Discussion: Fiscal Year 2000 Budget Process

• Re-Estimated Expense Worksheet
• Re-Estimated Revenue Worksheet
• Fiscal Year 2000 Expense Worksheet
• Fiscal Year 2000 Revenue Worksheet
• Payroll Worksheet
• Capital Expenditures Worksheet
• Capital Projects Worksheet
• Technology Worksheet
• General Discussion

Chairperson Bolkcom called the Johnson County Board of Supervisors to order in the Johnson County Administration Building as a Department Head Meeting at 10:07 a.m. Members present were: Joseph Bolkcom, Jonathan Jordahl, Stephen Lacina, and Sally Stutsman; Charles Duffy arrived at 10:17 a.m.

Department heads present were: Ambulance Director Mike Sullivan, County Attorney Pat White, County Auditor Tom Slockett, County Engineer Mike Gardner, County Recorder Deborah Conger, County Treasurer Cletus Redlinger, Emergency Services Director Jim McGinley, General Relief Director Kay Hull, Human Resource Administrator Lora Shramek, Information Services Director Jean Schultz, Mental Health/Developmental Disabilities Director Craig Mosher, Nutrition Department Director Mike Foster, Physical Plant Manager Pat Langenberg, Public Health Director Graham Dameron, Interim SEATS Director Burnell Chadek, Veterans Affairs Commission Director Leo Baier. Staff present were: Assistant Planning and Zoning Administrator R.J. Moore, Board of Supervisors Deputy Administrative Assistant Deana Pillard, Conservation Department Secretary Rose Grace, Department of Human Services Accountant Kathy Lynch, Deputy Auditor Chris Edwards, Deputy Auditor Rosemary Stratton, Planning and Zoning Department Secretary Mary Craig, Sheriff's Captain Duane Lewis, and Auditor's Office Recording Secretary Casie Parkins.

Bolkcom explained they were meeting to resume their conversation about the Fiscal Year 2000 budget. He said that earlier in the week instructions were circulated, which they were there to go over and answer any questions. He turned it over to County Auditor Tom Slockett to lead them through the forms and presentation.

Slockett said he would preface the presentation by saying that all of the forms except for the department narrative and payroll worksheet are available in Excel format and they will be e-mailing to those departments with e-mail and diskettes will be available to those without e-mail. He said that they can also provide paper copies. He said the Board would like to keep the deadline at Friday October 23. He said they realize that is coming up quickly, especially for the departments with boards, and those departments may have some difficulty in meeting the deadline. He said since they are moving the process up they need to understand that this is the crunch year. He thought the Board will be extremely flexible in granting extensions.

Slockett explained that the first form was the re-estimated Expense Worksheet. He said it should look familiar and it had estimates from FY97 and FY98, also FY97 and FY98 actuals, and the FY99 year to date numbers. He said the column for re-estimated budget was simply for them give a re-estimated amount. Given the fact that some time has gone by since the last budget process, they might have a better idea of their expenses, and they should state those. He said they could continue to change those during the budget process, if something comes to their attention. He said they want accuracy and so the Board wishes to have the most accurate information they can have. He asked them to make an honest effort not to use the same numbers, unless they were appropriate. He said the one important point to mention was that if they re-estimate their budget to higher than was certified, it won't automatically be amended. He said it wasn't approved because it was on those forms. Slockett said the re-estimated Expense Worksheet was pretty much the same as in the past year.

Slockett said that re-estimated Revenue Worksheet corresponds to the expense form and is the same as in the past year. He said it had the history, the actuals, and the current year to date information. He said if they have new revenue totals to please present them.

