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HomeMy WebLinkAbout2/19/2014 - SpecialFebruary 19, 2014 129 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 School Administration Building, 5937 Cove Road, Roanoke, Virginia for the purpose of a joint work session with the Roanoke County School Board to discuss fiscal year 2014 -2015 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 McNamara and Chairman Barrineau called their respective boards to order at 6:03 p.m. MEMBERS PRESENT: Chairman Joseph P. McNamara; Supervisors Al Bedrosian, Joseph B. "Butch" Church, P. Jason Peters MEMBERS ABSENT: Supervisor Charlotte A. Moore STAFF PRESENT: B. Clayton Goodman III, County Administrator, Richard Caywood, Assistant County Administrator; Paul M. Mahoney, County Attorney; Rebecca Owens, Director of Finance; Deborah C. Jacks, Deputy Clerk to the Board SCHOOL BOARD MEMBERS PRESENT: Chairman C. Minnix; Jerry Wymer Drew Barrineau, Supervisors H. Odell "Fuzzy" L. Canada, Michael W. Stovall, David M. SCHOOL BOARD MEMBERS ABSENT None SCHOOL ADMINISTRATION STAFF PRESENT: Dr. Lorraine S. Lange, Superintendent; Allen W. Journell, Deputy Superintendent of Administration; Penny A. Hodge, Assistant Superintendent of Finance; Dr. Martin Misicko, Director of Operations; Angela Roberson, Clerk to the School Board 130 February 19, 2014 IN RE: BUDGET 1. Proposed revenue sharing formula change Rebecca Owens and Penny Hodge provided the Boards with a PowerPoint presentation; a copy of the presentation is on file in the office to the Clerk to the Board of Supervisors. The new revenue sharing formula was reviewed, based on a rolling three -year average and it was noted all numbers can be traced back to a number in the financials. Staff recommends the approval of this new formula. Supervisor Bedrosian inquired if the split of revenue is sixty -five percent (65 %) for the schools (salaries and benefits) and thirty -five percent (35 %) for the County. Ms. Hodge responded in the affirmative. Supervisor Church inquired where is the debt service with Ms. Hodge advising this does not figure into the new calculation. School Board Member Canada asked if the percentage for the schools is sixty -five percent (65 %) even though they have lost employees. Ms. Hodge explained the percentage is a percentage of the total and takes into account a substantial increase in VRS. Supervisor Bedrosian asked for an explanation because of the debt service. Ms. Owens advised the formula in the past had a component incrementally increasing the amount that we were putting toward capital program. This is the last budget year for an incremental increase. Expenses and debt are not factored into the new formula. Supervisor Bedrosian then asked how does this effect the calculation? This is a pure revenue sharing allocation advised Ms. Hodge. The previous formula was more of a hybrid. The short answer would be pure revenue sharing and a completely different approach. Chairman McNamara advised the old program took into account various items including differences and changes in VRS, health insurance changes, life insurance, dental, which was a really nice part of the formula. The only problem is that it works with slightly increasing enrollments and slightly increasing populations and it does not work very well in the scenarios that we have been dealing with the last several years. He advised the big thing this does is to try to correct the sixty -five percent (65 %) factor. To simplify, the schools have a much higher percentage of their budget in personnel so you give them more benefit because of the higher portion in personnel and they have less discretionary things they can work on. Supervisor Peters inquired if the debt of the County were to continue, where does that money come from, School or County budget or joint. Ms. Owens responded evenly from both. School Board Member Canada advised since day one $300,000 came from each side for each year. Ms. Owens advised $2.9 million for a total of $5.8. After this year, which is the last year for the $300,000, this will be a self - supporting fund and allow for the $10 million debt each year. Chairman Barrineau stated the one unique aspect of this program, is to fund this, money is taken from your February 19, 2014 131 operating budget. So, all the projects they have been able to complete to date have not increased the operating budget. What we have done is taken it out of operating and put into capital. Montgomery County just had to raise taxes. City of Salem just increased sales tax. Bedford and Franklin County have also had some issues. We have incrementally reduced our operating expenditures to cover this and now it is self - funding. People marvel on how this is set up and what we have been able to do. Supervisor Peters inquired when will the fund be tapped out with Ms. Owens responding fiscal year 2034/2035. Supervisor Peters then asked in a catastrophic disaster, that we would have to bond for whatever reason what is our total limit we could go to. Ms. Owens advised at June 30th there was approximately $182 million outstanding and our total maximum would be $271 million. There is quite a bit of capacity or cushion. Supervisor Bedrosian stated we have $182 million in debt and noted he was raised to not like debt. The conversation seems to be around the County being able to pay it. The debt increases, but we are still making the payments. It seems to him that the conversation is always centered around the County paying the bill and not really concerned that the debt is actually going up. Twenty years ago, the debt was $60 million. Today we have $182 million and if we do Vinton and the school, the debt will be over $200 million. So, the debt actually does go up; we are servicing it and in two (2) years there will be another project that will add another $20 -30 million in debt. He asked if he is missing something, we do not appear to ever pay this debt down. How do we pay the debt down when we are adding $10 to $20 million? Chairman Barrineau stated the Schools do not bond anything over twenty (20) years; that is the maximum. We have thirty (30) facilities so essentially with the age of our facilities we are trying to play catchup from years past. He stated he thinks what this plan does