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HomeMy WebLinkAbout2/1/2012 - SpecialFebruary 1, 2012 8 Roanoke County Administration Center 5204 Bernard Drive Roanoke, Virginia 24018 The Board of Supervisors of Roanoke County, Virginia met this day at the Roanoke County Administration Center, Fourth Floor Training Room, 5204 Bernard Drive, Roanoke, Virginia for the purpose of a joint work session with the Roanoke County School Board to discuss fiscal year 2012 -2013 budget development. Audio recordings of this meeting will be held on file for a minimum of five (5) years in the office of the Clerk to the Board of Supervisors. IN RE: CALL TO ORDER Chairman Flora and Chairman Minnix called their respective boards to order at 6:03 p.m. MEMBERS PRESENT: Chairman Richard C. Flora; Supervisors Michael W. Altizer, Eddie "Ed" Elswick, Charlotte A. Moore MEMBERS ABSENT: Supervisors Joseph B. "Butch" Church STAFF PRESENT: B. Clayton Goodman III, County Administrator; Daniel R. O'Donnell, Assistant County Administrator; Diane D. Hyatt, Assistant County Administrator; Paul M. Mahoney, County Attorney; W. Brent Robertson, Director of Management and Budget; Rebecca Owens, Director of Finance; Deborah C. Jacks, Clerk to the Board SCHOOL BOARD MEMBERS PRESENT: Chairman H. Odell "Fuzzy" Minnix; Supervisors C. Drew Barrineau, Jerry L. Canada, Michael W. Stovall, David M. Wymer SCHOOL BOARD MEMBERS ABSENT: None SCHOOL ADMINISTRATION STAFF PRESENT: Lorraine S. Lange, Superintendent; Allen W. Journell, Deputy Superintendent of Administration; Penny A. Hodge, Assistant Superintendent of Finance; Brenda F. Chastain, Clerk to the School Board; Angela Roberson, Deputy Clerk 82 February 1, 2012 IN RE: DISCUSSION OF HIGH DEDUCTIBLE HEALTH INSURANCE PLANS WITH A HEALTH SAVINGS ACCOUNT Ms. Julie White gave a presentation on high deductible health insurance plans. A copy of this presentation is on file in the office of the Clerk of the Board of Supervisors. After discussion, it was the consensus of the Board to bring back for later work sessions with a possible start date for fiscal 2013 -2014. Chairman Flora and Supervisor Elswick both stated they would like to see how it would affect different levels of employees with actual case examples to be included. Chairman Flora also asked for staff to look into a health reimbursement plan. IN RE: HEALTH INSURANCE PLAN DESIGN CHANGES FOR 2012 -2013 Rebecca Owens outlined the next steps in the insurance plan design changes for 2012 -2013 would be the implementation of Key Care 200 with a calendar year deductible, $200 single and $400 family, with the out of pocket maximum to stay the same. She stated there were only two other changes with regard to emergency room and inpatient stays that would be replaced with the front -end deductible. Co- payments would remain unchanged. She explained the ultimate goal is not to have an increase to employees. Supervisor Elswick advised he would need to leave early. IN RE: OVERVIEW OF COUNTY BUDGET FOR 2012 -2013 Mr. B. Clayton Goodman III explained the departmental budgeting was just getting started and that Management and Budget would be receiving budget requests on February 3, 2012. He indicated that revenue estimates will continue to be estimated throughout February and March and sales tax numbers would be received in February. He indicated his main point was that everything remains a work in progress. He explained he has assigned each department a target reduction and anticipates these departments with having a hard time reaching these reductions. He added he had included a proposed budget increase at the beginning of the year for salary increases; no promises have been made and if the funds are not there, no increases will be given. Mr. Goodman explained due to the large deficit numbers, Roanoke County will need help from the schools. Ms. Diane Hyatt reviewed the preliminary numbers listed on page 2 of the budget breakdown provided with the agenda. A copy of the agenda materials is on file in the office of the Clerk of the Board of Supervisors. February 1, 2012 83 Mr. Brent Robertson reviewed page 3 of the budget information and indicated this was the first time in twenty -two (22) years that the budget process was starting with negative numbers. He explained that property taxes represent approximately seventy percent (70 %) of total revenues and have been profoundly affected by the economy. Ms. Hyatt explained the Virginia Retirement System (VRS) is the biggest issue to be dealt with. The actuarial rate assumptions for local governments this year were changed and went to a seven percent (7 %) investment return instead of seven point five percent (7 1/2 %) that was previously used. Accordingly, everyone was underfunded and resulted in a larger payment going in for future years. Roanoke County went from $15.05 to $19.01 and includes a five percent (5 %) employee portion, which will cost Roanoke County $2 million. There are some savings from the Plan 2 employees