MINUTES OF THE JOHNSON COUNTY FINANCE COMMITTEE MEETING:
FEBRUARY 18, 2010
TABLE OF CONTENTS
Page
Finance Committee Meeting.................................................................................................... 1
Insurance Associates County Insurance Agent of Record Bob Saunders: County Insurance Update 2
Joint Meeting of the Finance Committee and Board of Supervisors........................................... 10
Current Budget Update............................................................................................. 10
Current Budget Update: Setting New Budget Work Session....................................... 18
Current Budget Update............................................................................................. 18
FY11 Budget, March 3rd – Public Hearing and County Presentation............................ 19
Current Budget Update............................................................................................. 20
Having a Letter in the Tax Statements Mailed in July 2010.......................................... 22
FY11 Budget, March 3rd – Public Hearing and County Presentation............................ 23
Levy Information from Coralville, Iowa City, and Johnson County................................ 24
Finance Committee Meeting.................................................................................................. 24
County Insurance Cost and Vendors.......................................................................... 24
Copier Maintenance Contract.................................................................................... 26
Levy Information from Coralville, Iowa City, and Johnson County: Developing a Cooperative Budget Process Between Governmental Agencies in Johnson County........................................................... 27
Levy Information from Coralville, Iowa City, and Johnson County: Scheduling Joint Meeting in Future Years After Other Johnson County Governmental Agencies Have Set Their Budgets................ 28
Having a Letter in the Tax Statements Mailed in July 2010.......................................... 28
Next Meeting Date March 11, 2010, 2:30 – 4:00 p.m. Location to be Determined.......... 30
Finance Committee Chairperson Tom Kriz called the Johnson County Finance Committee to order in the Johnson County Health and Human Services Building at 2:32 p.m. Members present were: County Assessor Bill Greazel, City Assessor Dennis Baldridge, County Treasurer Tom Kriz, County Auditor Tom Slockett, Supervisor Sally Stutsman, Supervisor Rod Sullivan, Board of Supervisors Executive Assistant Andy Johnson, and Budget Coordinator Rich Claiborne; absent: County Recorder Kim Painter, County Attorney Janet Lyness (represented by Assistant County Attorney Andy Chappell), and County Sheriff Lonny Pulkrabek (represented by Sheriff’s Major Steve Dolezal). Also present were: Assistant County Attorney Andy Chappell, Sheriff’s Major Steve Dolezal and Insurance Associates County Insurance Agent of Record Bob Saunders. Staff present was: Temporary Deputy Auditor Elizabeth Kies.
County Treasurer Tom Kriz gave an overview of how the meeting is going to progress from a Finance Committee Meeting to a joint meeting of the Finance Committee and the Johnson County Board of Supervisors. He said that minutes are being taken by the Auditor’s Office. Sullivan noted that the minutes from the prior meeting are incorrect. He stated that he was present at the meeting on January 14, 2010 and the minutes reflect that Neuzil was present and not himself. Kriz said that he will make the needed changes.
Kriz reported that Insurance Associates carries the majority of the County’s insurance. Kriz said that he asked Insurance Associates County Insurance Agent of Record Bob Saunders to visit with the Finance Committee about where the County carries the deductibles and where the County may have some higher risk than normal. He stated that insurance constantly changes and needs change. He added that Saunders does a good job of keeping up with the changes, and thinks that the others in the County would benefit from an update from Saunders.
Saunders informed the Committee that in the mid 1980s only a handful of insurance companies were willing to insure anyone in a governmental body. He said that the coverage was very restrictive, with lower limits, and extremely expensive. Saunders explained that the Iowa League of Cities decided that they should be able to come up with an insurance program, which led to the creation of the Iowa Communities Assurance Pool (ICAP) in 1986. It started with 13 small cities that could not find any company to insure them. He said that there are 625 governmental agencies in the program today. As of today there are 296 cities, 68 of the 99 Iowa counties, 41 fairgrounds boards, and 220 other governmental entities.
Saunders explained that ICAP is a risk pool, not an insurance company. The State of Iowa Insurance Department has no rules, regulations or control over the ICAP program, since its members can only be governmental entities. He said that the program has brought incredible stability to the insurance market for governmental entities, because there is a consistent marketplace and because the prices that result from ICAP participation are unheard of in the private insurance industry. He explained that everything in insurance work translates to a rate per 100 or a rate per 1,000. The rates that have been used in the ICAP program are the same as the rates were in 1986. Saunders explained that if an entity had the same vehicles and buildings insured for the last 24 years, then that entity would have had no premium increase. He added that as a matter of fact, the entity would have experienced a premium reduction because the losses are so minimal compared to traditional insurance companies. He added that refunds are being ordered to ICAP members by the ICAP Board of Directors.
Saunders explained that the government entities that participate in ICAP are not considered policy holders, but ICAP members. He said the County’s member number is 422. He told the Finance Committee that the ICAP Board of Directors is entirely composed of ICAP members, so there are no outside interests involved in ICAP. Any excess money is considered to be profits distributed to stockholders, and are then returned to members. Saunders said that after a member has been in the ICAP program for a period of six years, that member is considered to be fully vested. Once a member is fully vested, that member can start to earn refunds based upon the profitability of the organization. He stated that the ICAP program just delivered a third check to the Auditor’s Office, which adds up to just under $40,000 of excess profits that have been returned to the County in the last year.
Saunders stated that not only is ICAP a unique program for government entities only, the verbiage in the policy is unique to each government entity. He conveyed that it was written by government entities, for government entities. He said that any government entity that does not participate in ICAP is making a sacrifice in insurance coverage. He said that those entities may be saving a few dollars, but the gaps in coverage are so significant that the cost savings cannot be justified. Saunders clarified this concept to the Committee by highlighting the difference between the County’s ICAP membership and the first insurance coverage that the County had. He stated that everyone should already have an understanding of how the concept of liability works, for example a personal auto insurance policy might have $300,000 of liability. He reported that the County’s insurance policy has $12 million of liability. He explained that all business insurance is written on a per cause and an annual aggregate basis. Saunders said the barbershop down the block might have a $1 million per cause liability and a $2 million aggregate liability. This means that for any one claim, the barbershop has $1 million available and in the course of one policy year, $2 million is available. He acknowledged that the barbershop owner could run out of insurance coverage after a couple serious claims. At this point, the barbershop owner would have no insurance left for the balance of his policy year.
Saunders explained that the County’s insurance policy is a $12 million per occurrence with no annual aggregate, which is relatively unheard of in the insurance business. He said that the County could have a multitude of claims. For example, at the time of the Chris Street accident in 1993, the County had $6 million of insurance. The plaintiff had asked for $12.5 million. He explained that if the County had lost that case, then the $6 million of traditional insurance would have been spent and the County would have been out of insurance for the rest of the policy year. The County would have had no insurance left to pay any following claim during that policy year. He recalled that the County was fortunate to win the case, with a judgment of $1 awarded to the County. Saunders explained that if the County had lost the case but was covered by ICAP, then the insurance would have paid $12 million and there would be another $12 million available for another claim. He said that he cannot believe that any County would not wish to have a program like ICAP.
Saunders said, after liability, the next difference is what kind of coverage the County is getting for the money. He said that the County’s coverage is the broadest coverage he has seen written for any entity. The coverage language includes such unusual events as the following examples: if an insurance claim is denied by the claim’s investigators, but the governing board feels that they want to be a good governing board to the citizen even though they have no legal liability, the board can direct the insurance provider to pay the claim anyway; additionally, if the insurance claim investigators feel as though a person is injured, determine that it is the government entity’s fault, and request that the injured person should be paid X amount of dollars, the governing board has the right to refuse to pay the claim when the governing board feels like it is not in the wrong. He explained how that cannot be done in traditional insurance.
Saunders said this is a rather large gap in coverage to give to the insured. He clarified that when the insurer determines that the injured person should receive $1 million in compensation and the governing board tells the insurer to fight the claim, if the insurer loses in court and the judge awards the injured party $2 million, then the insurer will still only pay the $1 million original compensation and the governing board is now responsible for the additional $1 million. He said that, yes, there is flexibility within the coverage, but the insurer will still not let the governing body increase the liability. He said that the mere fact that the County can control the coverage and even expand the coverage beyond anything that is written in the policy is absolutely unique.
Saunders reported that a couple of companies, Continental Western Group and Employers Mutual Casualty Insurance Group, Inc., underwrite a significant number of the other cities and counties that are not a part of the ICAP program. He explained that Insurance Associates has identified 53 gaps in coverage within just the Employers Mutual Casualty policy. These 53 gaps are significant negatives for the insured to have. He said these policy reviews were done by an independent law firm, not by Insurance Associates.
Saunders said that Insurance Associates insures things with a different approach, for example the physical insurance. He stated that the County owns a multitude of buildings. The long list of buildings is under the statement of values and currently totals 113 insured structures. He said the coverage is written on a blanket basis. In other words, the total value of all the buildings that are insured for the County is about $55 million. He suggested as an example what would happen if the Jail were destroyed by a tornado. Under the statement of values, a specific amount of coverage is stated for the Jail, which is Insurance Associates best approximation of what it would cost to replace the Jail. He stated that Insurance Associates is saying that the building can be completely rebuilt for $4.8 million. After the building is rebuilt, the County finds out that the actual cost to replace the Jail comes to $6 million. The County’s policy states that the insurance will pay the $6 million. Saunders explained that this is because the policy does not limit the County to the dollar amount on any specific structure. Rather, it limits the County to the dollar amount of the maximum policy, which is $55 million. He explained that the reason that the insurer is able to offer that spread of coverage is because the County does not have all of their buildings in one spot. He said that the insurance company is willing to let the County use as much as they need on a building replacement because of that spread of risk.
