Tuesday, April 6, 2010

Recommended Savings to Spotsylvania Budget v2

RECOMMENDATIONS FOR SPOTSYLVANIA BUDGET SAVINGS (SECOND DRAFT)
[click HERE] for a copy in Word.
INTRODUCTION

In February, Spotsylvania County Administrator Doug Barnes presented his recommendations for the Fiscal Year 2011 (FY11) budget to the Board of Supervisors with a property tax rate of 86 cents per $100 valuation, which would be an increase of three centers over the equalization rate of 83 cents. The Board of Supervisor advertised a rate of 88 cents per $100, five cents above equalization. However, some Supervisors have expressed hope for the equalized rate. That is why we first presented our budget recommendations last month. Since then, certain factors have led us to revise them into a second draft.

First, Administrator Barnes, Treasurer Larry Pritchett, and Commissioner of the Revenue Debbie Williams were kind enough to offer their responses to the initial draft. We are very grateful for their input, and have concluded that this is a dialogue that should be continued. We want to make clear why we decided to continue the dialogue in this manner (in public). It should not be read as any intention to slight Mr. Barnes, Mr. Pritchett, Ms. Williams, or the rest of the staff. It was, in fact, the value of their comments that led us to believe the people of Spotsylvania would be best served by having this dialogue be as public and informative as possible. We also sincerely hope that the dialogue will continue.

Secondly, there was Richmond to consider. In February, Mr. Barnes based his budget in part on the assumption that the state would fund the constitutional offices in a similar manner to past budgets. That funding was reduced, adding $1.059 million in savings that needed to be found (See Appendix 3).

Thirdly, it is clear that there is little if any support for moving below the 83 cent rate. Therefore, we decided to change the metrics of our recommendations to measure how much of the required savings each option achieves. This brings the report closer to the initial spirit in which we intended to present it, as a group of alternatives from which the Supervisors could pick and choose to avoid a tax increase.

Finally, Mr. Barnes himself – at the request of Supervisor Jerry Logan – just recently revealed his own recommendations for budget changes under an 83 cent scenario. We were pleased to discover that over half of the $3.6 million in FY11 savings that Mr. Barnes detailed were in our original report. As such, not only has the dialogue been advanced, but the area and size of any disagreement has narrowed considerably. We felt that should be acknowledged, and that a second draft was required for that.

We hope this revised report can help the Board of Supervisors maintain vital services to the county as much as possible without imposing a tax increase on property owners. This is but our latest attempt. We are neither inflexible nor arrogant enough to assume no further revision is possible, and we look forward to further dialogue with the Supervisors and county staff as we work, from our various vantage points, to keep Spotsylvania a dynamic and affordable county in which to live, work, and raise a family.

Sincerely,



Steven Thomas D.J. McGuire



EXECUTIVE SUMMARY



Administrator Barnes recommended a budget of just under $375 million for the county for FY11. The Administrator’s Recommendations (hereafter the “Barnes 86-Cent budget”) is overall lower than last year’s budget, but when the capital and education budgets are removed, the local operating budget actually increases over last year’s. While there are certain factors beyond control that led in part to that increase, we believe these factors should be addressed by finding reductions and efficiencies elsewhere, where practicable. It was in this spirit that we produced our first set of recommendations.

Since then, the county staff has both replied directly to our report and presented its own version of an 83 cent scenario (hereafter the “Barnes 83-Cent budget,” which can be found in Appendix 2). We felt that both of these new factors required revisions to our first iteration.

In the case of an equalized tax rate, the amount of savings required is driven by two factors: the revenue generated by each cent, and the $1.059 million in funds required by the aforementioned constitutional office funding shortfall. The Barnes 86-Cent Budget has calculated that each cent per $100 valuation in the property tax yields $1.182M in FY11 revenue. There is also an effect on FY10 (which we calculate to be $591K for each cent). Thus, for each cent below 86 cents, $1.773M in savings must be found. Given that we are looking to reduce the rate by three cents, the savings required equals 3 * $1.773M + $1.059 = $6.378M.

In our initial report, we cited the roughly $1.787 million in excess strategic reserves under the Barnes 86-Cent Budget as a possible partial offset. Unfortunately, the impression may have been left that this is an optional offset. In fact, an 83 cent rate would remove $1.773M from the FY10 revenues, and thus would reduce the reserves by nearly the entire $1.787M total. In other words, the FY10 part of the savings would be automatically “covered” by the lost revenue from the equalized rate.