of $100,000. The retiree health insurance credit with VRS also went up slightly, $4,800 and the VRS life insurance rate, which is one rate for everyone, would be one point nineteen percent (1.19 %), which will cost $455,000. Nothing has been added for a health insurance increase, which is currently six point eight percent (6.8 %), but is hoping with negotiations and plan design changes to get close to zero (0). After these adjustments are made, Roanoke County will be left with a deficit of $5.2 million. For further details, this information is fully quantified on the bottom of page 2 of the presentation. Departments have been asked for another $1.4 million in cuts and will involve service cuts, which will need to be brought back to the Board. After all of the cuts have been made, it appears between a $1.1 million and $2.6 million would need to be potentially reduced from the school transfer, depending on what is decided on the salary increase. IN RE: OVERVIEW OF SCHOOL BUDGET FOR 2012 -2013 Superintendent Lange reiterated the schools are also in the beginning stages of their budget process. She advised they feel it is going to be a tough year, with the same problems the County has with retirement and have had tough years in the past. Since the 2009 -2010 school year, $12 million has been cut from the budget and have eliminated over two hundred (200) positions in Roanoke County schools. Additionally, Bent Mountain and two other programs were closed. She stated she felt it was going to be difficult for school staff to look at the cuts that will need to be made. She advised they feel their employees are very important and have not been promised anything. They have not had a raise in four years so she would like to see if there is anything that can be done for their employees. To start, they have implemented a hiring freeze and are not replacing any positions unless it is a critical position. Central office people will be used to cover as well as retirees. Ms. Lange advised all departments have been asked to cut their budgets by three percent (3 %), but cautioned eighty -three percent (83 %) of the budget is personnel. Accordingly, they will have to look at personnel. 84 February 1, 2012 Penny Hodge referenced pages four and five of the agenda information for the revenue detail. She advised there were four lines that were of particular importance for this year. The first being the sales tax appropriation. The sales tax numbers have shown signs of improvement. The schools allocation is based on sales State -wide, not just Roanoke County. She indicated they had seen signs of improvement in the current year, however, the General Assembly voted last year to change their allocation for schools for fiscal 2013 from the locality census to be based on the 2010 federal census. She explained the Weldon Cooper Center in Charlottesville is using this data to enter a formula and are projecting Roanoke County sales taxes for schools next year will be $13.8 million, the prediction last year was $15.5 million, resulting in a $1.6 million reduction. She advised they have been speaking with Virginia representatives and the federal representatives working in this area for assistance. Superintendent Lange advised she has spoken with Senator Newman who has asked Weldon Cooper to present to the subcommittee and find out what is happening. Ms. Hodge explained no one has been able to provide an explanation as to how two thousand (2,000) more children were counted than appeared on the federal census. Secondly, Ms. Hodge pointed out the retirement line. Thirdly, is the school operating costs, which was also a General Assembly action last year to balance the budget and have taken it out of the budget for this year. Lastly is the transfers from other funds, $600,000 of health insurance reserve was used to balance the operating budget and they had a $100,000 adjustment for the joint alternative program that has been closed. She explained the estimated loss of revenues is approximately ($520,434). She detailed the expenditure side; the schools have the same situation with regard to VRS, which will result in a net increase in VRS of $4.7 million. Health insurance has been left without an increase, a salary increase has been included and the joint CIP increase has been included as well as the technology plan and the increase in County IT charges resulting in a beginning deficit in the school budget of approximately ($9.8 million). She advised she also included some historical information in the packet as it relates to the sales tax issue, personnel cuts, local appropriations and required local effort. IN RE: CLOSING COMMENTS Supervisor Altizer commented there is no doubt each side is going to have tough time. He feels both Roanoke County and the Schools are facing the "new reality." He stated he thinks the "new reality" is going back and looking at everything that has been done in the past three to nine years, etc. He advised this is best opportunity