Saunders added that this same type of coverage is available for the County’s personal property. He said that Insurance Associates receives inventories from all of the departments in the County and enters them into the statement of values spreadsheet. He explained that if some inventory data is wrong and the actual cost to replace the inventory in the Jail is not $450,000 as is quoted in the statement, but $1.2 million instead, the insurer will pay the $1.2 million. The coverage is available for up to the County’s policy limit, which is approximately $4 million for all of the contents in the various buildings. He added that those buildings all have a $1,000 deductible on that coverage.
Saunders informed the Committee of another unique feature of ICAP. He said that when the County had the tornado in 2006, the County had multiple buildings and multiple vehicles damaged in one occurrence. These totaled about 80 separate buildings and vehicles damaged. He said that ICAP took a $1,000 deductible off of the total claim, but a traditional insurance policy would have deducted $1,000 off of every building and $500 off of every car. He calculated that the County would have had over $40,000 worth of deductibles, which would have had to have been paid out of the County budget. He reported that ICAP states that, during a multiple claim, only one deductible is taken out.
Saunders said that the vehicles carry the same $12 million of liability that is carried under the general liability for the premises. In addition, ICAP provides coverage for EDP hardware and software. He reported that the EDP department supplies an updated list of the covered hardware and software once a year. Over the last ten years, the total value of that continues to drop as the competitive price of hardware and software brings the cost down. He said the EDP today is insured for less than it was ten years ago. He explained that it does not mean the County does not have great equipment, it just means that the equipment costs less to buy. The equipment is also covered under the building deductible.
Saunders explained that there are other types of property, called mobile equipment. He said that personal property is considered to be items such as desks and chairs, things that never leave the building. Items that leave the building are considered to be mobile equipment. He clarified that mobile equipment items must be put on a separate schedule. He said that this insurance coverage is a little more restrictive. Saunders informed the Committee that if a mobile equipment item is not on the schedule, then it is not covered. He said that ICAP places a buffer on this as well. ICAP states that they do not want a government entity to have to continually update a list of every item that leaves a building, because a fulltime staff member would need to be hired just to perform this task. He explained that miscellaneous equipment under a certain amount of money, $250, $500, or $1,000, is lumped into a sum per building. He said that ICAP does not require a list of all of that miscellaneous equipment, but that each structure will have $25,000 of miscellaneous mobile equipment coverage. That way, if a piece of high tech recording item is destroyed off premises, then it is covered.
Saunders remarked that, for items above a certain dollar amount, the insurer wants it covered on a schedule. For instance, the Emergency Management Association (EMA) gave Saunders a list of ten boats and trailers that the County owns, which cost between $9,000 and $11,000 each. He said that those are on a schedule, so that a boat can be covered if it gets destroyed during a rescue. He said that the expensive equipment from Secondary Roads is scheduled, but that Insurance Associates does not schedule all of the equipment that the Sheriff carries or the Ambulance Department carries because it is unnecessary. Those items are covered under scheduled and unscheduled properties.
Saunders informed the Finance Committee that the County has a significant vehicle fleet. He said that there is another unique feature of the ICAP program. When vehicle changes are made during the course of a policy year, no charge is billed to the County. He said that the feeling was that liability is liability. He said to trade up a 2002 ambulance for a 2010 ambulance, the liability is the liability. He acknowledged that it would cost a little more for comprehensive and collision coverage on a 2010 ambulance, but ICAP believes that it is not worth the paperwork hassle to charge for a vehicle upgrade within a policy year.
Saunders said that the policy has a vehicle list for each department, and the insurance works off of that list. For example, when Sheriff Office Administrative Secretary Kay Langenberg calls Insurance Associates about a vehicle change and reads the unique vehicle number off of the list, Insurance Associates knows what vehicle Langenberg is talking about. He said that it is a really simple system, which is checked a couple different times a year by the insurer. This has enabled Insurance Associates to be very careful and make sure that the County has everything that it owns under the insurance. He conveyed that this is the same recordkeeping done for the building list. For example, Conservation has a lot of structures and so Insurance Associates likes to make sure that the County has all of those insured. He added that there is a photo library on Saunders’ computer that includes a picture of every structure in the County. Therefore, if ICAP wants a picture of a structure in the County, then Saunders can email it to ICAP in order to identify the structure.
Saunders said auto lists are done now, but were not being done when Saunders began working with the County’s account. He said that there was a policy that nobody even knew where it was. At the time, Former Board of Supervisors Chairperson Dick Meyers told Saunders to assume that nothing was right and start from scratch. Saunders said that it was the best advice he got. He reported that the County did not own 70 of the 200 vehicles that the County was insuring at the time. He added that about 60 vehicles that the County did own were not even on the policy. He said that the County insured buildings that the County rented, and that the County had insured building that the County did not even own. He added that the County owned buildings that the County did not have insured. Saunders said Insurance Associates started from scratch and worked closely with the different departments. He said that he wants to thank the departments for allowing Insurance Associates to be a nuisance through pestering departments about getting essential bookkeeping items done, such as the auto and building lists. He explained that if the tornado had happened and the County found out that 30 of the 50 vehicles that were damaged were not on the insurance policy, it would not be good. He said that insurance may have covered one or two of these vehicles for the County, but not all 30 of the uninsured vehicles. Therefore, Insurance Associates makes a point to keep these items properly insured.
Saunders said that certain departments add a lot of extra equipment to their vehicles, such as Sheriff, Ambulance, SEATS, and Secondary Roads. He said that all of the equipment is insured as part of the vehicle. Each department has been very good about giving Insurance Associates lists of all of that equipment, from the highly marked squad cars to the transportation cars. He explained that this is all insured by keeping a breakdown list supplied by Captain Joseph Lalla. Insurance Associates works to make sure that the County has all of the additional equipment on these vehicles insured. He explained that this diligence will protect the County from a horrible situation.
Saunders commented that the County has a $250 deductible for comprehensive coverage and a $500 deductible for collision insurance. He explained that the typical individual can pick any deductible they want for their own personal vehicle. He said that ICAP states that this can get way too confusing. He said that ICAP has the County pick a fleet deductible instead. For example, if the County requests a $500 deductible, then that will be the collision deductible on every vehicle in the fleet. Saunders said that when he began working with the County’s account, the fleet comprehensive deductible was $100 and the deductible for collision was $250. He said that Insurance Associates went back and looked at the last ten years of County claims. He said that he had calculated the difference between the $100/$250 and $250/$500 deductibles. The savings for $250/$500 more than offset the change in the premium. He said that the County could go for a higher deductible, such as $500/$1000 or $1,000/$1500, but the costs savings do not justify that change.
Saunders explained the meaning of the two coverages. He said that collision is only three things. One is the standard, driving a County car and running into another car. He explained that the damage to the County car is collision and the damage to the other car is County liability. The second type of collision would be if a car were to slide on the ice and run into a building. He explained that the damage to the County car is collision and the damage to the building is County liability. The third type of collision is when a County vehicle is in a parking lot and is damaged by a hit and run. He explained that the damage to the County car is collision. Saunders concluded by saying that everything else is comprehensive, which is the broadest physical insurance policy that the County can purchase. For example, comprehensive insurance covers floods and earthquakes, amongst other things. He remarked that both flood and earthquake insurance are extra coverage for any structure. He said that comprehensive insurance is very broad coverage. He explained that the deductible for comprehensive is lower because the average claim is smaller.
Saunders stated that there are other things the County insures, such as the radio communications towers and the small shelters at Kent Park. He said that he is asked why the County insures each little shelter at Kent Park, because people believe that the County would just be able to reconstruct a damaged $2,000 structure without needing insurance coverage. He said that he would tell those asking that it costs the County $2 to insure the shelter. The reason that the County insures these is because all of Kent Park could be damaged in one fell swoop if a tornado came through. He recalled that there are about 60 structures at Kent Park. The County would not like to look at several hundred thousand dollars of uninsured loss. He maintained that these small buildings can remain insured for very little money.
Sullivan left at 2:54 p.m.
Saunders said that there are significant other coverages in the insurance program. He said that the County insurance has errors and omissions coverage. This covers errors in processing, such as in a deed in the Recorder’s Office. He added that the County has sewer back-up coverage and water damage coverage. He said that there are a multitude of extra coverages that are not available in the private sector. In addition, there is a fidelity bond that covers every single County employee. Saunders reported that there is $100,000 available to cover this. For example, if there was a case of embezzlement and it was proven that the County was out a definable amount of money, insurance would then pay that under the fidelity insurance. He said that fidelity insurance requires an arrest, a trial, and a conviction. He said that if the County wants to handle embezzlement internally, then the County cannot come to Insurance Associates, because then it will become very public.