The good news is that the FY10 savings required is no longer a concern. The bad news is that the excess in strategic reserves is effectively zero, meaning no help from it can come for FY11. Thus, our target for FY11 savings becomes 3 * $1.182M + $1.059 = $4.605M.

In that vein, we offered several potential efficiencies or reallocations that would prevent an increase in property taxes this year. The Barnes 83-Cent Budget included several of these recommendations, accounting for 40% of the $4.605M that would be needed. Furthermore, the responses of Mr. Barnes and the rest of the county staff to our earlier recommendations led us to revise some of them. The new list is on the following page, including how far each would go toward achieving the necessary spending reduction. The options from the first edition which are also in the Barnes 83-Cent Budget are in bold. Two options were partially included in the Barnes 83-Cent Budget; they are in italics.





Recommendation

Savings Percentage of $4.605M required

Partial shift of responsibility for retirement funding to employees $1,300,000 28%

Efficiencies in Social Services Department* $1,150,028 25%

Cancellation of General Fund Transfer to Transportation Fund $877,806 19%

Net Cancellation of General Fund Transfer to Code Compliance $796,396 17%

Reduction in Regional Library Funding $597,799 13%

Suspension of increase in the Capital Reserve $536,975 12%

Reduction in Regional Agency Funding by 25% $393,290 9%

Efficiencies in Planning Department $379,302 8%

Efficiencies in Information Services Department** $350,613 8%

Efficiencies in County Assessment Office $211,107 5%

Efficiencies in Human Resources Department $136,003 3%

* Partially listed in the Barnes 83-Cent Budget: Deletion of new Social Services positions: savings of $218,000 (see Option 2)

** Partially listed in the Barnes 83-Cent Budget under Hold Half-Year Positions Vacant Full-year. Because of the lack of detail on the position in question (Operations Manager), it could not be determined how much of the $428,547 was covered in the Barnes 83-Cent Budget (see Option 7)



The above efficiencies and reallocations provide a total of $6,729,319, or 146% of the required $4.605 million. Given that the total number is well over the amount needed for equalization, the Board can select from among these recommendations – or choose all of them with reduced impacts – to produce a budget that does not have local government demand more from the citizens and landowners of Spotsylvania than last year. As noted earlier, some of the options above were included in the Barnes 83-Cent Budget. The total measurable reduction in this category is as follows:



$877,806 + $597,799 + $218,000+ $136,003 = $1,829,608



This is 40% of the $4.605 million required.



Moreover, we are more than happy to accept two of the options listed in the Barnes 83-Cent budget that were not included in our first report: namely, holding all non-Public Safety ½-year positions vacant and reducing regional agency funding by 10% (in fact, as can be seen above, we are recommending a 25% regional funding reduction in this edition). These savings total $431,053.



As such, the Barnes 83-Cent Budget includes $2,260,661 in savings with which we agree. This reduces the delta between this report and the Barnes 83-Cent Budget to just under $2.345M. With this in mind, the following page lists the options that remained outside the Barnes 83-Cent Budget, including how far each would go toward achieving the necessary spending reductions of nearly $2.345 million.





Recommendation Savings Percentage of $2.345M Delta

Partial shift of responsibility for retirement funding to employees $1,300,000 55%

Additional Efficiencies in Social Services Department $932,028 40%

Net Cancellation of General Fund Payment to Code Compliance $796,396 34%

Suspension of increase in the Capital Reserve $536,975 23%

Efficiencies in Planning Department $379,302 16%

Additional 15% Reduction in Regional Agency Funding $253,974 10%

Efficiencies in Information Services Department* N/A N/A

Efficiencies in County Assessment Office $211,107 9%

* Partially listed in the Barnes 83-Cent Budget under Hold Half-Year Positions Vacant Full-year. Because of the lack of detail on the position in question (Operations Manager), it could not be determined how much of the $428,547 was covered in the Barnes 83-Cent Budget (see Option 7)



Even excluding Information Services, the above options total $4,391,782, or 187% of the required $2.345 million (rounding up). Once again, this gives the Board the option of selecting from among these recommendations, or choosing all of them with reduced impacts, to reach the 83 cent rate.



Some of these recommendations would lead to staff reductions. The details can be found in Options 1 through 11.