to go back and change the wrong things that were done in whatever was created, whether it is programs, etc. He stated the Board does not make budget decisions on raises until the end and knows neither side has promised raises. February 1, 2012 85 He explained staff must "turn over every rock" and then it is what it is at the end of the day. From the County side, he hopes that staff will look at every single thing that can be done that is not needed. He explained that he does not think it will be any better next year or the year after and even if there is a nominal one percent (1 %) growth and the greatest thing in the world happens and the State legislature goes through their budget and does not take any more money away. His fear is that he could see employees not seeing a raise for five (5) to ten (10) years. His thought is if not now, when? He thinks staff needs to give its best efforts at looking in each department, if something was created and it is not paying for itself, the Board needs to find money. The Board is being tight, but so are our employees. This is tough on all and whether it is a raise, something at year end as a combination, he does not know but something must be done because case after case and it does not matter whether you are a school teacher, firefighters or a police officer, the pay schedules have become so compressed, some of the areas that are doing raises are going to begin to take Roanoke County's good people. A clear case in point is the regional jail. The jail is losing people to other localities just because they have given some raises. His fear is as Roanoke County continues to shrink and compress these pay schedules, the Board is trying to do the best it can by its employees, but then they start to look and you start to lose more and more experience. The only thing the Board can do is give its best effort to see where some things can be cut, eliminate things that are not needed and try to do something for our employees, in whatever form that takes or whatever combination that takes, but something needs to be done to relieve the stress for the liability of Roanoke County and our employees and knows each and every one will do so throughout the budget process. School Board Chairman Minnix commented this was his seventeenth (17 year in Roanoke County, twelve (12) years on the Board of Supervisors and now starting his fifth (5 th ) year on the School Board and he has never seen it worse and it seems that Richmond has forgotten us, not just us but all schools in the Commonwealth of Virginia. He advised he always thought of education as being a very high priority in the State because you train young men and women to do jobs for businesses established in the Commonwealth. They are trained and prepared them to do these kinds of jobs, but we cannot do that forever. In the past four years, schools have been cut to the tune of $15 -$17 million and this year it could be up around $8 -$9 million. It is depressing because staff keeps combining classes and does not hire people when people retire. We are going to get to the point where SOL's will be the same. He does not know if the folks in Richmond will throw up their hands all of a sudden and say "what's going on ?" He stated he guessed one of the things that disturbs him the most is that when the local folks run for government tell us how important schools are to them, but they do not reflect it when they get to Richmond, which places us at a gigantic economic impact; puts us far behind. 86 February 1, 2012 He stated he is afraid it is going to get worse before it gets better. We have some tough roads ahead of us still and we all need to be together. He agrees with the County Administrator, we need to be together on this by helping each other as much as we can, where we can because we are going to have to make, on the School Board side, some very unpopular decisions with parents, teachers and other people concerning our school system. They are going to have to; they just do not have the money. Hopefully, and they will encourage at each of their meetings, our parents, friends and people to contact their delegates, senators and the Governor. Last year, he feels it probably helped a great deal because in the end they were able to derive a few more funds out of having their people talk with their politicians. It is going to be very difficult and his feeling is we are in this thing together and would like to see everyone work as hard together as we can in order to make it successful. Primarily looking ahead, what has happened in the past is over and there is nothing we can do to change it, but there are some things we can do to change the future and take a new look at what we can do to make ourselves stronger because he has heard from many authorities that next year is going to be worse than this. We have a charge from the folks that put us in office to make our systems work. We must work as diligently as we can in order to do that and come up with