2012 BUDGET RETREAT

September 13, 2011

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KALAMAZOO COUNTY BOARD OF COMMISSIONERS BUDGET RETREAT

September 13, 2011, 5:30 p.m. to 8:30 p.m.

County Administration Building

Call to Order

Chairman Maturen

Introduction – 5 minutes

Peter Battani

Five Year Budget Projections – 15 minutes .................................. 3-5

Tracie Moored

Preliminary 2012 Budget – 30 minutes ........................................ 7-9

Tracie Moored

New Funding Requests – 15 minutes ......................................... 11-13

Tracie Moored

Historical Analysis – 15 minutes ................................................ 15-21

Tracie Moored

Budget Balancing Options - 60 minutes ..................................... 23-27

Tracie Moored

Employee Benefit Considerations – 15 minutes ......................... 29-31

Citizens Time

Adjourn

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FIVE YEAR BUDGET PROJECTIONS

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Revenues 2011 2012

Property Taxes 49,159,600$ 48,676,700$ State Court Fund 1,284,700 1,284,700 Alcohol Tax 1,394,500 1,689,500 Cigarette Tax 8,300 - Revenue Sharing Reserve 3,725,800 State Shared Revenue 3,725,300 3,928,700 Departmental Revenue 27,537,600 25,799,300 Carryover 1,244,200 - Interfund Transfers 202,200 202,200 Total Estimated Funds 88,282,200$ 81,581,100$

Expenditures

Salaries 39 836 100$ 39 789 700

Five Year ProjectionsOperating Funds*

Salaries 39,836,100$ 39,789,700 Fringe 16,966,400 16,940,600 Direct Operating 22,675,900 23,374,000 Contingency 250,500 250,500 Capital Tier I 650,000 650,000 Capital Tier II 250,000 250,000 Capital Tier III - Justice Facility 3,725,800 - Capital Tier III - General County 3,725,300 3,928,700 Debt - - Interfund Transfers 202,200 202,200 Total Estimated Expenditures 88,282,200$ 85,385,700$

Excess Revenues and (Expenditures) -$ (3,804,600)$

*General, Law Enforcement, Parks, FOC, Health, Child Care

ASSUMPTIONSA- Property tax assumptions: 2012-~ -.05%, 2013~ 0%, 2014~ 1.0%, 2015~ 1.5%, 2016~2.0% B- Increased projection of 1% each yearC- Increased projection tied with salary steps D- Increased projects reflect step increases onlyE- Projection includes blended fringe rates F- Increased projection of 1% each year

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2013 2014 2015 2016

48,676,700 49,162,000 49,899,430 50,897,419 A1,284,700 1,284,700 1,284,700 1,284,700 1,689,500 1,689,500 1,689,500 1,689,500

- - - - - - -

3,725,300 3,725,300 3,725,300 3,725,300 26,057,293 26,317,866 26,581,045 26,846,855 B

- - - - 245,000 265,000 285,000 285,000 C

81,678,493$ 82,444,366$ 83,464,975$ 84,728,774$

40 189 700 40 589 700 40 989 700 41 364 700 D40,189,700 40,589,700 40,989,700 41,364,700 D17,080,623 17,250,623 17,420,623 17,579,998 E23,607,740 23,843,817 24,082,256 24,323,078 F

300,000 300,000 300,000 300,000 650,000 650,000 650,000 650,000 250,000 250,000 250,000 250,000

- - - - 3,725,300 3,725,300 3,725,300 3,725,300

- - - - 245,000 265,000 285,000 285,000

86,048,363$ 86,874,440$ 87,702,878$ 88,478,076$

(4,369,870)$ (4,430,074)$ (4,237,903)$ (3,749,302)$

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2012 PRELIMINARY RETREAT OPERATIONAL BUDGET

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General Parks F.O.C.Fund

Revenue

Property Tax 36,815,000Single Business Tax 0State Shared Revenue 3,928,700State Court Fund 1,268,700Alcohol Tax 1,689,500Cigarette Tax 0Revenue Sharing Reserve 0Circuit Court, et al 1,919,700District Court 4,500,200Clerk/Register 1,730,800Treasurer 2,200,700Sheriff 3,108,200Other Departmental Revenue 1,992,900 1,280,400 2,163,000Wireless Emergency Fund Transfer 100,000Carryover 0Interfund Transfers 20,000