Saunders said that the State of Iowa changed the laws a couple years ago to state that if any monies of a governmental entity are now used to settle a claim against a member of the public, then it is a public record. He asked the Committee if they recall a mudslide on North Dodge and how a man on a motorcycle broke his back. He said that was a significant settlement, but was sealed because the City of Iowa City settled the claim. He said that no one knows how much the injured man got paid and no one will ever know. Saunders said that this is not possible any more because any time that public money is used from a government entity to pay a claim, it is a public document. He said that Insurance Associates keeps a claims record and anyone can view the documents. He said that there is a filing cabinet in the backroom of the Auditor’s Office that holds all of the old insurance policies. These date back to when Insurance Associates became the agent in the mid 1980s. He reminded the Committee that these policies are public documents and have been shown to the public by request.
Sullivan returned at 2:57 p.m.
Saunders conveyed that there are two significant coverages that the County does not have. One is police professional liability insurance. He said that the given the expensive cost along with the County’s philosophy and claim history, the County decided to self insure this about 20 or more years ago. He added that the police professional liability insurance costs about $25,000 to $45,000 a year. Saunders said that it has worked out for the County, given the history of the last 25 years. He acknowledged that claims have been made and dollars have been spent on this. He said that there are still ongoing claims at the County Attorney’s Office.
Saunders said that the other coverage the County does not have is directors and officers’ liability insurance which would cover the Board of Supervisors. He said that the County Attorney’s Office states that the County Board does not act behind closed doors. He said that he is on the Zoning Commission and Assistant County Attorney Andy Chappell attends the meetings. He said that Chappell will not leave the room until all of the Committee members leave the room because the County is very cautious to avoid a quorum without supervision. He said that if the County has a group of boards and commissions that understand what the open meetings requirements entail then directors and officers’ liability insurance is not as essential because the boards and commissions will not do the types of things that can get them in trouble.
Saunders concluded that police professional liability insurance and directors and officers’ liability insurance would cost the County an average of $50,000 a year. He said that the County is way ahead by covering the insurance on its own, because the County has a good history with both. He said that Insurance Associates can give a price quote for these coverages upon request, and this is typically done about every five years.
Saunders explained that there is no deductible on liability insurance. Therefore, if the County loses a judgment of $200,000, there is no $20,000 deductible in situations like that. He recounted that there are a few base deductibles on the general liability coverage of $10,000. Again, the few claims that the County pays are typically minimal in this regard, which is one reason why Insurance Associates has been able to keep the rates where they are and keep the County’s rates where they are. Kriz thanked Saunders for the information that he provided to the Committee. He added that nobody concretely knew about the details of the ICAP program. Stutsman asked if the County could get back into the ICAP program if the County dropped out. Kriz thanked Saunders for the information that he provided to the Committee. He added that nobody concretely knew about the details of the ICAP program. Stutsman asked if the County could get back into the ICAP program if the County dropped out.
Saunders said that Johnson County is the shining star in the ICAP program. He said that Johnson County is one of two or three examples that are used when the Iowa League of Cities consults a county about how to run a program. When ICAP wants to try something new out, the Iowa League of Cities asks Johnson County because the County will work together with them. Saunders stated that when Johnson County entered ICAP they were the biggest entity in the program and ICAP was cautious about allowing such a big player into a program designed for small entities. Saunders said the original thirteen members combined are smaller than Johnson County. Now things are different, as they have allowed several larger entities to get involved, including Black Hawk County and Sioux City. He added ICAP does not have to allow the County back in if they elect to leave. He told the Board of one entity which said they will not have a SEATS Committee and told ICAP to pay the claim if they do something wrong. They left the group, and their rates doubled in a couple of years. Saunders said they came back and the ICAP Board refused to let that entity back in because they do not agree with ICAP’s philosophy of how they take care of themselves.
Sheriff's Major Steve Dolezal said he wants to go on the record and say that working with Saunders has been wonderful, that Saunders is great to work with, and it's been a pleasure working with him. Saunders invited the committee members to call him any time with questions. Kriz said they may do so to obtain more details now that they have some basic information.
Finance Committee Meeting recessed at 3:04 p.m.
Stutsman called the Joint Meeting of the Board of Supervisors and the Finance Committee to order in the Johnson County Health and Human Services Building at 3:04 p.m. Members present were: Pat Harney, Terrence Neuzil, Janelle Rettig, Sally Stutsman, and Rod Sullivan.
Finance Committee Members present were: County Assessor Bill Greazel, City Assessor Dennis Baldridge, County Treasurer Tom Kriz, County Auditor Tom Slockett, Supervisor Sally Stutsman, Supervisor Rod Sullivan, Board of Supervisors Executive Assistant Andy Johnson, and Budget Coordinator Rich Claiborne; absent: County Recorder Kim Painter, County Attorney Janet Lyness (represented by Assistant County Attorney Andy Chappell), and County Sheriff Lonny Pulkrabek (represented by Sheriff’s Major Steve Dolezal). Also present were: Ambulance Director Steve Spenler, Facilities Director David Kempf, Medical Examiner Administrator Mike Hensch, Sheriff's Major Steve Dolezal, and Assistant County Attorney Andy Chappell. Staff present was: Temporary Deputy Auditor Elizabeth Kies.
Stutsman said the purpose of the Joint Meeting is to receive a budget update and have a discussion regarding the budget hearing and further action. Claiborne said he put together an answer to a question he received from several Board members regarding the reason taxes increased while the budget decreased. He passed around a sheet and said he will cover the information. Claiborne said there has also been discussion regarding how to handle the budget public hearing. He said he brought FY10’s slide show to review, and they can discuss what they like and dislike and generate ideas for preparation of the March 3, 2010 slide show.
Claiborne said several Board members saw that the original filed budget of FY10 was $84 million, and the re-estimate is up to $90 million. Although the actual budget for FY11 is $75 million, everyone’s taxes went up. Claiborne said it is too complicated for a quick answer. The County only taxes one time per year, and that is at budget time. If the FY10 budget, as it was filed with the State, is viewed, it can be seen that the County Levy was about $7.39 overall. The Rural Basic Levy was pretty low. The total budget was $84 million, which included the bonding for the Joint Emergency Communications Center (JECC) and had to be amended out in FY09 because it came through early. Claiborne said the re-estimate includes the Fall amendment and has no bearing on taxes; the tax part has already been done. The re-estimate either uses pass through money or reserves. Claiborne said there was a huge list of changes that he brought with him to the meeting. The changes include backing out of the JECC bonding, flood buyouts, and the inter-fund transfers to cover the early payment for the Health and Human Services (HHS) Building. Claiborne said it amounted to a consolidation of expenses of $90 million and revenues down to $28 million.
Claiborne said the proposed FY11 budget of $75 million is now being compared to the $90 million figure. He said to remember that the County only taxed on $84 million. He said he will now address why taxes went up with the FY11 budget. A 4.8% growth in valuation was seen, which is far ahead of most counties in Iowa. He said Scott County saw a 2.2% growth in valuation, according to the budget coordinator there. Claiborne said the General Basic Fund is always $3.50. The 4.8% growth in valuations resulted in roughly $900,000 in extra money. He said the General Supplemental Fund is elevated because of the JECC operational budget. Mental Health/Disability Services (MH/DS) always involves the same dollar amount. The Board is looking at keeping the Debt Levy the same. Claiborne said the total is still $7.40, however. The dollar amount is slightly higher due to growth.
Claiborne said a significant change from FY10 to FY11 involves the State rollback. The FY10 rollback was 0.455 so individuals were only taxed 45.589 dollars for a $100,000 house. He said countywide tax at the $7.40 rate is $337. The rollback increased 2.9% for FY11. When the figures are calculated, it results in $347.13, which is nearly a $10 jump. That is a 2.9% increase through the rollback alone. Claiborne said the rollback came from the State, and the Board has no control over it. They also have no control over the valuations because those come from the Assessors. All of the data combined results in an increase in taxes and operating money, and there is a reason for that. Kriz said the rollback has a major impact. Stutsman said the Board probably should have worked backwards from the rollback if they wanted to keep taxes truly flat. They could have looked at the impact of the rollback and lowered the levy in order to make up for it. Claiborne agreed.
Claiborne said Harney asked him on February 17, 2010 about keeping bonding the same. Claiborne said it sounds like the Board is in favor of the Shueyville Road Project, and it is a good thing for the community. The other two bonds involve purchasing homes for the future jail and starting the Ambulance project. Claiborne said Harney asked him what the budget would look like if the County only bonded for the Shueyville Road Project. Claiborne said it would result in a very significant difference and indicated that he is passing out related information. Stutsman asked if Claiborne means taxing for it but not bonding. Claiborne responded doing just the Shueyville Road bond. He said the Board will have roughly $1.7 to $1.8 million in Capital Projects that the Board used to cash flow most of the HHS Building. It’s the mark that would take the Board up to $3.50 cap in the General Fund.
Neuzil said he thinks it’s important to discuss creating these scenarios together as a Board. He thinks he could personally find five to ten things he doesn’t want in the budget and ask Claiborne to show them what the budget would look like without them. He said it seems a bit awkward to discuss potential scenarios after they have gone through the entire budget process and published it. Neuzil said he is okay with discussing potential changes as long as everyone is part of the discussion, and they are able to look at more than one example. Sullivan said all of the Board members essentially lost out on some things regarding the budget. There are items in the budget that he did not want included, and there are things he wanted included that were not. Polls were taken regarding whether to include several items in the budget, and the Board members all experienced wins and losses.
