of the budget cycle. Johnson said the Board’s next meeting will be at the end of the fiscal year, and they can have a report ready that will show the ending budget for each department. Some items that the Finance Committee added to the budget amendment form are the last three years of budget information, how much was budgeted, and the reserve amount. This will provide the Board with a budget history for each department so they can form a strategy. Neuzil said the other items the Board needs to include mandated versus non-mandated issues, obligation contracts, and employee cost of living adjustments. In addition, they need to consider an operating expense freeze, new employee freeze, and additional fees. It seems there are so many things to consider that additional meetings may be needed. He said he is curious as to what the form given to departments will look like this year. Will it be the same form used in the past or will it be a different form.
Stutsman said similar to the Finance Committee, maybe there should be an overview of the taxpayer revenues. Harney agreed it would not hurt to review them. Kriz said they are trying to get people to think about two year budgets. The process is starting, but there are 50 years of habits that are difficult to change in a short amount of time. Stutsman said they need to somehow bring the other taxing entities into the discussion. The Board can cut their budgets, but the actions of the school district and cities are also important. She feels a sense of responsibility as an elected official to manage the County budget as well as she can.
Neuzil said they experienced problems with the sales tax issue because of a lack of cooperation. Everyone did their own project for themselves, and there was no thought of cooperation or identifying ways to jointly work on a project. Painter commented that people are generally developing strong opinions about various governmental entities as a result. Stutsman said maybe the discussion should be added to the next Joint Cities meeting. These meetings are not used effectively, and maybe the question of overall finances for the County should be raised. Sullivan said another issue is that the State gives and takes away from those entities, and a conversation should take place with the Senators and Representatives regarding unfunded mandates.
Kriz said he is concerned by comments that taxes can be cut once a specific project has been paid for or a certain debt is eliminated. He reminded the Board to keep in mind that what they decide for their budgets will not necessarily cut taxes. The tax bill will still go out at a higher level. For example, if Coralville decides to levy $.90 per 1,000, the residents will receive a huge tax bill. Meyers said the Board will get the heat from the public for the higher tax bill. Kriz agreed and said the County is still a small factor in the whole big game of taxes.
Neuzil said it is nice that the County is not in the same position as some other communities. There is some credit to the Board for reading that the economy was tanking and keeping spending in line this past year. He said one more item to add to the list is determining funding for the dispatchers this coming year and when will this item be eliminated from the budget. Harney said it looks like November of next year. Kriz said one and a half years. Harney clarified in November of 2010, FY11, it can be removed from the budget. Neuzil said those funds will impact the 2011 budget. There could be approximately $300,000 to $400,000 extra. Meyers said his hunch is the Sheriff’s Department will request more deputies. Neuzil stated they already made that request this past year, and he anticipates they will be back again this year. Stutsman asked if public safety is a priority. Neuzil said there are two dispatchers at a time and asked if that is enough for Johnson County. Sullivan said with an additional 30,000 residents, additional law enforcement will be needed at some point. Meyers mentioned that Tiffin does not want to help pay for law enforcement. Stutsman said there may need to be a discussion about that. It is automatically assumed that the County is going to provide Sheriff’s service, but maybe they should get their own police department.
Neuzil asked if Johnson and Claiborne have enough direction from the Board. He suggested the exit interviews should be scheduled through additional meetings on Fridays. This will help to keep the lines of communication open between the departments and the Board. This will also help them to start thinking about the FY11 budget. He said Johnson would need to come up with a set of questions for the Board to ask and possibly create a chart. Johnson said ok.
Adjourned at 10:55 a.m.
______________________________________________________________________
Attest: Tom Slockett, Auditor
By:
On the _______ day of _____________________, 2009
By Nancy Tomkovicz, Recording Secretary
Sent to the Board of Supervisors on August 25, 2009 at 1:15 p.m.