the best possible solution. School Board member Canada stated he looks at this a little differently. Now that they have gone beyond $9 million and in effect looking for $12.9 million, which is the bottom line on top of $15 million in cuts over the last three (3) years and over two hundred (200) fewer employees over the course of the last three (3) years. The School Board feels like they have retooled themselves to some extent already and they are doing business differently than it has in the past and doing it very well. Although, if you are out in the schools and speak to the teachers, you can see some of the strain in their faces because they have a lot more being placed on these folks. So far, mainly at the elementary levels and the high schools. He stated he thinks what the Board will see from the Schools is a good effort on their part to make this happen. There is no use landing blame anywhere. It is what it is; $28 million over four (4) years is a lot of money and is a big reduction. It takes a lot of work to reduce your services to accommodate $28 million. He stated he knows there is very little that he can do about it and thinks the County side is where they are with lost revenues. When the School Board was told about this on Friday, he advised he has not slept a whole lot since. He stated he has been mad, sad and now he is just resigned to the fact that it is what it is and they need to go back and look at this again and see if they can retool themselves even one more time to become even leaner and meaner. Mr. Canada stated he is just talking for himself and there are five different opinions down this table and would ask as they look at these things to generate this kind of money, it will involve some changes. It will be changes maybe where children go to school and those kinds of things. Probably, some of the things they can lay on the table, their first meeting is next Wednesday, to actually look at some of the things staff is going to recommend. Once the meeting is held, February 1, 2012 87 there is going to be a lot of proposals on the table that will generate some interest. He is sure it will generate some interesting meetings between now and the end of budget, which will probably overflow to Board of Supervisor meetings as well. So, he asks that as they go through this and struggle with this, and he is sure there will be time spent yelling at ourselves because they are not going to agree on what they need to cut and how they get there. He does not look forward to that either, but has been here twenty (20) years now and can see it coming, but would ask for the Board of Supervisors support as they struggle through this and try and make this work for all of us. He stated he hopes that if they get to that point and they can make this effort and make it work, he hopes they can save every job; that is his number one goal. He commented that he is not interested in sacrificing any employee so that they can give the others a raise; that is not how they are going to get there. If they can get this money, they are not going to get it that way. He hopes that his fellow Board members will agree to that. Even if they wind up closing a school here or there, he hopes that they can mingle the people in with the holds on different positions. He reemphasized he is asking for the Board of Supervisors support as they work through this because they will really need the Board's support on this side as well. School Board Member Barrineau stated first of all he wanted to thank the Board of Supervisors for just being a tremendous partner in K -12; they have been blessed to have the Board putting our children and students in the best possible position to succeed; that being Roanoke County. In a perverse sense the downturn maybe has been good for them from the standpoint that they have been nonstop budgeting and he thinks the last time he was Chairman the very first day of the new year, July 1 St sending out an email that they had to continue looking. In essence, they have been making cuts a year in advance and what they have been able to do to date, they are down 217 full time equivalents, net of $12 million including a supplement a few years ago; that is an awful lot. He thinks the schools have done a tremendous job trying not to impact people as much as what otherwise could have been, but a lot of that has been foresight, looking ahead. What bothers him about what they are looking at now realistically is both sides have lain on the table $15 million of reductions that need to be made; it needs to come from somewhere. Also, he added he is very pessimistic and what is not on the table is probably at least another $6 million in VRS, another $2 million from the County side and at least another $4 million from the school side that is still underfunded. To top that, there is no momentum in the real estate market of any significance that would help us. There are options whether to non - renew, non - essential, non - tenured teachers; that is one option. There are four (4) elementary schools that could be looked at: Ft. Lewis, Clearbrook, Back Creek and Mt. Pleasant. Going forward is going to be extremely difficult. 