2012 BudgetPreliminary Retreat Version

Total 59,254,400 1,280,400 2,183,000

Expenditures

Salary 23,106,200 847,800 2,116,500Fringe 10,147,200 255,400 772,500Salary/Fringe Reserves 0 0 0Direct Operating 17,234,000 440,800 307,400Contingency 200,500Capital - Tier I 500,000Capital - Tier II 250,000Capital - Tier III - Justice 0Capital - Tier III - General 3,928,700DebtSheriff ReductionInterfund Transfers

Total 55,366,600 1,544,000 3,196,400

Variance 3,887,800 (263,600) (1,013,400)

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TotalHealth Child Care General Law Grand

Funds Enforcement Total

36,815,000 11,561,700 48,376,7000 0

3,928,700 3,928,7001,268,700 1,268,7001,689,500 1,689,500

0 00 0

1,919,700 1,919,7004,500,200 4,500,2001,730,800 1,730,8002,200,700 2,200,7003,108,200 3,108,200

3,447,500 3,580,700 12,464,500 91,200 12,555,700100,000 100,000

0 0 0182,200 202,200 202,200

0 0

3,447,500 3,762,900 69,928,200 11,652,900 81,581,100

3,346,400 3,466,500 32,883,400 6,906,300 39,789,7001,160,400 1,224,200 13,559,700 3,380,900 16,940,600

0 0 0 0 01,352,100 2,872,200 22,206,500 1,167,500 23,374,000

200,500 50,000 250,500500,000 150,000 650,000250,000 250,000

0 03,928,700 3,928,700

0 00 0 00 202,200 202,200

5,858,900 7,562,900 73,528,800 11,856,900 85,385,700

(2,411,400) (3,800,000) (3,600,600) (204,000) (3,804,600)

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! !2012 NEW FUNDING REQUEST

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2012 New Funding Requests

! Courthouse Security $300,000 This request would facilitate a change in the courthouse security service model. Annually, this would generate increased operational cost of approximately $300,000. There is a General Fund reserve of $261,200 that was established in 2007 and a general fund security activity to offset on-going costs. The commitment needed would be to extend the reserve into the operational budget for future years.

o Gull Road Courthouse $209,000 o Crosstown Center $119,000 o Michigan Avenue Courthouse $105,000

Formal detailed proposals must be developed for Board of Commissioner approval before these funds are expended.

! Drain Commissioner – Document Security & Retrieval System $ 49,000

Scanning and archiving of drain documents to replace paper files in the Drain Office. This request includes a combination of contractual services and labor for a part-time temporary employee.

! Planning Department – GIS Coordinator - 0.50 FTE $ 26,300

This is a request to increase the GIS Coordinator position to 1.0 FTE to meet the need for support as recognized in the GIS Tactical Plan for Kalamazoo County.

! Probate Court – Probate Caseworker - 1.0 FTE $ 63,900 This request is to create a 1.0 FTE position for the Probate Court to fulfill the statutorily required reviews and assessments that fall within the jurisdiction of the probate court. This function was previously provided by a Circuit Court employee.

! Sheriff – Dispatcher - 1.50 FTE $ 97,500 This is a request to create an additional 1.50 FTE Dispatcher F16 position to facilitate call center responsibilities.

! Treasurer – Accountant Position 1.0 FTE $ 50,200 This is a request to create a 1.0 FTE Accountant position to assist with the additional workload created when the County began handling the Tax Foreclosure process.

! Treasurer – Additional Land Bank Appropriation $ 50,000 Currently $100,000 is transferred from the Foreclosure Fund to the Land Bank. This supplementary amount would cover additional Land Bank expenditures.

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2012 HISTORICAL ANALYSIS

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Historical Departmental RevenueSummary Comparison

2003 2004 2005 2006 2007Actual Actual Actual Actual Actual

General Fund 54 509 690 55 311 300 58 041 339 62 082 438 63 218 605General Fund 54,509,690 55,311,300 58,041,339 62,082,438 63,218,605

Law Enforcement Fund 8,937,762 9,423,446 10,059,812 11,142,226 10,834,790

Information Systems 152,486 110,463 128,472 122,491 87,625

Parks 598,615 611,026 724,147 717,751 793,725

Friend of the Court 33,957 50,186 86,487 90,645 87,331

Health 3,588,826 3,764,716 3,781,554 2,994,619 3,644,648Health 3,588,826 3,764,716 3,781,554 2,994,619 3,644,648

Child Care 2,920,929 3,344,387 3,204,897 3,218,556 3,605,302

Grand Total 70,742,265 72,615,524 76,026,708 80,368,726 82,272,026 Grand Total 70,742,265 72,615,524 76,026,708 80,368,726 82,272,026