Slockett said the Fiscal Year 2000 Expense Worksheet looks quite a bit different. He said that they are figuring out a new base budget amount in which incremental increases are asked to be presented, and they could set one free lance increase at their own discretion. He said the first column is the Fiscal Year '99 certified budget. He said reoccurring amendments are listed in column B. He added that reoccurring amendments are amendments to the budget which it is understood will be permanently a part of the department's budget, such as hiring a new person. Slockett said that Deputy Auditor Rosemary Stratton had worked with department heads and the Board where she had questions in her mind about what was reoccurring and what wasn't. Slockett said if the information wasn't correct they should contact Stratton in the Auditor's Office. He said next was the technology column and all of the technology was going to be subtracted out of the individual budgets, except for consumables, which were things like paper, ribbons, and toner. He said that was an explanation of how the base budget was determined.

He said the first step in filling out the form will be to go to the last page. He said they should take a look at the department totals. He said the department total line which is third from the bottom shows the certified fiscal year '99 budget total amount and then added in is the reoccuring amendments. He said almost all departments will have a small reoccuring amendment; small amendments were made for life insurance increases. He said the technology total will be taken out and that will give the base number for the FY2000 budget. He said that would include grants, and for the departments that don't have any grants, that would be their base number. Slockett said for departments with grants the next line is for subtracting out grants, and they will have an adjusted department total which will actually be the base amount. He said with that number they will calculate the percent incremental increases. He said column F at the bottom of the page would be 1% greater than column D. He said that G would be 2% greater, H would be 3%, I would be 4%, J would be 5%, and then column K is where, if they need more resources than the incremental percentages, they can make a pitch to the Board. Slockett said the reason they are subtracting the grants for the baseline was to give them complete flexibility in making proposals to the Board that utilize grant funds.

Duffy entered at 10:17 a.m.

Slockett said column E (no department increase) presents, if they had to run their department at the level of their current budget, how they would budget it. He said the line items could be adjusted dramatically, but the bottom line had to be the same for this column. He noted the columns for showing incremental increases to line items. He said one of reasons for the percent incremental increases was that the availability of funds isn't known yet due to the assessment process on the local and state level. The legislative and State adjustments, such as rollbacks, may not be known until January. He said any information they would give them prior to that would be so subject to change and that it isn't worth doing it. He said that utilities are assessed at the state level and they have varied quite a bit over the past few years. He said there was no way to know what resources would be available and what the impact would be of certain expenditure levels on the taxpayers. He said that won't be known until the budget process is well along its way. He said the increments allow the Board to make adjustments either up or down at the point that they get good information. He said it's to the departments advantage to fill out each column because for example, if the Board has chosen a 3% level for the department, they've looked at the department narrative, they've looked at the budget numbers, they've looked at any grant numbers, and they've decided a 3% level is OK for the department. He said, supposing they find that there is an addition to the valuations or the rollback didn't reduce the valuations for taxable purposes as much as expected and the Board had additional funds available that it felt it could justify, they might be able to give them a 1% increase, so if they had the 3% and they had the 4% column filled out, they might be willing to go to a 4. He said if they don't have a 4, but they have a 5, the Board may not be able to justify it. He said it gives the Board a lot of additional information and they have a lot of extra work, but he's tried to think of it in the positive way, it will be good exercise for him to think about the budget that thoroughly. He said filling them all out could be to their advantage because they may end up with more resources. He said the same thing goes the other way, if the rollback is higher than they expected, if the new valuations don't come on line in the same rate that they have in the past and less money is available, it might be they would be willing to give them a 1% reduction in the increase to a 2% increase. If 2% isn't filled out the Board may need to go to the next lowest level filled out or the current year's amount. He said it would be helpful if everybody fills out the full worksheet.