Claiborne said they are having the discussion now, and they have until March 12, 2010. Neuzil said his opinion is that this should have been done before the budget was published. Claiborne said they were under time constraints, but they put together the best budget they could. Neuzil agreed and said his point is that they are now going beyond the deadline initially set and looking at new scenarios. If the Board is going to start considering new scenarios, he has some ideas also. Harney said he thinks it was a legitimate question because the Board did not know what the final numbers were until the meeting during which publishing was discussed. He said although it was not Claiborne’s fault, he does not think the Board had time to review it, and that is one of the fallacies of this process. Harney said it is very difficult to track budget figures while sitting in a conference room and looking at figures on a wall. It is difficult not to have it in hand to allow comparison of actualities. He doesn’t think it worked well at all. He has concerns now that they have started reviewing the budget and seen the increases that are hitting some people pretty hard.
Stutsman said the points are well taken, but she doesn’t want to spend a lot of time discussing process today. She thinks there will be a budget-wrap up following the public hearing during which the Board will discuss what worked, what didn’t work, and what they can improve upon. She would like department heads and elected officials to be a part of that discussion and said it should possibly be discussed at a Department Head Meeting. Stutsman said there is always room to make things run better or more smoothly.
Claiborne agreed. He said he did this work for one Supervisor and shared it with the other four Supervisors. It was just an idea that came up. The numbers were run, and they are pretty significant. During the budget talks, the Board discussed leaving the Debt Levy normal. Claiborne said one Supervisor expressed unhappiness with the way the budget was published and with residential Iowa City going up 4.3%. Rettig held up a copy of the budget being discussed and said she is that Supervisor. She said that as the rookie, she never got a vote on the budget being discussed now and, as it stands she will be voting no. She thinks the tax increases are way too high. She said the Board members nod their heads at a couple of things but do not see the final budget until the very end.
Stutsman disagreed. Neuzil said they saw it and asked Rettig what she is talking about. He asked if the draft was completed two or three weeks ago. Claiborne said it has been on the website. Stutsman said she thought the Board saw it before the public hearing was set. Claiborne agreed. Rettig said right, but they did not take a vote. She said she will be voting no on the County budget. Neuzil said they don’t take a vote until March 11, 2010. Stutsman agreed, and said that they have to wait until after the public hearing. Neuzil said he thinks the question is what would Rettig have cut a few weeks ago because that is what determines the budget. Rettig said she thinks the HHS Building does not need to be paid off this year. She also thinks paying $3 million on the HHS Building before they should have and having borrowed the money from the JECC to do so, caused the County to have a cash fund balance. Rettig said the problem with this budget is that they are making up the cash fund balance and still trying to pay off the HHS Building during FY11, which is three or four years ahead of schedule. Kriz clarified that it would be three years ahead of schedule if it were paid off in FY11, resulting in substantial savings. Rettig said by paying $3 million on the HHS Building when it shouldn’t have been and still attempting to pay it off and make up for all of the cash fund differences in one year, the Board is creating too much of a tax increase for people. She is not comfortable with it. Rettig said she did talk to Claiborne about whether there were options that did not involve doing all of that in one year.
Stutsman said she thinks those actions were a recommendation that came from the Finance Committee. Kriz agreed that it came from the Finance Committee and was based on information that it was excess money. Rettig said it turned out that it was JECC’s excess rather than the County’s.
Claiborne said the amount of $3.50 in the FY11 budget does not change; they need that. Of that $3.50, there is about $1.7 or $1.8 million that the Board can use at their discretion. It could be used to pay off the note or start the new Ambulance building, for example. He said the Board members all know that they have mostly financed the cash flow of the HHS Building in years gone by and that the land was bought with cash flow, so that is the amount of available cash. Claiborne said the idea came up to cut the General Supplement Fund if they are not happy with taxes; however, that fund involves FICA, IPERS, and insurance so there is not much there.
Claiborne said Debt Service is the other thing. If the Board wants to have a direct, immediate impact, the easiest change would involve keeping the Shueyville Road Project on. Neuzil said he doesn’t know about that. Sullivan said he would say the easiest thing is to take it off. Neuzil agreed.
Neuzil said he is okay with going back into budget discussions after the budget has been published as long as he is able bring up all of the things he didn’t like. He needs to know so he can go back through all of his notes. Stutsman said the things Neuzil didn’t like involve the General Supplemental Fund. Neuzil said not necessarily. Stutsman indicated that she meant the General Basic Fund. Claiborne added that General Basic is not going to change. Neuzil said the Rural Basic Fund is getting an extra $300,000 to $400,000 for maintenance, which the Board all agreed on. He asked if they should take that off. He said $1.9 or $2 million dollars was included for the 120th Street project and asked if they should take that off. He asked if they should eliminate the Ambulance Study and the buildings across the street from the Jail. Neuzil said they can keep going through the list of yes’s and no’s, but he thought they did that already. He said they did do that already.
Claiborne agreed and said he is saying that most of the decisions involve the General Basic Fund and won’t change the tax bill. Claiborne said the General Supplemental Fund and the Debt Service Fund do affect the tax bill. Sullivan said they could take something out of the General Basic Fund and pay General Supplemental Fund expenses using the General Basic Fund. That would thereby lower the General Supplement Fund and the overall tax bill. Claiborne agreed. Sullivan said it would be a backfill. Neuzil said that is fine, but it is in opposition to the recommendation of the Finance Committee that they start building reserves. He said the Board is basically talking about using money that they committed to reserve in the proposed budget to pay for another thing. Neuzil said they don’t have to bond for the buildings across the street. They could take the money out of reserves and not tax for it.
Rettig said her point is that they shouldn’t have paid $3 million on the HHS Building when it wasn’t the Board's money. Now that they did that, they have to backfill all the cash. As a result, they start FY11 with low cash fund balances. Rettig said that trying to make all of that up in one year is one of the problems that results in the tax increase. Sullivan added that they are also still making payments. Rettig agreed and said she doesn’t see how it can all be done at once. She said she would be happy to reopen the budget if they want to do so. Neuzil said Rettig is the one who is opening it back up. Rettig stated that she said she is voting no; if Neuzil has three votes, he can vote. Neuzil said that is what happened a couple of years ago. Rettig said she doesn’t need a lecture. Neuzil said maybe Rettig needs some lessons. Rettig said she doesn’t think the HHS Building should be paid off, and a $3 million payment shouldn’t have been made last year. Rettig said it wasn’t their money, and they stole it from JECC to do it. Stutsman said they didn’t steal anything. Claiborne disagreed. He said the County is using its own fund balance. It is a combination of Technology, Capital Projects, and Debt Service. They did not take money from anyone, and he doesn’t know where that came from. Claiborne said all of the transfers he will be writing in the next few months for the Board to adopt will be using the County’s own money. He said he, Deputy Auditor Dana Aschenbrenner, Kriz, and Johnson all sat down and looked at money Kriz said is just sitting there and could be put to use. Claiborne said by prepaying on the HHS Building, they would have to borrow it. They didn’t take from anyone. He said JECC is JECC and County money is County money. Claiborne said they are using funds that have been sitting idle to help pay down a debt and the County is saving $60,000 to $70,000 in interest by doing so. He doesn’t know where the JECC idea came from. They are not taking money from JECC. JECC involved the General Supplement Fund and Debt Service Fund. By law, they can’t take bond money or that money put in the General Supplemental Fund. Claiborne said it needs to be clear that the $3 million came from several of the County’s existing pots.
Kriz said he agrees that the fund balances appeared to be abnormally high because of the JECC money. He said Claiborne is exactly right that it would involve the use of funds that have been carried over from year to year and have sat idly. He said he would call them reserves and agreed that reserves were used to do that. Kriz said it was not JECC money. Rettig said it makes the County cash poor coming into the beginning of the fiscal year. Kriz agreed that it lowers the amount because some of the reserves have been used. Rettig said making that difference up while still paying $1 million on the HHS building is one of the impacts on the FY11 budget. She said it makes the tax increase higher.
Neuzil agreed that they have to keep the level of taxation where it was previously to build up reserves. He said he heard from the Finance Committee that the incentive of paying off the HHS Building is that the Board would not have to pay for interest which would save taxpayers’ dollars while using money that would have sat there anyway. At the time, all of the Supervisors agreed with the philosophy of saving money for taxpayers, and now they are being criticized. Kriz said it results in a savings of about $70,000 in short-term interest. Direction was given from the start of the building to reduce the debt and pay the HHS Building off as quickly as possible. He said Rettig is correct that the last payment does not have to be made by June 30 of 2010, 2011, or 2012. It is scheduled out further.
Harney said they have been following a budget all the way through, and they have backfilled, which is exactly what they have been criticizing other communities for doing. He said when money becomes available, the Board spends it on something else. That came down on the bonding recently. Harney said they worked through the budget pretty well. Then they got to the point where they suddenly needed to come up with the bonding to buy the three homes next to the Sheriff’s Office and to use for the new Ambulance building. He said he asked that the million dollars be held back for the purchase of those homes. The Board decided they didn’t need it and put it towards the HHS Building but now they are taxing for it again.