It should also be noted what these recommendations do not include:



• No reduction in public safety funding (police, fire and rescue), except for the retirement contribution shift

• No reduction in local school funding



Due to this, among the many options listed in the Barnes 83-Cent Budget that were not discussed here, there are two to which we would immediately object – holding vacant five Fire and Rescue positions and reducing funding to the school system. We think the former is unwise given the current imbalance between resources and need in the eastern part of the county (which will remain until a new station in Lee Hill is built). The latter we find objectionable due to the large amount of reductions the school system has already taken due to lower funding levels from Richmond. Of course, we also do not believe the reduction in constitutional office funding should be left unaddressed, which is why we added $1.059 million to the required savings figure.



Hopefully, this revised report will be received in the way it is intended: as an opportunity for alternatives to an economically damaging tax increase just as we are trying to come out of the Great Recession. We very much appreciated the response we received from both Supervisors and staff, and we look forward to continuing the conversation with both of them.



OPTION 1: PARTIAL SHIFT OF RETIREMENT FUNDING TO EMPLOYEES



This year, the Virginia allowed local school districts to require their employees contribute to their own retirement, rather than forcing the districts to fund both sides of the usual employer-employee match as is the present situation. Dr. Hill himself has stated that this change could save the Spotsylvania School Division at least $5 million – or roughly 2.6% of the total personnel budget of $194.4 million.



The initial report included this option in the appendix because it was unsure at that time that it would become law. However, Administrator Barnes noted in his response that, in fact, county staff has always had the option to stop funding the employee part of the match and return instead to the traditional match format. The personnel budget for local government is listed as just over $50 million. Using the 2.6% figure as a guide, this change could save the General Fund at least $1.3 million annually.



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 28.2% of the $4.605M required to achieve the equalized rate; it would also cover 55.5% of the $2.345M delta between this report and the Barnes 83-cent Budget. No staff reductions are required as a result of this option.





OPTION 2: SOCIAL SERVICES EFFICIENCIES

The Department of Social Services provides numerous services across a variety of areas. Under the Barnes budget, a tax-supported increase of nearly 17% is projected in order to fill vacant positions and address “a 72% increase in benefits applications.”

As Mr. Barnes noted in his response to our first iteration of this report, that increase came over a three year period (from FY07 through FY09), half of which was before the Great Recession (which may soon be ending, as Mr. Barnes himself notes ). While Mr. Barnes made clear that most of the increase came as the Great Recession was most felt (from December 2008 through December 2009, the latter of which is halfway through FY10), roughly a third of the increase was not, which could mean the benefit application increase was driven in part by the increase in population which occurred in the early part of the last decade (and which has been slowed to a crawl in recent years).



In any event, when looking at the Social Services spending during much of the past decade (FY02-FY10), one finds that spending was actually lower than initially projected at budget adoption for every single year but two (FY03 and FY08). This leads us to believe it would be better to project spending as a function of revenue. Initially, we just used FY10 as a guide, meaning the ratio would be 1.54 to 1. After some consideration, we thought it best to go further back. Thanks to the budget data available, we were able to examine actual Social Service revenue and spending as far back as FY01. As a result of the additional data, a more robust spending to revenue relationship of 1.57 to 1 can be used:



Said ratio leads to the following:



Recommended Savings = Barnes Budget FY11 Expenditures – (FY11 Revenue * 1.57) = $17,507,247 – ($10,433,737 * 1.57) = $1,150,028



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 25.0% of the $4.605M required to achieve the equalized rate. Given that this is a specific cost estimating relationship driven by revenue, we do not expect the reduction in spending to lead to a revenue loss (a concern raised by Mr. Barnes in his response to the first iteration).



The Barnes 83-Cent Budget partially includes savings from this option under “Delete HR Director and new DSS positions.” The DSS piece of this line item is $218,000 (the HR piece is addressed in Option 11). Thus, the difference between the Barnes 83-Cent Budget and this report comes to $932,028, which would cover 39.8% of the $2.345M delta between this report and the Barnes 83-cent Budget.



This option would result in an approximate proportional reduction of 5 positions (in the absence of specific salary data, exact FTE figures could not be determined); at least two of which are currently unfilled and would be deleted under the Barnes 83-Cent Budget. Therefore, reduction is staff would be limited to three at most.





OPTION 3: CANCELLATION OF THE GENERAL FUND PAYMENT TO TRANSPORTATION



The Transportation Fund has a number of circumstances befall it in FY11, including a dramatic increase in Reserves – over $1.1 million from FY10 and a whopping $3.8 million increase from FY09. Of course, most of those reserves are slated for particular transportation districts, but the heavy increase does mean there can and should be less reliance on the General Fund. Indeed, a dramatic decrease in the General Fund transfer to Transportation would already occur under the Barnes budget (over $2 million). The Board might explore removing the remainder, which would be $877,806.