Slockett said this was the worksheet that corresponds to the expense worksheet. Slockett said this was a little different. He said the column headings show the adjustments which conform to the same columns in the expense worksheet but they obviously are at no limitation. He said if at a zero level increase they have found they can double their revenues the Board doesn't want to discourage them from doing that. He said, if next year they receive a 1% increase, they can have much larger than a 1% increase in revenues. He said they should list what they can actually achieve at the 1% expenditure increase level. He said on the revenue worksheet the headings do not in any way imply limiting the revenues but they simply imply to ask what the revenues would be with that level of expenditure. He gave an example; one year the County Attorney indicated if he had someone who could spend more time working on it he could collect more back taxes. He said it was not an emergency to do that because if people owe back taxes one year they're going to continue to owe them; however, an increase to cover the cost to collect the taxes could give a significant increase in revenues. He said this may not be a good example because the revenue would appear in another departmental budget.

Slockett said this worksheet was really detailed and it hadn't changed at all except for the last page. He said the last page is where they were requesting additional employees over and above the level currently approved in the certified or amended budget. He said the difference was on the right side of the page. He said the Board needed to know if they requested new personnel which levels of increase are they included in. He said that if they have a new employee listed, it might be that it would take a department a 5% increase to hire that employee. He said they would then just check the 5%. He said that it might be they could hire the employee with a 1% increase. He said if they retain that new employee at each level then they would check each one. He said it was possible for example that they would hire a new employee at 1% but if they got a 5% increase they would have another expenditure and they wouldn't need that percent anymore. He said that was the type of flexibility they have and the Board wanted an indication if they hired people at what level would they be hired. He said if they've required a 3% increase and they've only given them a 2% increase the assumption would be they wouldn't require the employee anymore.

Slockett said this worksheet had a shaded section and non-shaded section. He said the purpose of this is to list all capital expenditures that are intended to be spent. He noted the column where the account number and the description should be listed. He said the next column is to indicate whether it's new or a replacement. Slockett said they should also list the estimated useful life. He said they would talk to the sales people and the other people who would use that type of equipment and get an estimated useful life. The next column indicated was the project total amount. He said they should list any grant funding they might be getting next. Slockett said they need to indicate at what level of increase in the budget would they be purchasing the equipment, zero, 1, 2, 3, 4, 5, or the alternate amount.

Slockett said in the shaded area the Board also wants to know about future capital expenditures that might not necessarily be happening during the FY 2000 budget. For expected future year capital purchases, Slockett said the Board wants departments to propose to begin to save the money in the next year's budget. He said it would seem least disruptive to the budget for a capital expense in FY2001 to save half the money in this coming year's budget and then expend the balance in FY2001. Department of Human Services Accountant Kathy Lynch said that the directions on page 5 said that these purchases should not be included in the department's budget under capital expenditures. Slockett said that was for the shaded areas. He said that if they are saving the money for future years it would not be in the department budget, but if they are spending it this year it should be included in their departments budget. Slockett said that both go on the capital expenditures form, whether they're included in the budget or not. He said the ones that are included in the budget are the ones that they are going to expend during that budget year. He said the ones that they don't include on the budget are the ones that they are going to purchase in a future year, but all of them are listed on the worksheet. Lynch said the money that they are saving for the future really won't be considered as part of their asking for Fiscal year 2000. Slockett said it could be an asking if the Board decides it will be. He said the Board is trying to gradually shift from having capital expenditures be a surprise each year to having a long-term depreciation schedule where they understand what their future requirements are to replace the equipment, rather than having an emergency because the roof started leaking. Lynch said they were going to set aside that money outside of the budget asking. Slockett said yes, the funds that they are requesting for future use if approved will go into a capital expenditure fund that is reserved for their department's use for capital expenditures only. He said it will not be available to anyone else, and it's really to the department's advantage to have the money available so the Board won't be surprised and say they're sorry, the money isn't available.