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2008 2009 2010 2011 2012 Increase %Actual Actual Actual Adj Budget Budget (Decrease) Change

65 128 801 64 056 984 60 159 458 65 495 500 59 254 400 (6 241 100) -9 53%65,128,801 64,056,984 60,159,458 65,495,500 59,254,400 (6,241,100) -9.53%

11,569,823 12,029,019 12,019,936 11,889,600 11,652,900 (236,700) -1.99%

83,310 59,986 0 0 0 0 0.00%

876,843 1,017,753 1,182,088 1,196,200 1,280,400 84,200 7.04%

363,703 371,805 2,267,119 2,383,000 2,183,000 (200,000) -8.39%

3,815,981 4,168,124 3,928,126 3,660,500 3,447,500 (213,000) -5.82%3,815,981 4,168,124 3,928,126 3,660,500 3,447,500 (213,000) 5.82%

3,463,388 3,684,429 3,506,278 3,762,900 3,762,900 0 0.00%

85,301,849 85,388,100 83,063,005 88,387,700 81,581,100 (6,806,600) -7.70%85,301,849 85,388,100 83,063,005 88,387,700 81,581,100 (6,806,600) 7.70%

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Historical Departmental Expenditure

2003 2004 2005 2006 2007

Summary Comparison

2003 2004 2005 2006 2007Actual Actual Actual Actual Actual

General Fund 44,070,346 44,864,481 46,554,685 46,572,781 49,528,809

Law Enforcement Fund 8,929,180 9,752,116 10,083,630 10,118,343 10,527,878

Information Systems 1,211,840 839,593 895,223 885,936 925,207

Parks 1,084,041 1,122,776 1,142,658 984,972 1,056,268Parks 1,084,041 1,122,776 1,142,658 984,972 1,056,268

Friend of the Court 3,022,751 2,851,249 2,881,325 2,791,177 2,846,563

Health 5,675,315 5,688,323 5,684,488 5,519,701 5,465,463

Child Care 6,895,522 7,524,749 6,687,286 6,736,317 7,214,555

Grand Total 70,888,995 72,643,287 73,929,295 73,609,227 77,564,743

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2008 2009 2010 2011 2012 Increase %2008 2009 2010 2011 2012 Increase %Actual Actual Actual Adj Budget Budget (Decrease) Change

52,808,444 52,500,686 54,568,222 58,201,200 55,366,600 (2,834,600) -4.87%

11,658,270 12,658,599 12,469,434 11,889,600 11,856,900 (32,700) -0.28%

948,255 901,220 0 0 0 0 0.00%

1,154,692 1,319,094 1,440,046 1,490,300 1,544,000 53,700 3.60%1,154,692 1,319,094 1,440,046 1,490,300 1,544,000 53,700 3.60%

2,880,353 2,981,881 2,996,714 3,134,600 3,196,400 61,800 1.97%

5,672,538 5,497,315 5,774,119 6,025,600 5,858,900 (166,700) -2.77%

6,685,497 6,943,724 6,598,294 7,646,400 7,562,900 (83,500) -1.09%

81,808,049 82,802,519 83,846,829 88,387,700 85,385,700 (3,002,000) -3.40%

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Fund Balances and Working Capital(Operating Funds Only)*

Beginning Excess Ending Unrestricted BalanceFund Revenues Fund Unreserved as % of

Year Balance Revenues Expenses (Expenses) Balance Balance Revenues

2010 29,019,852$ 88,988,567$ 89,772,390$ (783,823)$ 28,236,028$ 23,479,352$ 26.4%

2009 26,434,275 92,822,757 90,237,180 2,585,577 29,019,852 23,491,925 25.3%

2008 22,940,475 93,091,705 89,597,905 3,493,800 26,434,275 19,835,738 21.3%

2007 18,233,191 90,636,244 85,928,960 4,707,284 22,940,475 16,181,046 17.9%

2006 11,473,699 89,256,832 82,497,340 6,759,492 18,233,191 11,839,686 13.3%

2005 9,376,286 84,496,909 82,399,496 2,097,413 11,473,699 6,270,031 7.4%

2004 9,404,051 81,921,845 81,949,610 (27,765) 9,376,286 4,909,521 6.0%

2003 9,550,782 80,123,939 80,270,670 (146,731) 9,404,051 4,911,071 6.1%

2002 11,413,520 77,846,952 79,709,690 (1,862,738) 9,550,782 4,979,642 6.4%

2001 11,473,210 75,754,659 75,814,349 (59,690) 11,413,520 6,846,218 9.0%

*Includes General, Law Enforcement, Parks, Friend of the Court, Health and Child Care-Probate Funds.