is the debt as a percentage of revenues will go down in the foreseeable future once we fully implement this and this is the base level. He stated he could also see a time to continue the $300 if you chose to. Instead of additional bonding, you could build up your cash reserves. Mr. Bedrosian asked what happens to the $182 million that we have right now; he believes the schools carry $100 million. Ms. Owens responded the schools have fifty -six percent (56 %) of the total. Mr. Bedrosian asked if this number ever goes down. Chairman McNamara stated the capital budget is a huge thing, which is why we put the Cultural and the Health and Human Services in one day. Rebecca is putting together three (3) different scenarios from a capital perspective for the Board to look at. Obviously at one end of the spectrum, if we stop projects we drop $10 million a year that is pretty simple we would not have to do anything else. If you want to keep everything exactly the way it is then we are going to do $10 million a year. Our total outstanding debt will come up with those numbers, but will be reasonably consistent. The third alternative is to keep the $10 million a year and keep bumping up contributions. In which case you can either increase what you do or lower debt. That is a discussion that we need to discuss as a Board and evaluate. 132 February 19, 2014 Supervisor Peters stated in using the analogy of our homes, he would hope that none of us would live in our homes for twenty years and not do anything to it. If you do you are going to have a huge amount of debt because you will have to replace everything all at one time. He stated that for years the County has put projects off and now they have piled up. There is a way to do it that is not going to put the County over a barrel. School Board Member Stovall stated they have to bring these buildings into the 21st century. He further added, he admires Mr. Bedrosian's position, but it is not practical. Supervisor Bedrosian stated we have tripled the debt in the last twenty (20) years. Mr. Stovall stated the difference between us and the federal government is the federal government wants to keep increasing the debt ceiling and we are not doing that. We are paying this off as a rolloff. Twenty years is a long time. Supervisor Church added that with regard to Glenvar, it is the right thing to do for the area, it is an antiquated building and construction costs should not be as high. School Board Member Wymer stated his only comment is that through this whole project of renovation, he sees it almost like an insurance policy for the older schools against catastrophe. We are renovating our oldest buildings, but by having the funds it is being done in an organized way and being able to project. In talking about the Glenvar project, this project is part of the study that was done in 1996 and here we are eighteen (18) years later talking about doing it. There are a lot of other projects that were in line or moved ahead of this project because of their needs. It is not going to stop with Glenvar. We have Cave Spring High School and the Burton Center and a few elementary schools that have not been renovated. He stated he thinks it is the foresight that the County and Schools had in 1996 to address the problem and put in place a system so that we did not have to raise taxes; did not have to come to the Board of Supervisors and say we have a school that is ready to collapse. The prior planning that went into the CIP and funding is now allowing us to do these things so that we do not have a catastrophic situation or a financial situation where we had to come up with a lot of money in a very short period of time. Chairman McNamara stated 1996 was the Blue Ribbon Committee. 1998 was when he came on the Board and Mr. Minnix was here. If he remembers correctly, there was not $148 million in 1998 dollars of need; $148 to $150 million worth of needs in twenty (20) year old dollars when we were building Hidden Valley with construction costs of $19 million and now our debt as a percentage of total revenue is a tad higher, but we were in a sad, sad state of affairs and totally neglecting our educational infrastructure at that time. It has taken twenty (20) years to get back to some reasonable sense from a facility standpoint. There was never an issue with teachers and administrators and staff, but we did have facilities and we had fire hazards at Cave Spring High School, ninth grade in with the Junior High. February 19, 2014 133 School Board Member Canada remarked that times and technology in the classrooms have changed. We did not have the infrastructure twenty (20) years ago to support the technology that we have now. School Board Member Minnix stated he does not like it, but it is unfortunately here to stay. He added that we cannot wait until we save up the cash. Staff has come up with a pretty good plan. It will cause us to incur debt. He knows we don't like it, he does not like it either, but it has caused us to perform well up to this point as far as our facilities and yours. All the debt is not the school's. So, it has placed us in a position where we have been able to keep up with the needs of the children that we are teaching and preparing to take care of us when we get older, but it is a fact of life. We are going to have debt. It would take a long time for you to save $50 a payday to buy that $225,000 house that you want to buy. So, he understands that you do not feel comfortable with this and that is why you can vote yes or no. Supervisor Church stated he knows we have an unappropriated fund balance, does the school have a "rainy day" fund. If the bottom falls out of our world on our side the Board has directed our budget department to come up with approximately eleven percent (11 %) or $21 million dollars, so it is not like we are sitting on the corner with a hat asking for money, but that is a pure "rainy day" emergency fund. He thinks this funding process has served us well over the years. Hopefully, we are going to get to the point, hopefully sooner versus later, where we can take that money and pay down. On our side, he believes we are retiring some debt, the County Administration building and Salem Bank and Trust in another year. So, we are paying off debt