Harney said he has a problem with backfilling all the time. It’s a real issue when taxes are being pushed up. The basic tax on one individual home may not be that much, about $40 for rural residential and about $20 for city. On the rural side, however, adding the agricultural property tax to the residential property tax amounts to $200 or more per property owner, which gets pretty expensive.
Sullivan said it sounds like the Board should reopen the budget process. The budget making process is ugly, and there are things in the budget that he doesn’t like and there are things he likes a lot. He said the bottom line is that three Board members have to agree to it and it doesn't sound like three Board members are going to approve the proposed budget. Sullivan added that there isn't much time either. Neuzil said whatever they decide will have to be lower than the amount already published. Claiborne said the Auditor's Office has a pretty complicated worksheet, and they want a roughly $2.6 to $2.7 million ending balance/beginning balance for the new year because there is that short time before taxes start rolling in to get through the summer months. Slockett asked Claiborne where he got that information. Claiborne said it has been in the worksheets for ten to 15 years and is part of the budget process. Slockett said it is not a determination made by the Auditor's Office for this budget year. Claiborne said it is an ongoing document created way before he worked for the County, probably way back when Slockett started. Slockett said he is familiar with the spreadsheet, but the fact that a 20 year-old spreadsheet is used is different than saying the Auditor's Office wants the balance to be at a certain level. Claiborne replied that this is a document created by the Auditor's Office, which has been going on forever, and it is updated every single year. Claiborne said the Auditor's Deputies are involved with the budget process and they all look at it. Slockett asked which Deputies are involved. Claiborne replied Deputy Auditor Chris Edwards until he got too busy, and now Aschenbrenner is involved. Claiborne said he asked for Aschenbrenner to be part of the Finance Committee. He said he and Aschenbrenner work together daily. Claiborne said they all work together on the budget and that it is not the Auditor versus the Board of Supervisors, rather it is everyone working together. Slockett said he is just saying that if Claiborne asks for assistance from an employee in the Auditor's Office, that is different than if he asks for the Auditor's Office position, or if Slockett is asked to be involved. He said he wants to make that clear. Slockett said that Aschenbrenner has not kept him apprised of any request for budget balances to be at a certain level. He said that is something he takes very seriously as Johnson County received an award for the revenue expense adjustment and Slockett said he thinks that is what Claiborne is referring to. Claiborne agreed. Slockett said the Auditor's Office has not been involved in that for some time.
Claiborne said he is actually thanking the Auditor's Office for helping. He said in all the documents, $2.7 million is what the ending balance should be. He said that worst case scenario, they will have about $2.2 million in General Basic, which is a little below what they should have. Slockett asked Claiborne what the $2.2 million is for. Claiborne responded $2.2 million is in General Basic. Rettig asked Claiborne if he means for the end of FY10 or FY11. Claiborne replied the beginning of FY10. Rettig said $2.15 million and it is projected to go to $2.69 million in one year. Slockett asked Rettig if she is talking about the beginning and ending balance. Rettig replied she is talking about the ending balance of this fiscal year and the ending balance of the next fiscal year. Rettig said it shows an increase of half a million dollars which she is in favor of, however, the problem is in attempting to complete everything on the capital projects list, and the bonding to pay off the HHS Building, and to do that all in one year has dramatically impacted the bottom line in taxes. She said if there was a way to adjust that, she'd be in favor of it.
Stutsman said at this point, the Budget Public Hearing is set for March 3, 2010, and at that time the Board certainly can lower the budget. For now however, she proposed that the Board hold a work session right after the Budget Public Hearing to discuss any adjustments they wish to make. Harney asked Claiborne if he has any idea of what the upcoming amendments might be for this year's budget. Claiborne said the Board had requested that budgets be held flat, however merit will always be there and Public Health always breaks even or has more revenue than they budgeted for. He said he has heard something from the Sheriff's Office, but that is all revenue equals expense. He said Veteran Affairs will have an appropriation change and whether SEATS will need that back has not yet been determined, but that is $20,000. Stutsman asked if the Board must vote on the budget on March 11, 2010. Claiborne said yes. Neuzil said this conversation should occur before March 3, 2010. Sullivan concurred. Stutsman said they have already published the budget. Claiborne said the Board can lower the budget. Stutsman acknowledge that they can lower it after the public hearing. Sullivan said he would rather go into the public hearing with some idea of what the Board is prepared to do, rather than to announce that they plan to lower the budget but have yet to determine how. He said he prefers to go in with a plan.
Harney said he has a problem with spending $1.2 million for the three houses across the street from the Jail and dropping the Ambulance budget down to what he thinks was $400,000. Neuzil said $280,000. Harney said the Board paid $500,000 for the houses across the street from the Jail from the City of Iowa City in the same location, and the same type of houses. He asked why the Board would offer over one million dollars for those three houses and said he thinks that is clearly out of line. Sullivan said that Harney is misrepresenting the situation. Harney said it is not a misrepresentation. Sullivan replied that it is. Harney stated that he saw what happened with the HHS Building property when the County started purchasing, and that they could have bought those three properties for a lot less, and they just handed money out to individuals. Sullivan said the $1.2 million is there as a protection because they do not know the exact figures yet. Harney replied that they can't spin that money back to Ambulance even if it is not used to purchase the houses. Neuzil said the Board can give that money back to Ambulance. Harney and Stutsman said that would require public hearings.
Stutsman said that it sounds like the Board wants to revisit the budget before the public hearing. Neuzil said he does not want to but it sounds like they are going to. He said he was perfectly happy with what was published, but he does not want to go into a situation where he is pinned to defend everything in the budget while someone votes against it and then can claim they were able to cut taxes while others were not. He said that this is the very situation he wants to avoid; he said this is exactly why they go through the budget process. He does not want to go through being the only defender again.
Sullivan agreed and said the budget will look one way if they bond for the Shueyville Road Project at $2.8 million and another if they don't. Harney said they can do that. Sullivan said that by doing this, Harney is hand picking what comes out of the budget. Harney said he did not hand pick. Sullivan said the give Supervisors worked on the budget for three or four months, and then there is alternative budget B, which is Harney's pet project that he pulled out, and of course the budget is lower. Harney said he pulled it out because that threw off the budget. He explained that what happened was that at the last minute, the other Board members threw in a $1.2 million bond for buying the houses across the street from the Jail and for a new ambulance facility. He said that is not how it was originally laid out. Sullivan disagreed and said there is $1.4 million in bonding capacity that would maintain what was bonded last year, which is what the Finance Committee suggested to the Board of Supervisors. The question was how the $1.4 million would be spent. The answer was to spend it on the houses and the ambulance facility. Sullivan said no one threw that in at the last minute. He said that is following the recommendation of the Finance Committee. He added that the Board does not have to follow the recommendations of the Finance Committee. Neuzil said that is what the public hearing set by the Board on February 18, 2010 is all about.
Stutsman said the Board needs to figure out how to proceed. She asked if they want to meet on March 1, 2010 or on March 5, 2010, and clarified that she meant either before or after the budget hearing. Sullivan said he thinks the Board has to meet before the budget hearing and asked if March 1, 2010 is the only day available before the budget hearing. Neuzil confirmed with Stutsman that she is scheduled to be in Washington D.C. for awhile. Stutsman said yes. Sullivan asked Stutsman what days she is in Washington D.C. Stutsman replied that she is there through late on February 26, 2010. She said she will be back in the office on February 25, 2010. Sullivan said that February 26, 2010 is the first day Stutsman will really be back. Stutsman said no, she will be back for the Board meeting on February 25, 2010. Sullivan said ok. Johnson asked if the afternoon of February 25, 2010 would be a possibility. Stutsman said she has an East Central Iowa Council of Governments meeting, but she thinks this is important enough that she could miss it. Neuzil asked if they could meet just immediately after the Board meeting. Stutsman said they could start then.
Neuzil said if Board members have specific requests to have things reduced they give those to Budget Coordinator Rich Claiborne and then Claiborne prints out a paper that shows them what the taxes would then be. He asked if that is what the Board is going to do. Neuzil asked Claiborne if he is prepared for that. Claiborne said there could be ten million combinations. Neuzil agreed and said that’s why they go through the whole budget process before this. Stutsman said that the Board is going to meet starting right after the February 25, 2010 Board meeting. She said to try to keep that Board meeting agenda to a minimum.