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Budgeted Carryover History

Year General Fund Law Enforcement Fund

2012 -$ -$

2011 1,144,200 202,200

2010 261,700 242,400

2009 221,400 138,000

2008 594,900 146,000

2007 - -

2006 25,000 -

2005 100,000 25,000

2004 248,000 500,000

2003 522,900 -

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2012 BUDGET BALANCING OPTIONS

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2012 Budget Balancing Options

Specific Targets

Expenditure Options Eliminate Benefit Package for Part-Time Employees $200,000 Currently employees with an FTE designation of .50 - .799 are considered part-time. These employees would no longer receive the following: Health care premium subsidy, college credit reimbursement, opt out bonus for health insurance, holiday pay, longevity pay, personal time allocation, vacation time allocation, short term disability, long term disability, dental premium subsidy, vision premium subsidy, pension allocation, wellness benefit. Union contracts will be negotiated where applicable. (This dollar amount would include current employees and new hires~ the pension future service would be frozen for current employees). Freeze Salary Steps for All Non-Union Employees $500,000 Currently the preliminary budget contains step increases (no schedule adjustment) for all non-union employees. This option would freeze non-union employees at current salary levels (includes fringe impact). Reduce the Current Non-Union Salary Schedule by 2% $210,000 This action would reduce the current salary schedule by 2%. Employees that are eligible for a step would still receive a step just at a reduced amount. Those that are at the maximum step increase would be red-lined. This would permanently affect the salary schedule and continue to provide long term savings (includes fringe impact). Target Salary Concessions for All Union Employees Pending As dollar salary reductions or freezes are considered for the non-union employees, budgetary reduction targets for union employees will also be mirrored. This will need to be accomplished with concessions or FTE reductions. Hiring Freeze Pending During 2012, all vacant positions must be Administrator approved before positions are posted to fill.

Specific Targets Revenue Options

Utilize Carryover from General Fund $500,000 Many times during a year expenses may come in under budget and revenues may be realized at a higher amount than forecasted. This is a budget exercise option that increases revenue. Utilize a Portion of Revenue Sharing $500,000 Now that we have received revenue sharing commitments for at least one year, with authorization, a portion of the $3.7M could be used to cover operations. $1.3M has also been discussed to allocate to the operations of the jail expansion. In any given year, revenue sharing could cease.

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Authorize Phone Land Line Surcharge $375,000 The Board has the ability by statutory authority to assess a 911 surcharge to all land line phones in the County. These funds can be utilized for operational dispatch expenses therefore removing the expenditures from the general fund. Transfer Net Foreclosure Funds to the General Fund Annually $300,000 Each year revenues are generated from the tax foreclosure process. Per state statute, money can be utilized as a transfer to General Fund. A Budget Policy would be developed to outline this process. Township Patrol Officer Concept Changes as Per Concept Paper Pending Revise Tier 1 Contract Agreements with Townships to implement charges based on all direct costs. Additional Targeted Reductions As Needed The balancing options presented on these pages will not be sufficient by themselves to achieve a balanced budget. Targeted adjustments will also become necessary. The two pages that follow outline and designate potential departmental reductions based on expenditures related to total operating budget.

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2012 Budget Balancing Options

Department Reduction Target Option of $2M

Operating Funds

Reduction Reduction External Departments General Government

Adult Probation 1,600 Elections 16,600 Resource Development 3,600 Clerk/Register 21,600 Animal Services & Enforcement 18,400 Treasurer 22,400 HCS Administration 34,000 Drain Commissioner 9,000 Veterans Affairs 4,800 Soil Erosion & Sedimentation 2,800 Medical Examiner 16,800 Services for Seniors 6,400 Total General Government 72,400 Veterans Burial 3,400 Soldiers & Sailors 400 Law Enforcement

MSU Extension 11,400 Planning 4,800 Circuit Court Trial Division 9,400

Circuit Court Family Division 14,100 Parks 49,600 District Court 8,800

Friend of the Court 400 Health Fund 187,800 Prosecuting Attorney 33,500

Community Corrections 200 Total External 343,000 Sheriff 131,100

Animal Services & Enforcement 6,500 Administration

Finance 33,400 Total Law Enforcement Fund 204,000 Equalization 15,200 Human Resources 21,600 Information Systems 30,800 Board of Commissioners 9,400 County Administration 16,800 Legal Services 6,600 Purchasing 4,200 Buildings & Grounds 74,200