Lynch asked if they would check the percentages on the right of the worksheet for items in the shaded area because they won't be in the budget. Lacina said they will be in the tax asking. Lynch asked if they would fall into the 1%, 2%, 3% etc. Lacina said it would because that would be in the tax asking. Lynch said then they would have to list it back on the expenditure worksheet. Jordahl said that was the way he was understanding it, that the idea is that the Board wants them to request a portion of the need for an item each year rather than requesting the whole item at once. He said it was a given that things were going to wear out and become obsolete, they know that, and they shouldn't act as if they don't. Jordahl said last year for example they got a number of requests for vehicles and they funded part of a vehicle instead of a whole vehicle as a way of initiating this process and the form formalizes that. Slockett said he would like to discuss that with the Board a little bit more because he can see drawbacks from doing it that way. He said mainly if they are going to do that, why would a department head write it down? He said if their next year budget proposal is going to be cut back because they're planning ahead and saving up for something, then they're not going to list it. Jordahl said they will understand that that's the way the Board wants to see budgeting done, and rather than the department comes around with a surprise, the Board will look favorably upon this type of budgeting. He said he would think it was great because they would be planning. Slockett said he doesn't think a majority of the Board will agree with that once they consider it with the repercussions of doing it that way. Slockett said this was an ongoing discussion that has been taking place. He said it gets back to the basic problem when you're shifting from making your capital expenditures in current year budgets without saving up for it.

Slockett said the best example is of the Sheriff's cars. He said they have equipment depreciating every year but they purchase it every year at approximately the same amount. He said if they make that purchase and at the same time start saving for replacements and they replace cars every 3 years, they would budget $100,000 every year for the replacement. If they are going to buy the cars they need in the current year budget and save 33% for future years they've got a 133% increase in that expenditure. He said that's why they've taken the go slow approach instead of making that shift mandatory. He said they're asking people to suggest things that could be saved for in the future and then as funds are found to be available, to put it on a schedule to have it purchased. Slockett said the problem is there is a big cost to doing that suddenly and he would think the Board would be much better advised to not punish or cut a department who suggests doing that. He said they need to figure out where those funds are going to come from to make that shift. He said once the shift is made the additional increase is reduced again; it's just in the transition that the problem occurs. Jordahl said he would suggest that the goal of this is to have a flat budget year to year, so they don't have a spike. He said in the Sheriff's Department they are buying vehicles every year and that is a flat budget, so they don't need to going to another 33% on that. Slockett said if he places it on the form as Jordahl suggested, he would have a 33% in that line item. Slockett said if it was done the way he suggested there wouldn't be a 33%. Lacina said, going back to Lynch's question, they should not put it in that 1% column. Slockett said yes. County Treasurer Cletus Redlinger said if they don't show it in the budget, then they can't use that percentage. Jordahl said the request for funding for a department that's going to be saved is part of that department's request. Slockett said he thought it would be better to discuss this at another time. Lacina said for the reporting portion they would go with what Slockett said in answer to Lynch's question. Slockett said the Board will see these requests with the information about the additional costs.

Director of Public Health Graham Dameron asked if he was saving $5,000 toward a car in the current year's budget would he have to put $5,000 in his departmental budget for the coming year. Slockett said if he was saving he wouldn't have to put it in his departmental budget; it would go into a capital expenditure budget with the previous amount saved. Bolkcom said he had a question about that distinction of what goes in and what doesn't. Slockett said once they begin putting money into a capital expenditure fund then that expenditure will no longer occur in the departmental budget, but other than that any expenditure that is going to be made out of the departmental budget, not out of the capital expenditure budget, those funds would be budgeted in the departmental budget. Mental Health/Developmental Disabilities Director Craig Mosher asked if the money they've been saving in their budgets for capital expenses can be moved to a capital expense account. Slockett said that was correct.