It should be noted that part of the reason for the General Fund transfer is the fact that decal revenue falls into the General Fund, rather than the Transportation Fund. We expect this concern drove Mr. Barnes’ initial concern for cancelling the transfer. It is a concern we share for the long term. As we do not expect the Great Recession to be the usual state for the economy, the Board may want to consider permanently placing the decal revenue in the Transportation Fund for FY12 and beyond, thus ensuring a steadier funding stream for Transportation.



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 19.1% of the $4.605M required to achieve the equalized rate. This option was included in the Barnes 83-Cent Budget. No staff reductions are required as a result of this option.



OPTION 4: NET CANCELLATION OF THE GENERAL FUND PAYMENT TO CODE COMPLIANCE

Prior to FY09, costs for the Code Compliance Department were covered by fees, not taxes. In fact, going back to FY01, Code Compliance usually made fees well over and above its expenses, although that was certainly due in part to the building boom here that stretched into the early 21st Century. Even as late as FY07, Code Compliance managed to get at least 96% of its budget in fees (there was a fall-off to 77% in FY08, but it returned to 96% in FY09).

FY10 saw a dramatic falloff in fees, but the Great Recession was only part of the reason. That fiscal year also saw the attempted “stimulus” fee reduction, which did nothing to alleviate the Great Recession but did manage to lose the county over $250,000 in revenue. As a result, Code Compliance is now relying on transfers from the General Fund to maintain staff. We do not consider that in the best long-term interests of the county. While Mr. Barnes has made his case otherwise, both in the Barnes 86-Cent Budget and in his response to the first edition, we simply have a disagreement here.

The Barnes 86-Cent Budget includes a General Fund payment of $1,274,623 to Code Compliance. That said, it should be noted that Code Compliance is sending $478,227 back to the General Fund. Therefore, unlike the first iteration, we now recommend the net contribution from the General Fund be reduced to zero, leading to a savings of $1,274,623 - $478,227 = $796,396.



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 17.3% of the $4.605M required to achieve the equalized rate; it would also cover 34.0% of the $2.345M delta between this report and the Barnes 83-cent Budget. This option could result in an approximate proportional reduction of 8 FTEs (again in the absence of specific salary data, exact FTE figures could not be determined), but only if the Board chooses not to raise fees.



OPTION 5: REDUCTION IN REGIONAL LIBRARY FUNDING

Spotsylvania Count naturally wishes to maintain good relations with neighboring jurisdictions, and regional agencies can go a long way toward achieving that goal. However, the current economic climate, combined with the county joining VRE this year, should provide some leeway (we would consider the same factor in recommending Option 7: Reduction of Regional Agency Funding by 25%).

In particular, Spotsylvania may want to suggest a postponement of the new regional library branch. While Stafford (which would host the branch) might express some angst for this, a postponement would allow them to more smoothly deal with their elimination of the BPOL tax.



Mr. Barnes himself noted in his initial response that there is some discussion among the Regional Library jurisdictions about postponing the new branch. We hope these talks continue and lead to an agreement to postpone. Spotsylvania’s portion of funding for the library system over FY11 comes to $597,799.



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 13.0% of the $4.605M required to achieve the equalized rate. This option was included in the Barnes 83-Cent Budget. No county staff reductions are required as a result of this option.





OPTION 6: SUSPENSION OF THE INCREASE TO THE CAPITAL RESERVE



The Capital Projects Fund is due to receive roughly $3.8 million from the General Fund in FY11 under the Fiscal Guidelines for the CIP, which call for step increases of 0.25% a year of revenues until the long-term goal of 5% is reached. Given the current economic circumstances, taking this step (from 1.5% to 1.75%) along this path may not be entirely wise.



In their responses, Messrs. Barnes and Pritchett expressed grave concern over the effect this would have on the County’s bond rating (Mr. Pritchett in particular noted county efforts to move up from AA to AAA). We fear there may have been some confusion in the initial iteration, which we regret. We do not recommend shifting the path, but rather skipping a step, and returning to it next year with a 2% set-aside.



At 1.75%, the transfer stands at $3,758,827. At 1.5%, it would be $3,221,852, for a savings of $536,975.



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 11.7% of the $4.605M required to achieve the equalized rate; it would also cover 22.9% of the $2.345M delta between this report and the Barnes 83-cent Budget. No staff reductions are required as a result of this option.