Total Administration 212,200

Justice

Circuit Court Administration 172,000 Circuit Court Trial Division 14,600 Circuit Court Family Division 27,600 District Court 168,200 Probate Court 30,400 Prosecuting Attorney 82,000 Sheriff 525,000 Emergency Management 7,400 Friend of the Court 102,600 Child Care Fund 242,600

Total Justice 1,372,400

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2012 Budget Balancing Options

Department Reduction Target Option of $4M

Operating Funds

Reduction Reduction External Departments General Government

Adult Probation 3,200 Elections 33,200 Resource Development 7,200 Clerk/Register 43,200 Animal Services & Enforcement 36,800 Treasurer 44,800 HCS Administration 68,000 Drain Commissioner 18,000 Veterans Affairs 9,600 Soil Erosion & Sedimentation 5,600 Medical Examiner 33,600 Services for Seniors 12,800 Total General Government 144,800 Veterans Burial 6,800 Soldiers & Sailors 800 Law Enforcement

MSU Extension 22,800 Planning 9,600 Circuit Court Trial Division 18,800

Circuit Court Family Division 28,200 Parks 99,200 District Court 17,600

Friend of the Court 800 Health Fund 375,600 Prosecuting Attorney 67,000

Community Corrections 400 Total External 686,000 Sheriff 262,200

Animal Services & Enforcement 13,000 Administration

Finance 66,800 Total Law Enforcement Fund 408,000 Equalization 30,400 Human Resources 43,200 Information Systems 61,600 Board of Commissioners 18,800 County Administration 33,600 Legal Services 13,200 Purchasing 8,400 Buildings & Grounds 148,400

Total Administration 424,400

Justice

Circuit Court Administration 344,000 Circuit Court Trial Division 29,200 Circuit Court Family Division 55,200 District Court 336,400 Probate Court 60,800 Prosecuting Attorney 164,000 Sheriff 1,050,000 Emergency Management 14,800 Friend of the Court 205,200 Child Care Fund 485,200

Total Justice 2,744,800

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2012 EMPLOYEE BENEFIT CONSIDERATIONS

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2012 Employee Benefit Considerations Union and Non-Union Groups

In addition to balancing the 2012 operational budget, we will be recommending long-term changes in benefit levels for union and non-union employees to support long-term financial sustainability for county government. What follows are possible options we are considering and may be recommending as part of the 2012 budget. Please keep in mind that changes in the Employee Benefit Fund do not have an immediate impact on the operating budget. However, the Employee Benefit Fund is reviewed annually to calculate the employee fringe rates which are charged to the operational funds. Eliminate Retiree Health for All New Hires

All new hires after December 31, 2011 would not be eligible to receive health care benefits upon retirement. This change would reduce expenditures long term. This would also impact our Other Post Employment Benefits (OPEB) funding strategy in the near future. The Annual Required Contribution will spike but policy enhancements could be made to soften the short term increase. Full Time Employees Contribute 20% Health Care Premiums (40% for Part-Time)

Currently State Legislature mandates a cap limit or 80/20 cost share for employee health insurance packages. At this time the cost share proves more cost effective for the County. Eligible part-time employees currently pay double the requirement of full-time employees. If part-time employees are still eligible to participate in this benefit, a 40% premium share is set.

Retirees Contribute at Least 20% Health Care Premiums

Retirees currently have a sliding scale pay system based on years of service. This change would set 20% as the minimum contribution in health care premiums for retirees. Change Pension Benefit Vesting Requirement to Ten Years

Currently the County pension plan has an eight year vesting requirement. New hires after December 31, 2011 would need to meet a ten year requirement. Eliminate Longevity Bonuses

Non-union employees hired before 2006 are eligible to receive an annual one time longevity payment. This benefit change would need to be part of bargaining discussions with Union groups.

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Eliminate Benefit Package for Part-Time Employees Currently employees with an FTE designation of .50 - .799 are considered part-time. These employees would no longer receive the following: Health care premium subsidy, college credit reimbursement, opt out bonus for health insurance, holiday pay, longevity pay, personal time allocation, vacation time allocation, short term disability, long term disability, dental premium subsidy, vision premium subsidy, pension allocation, wellness benefit. Union contracts will be negotiated where applicable. (This would impact both operating funds and the Employee Benefit Fund.) Future Pension Plan Review

In 2012 a comprehensive analysis will be prepared outlining future funding options and projections in regard to the County’s pension plan program.

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