88 February 1, 2012 They have done this in a very humane way so far. He commented another thing is that he sees what Richmond is doing to the County as well to the schools. We are assuming that hopefully they are at the bottom, but there is no one at the table that thinks Richmond is not going to push down expenditures on to the County. He stated he thinks they are living in a fantasyland to think that is going to stop. He advised he is also concerned with what the federal government is going to do on the school side. This is a very difficult time to be a Board member and then you go out in community meetings and parents have high expectations; they are used to the way things have been in the last ten (10) years in his tenure on the Board and what they have been able to do. "It is kind of okay if something gets cut in Mr. Canada's district, but leave us alone and cut everybody else." Those days are over and where they are going now is unchartered waters going forward. The primary focus that he is looking at is the integrity of the classroom, where they are educated is on the table. To date, the schools have expended a tremendous effort to get to where the school system is and quite frankly, he is quite proud of what has been accomplished. He commented he looks at what is going on in Washington; they are pretty well dysfunctional and Richmond is still up in the air. He thinks they have done it the right way in Roanoke County. He reemphased they have worked together, there is a revenue sharing format that has been used in the past; have never bickered about that money. They have not second - guessed the County decisions and the County has pretty much left them alone to handle K -12. As one School Board member, he will do whatever it takes to put Roanoke County in the best possible position. As far as the magnitude of what they are looking at is indescribable right now. He added they have their first budget session next Wednesday and it is going to be interesting and from there he is planning on having some community meetings to discuss. Unfortunately, a lot of his constituents are not aware of the magnitude of the cuts they are facing and how it is going to impact them. It is going to be a difficult few months ahead. School Board Member Stovall stated they know the magnitude and has said so in the past, Mr. Barrineau is correct. They know where they are because of Richmond and Washington and they are where they are because of the County. He has done his best to advocate what Mr. Altizer mentioned — raises. He stated he remembers sitting beside Mr. Altizer in a meeting eight or nine years ago, still has the article handing on the wall in his office. Mr. Flora looked at him and said let's go for five percent (5 %) and the next morning in the press someone not in this room got very mad at him and sent a letter over saying he was hurting the relationship with the County Board of Supervisors and the School Board. We worked through that. A couple of years ago when he was Chairman and was sitting downstairs and had a guy at the lectern and turned around and looked at him and called him everything because of a $500 bonus. Last year, we gave a four percent (4 %) bonus. So, to him, everybody knows everything, everybody in this room is smart. February 1, 2012 89 He advised you can break the budget down into three areas: make a budget; balance the budget, balance the budget and see if the raise can be given, whether it is a $500 bonus or a four percent (4 %) bonus. Lastly, it comes to the ratings. Do we go from balancing the budget and giving the raise; he does not think so. The first thing they have to do is the $1.1 to $2.6. We need $1.1 from the schools, so we have talked about $15 million and you know all the numbers and thinks this is what we have to do and do right now. The school board is going to start on Wednesday; normally they do not start until March. Can we do the $1.1 million? He stated he would not do it, he is not going to consolidate schools, and affect people's jobs so that he can look back four (4) months from now and say he gave a three percent (3 %) raise. He is not going to do it. He is not going to consolidate schools, affect people's jobs and not take the classroom into consideration to give a bonus. He will not do it. Yes, we look at each and every one of them in the eye and tell them we love them every day and hope they know that, but everybody knows what the economy is. In his opinion, he is from Vinton and they do things a little different, but break the budget down to three areas; get the budget balanced, if we can give a bonus let's give it or a raise.School Board Member David Wymer stated one thing that has not been talked about this evening and again thinks it shows good stewardship on both sides — the stimulus