OPTION 7: REDUCTION IN REGIONAL AGENCY FUNDING BY 25%



While we did not include reducing non-Library regional funding initially, we are more than willing to accept – and in fact expand – the 10% reduction in regional funding in the Barnes 83-Cent Budget.



The reason we expanded the reduction to 25% was specifically related to one part of the Barnes 83-Cent Budget that did concern us, a $179,360 reduction in the School Fund Transfer. While we are also concerned about the Fire and Rescue de facto hiring freeze (we noted the reasons for our objections to both in the Executive Summary), we felt the School Fund Transfer reduction can be eliminated more easily with one option, and we chose this one.



The 25% reduction in regional funding leads to a savings of $393,290.



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 8.5% of the $4.605M required to achieve the equalized rate. As mentioned above, the Barnes 83-Cent Budget already has a 10% reduction here. The additional 15% would save $235,794 – or 10.1% of the $2.345M delta between this report and the Barnes 83-cent Budget. No county staff reductions are required as a result of this option.





OPTION 8: PLANNING DEPARTMENT EFFICIENCIES

The Planning Department is not as revenue-driven as Code Compliance; nor should it be. However, one would expect a relatively stable relationship between the revenue that comes in and the expenses that go out, even if that ratio is not 1 to 1.

However, in FY11, said stability is not to be found. Unlike any of the past nine years, the Barnes 86-Cent Budget calls for expenses to be more than two-and-a-half times that of incoming revenue. In fact, the highest previous spending-to-revenue ratio was 2 to 1 (in FY08), but the two subsequent years saw a steady decrease in that ratio, despite the Great Recession. That it would suddenly swell to 2.72 to 1 is counterintuitive. If revenues truly are to fall as low as Mr. Barnes believes, spending should likewise be reduced – not to a 1 to 1 basis, but at the very least to a ratio of FY10 (1.66 to 1).

A more robust relationship, based on the last ten years of data (FY01-FY10) would actually call for a more stringent ratio of 1.29 to 1. However, we are prepared to accept 1.66 to 1.

This ratio leads to the following:



Recommended Savings = Barnes Budget FY11 Expenditures – (FY11 Revenue * 1.66) = $976,541 – ($359,336 * 1.66) = $379,302



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 8.2% of the $4.605M required to achieve the equalized rate; it would also cover 16.2% of the $2.345M delta between this report and the Barnes 83-cent Budget. This option could result in an approximate proportional reduction of 5 FTEs (in the absence of specific salary data, exact FTE figures could not be determined), but only if the Board chooses not to raise fees.



OPTION 9: INFORMATION SERVICES EFFICIENCIES

The Department of Information Services (DIS) provides numerous information technology (IT) services for the county, including providing GIS data for the citizenry. The DIS table in the Barnes Budget notes 28.5 FTEs. However, 4 positions are to remain vacant, while the post of Operations Manager is slated to be filled for only half a year; so the effective FTE number is actually 24.

Mr. Barnes himself acknowledged in his responses to our first iteration that there were no new initiatives here. In effect, the county has decided, and wisely so, to make a strategic “pause” in new application development. Yet Mr. Barnes still states that the current number of Analysts (which, based on the last staff report from the FY09 budget, is five, although one of those positions is currently vacant) is necessary for maintenance of current systems. Traditional costing for software maintenance disputes this view (depending on the systems, maintenance tends to require between 12% and 18% of development cost). As such, we still believe one analyst is sufficient at this time.



We also continue to recommend that the Operations Manager position stay vacant for the entire year, and that the Deputy Director position be eliminated to streamline the top-heavy bureaucracy. Mr. Barnes noted in his response that the Deputy Director is currently running the Department, due to the Director being transferred to a different post. As such, we would recommend that, rather than funding both the Director and Deputy Director positions, the Deputy Director be promoted to Director.



It should also be noted that the GIS service was not examined here, in part because of a lack of data on the cost of the GIS to the IS Department. There may be potential to recoup staff losses here through an increase of fees, especially if the fees do not currently cover the GIS cost.



Barring a change in fees, this option leads to a total of 5½ positions, of which 4½ were funded in the Barnes 86-Cent Budget). Since two of them are vacant (the Operations Manager and one of the Analyst positions, the latter of which was not funded in the Barnes 86-Cent Budget), the actual loss to staff would be four – again, only if the GIS fees are left unchanged.