Stutsman suggested Board members hold off and have discussion on February 25, 2010 about things that they want to do in order to save Claiborne some time. Claiborne said to really make things simple, so they’re not looking at a $100 figure here and $50 there, the idea that they all know is the $3.50 cap is the $3.50 cap. He said the only thing they would do is take that money and reduce General Supplemental, but it needs to be significant enough. Stutsman said that it needs to meet certain requirements, too. She said Claiborne can’t just shift anything nilly willy into General Supplemental. Claiborne said that if they, for example, cut $100,000 from General Basic, he can reduce one of the transfers, like IPERS, and then that will bring General Supplemental down. Claiborne said the only other thing they could do now is, of course, cut back on some of the bonding. Neuzil agreed, and reminded everyone that the goal of the Board of Supervisors is to utilize the bonding so they’re able to tap into the TIF districts. So, if the Board chooses to take reserve out of the General Basic and put that instead towards a particular project it means they’re then not using the TIF districts. He said he just wanted to remind everybody that’s what they decided three weeks ago when they published this. Sullivan said that if they end up with next year, and they, for example, take the bonding out this year; taxes will go down substantially, but then if they want to bond next year, taxes will go up substantially. Harney said they’re not going down substantially because they’re going up. He said they’ll level. Sullivan said if they take this $4 million out of the budget, the taxes will go down. Harney said if they take $4 million out, yes. Sullivan said they would go down if they take $2 million out. Neuzil added even $1.4 million would take it down. Harney said that $1.4 million holds it even and it goes down from what they projected.
Claiborne said these are one year bonds. He said the road is a three year bond, but if they took out the Ambulance and the houses, that’s a one year bond, so that’s a big levy hit. Sullivan agreed that it’s big, but said it’s not nearly as big as the road. He said it’s half of the road. Claiborne agreed. He said if he takes the road out, then he needs to reduce the revenue in Department 18 because they have money coming back from their paybacks. Kriz said he has just one comment as they talk about taxes going down, and they used Iowa City as an example, they’ve got to remember that only about $0.18 of that $1 is the County's. Claiborne said that Iowa City still could go up. Kriz said that he doesn’t want them to think that what they do is going to reduce the tax statement. Claiborne said they’re still going to get yelled at. Kriz said that’s one thing they’ve talked about with levies here; what’s coming in from Coralville and what’s coming in from Iowa City. He said he didn’t want to belabor that, but he asked the Board to remember that 17% in Iowa City is the County's share of taxes.
Stutsman said she has a process question. She said they’ve published a budget, but now they’re talking about possibly making significant changes to that budget before the budget hearing. She asked if they can legally do this without republishing. Slockett said that they can always lower it. Stutsman said that the public doesn’t know that what they’re going to respond to at the public hearing is probably not what the Board is probably going to talk about. She asked if that makes a difference. Sullivan said that’s why he wanted to do it before the public hearing, so they can tell them here is what’s published, but here’s what they plan on doing, which will be lower. Claiborne said that what they’ve published is just the State form, which the average person won’t really understand. He said that the only thing they’ll understand is the levy and they’ll understand the things that he spelled out, the bonding for the road and the few things he has put out in words. He said if they go into the public hearing on March 3, 2010 and say they have second thoughts about what they’ve published they can show the new budget which will be what they’re going to vote on. He said they can show a decrease.
Neuzil asked if on March 11, 2010, if three Supervisors say no, then what happens. Rettig said the budget reverts back to last year’s budget. Claiborne said he guesses they ask for an extension. Sullivan said yes, they probably ask for an extension. Slockett said he’d have to look that up. Neuzil told Slockett he may want to brush up on that. Slockett said if the budget doesn’t pass, then they go to the previous year’s budget, but he said he will have to look into the extension process. Sullivan said that when Slockett says they go to the previous year’s budget, he said there is bonding for things that are paid for already and that sort of thing. Slockett said yes, it would be problematic. Neuzil said it’s something that should be studied, because it may be that vote. Stutsman agreed. Slockett said that it may be that what happens is the Board would be in violation of the law. He said he doesn’t think there are any real penalties for that. He said the Board would still have to pass a budget. Slockett said it wouldn’t go away so they wouldn’t have to do it, but they would just be passing it late. He added that it complicates things, if the budget is protested, the protest automatically wins, if there’s not sufficient time for them to consider the protest. Slockett said that there are a lot of negatives and it’s not the way the Board would want to do it. Neuzil said it’s what they avoided a couple years ago and he doesn’t want that to happen again.
Rettig said she has a question for the Finance Committee. She said she knows they recommended that this building get paid off as soon as possible and she knows they want the reserves to grow. She said that she knows they want to make progress on an Ambulance facility, but she doesn’t think they’re building an Ambulance and Medical Examiner Building next summer anyway. She said she’s wondering if the following idea would be palatable at all. She suggested they pay $0.5 million on the HHS Building and $0.5 million more the next year. She said they don’t set aside as much money for the Ambulance and Medical Examiner Building, but they do set enough aside to move forward with the architect’s renderings and they don’t quite go up $500,000 in reserves in one year. She said if they do all of that then they’re able to tax for almost $1 million less and they’re still doing everything they planned on doing anyway. She said they don’t really reopen the budget with a scalpel; they’re just not building up the reserves and paying off the HHS Building quite as fast as they wanted to. She said she thinks what’s problematic in an economic crisis is to try to do everything at once. She said if they do that, then they’re able to tax for almost $1 million less, not reducing taxes per se, they’re recognizing that they had new revenues and they had new assessments and new property. She said they’re basically getting at the level where the taxes would be at 2% or 2.3% as opposed to 4.9% County-wide. She said the rural thing is a totally different matter. She said if enough people scream bloody murder, they don’t have to put that much gravel down, but it’s the County-wide at 4.9% and it’s doing all of those things at once that causes a problem. She asked if that would be totally against the Finance Committee’s recommendations.
Kriz said he doesn’t know that those were ever recommendations from the Finance Committee. Rettig asked if he was referring to paying off the HHS bonding quickly and building the reserves. Kriz said it was a recommendation to pay it down. He said to try to build reserves was a recommendation that they were charged with trying to find ways to do it. Kriz said it certainly is palatable. He said if they wanted reserves where the bonding company Moody’s would like them to be, it would be $18 million. He said he thinks they won’t live long enough to probably see that. He said yes, he thinks they take the data they are given and try to fit that in to make recommendations, but ultimately it’s the Board’s decision. Kriz said the Finance Committee is an arm of the Board. Harney said that their intention all the way through was to pay the HHS Building off early. Kriz said that was the intent from the beginning.
Neuzil said that does four to five things if they choose to go that route. He said that the first thing is it lowers taxes. He said it does impact four different things. He said that number one they’ll have interest that they’ll be having to pay off, they won’t have as much reserve, they won't then be able to use as much debt service, which means they don’t access as much of the TIF, and number four is the level, as Sullivan pointed out. The level means they’ll drop down, which means there’s now a new level, which means that as far as using that level to pay for an Ambulance Building, which is what they’d need to put it towards, would have to then be lowered. He said he’s just throwing out that there are consequences to doing that. He said that obviously one significant reward is the fact that it’s less taxes. Slockett said there are a lot of different individuals on the Finance Committee, just like on the Board, and he thinks that everyone agreed on two things. He said, first, if there are idle funds that are not required and a debt can be paid off and interest can be saved to the benefit of the tax payers, it should be done. He said that is basically what they did. He said it wasn’t that the Board had to pay this specific amount off regardless of the consequences. He said they did it based on information they had that changed. He said he doesn’t think there is anyone on the Committee that feels like they made a specific recommendation that shouldn’t be judged by updated facts and figures. He said the second thing is, in order to increase the ability to get a higher bond rating, which is desirable if they are looking at significant additional bonding for the Justice Center, or for whatever purposes, it’s a good idea to increase the balances in line with what the bond rating companies desire the County to have. He said he thinks those are two important goals, but he doesn’t think those override particular circumstances in an economic downturn. He said he thinks the Board should look at all of the data and if they want the Committee’s additional advice about something they can ask them again. But, he said he wouldn’t take a recommendation that the Committee made some time ago as a hard and fast recommendation. He said it was based on those two basic goals that he thinks they all agreed upon, including the Board.
Harney said that he thinks when they did the budget one of the things they were looking at was the bond issues being paid off and that money coming back to help supplement the balancing of these budgets. He said he thinks the budget is good, except he has an issue with spending $1.2 million for the houses near the Jail, when he’s not sure they need them. He said they don’t even have a design going or a plan for what the facility is going to be. Claiborne said that an idea he had mentioned to Rettig on February 17, 2010, was if they look on the proposal of just the road being bonded, if they look at residential Iowa City, at the percent and dollar change, if the approximately 2% figure is more comfortable for the Board, then they could still do the housing thing and maybe bond $600,000 or $700,000, which are very rough figures but it puts them around 2% for Iowa City residential. He said that then, at their discretion, the Board, if they wanted to use some of that $1.8 million to supplement the difference between what they get in bond proceeds and the true value of what they spend buying the houses, it could still be done. He said they’re using cash flow versus TIF. Stutsman said that nothing is done in a vacuum. Harney said that not everyone is carrying the load, is what Stutsman is saying. Stutsman agreed and said she thinks they need to continue this discussion after the February 25, 2010 Board meeting. She said she guesses even talking about the County presentation she thinks they can have time for discussion about that too. She said it’s almost 4:00 p.m. She asked what Kriz thinks about this. Kriz said that is fine.