Interim SEATS Director Burnell Chadek said that for most of them it wouldn't be an issue, but he could see where it would cause problems. He said he could see where saving for a capital expenditure is a legitimate portion of a year to year budget that should be reflected in the costs for doing business. He said if he were to come in as a member of the press and look at somebody's budget there were thousands of dollars that didn't show up on the books as a cost for that department. Slockett said that wasn't the case. He said these forms were internal worksheets by which they gained the information they need for the budgeting process. Slockett said that each department would have the departmental budget (the operating budget), the technology budget, the capital expenditures, the capital projects, and then a department total with the corresponding increases. He said in the lines where the savings occurs it will be indicated for that department. Slockett said the budgeting itself for the operational part of a budget is calculated differently, but the information will be there. Chadek said that answers his question and he was just concerned because their set-aside year to year doesn't have that big of an effect on a million dollar budget if they're setting aside $7,000 a year; he just wanted to be sure this was a worksheet change only. Slockett said it won't show on the same page of the worksheet, but it will show. Jordahl said that ultimately when the Board is considering a percent increase for departments, they will have reference to a department-wide increase, including the savings percent increase, so they just won't be looking at the expenditures increases. Slockett said that was right. Lynch asked if in the future when they do one of their expenditures will the money be amended back into the budget out of which it gets paid. Slockett said it will get paid out of the capital expenditures. Sheriff's Captain Duane Lewis asked if the County was going to start buying things as a county and not out of individual budgets. Slockett said no; it was a separate fund and it will be earmarked by department. Slockett said with this Board it would be accounted for a different way, but it would still be reserved for the departments to make the purchases.

Slockett said the Capital Projects Worksheet was similar to Capital Expenditures, only it was for capital projects. He said capital projects were construction or remodeling. He said in the non-shaded columns they would be listing the things that are included in their budget proposal for FY2000. Slockett said this area is used the first time a capital expenditure has been recognized by the budget system and they will be expended in the same budget year they were recognized. He said if they feel they have a need to remodel in the next year or so, or they feel they will need to in 5 or 10 years, they can list the information in the shaded column to indicate that. He said he would suggest they only fill out the percentage increases for those items that will be expended in the FY2000 budget. He said in future years the Board will begin putting things in their capital expenditure account.

Slockett said on the Technology Worksheet they will be listing descriptions of any of their technology. He said it's all been pulled out of the department's budget, so it all needs to be included on the worksheet. He said they need to list all technology purchases other than consumables, such as toner, paper, ink cartridges, etc. He said they need to list whether it's new or a replacement, estimated useful life, project total amount, and grant funding amount. He said that's all they need to fill out if it's a request for their current year budget and then they need to check the corresponding percent column in which they would need that equipment. Slockett said this form would go to Information Services Director Jean Schultz and she will try to figure out the best way to meet the requests. Slockett said, for example, if in a department a 2% increase is requested for hiring a new person and they would need a computer, they would list the computer, and then check the 2%. He said in addition to what they will be purchasing in their budget proposal, they would like them to identify all of their other computer equipment with what the life span would be. Slockett said Schultz has the current departmental inventory lists of computer equipment, but she wants the departments to list their equipment to make sure that their lists match. Slockett said for future use the shaded areas should be filled out so that the reserves can be accumulated to purchase new or replacement equipment. He said this was particularly the case for large expensive pieces of equipment that might cause an incremental jump in departments. Slockett said Schultz would like to have as much information as she can from the departments so she can make the best decisions when she works with them.

Schultz said it was her understanding they wouldn't list their replacements under the 1%, 2%, 3%, 4% or 5% because they would be covered by the central technology budget which is what Schultz requests. She said if they have some old PCs they need replaced they can list them but not include them in their percent incremental requests. Slockett said that every technology expenditure would be in Schultz's area. Schultz said it was her understanding it would be just like capital expenditures. Slockett said the Board gave him clear direction that all technology was to be subtracted out of the departmental budgets and that no technology would be budgeted within departmental budgets. Slockett said he knew this because it was not what he wanted to do, but those were the instructions that he was given. Schultz said it was going to be that departments were still going to request it and include it in the percentage, only instead of it being technically under their departments it was going to be earmarked for them under the technology budget. Jordahl said it was just like Slockett had been saying with the other capital budgets, that it is not in the department budget. Bolkcom said the goal for this was for the Board to know as a County how much they're spending on technology and also know by department how much they're spending on technology. He said it's not completely clear to them the way they've been accounting for it.