Because the detailed cost for each position was not given, used the following approach to gauge the effect on personnel cost (given the nature of DIS, Operating Cost was left alone):



Recommended Savings = Barnes Budget FY11 Personnel Cost * 4.5 / 24 = $1,869,936 * 4.5 / 24 = $305,613



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield roughly 7.6% of the $4.605M required to achieve the equalized rate. The Barnes 83-Cent Budget included a line item Hold Half-Year Positions Vacant Full-year, which would include the DIS Operations Manager. Because of the lack of specific detail on the Operations Manager position, it could not be determined how much of the $305,613 was covered in the Barnes 83-Cent Budget, and what would be left compared to the delta between the Barnes 83-Cent Budget and this set of recommendations.



SECTION 10: COUNTY ASSESSMENT EFFICIENCIES

The first iteration of this report included large efficiencies in the three “departments” of Finance, Treasurer, and Commissioner of Revenue (the latter two being not departments but constitutional offices). That recommendation inspired the most detailed and informative responses from Mr. Barnes, Mr. Pritchett, and Ms. Williams. We were very grateful for them, as several residents of Spotsylvania shared our initial concern about redundancies in these areas, and their responses helped clear up those concerns.

Within the County Assessment office, however, we still believe efficiencies are possible. There are few comparable counties to ours; in fact, only Stafford has the combination of comparable population and budget detail. However, the Stafford numbers are telling. Despite a roughly equal population to ours and a similar assessment cycle (biennial), Stafford’s level of appraisers stands at six, while ours is at ten. We acknowledge that Stafford has roughly 20% fewer parcels than Spotsylvania does. However, Stafford’s assessors handle, on average, nearly 4,100 parcels a year, over a third more than the 3,000 and change the average Spotsylvania assessor covered in FY10 (FY11 parcel data was not given in the budget).

This implies the county could conduct assessments with a staff of 7.5 FTEs rather than 10 (for a loss of 2.5). Without specific salary data, exact savings could not be determined; approximate savings would be:

Recommended Savings = Barnes Budget FY11 Personnel Cost * 7.5 / 10 = $844,428 * 0.75 = $211,107



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield 4.6% of the $4.605M required to achieve the equalized rate; it would also cover 9.0% of the $2.345M delta between this report and the Barnes 83-cent Budget.



SECTION 11: HUMAN RESOURCES EFFICIENCIES

The Department of Human Resources includes funds for a restored Director. The position was resurrected in the Barnes budget after being eliminated last year. While the resurrection of this position was not discussed in the Barnes 86-Cent Budget, Mr. Barnes did address it in his response to our initial report, for which we are grateful. We also agree with him that the responsibilities of this position should not be placed upon Deputy County Administrator Ernie Pennington on a permanent basis. As such, we are not asking for the permanent elimination of this position. If we can restore it in FY12, we should.

For now, however, we feel we must hold to our recommendation not to bring this position back this year, although we are adjusting the savings to accommodate for the $6,741 in personnel costs not driven by the restoration of this post. This leads to the following:



Recommended Savings = Barnes Budget FY11 Personnel Cost – (FY10 Personnel Cost + $7,586) = $556,084 – ($413,340 + $6,741) = $136,003



These savings, based on the funding effects of the property tax as described in the Executive Summary, would yield roughly 3.0% of the $4.605M required to achieve the equalized rate. This option was included in the Barnes 83-Cent Budget under “Delete HR Director and new DSS positions.” The HR piece of this line item is $136,003 (the DSS piece is addressed in Option 2). Because the position in question is already vacant, no staff reductions are required as a result of this option.





APPENDIX 1: OPTIONS NOT EXAMINED



In our analysis, there were some options that we did not consider, but that the Board might, such as Supervisor Emmitt Marshall’s idea for selling state land and, if necessary, helping to finance the sales for buyers. While the effect on this year’s budget is not clear, it would certainly improve the county’s financial position by (1) moving land from local ownership to private ownership, thus putting it on the tax rolls, and (2) reducing the net debt of the county if it is to become the creditor on these parcels. It is an option very worthy of the Board’s consideration.



A second possibility to consider is the exploration of Health Savings Accounts (HSAs). Indiana has offered HSAs as an option to its employees since 2005. Today, according to Governor Mitch Daniels, “over 70% of our 30,000 Indiana state workers chose it.” They “will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative.”



As for the state itself:



Indiana will save at least $20 million in 2010 because of our high HSA enrollment. Mercer calculates the state's total costs are being reduced by 11% solely due to the HSA option.



Again, this may be more of a long-term budget strategy than one for FY11, but we think it’s worth a look.

APPENDIX 2: THE BARNES 83-CENT BUDGET





APPENDIX 3: ESTIMATED REDUCTIONS IN STATE AID – FY11

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