Kriz said one question he’d like to ask before the Board adjourns is that the Board continues to talk about having a letter go out with the tax statements. He said he’s going to need to know fairly soon if that’s something they’d like to do this year, so that can start being crafted. Neuzil asked if that’s from who supports the budget versus who doesn’t. Stutsman asked who’s going to write this letter. Neuzil asked who is putting their name on this letter. Kriz said a general letter about taxes, where to read their tax statement. Stutsman said she thinks that is good. Kriz said he just has to know in order to be able to plan ahead. Rettig said she thinks it’s a good idea. Kriz said it’s brand new. He said what they’ve tried to do is, through the use of the internet, put tax statements out stating what the school gets, what the County gets, and things like that. He said there’s always been talk with the Board that sometime they’d like to have a letter to explain in more detail from the Board. Harney said he’d like to see one with that information in it. Kriz said that they need to start working on it.
Stutsman said she’s always supported having some kind of letter or document that they can use to explain, but the only problem is have they checked with the cities and the schools and found out if they are in agreement with this letter. She asked if the Board is going to present their side of it and the other entities are not going to have an opportunity, unless it’s very generic. Kriz said they can put as many inserts in that envelope as long as they want to pay for it, because there is a cost to it. He said he only brings that up now because there is only have two months remaining to do it. Sullivan said that’s what he was going to bring up; there’s a cost to it because they’re sending out maybe 50,000 tax statements. Kriz said they send about 38,000 envelopes. Sullivan said they’re already talking about cutting the budget, so he asked where they want to put in the 38,000 times whatever they’re paying for this letter. He said he doesn’t see where it’s going to fit into this budget that they’re going to cut. Harney said Kriz said it would be included in the envelope sent out. Kriz said they put it in but the additional sheets add to the cost of postage. Rettig said that they have to print it. Sullivan said it still costs money. Harney said he doesn’t care if they don’t send it. Stutsman said it sounds like they need to have a lot more leg work and she doesn’t think the Board is ready to commit to that. Kriz said Information Services has asked to maybe put something in about technology. Stutsman said that maybe that’s something they could talk about at the Joint-Cities Meeting. She said they could ask them how they feel about it and if they want input into it.
Claiborne asked if a week from today on February 25, 2010 after the regular Board meeting, he can get concrete answers from the Board regarding what they want the budget to look like, because less than a week later is the public hearing. Stutsman said he’s right and they have to. Claiborne said then what’s left of that Thursday and over the next few days the Board can all help him arrange how they want the show to go. He said he was going to use last year’s format. He said it’s changed a lot from last year, but kind of showing the public this is their County and this is what the County does and this is how it is paid for. Claiborne said that for this year he said this is the County and this is what it costs; this is the Conservation Bond and this is what it costs and this is the JECC, and again the $0.68 that’s been public information for a year, this is what it costs. Claiborne said he then broke it down on the pie charts that this is the County only and this is the County with the JECC. He said he tried to make it very clear. He said he’s sure the Board wants that same approach and that the Board and he can come up with that next week.
Neuzil asked Claiborne if he wants the Board to come prepared with suggestions on this budget and what they don’t like and see if three Supervisors like it or not. Claiborne said that he just hopes by the end of the meeting on Thursday they have consensus on what they want so that they are ready for the meeting. Neuzil said they had consensus when they published this budget. Claiborne said that in this next week, before February 25, 2010, he asked if he should take ideas individually. Sullivan said no. Stutsman said she won’t be here to give him any ideas. Sullivan said that if they’re going to discuss it he thinks it should be discussed at a public meeting. Claiborne said that everything will come out on February 25, 2010.
Greazel said that when he hears talk about not meeting the budget deadline, for those who have budgeted expecting tax money to come in at a certain time, Kriz has to have a certain amount of time to put everything together and it’s tight the way it is and if they delay it a month, there is no penalty from the State, they’re just not in compliance, but he’s seen before where they’ve put off and everything got pushed down because the budgets weren’t all put together and then it squeezes the first and second half together where people don’t have time to recover from the payment. He says he would really advise the Board to do it at the time level. Greazel said there’s a reason there is a time level with a deadline and to try to stick to that. Slockett said they are limited to the tax dollar amount and/or the levy amounts from the previous year. He said he’ll have to check on that. Slockett said there are definite consequences to not meeting the deadline. Stutsman said she thinks the Board will make every attempt to meet that deadline. She said it may not be pretty, but she thinks they’ll do it. Neuzil said it will not be a 3-2 vote for this budget. He said that will not happen, because he’ll join the negative. Stutsman said it’s for further discussion.
Stutsman asked if there is any levy information. Kriz said that was on the agenda just to see if they started receiving any information from Coralville and Iowa City. Claiborne said he hasn’t received anything. Kriz said what he thinks is appropriate and what they’ll probably do is start asking for some of that so they can plan on that. Stutsman said that’s a good idea.
Stutsman adjourned the Joint Meeting of Board of Supervisors and Finance Committee at 3:58 p.m.; and Kriz reconvened the Finance Committee Meeting at 3:58 p.m.
Kriz said they have covered agenda item number six. He said item number seven is County Insurance Cost and Vendors. Kriz said that he learned more in 20 minutes than he ever thought he could learn about the insurance that Johnson County has. Stutsman said it’s too bad they didn’t record that for the other Board members, because there was a wealth of information in that. Kriz said there were minutes being taken. Slockett said it is recorded. Sullivan said it is recorded and she can listen to it. Kriz said that Slockett granted the Finance Committee the ability to have recorded minutes so people will be able to listen to the meeting. He said he personally learned a lot from that. Kriz said he knows the reason some of this came up was because they didn’t have much. He said it would be nice to get some kind of written synopsis of the County’s insurance and they can all peruse through it to see where they’re at and what the levels are. He said it sounds like a pretty good bang for the buck based on the size of their committee He said he knows Johnson has had contact with some people about alternative coverage. Johnson said he was just contacted by another firm and they wanted to visit about it and that’s sort of what brought some of all that up is that he wasn’t even sure where to go. He said he knew that Saunders oversaw all insurance aspects for the County but he didn’t know if he was the one to go to.
Stutsman said that for those of members of the Board who have been around for a while, this comes up periodically and Saunders, his service, and ICAP are hard to beat. She said they can certainly talk about it in the Board Room. She said Slockett has been around a long time, too. Slockett said yes, Saunders is good, but people can sharpen the pencil if they know there’s competition. Slockett said he does not know what the County would do without Saunders. He said he’s not speaking against checking prices. Stutsman said it’s good for the community, too, because she thinks sometimes they get upset if they think County government is closed and there is no opportunity. She said if they just have that discussion to say they are willing to consider it. Sullivan said he thinks they owe it to the public to actually open it up, but he thinks that from everything he’s heard and everything he hears from all the different departments, it’s not going to be a big stretch for him to say they’ll stay with Saunders, even if someone can undercut it by a few hundred dollars. Slockett said it will give Saunders the opportunity to talk about what he does and how great it is. He said it’s just like if the Election's budget is criticized, it gives him the opportunity to talk about what they do in Elections.
Sullivan said he guesses the question would be how the Board should do that, because somebody approached Johnson. He asked if they actually go to the RFP process or do they just say since one person approached. Greazel said that for those people that approached, he thinks they can come to the Finance Meeting and give the Board a presentation about it and if they give the Board a great sell and they think they really ought to look into it, then they can do the RFP. But, Greazel said he agrees and thinks it’s going to be a perfunctory thing on their part. He said he doesn’t see how anybody can beat them, but he thinks they have to give people the opportunity to come and talk to them and if they can do it as part of the Finance Meeting then they don’t have to take up formal Board time. Slockett said if the Board wants to do it, it certainly can. Stutsman asked if to be fair, they should put a notice in the paper to find out who’s interested. Greazel said they are a very close-knit group and if one knows one is doing it, then they will all want to do it.
Kriz asked if it would help if the County had some base, because he said he has no clue as to what the County pays for insurance, how it is broken down, and which component is how many dollars per year. He asked if it would help if they had that to start with. Kriz said maybe Slockett has that amount, but Kriz said he could not say today that the County pays a given amount in premiums. Greazel said that all of the Board’s meetings are public, and they would invite Saunders to come and sit in on the other insurers’ presentations so that he could give the Board a critique. Greazel said that this is pretty complicated stuff, and he does not want to be the insurance expert, but he said with them hashing things out, the Board could get a pretty good idea of what is going on. He expressed that he does not see how the Board could beat what Saunders is doing with that consortium that the people have put together, but he noted that the Board has to listen.
Sullivan said that Kriz can go back to his office and pull up Insurance Associates to know how much has been spent. Stutsman said that Claiborne also has this information. She asked if he has the premiums. Claiborne said that he just has the budget, but GEMS would be a lot more accurate. Sullivan said that the Board could find that out pretty easily. Claiborne agreed. Greazel said that they will tell Johnson to put that on the agenda for the next meeting. Stutsman said that is fine with her. Johnson said he mostly thought this would be a process or more than one meeting.
Sullivan said that Saunders was allocated 20 minutes to talk to the Board, and he asked if that is what they would offer to somebody else. Stutsman said she thinks that is fair. Baldridge said that Saunders did not talk about costs at all, so maybe the Board should have him tell them how it works. Kriz said he could maybe contact Saunders to have him show the Board some of the costs so they can lay that out. He said he thinks everyone is all in agreement on that, and it may be easier for Saunders to lay it out than for Slockett to have to go back and extract piece by piece.