Dameron said it would be difficult for him to know what Schultz's plan is to replace equipment. Bolkcom said they should indicate on their form new equipment and equipment to be replaced. Slockett said, if for example they needed equipment with greater capability, this was a way for them to increase their communication with Schultz. Mosher said that if they have PC's that are 3 years old that don't need to be replaced in FY2000 but will need to be replaced in FY2001 they don't show up. Slockett said they should and then next year they will have the whole list. Mosher said they would want to show that for each year's replacements, so that they have a 5 or 10 year capital projection of what their needs are. Slockett said he agreed and that's the way these forms were envisioned. Bolkcom asked how many years they want to go with this on technology. Slockett said that most computer equipment would need to be replaced in 5 years. Stutsman said the Board envisioned departments working closely with Schultz in filling this out, to have communication with Schultz about what she felt would be appropriate as far as compatibility within the County. Lynch asked if they could get a list of what they already have and what they are thinking they were going to be replacing. Schultz said she did for most departments but didn't know if they had Human Services. Mosher said they would have to talk about how they were going to do that. Slockett said that took them through all of the forms.

Dameron asked if they wanted the narrative to include the comments about the re-estimated budget or should it speak to additional needs only. Bolkcom said additional needs only. Jordahl said anything that makes the trends clear. Dameron said that one of his expenditures was related to a grant allocated software program, and asked if this should be deducted out twice because it would be a double deduction under grants and technology. Bolkcom said that kind of question should be taken up with the Auditor. Bolkcom said that Dameron's department was like none of the others because there are 20-plus grants and he should sit down with Slockett, Stratton, and Edwards. Dameron asked if the County was going to provide money for the Internet connection. Bolkcom asked what they decided. Slockett said anything that was not a consumable would come under Technology budget and that would include something for the Internet. Jordahl said he was confused by that because they have County-wide Internet access. Dameron said that is e-mail, not Internet. Lacina asked if they were connected to the Department of Public Health for Internet access. Dameron said they have 3 log-ons. Bolkcom said if they are maintaining that account, it should be left in their budget, but there are probably reasons not to. Jordahl said it was like a maintenance contract, in that it was a recurring expenditure. He said he was wondering if they need it at all. Dameron asked if they have an estimated use of life of equipment or if there was any available guidelines. Slockett said no, that would be up to the department.

Bolkcom said this was a change, he said it would help them get a better handle on the technology and on some of their capital needs. Dameron asked what the difference was between column D and column E. It was noted column E was for shuffling the line items, but they ended up with the same bottom figure. He asked about presenting the changes; there would be a multitude of ups and downs, but for the narrative he was going to stick on trends, not talking about individual accounts because they would be there all day. Board members agreed. Jordahl said they should do what makes sense to them presenting their case. Bolkcom said at this point in time they do know some things. He said there was talk at the state level about bringing the tax freeze back to counties and they could be in the situation in January or February where legislation is passed and their budget gets frozen. He said they also know next year they are going to have to make a contribution to the County's health insurance pool. He said another issue is that the farm economy is clearly sagging and going to be in worse shape as the year goes on. He said they continue to want to save for space needs. He said they already have approved a budget amendment with an impact of about a quarter of a million dollars to the ending balance. He said they will also be kicking into the implementation of the salary survey. He said there are some things they do know, but they will probably be in a fairly conservative mode as they approach the budget. Bolkcom said they also want to try and get as much revenue into their budget as they can. Bolkcom said he would like to thank Slockett, Edwards, and Stratton for their work on the budget, as well as Schultz. He said that Stutsman, Jordahl, and Pillard have put in lots of time on developing where they are. He said if they have questions or concerns they should let the Board know.

Adjourned at 11:15 a.m.

Attest: Tom Slockett, Auditor

By Casie Parkins, Recording Secretary