service but at the same time we cannot let our buildings get so dilapidated and antiquated that we are doing a disservice to any particular area. We have five areas that we try to treat on a fair basis in a rotation, needs coming first. He added he thinks we are doing things in a proper avenue, between us we are keeping a rein on both Boards; this is the beauty of this agreement. It is better than most. Chairman Barrineau advised the school system has a $2 million contingency fund. It is not a very high percentage of the total budget. It originally started when fuel went over $4 a gallon. The last thing the schools want to do is come back to the County Board with money issues. Ms. Owens finished the presentation drawing attention to pages seven and eight, the draft Memorandum of Understanding (MOU). Please review the other items of interest on page 8 as they relate to the MOU. 2. Fiscal year 2014 -2015 priorities and employee raises Mr. Goodman advised the County was looking at compensation; two alternatives: two percent (2 %) and two percent (2 %) with market adjustments. He indicated the County is no longer in the middle of the market and no longer competitive. The issue is can the County afford it. He added that sales tax figures were down 134 February 19, 2014 twenty -four percent (24 %) for December. Staff will be reviewing to make sure there is not an error in report. Of additional concern is that the cold weather in January and the snow events in February will have impacts on sales and meals tax. Preliminary numbers indicate an $800,000 loss at year end. It appears we will need an additional $2.8 in revenue for fiscal 2015. Chairman Barrineau stated the schools will set priorities next month, but a two percent (2 %) raise is being considered. School Board Member Minnix advised we need to look at what we need to do to keep our staff. We need to address some type of help in the form of a raise and to figure out a way to keep our staff at the same level we have. Chairman McNamara stated if both Boards are in agreement, staff needs to get the raise on the table first and then figure out the budget. Both Boards should try and give the same raise. School Board Member Canada asked Mr. Goodman about the market adjustment with Mr. Goodman advising they would be looking at jobs, not people. School Board Member Canada stated the only caveat he has is that he does not want to do a pay raise if they have to eliminate positions. School Board Member Canada then asked what the County cut off is under the Affordable Health Care Act with Ms. Owens responding not allowing employees to work more than 29 hours. School Board Member Stovall asked if they were receiving benefits before, with Ms. Owens advising they were allowing them to work more hours, but they did not have benefits. Supervisor Bedrosian inquired if the correct number is around 2,000 employees with Chairman Barrineau advising 2,100. Supervisor Bedrosian asked if that was the number they were budgeted for or is that 2,100 actual, physical people that have a name with School Board Stovall responding in the affirmative. Supervisor Bedrosian stated he asked that question because sometime you budget for 2,200 people but all the positions are not filled. School Board Member Stovall responded they do not round numbers and 2,100 people come to work each morning. Supervisor Bedrosian stated so that is the amount of money that we allocate. School Board Member Stovall responded that over the last fourteen years, they have lost over $14 million in revenue and in that $14 million; we have lost over two hundred and fifty (250) employees. They have not laid off any full -time employees off through attrition or retirement. Supervisor Bedrosian stated so when you lost $14 million, the budget for salaries for two hundred and fifty less employees; was it the same. Ms. Hodge stated on page 277 of the budget book you can see the full -time equivalent they have budgeted. They have budgeted in the current year for full -time equivalents, not all employees are full -time. So it is not physical bodies. This is an education standard. Supervisor Bedrosian stated out of the whole group about fifty -five percent (55 %) are actual teachers with Ms. Hodge confirming. February 19, 2014 135 Supervisor Peters stated he would like to add one thing that he thought was very enlightening him. When talking about raises and what it cost from the County side he had the opportunity to meet with Mr. Goodman and Chief Hall. Over the last five to six years, they have hired eighty -eight (88) people and lost thirty -eight (38) of those people to other jurisdictions. Out of those thirty -eight people, the County invested $39,000 per officer in training, which is more than $500,000 and most of that was because of pay. That loss is going to continue. He advised his concern is that he does not want to see Roanoke County, whether it is Fire and Rescue, Police or teachers, as the training ground for everybody else. IN RE: GLENVAR HIGH SCHOOL PROJECT OVERVIEW AND TIMING Dr. Martin Misicko provided a PowerPoint presention on Glenvar High School and its current condition. A copy of this presentation is on file in the office of the Clerk to the Board of Supervisors. Next, representative of Spectrum Design gave a PowerPoint presentation of the proposed changes to Glenvar. Supervisor Peters inquired if it was cheaper to tear down and start over and was advised no because the building is structurally sound. Ms. Hodge went though the remaining time schedule, which was the last page of the agenda package. IN RE: DISCUSS FUTURE MEETINGS Chairman Barrineau advised he would like to have ongoing discussions especially with the pressure points they are facing and would like to get together on a quarterly basis. Chairman McNamara stated both Boards would be spending a lot of time looking at capital and debt over the next several months and suggested meeting again in July. It was the consensus of both Boards for the next meeting to be held on July 1, 2014, with dinner at 5:30 p.m. and the meeting to begin at 6:00 p.m. 136 IN RE: ADJOURNMENT February 19, 2014 Chairman McNamara adjourned the meeting at 8:00 p.m. u4mitted by: Deborah C. Jocks,/ Deputy Clerk a Board Approved by: geph P. McNamara airman