Claiborne said the budget for Department 22 is roughly $1 million. He said it would be better to just look at vouchers. Johnson said he met with these other people to hear what they had to say, and he thinks that other firms would want to do kind of an audit of what the County has. Stutsman asked if they want to do a quote. Johnson said that they would not do that in this meeting, but that would be the next step if the Board wanted to have a comparison. He said he can invite them to come to the next meeting, and then the Board can hear the speech that he heard, but the next step would be a side by side comparison if the Board wanted to have that done.
Sullivan asked if the Board just gives this to them first and lets them do a side by side comparison that they bring back to the Board. Stutsman said she thinks that they would almost want to see all the policies. Johnson asked if that is Saunders’ notebook. Slockett said that maybe the Board should just look at things and take this slowly, and that he doesn’t know that he would rush this. He said they can start looking at what is involved and figure out how to move forward together with the Board. He asked if that is agreeable to everyone. Slockett said to start with what they have and what they are paying for it. Slockett said he knows Saunders and he is very professional, and there will be no resistance to these proceedings. Johnson said that for the next meeting, the Board will follow up with what they currently pay for what, and then they can determine where they want to go from there.
Kriz said that for years, the County has had a Copier Maintenance Agreement. He said it has been handed down, and Johnson has looked at whether it makes sense and what is covered under the agreement. He asked where Johnson is at with this. Johnson said that when he first started, and the premium was due, he did a chart of what the County was covering and what they were paying for it. He said that they were covering a lot of things that they did not have, and there were some things that were not listed. Johnson said that by taking things that they did not have out of the contract, they reduced the premium from $17,000 for the year to $12,000 for the year. He said he has not gotten a lot farther than this.
Johnson said that the contract is up on July 1, 2010, and by then he wants to figure out if it is even worth having. He said that he contacted Coralville and Iowa City, and neither of them have a contract like that. He said they get a maintenance contract when they get a new piece of equipment. Johnson said he can bring the schedule to the next meeting and get input on what people think about it. He said the contract covers major repairs on the covered equipment. Johnson stated that for the next Department Head Meeting, he and Information Services Director Jean Schultz are going to work on some information with department heads regarding technology needs. He said that this can be part of that discussion as well, and he said he will bring more detailed information in the next meeting.
Baldridge said that Johnson did not know what was covered when he started, and he asked if Johnson thinks the different departments know what is covered for them. Johnson said the schedule is in the policy, and he sent that policy out to each department with the pieces that it said were covered. He said they responded whether they had this equipment. He said that now everyone should know what is listed because if they confirmed that they had the equipment, he kept it on the contract.
Johnson said that Slockett has the plotter and some other machine that is not on the contract, and County Recorder Kim Painter does not have any of her equipment on the contract. Johnson said that some departments have things covered and some do not. He expressed that hopefully people now know what is covered. He said he will have more information at the next meeting. Kriz said it is ridiculous to pay to cover something that the County does not have and has not had for years.
Greazel said that one thing the County did this year was invite Coralville and some of the school boards to come and pre-load the whole budget process. He said this was to get an idea of what they are doing in their budgets so that there is no big shock once everybody gets their budgets to Slockett and there is a sudden increase because of people doing this and that. Greazel said this all comes under the County’s letterhead when they send it out, and they have not heard back from anybody. He said they have not seen much interest from anybody else in working with the County. Greazel said he supposes they do not have any incentive because they are not sending the letters out, but he is a little disappointed with that.
Greazel said there was a little discussion in this meeting today about deciding yes and doing certain things, but when the Board sees the published budget, they are surprised and say they did not intend to do that. Greazel said he is afraid this is just a precursor to what the County will see when everybody else gets their budget to Slockett and the consolidated levy is put together. Greazel said he wants to express that he thinks the County did their part in trying to get everybody together to work as a group on this consolidated budget, but he does not think there is much interest.
Greazel asked if anybody can think of something that can be done differently next year to get everyone more involved in budget process. He said one of the things this does is puts the Board’s decisions into perspective. He said that somebody can be really upset because the levy is going up 4% from the County’s 17%, but when they see what Iowa City or the Iowa City School District does, it makes that 4% of 7% seem barely worth talking about.
Stutsman said the Board almost needs to have a joint meeting after everybody sets their budget before the public hearing so that they can look at the big picture. She said then people can look to see where their part is in the levy for the taxpayer. Stutsman said that people all set up their budgets in a vacuum and say that they have these important needs that need to be met. She asked if Coralville is realizing what the County is doing and what the school districts are doing. Sullivan noted that the County loses out on that. He said that frankly, the County does not do things that are sexy. He said the County does not educate the kids, so the school district is going to win every time if people are put to a vote on whether they want to house prisoners or pay for teachers. Stutsman said that she does not know, and she thinks that people will be changing their minds.
Greazel said that he has already had people complain to him. He said they are paying their taxes at the end of the month and they are already complaining to him, and they are complaining about last year’s budget. Stutsman said that she thinks the communication would be excellent, and she thinks the Board needs to start working toward that so that everyone in the County realizes that they are all in this together. She said she agrees with Greazel that the Board works away on the budget, but then realizes that it is insignificant in light of the big picture. Greazel asked why they worried about it, when a tsunami came from the other groups that made the County’s insignificant.
Dolezal said to expand upon what Greazel said, the County has invited these other groups to the table. He said he knows that the Finance Committee as a whole wants to put a letter out. He said he knows there is some concern to bring these people on board, but he thinks the Finance Committee has tried. Dolezal said in his opinion, the Finance Committee should say that they tried to bring these groups to the table and then craft and send out a letter. He said when the backlash comes from these groups asking the Finance Committee why they sent this letter, the answer is that the Finance Committee invited them to the table and they chose not to come. Dolezal said his opinion is that they let these groups feel some of the backlash, and next year the incentive will be to come to the table. Stutsman agreed.
Greazel said that the Finance Committee cannot make people come, but they can put what they want to in the letter, and he thinks they should do this whether the groups like it or not. Dolezal agreed and said his recommendation is to craft a letter. He said it is the Board’s decision. He expressed that nothing is stopping these groups from sending out a letter on their own too, and they can send out 38,500 letters on their own if they want to. Dolezal said the County is already sending out letters and will just throw one sheet of paper in to explain it. Stutsman said the groups put their letters in their water bills. Dolezal said they have an avenue too. Stutsman said maybe the Board can revisit this at the Board budget meeting if they want to reconsider this letter again.
Sullivan asked how close the deadline is. Kriz said that the deadline is in 60 days, but he said he really wanted to bring it up now because he knows how things get shoved to the side sometimes, and he needs to give some notice to the people that prepare all their taxes that there could be a letter included in there. He said he sent it back saying that they could this year for the first time, but he feels pretty strongly that this needs to come from the Board. He said he does not think it has much merit if it comes from the Finance Committee.
Stutsman asked if Kriz can get a ballpark cost estimate. Kriz said he could, and he just wanted to find out today if the Board even wanted to consider this. Johnson said it probably depends on whether it is a full page letter or on the format of it. Kriz said there are cowboy cards, which are thirds, or full page. He said he will get some costs on this and he can email them to the Board. Stutsman said it does not have to be exact. Kriz said from the last time the County looked at Iowa City it was about $1,200. He said what skews it a little bit is not knowing the postage stickers, because they can put four statements in each envelope that go out for the one ounce rate. He said it is not terribly expensive.
Greazel said that Iowa City and Coralville already published their budgets, so the Board can see the levy rates in there when they meet next. He said that the only budget the Board does not know is the school districts, but they are going to max out their levy, so their budget is basically known. Greazel said he thinks by the time the Board has their meeting, they should have a pretty good idea of what the total package is going to look like. He asked if this is correct, as they will have the County’s, school districts’, Iowa City’s, and Coralville’s budgets. Slockett said they couldn’t know what is published if they do not know what is theirs.
Greazel said that by the final meeting, the Board can have a pretty good idea of what impact their budget will have on the tax bill. He said they can see if it is significant. Stutsman asked if Johnson can get information from those other entities on where they are at. Johnson said they can get what information is published in their press release. Greazel said it was in the paper the other day, and he suggested the Board look and see if the numbers they are talking about are really something to worry about.
Kriz said if they can have the information to look at a mock up of what it might be for a tax statement in March, at that time they could put something together. Johnson said that Iowa City has published theirs and they have their levy rate, but they have instituted the new franchise fee as well. He said that is an income that is kind of off-setting the increase in cost that is not going to be reflected in the levy rate. Greazel said the levy rate is going to look better than it normally would. Johnson agreed. Kriz said they also have a sales tax increase.
Kriz said the next Finance Committee Meeting date is March 11, 2010, from 2:30 to 4:00 p.m. He said he put down that the meeting will be held in the Administration Building Board Room, but he does not know if this is going to be possible or not. Stutsman said the only problem is that there are no tables in there. Greazel said he would prefer to meet in the HHS Building. Kriz said he will see if he can schedule the HHS Conference Room. Sullivan said that by that time, the Board will also have access to the old conference room downstairs in the Administration Building. Kriz said that the date and time will be the same, and the location will be to be determined. He said they always try to follow the Space Needs Committee Meeting from 1:30 to 2:30 p.m.
Adjourned at 4:18 p.m.
By Elizabeth Kies, Recording Secretary