money that they were criticized for not hiring and creating jobs. We cut 217 and if they did not have the stimulus money three (3) years ago, we would be having this same discussion then. He commented he thinks the thing that has made it worse is the State, because of how they have handled funding, especially VRS and the funding of VRS by using the VRS to balance their budget and a few other items, plus the LCI which the Weldon Cooper Center has thrown us into the drink with. He stated they are looking at $6 million or $7 million that could not be anticipated. When they plan and go through the process before and making these adjustments, who knew at this hour, Richmond was going to drop $7 million on them that they did not anticipate and that is kind of the thing that hurts the most. In all of the deliberations and all the decisions they have made regarding everything in the budget, they have tried to make sure that they think down the road, can they do this, what is the effect going out, but this is a unique budget. He reimphased they have talked about this a couple of times, but look at what the school's budget has been reduced and it would have been reduced more if the County had not helped in the last three (3) years. The County contribution the last three (3) years made it go from $17 million to $18 million to $13 million. This year, the schools could conceivably be looking at $10 million, $9 to $10 million in one (1) year on top of the $12 million over the last three (3) and that is a tough situation. They are going to make that decision. They hope at the end of the day both Boards will come together and find a way to do it. They are committed that is what they are here for and as they begin deliberations next Wednesday, all the things the Board has heard tonight are important. Students in Roanoke County will be affected. The School Board's goal is to make it as noninvasive as possible over that period. 90 February 1, 2012 Chairman Minnix advised Chairman Flora that the Board of Supervisors has their pledge of support to do the very best they can in working with the Board of Supervisors, probably a good deal more as they get to end of this. He added the School Board appreciated meeting here tonight. Chairman Flora advised sitting there looking around the table, most everyone sitting here was here when times were good. Ms. Moore happened to come on board just about the time the economy went south, but during the good times, they had the most relaxed budget sessions. The worst thing that had to be done was figuring out where to spend the money. Things have changed. He advised he likened this to what many, many families across this nation have gone through in the past three or four (3 or 4) years, where one of the spouses lost their job and now instead of a two income family, that family now has one income and they are having to adjust everything they do, all the money they spend, every decision they make has to be thought through very carefully and it creates huge stress within that family just making those adjustments. He can sense the stress that the Boards have had to deal with because when you don't have the money, you don't have the money and that is the way it is. The short of it is that family is solid, they work through it and that is exactly what we are going to do. The elected officials cannot sit there and make those decisions on how we are going to make this thing work. People sitting on the other side of the table can make it happen or not make it happen and they will tell us whether or not they can make it happen. He commented he is with Jerry Canada on this, we talked about it the other day, and we do not want to give raises if we have to pink slip anyone. He stated he has been through times like this, but not this long, back in the 1980's when times were tough, he was with local government then as well. He knows how tough it really gets to be to balance the budget when you just don't have the money and you know you cannot raise taxes because that is sending the wrong message. People are having a tough enough time as it is. He stated he is sure it will be worked out; there is no doubt in his mind. When this thing ends and in May when the budget is adopted, we will all feel good about what we did even though it is going to be a difficult road to get where they are going. We have worked together for so long; we may as well continue working together. Chairman Flora then asked if anyone had any good news. School Board Member Stovall announced for those who did not know, Lorraine Lange is Superintendent of the year in the Commonwealth of Virginia and is one of the top four finalists for national superintendent of the year for the United States and she will find out in February. February 1, 2012 91 IN RE: ADJOURNMENT Chairman Flora adjourned the meeting at 8:03 p.m. Sybmitted by: _ Approved by: C ; Deborah C. J s Richard C. Flora Clerk to the Board Chairman 92 February 1, 2012 PAGE LEFT BLANK INTENTIONALLY