Travis County Commissioners Court
February 14, 2012 (Agenda)
Item 6
>> leroy pick up item 6, consider and take appropriate action on fiscal year 2013 budget issues and guidelines.
>> leroy, planning and budget office with my budget staff, minus katie and jessica.
what we have sent you are -- are recommended fy 13 budget guidelines.
those guidelines have concentrated on very little change from fy '12 in light of the fact that we will be going simultaneously with the fy '13 budget cycle and the conversion to the sap financial system.
and what we're attempting to do is limit the amount of difference that the departments have to deal with.
I have prepared with my staff the draft copy of the fy '13 budget parameters, and the intent of that is not to be precise but it was an exercise to attempt to show you that the recommended tax rate in the recommended guidelines would at least meet those required ongoing costs that you're going to -- we believe you're going to see in fy '13.
you know, the recession is over.
the recovery is kind of on a level plateau.
it is interesting that the nine-month cd interest rates have inverted.
that means that the short-term interest rates are higher than the nine months, which means that at least some people in the economic community believe that we're not completely on the full road to recovery.
so we have been conservative in our estimates.
I can tell you that on your budget parameters, I've worked with the auditor's office on the tax revenue, being the property tax there, and that is -- that's projected in reference to the recommended tax rate of no higher than 3% above the effective tax rate.
as you can see in your guidelines, that represents less than a $30 increase on the projected average homestead.
you'll recall that your current budget is somewhere around $40 increase on the average homestead.
the expenditures that we've laid out on these budget parameters, I have put some rough estimates.
we're in the process currently of doing the finalized costing on the market salary survey.
you can see that what I've set out is an estimate at this point that's at a very high level, is about $11 million that we have estimated on page 2 of the budget parameters.
that's ongoing money, and what I attempted to do with the overall analysis is look at things such as the maintenance of current effort escalation of cost.
I took the average of the last two years and estimated those numbers.
like I say, until we get the budget request in, which we're calendar's right now for the latter part of April, we will not know exactly how much those maintenance current effort costs could be, but we do think that by estimating the various expenditures within this fy '13 budget parameters, that if, in fact, the court authorizes the guidelines to include a tax rate not to exceed 3% above the effective tax rate, that you would have the capacity within your fy '13 budget to implement the market salary survey if you decided to and cover your required expenditures, your ongoing expenditures.
the -- we do anticipate that the fund balance will be increasing.
I have not attempted to estimate that at this point because it will depend upon the actions that the court takes between now and the end of the fiscal year.
you know, on your weekly budget adjustments, we do have a schedule there of the allocated reserve, and all of those earmarks that you placed against that allocated reserve.
they are substantial, and if, in fact, the court elects not to fund those earmarks during fy '12, then your fund balance would naturally go up.
so I can go through either line by line on this budget parameters.
I know that I've shared one-on-one with you these numbers, and I've made some revisions as we visited and things were brought to our attention.
I have not -- on that first page, I have not pulled down the reserves with the exception of the allocated reserve, and I did -- I did pull it down in these preliminary numbers from 15.1 million to 6.2 million.
and a large portion of your earmark on your current year allocated reserve was that $5.9 million for potential funding portion -- partial funding of your market salary survey.
so I'll be glad to answer any questions or go through a more line by line explanation or answer questions.
>> questions?
>> leroy, thank you.
you all have done a great job, as you normally do, and let me ask this question.
the timeline -- let's look at maybe the budget rules, as far as the timeline is concerned, before the deadline, as far as persons needing to get requests for funding of certain particular items, especially organizations, whatever, nondepartmental-type situations, what is that date?
>> the guidelines point out the date for outside organizations to request -- let's see -- March 23, those budget requests from outside agencies should be submitted as the guidelines for the current year through the department that's responsible for that -- that type of program i.e., the outside service -- social service agencies would be submitting by March 23 to hhs department, and then those outside requests would be integrated with the hhs department's request and prioritized, and then turned into us.
I believe the date we have for this year is April the 23rd for all the departments to turn in all their budget requests to the planning and budget office.
>> okay.
the reason why I asked that, because I want to make sure, for example, you mentioned hhs, and of course -- how they specifically do it, we've got a pretty good idea, but I don't know if all departments if all departments, of course, are doing the same, similar thing, but it would be good to hear the departments to make sure that these particular outside funding situations are done in a -- in a way where it shows some consistency, and I think we've done this over the years, but I just want to make sure that it's going to be continued as we've done in the past.
and that is my concern, especially when you come up with a date, okay, here it is, departments, what are you going to do about this, and are you doing it in a way whereby folks will actually get notification in time enough to know what the rules are.
>> right.
>> or the guidelines in this particular case.
so I'm concerned that that is hopefully being done, and I guess the departments have to speak for themselves to make sure that that's done, doing it themselves.
>> right.
and my understanding is that all the departments that have outside agencies, that traditionally have submitted budget requests to them, that they -- once the court approves the guidelines, then they send out a notification to all those normally nonprofits indicating what the deadline is for them to get their budget request in to the department that's concerned.
>> okay.
and secondly, I'm trying to look at, you know, the employees -- we have -- right now we have msf type situation going on, money that will be -- has been basically set aside to actually fund those particular persons that are captured within the msf structure.
my concern is what -- the rest of the employees.
what -- and if you can give me maybe a percentage basis, if you want to maybe start with 1%.
I'm saying one-time money, more likely, and can you actually do a cola, for example, a one-time cola for employees that are not included in the msf increase, and if that's the case, then what would a -- an example, 1% of the -- for employees, do you have --
>> you had asked us to run that --
>> run the numbers.
>> -- and we did a rough estimate on that.
>> what are we talking about?
>> for the employees that at this point are not scheduled to receive an increase under the market salary survey, a 1% increase for those would amount to about 541,000 for the general fund, obviously double that if it's 2%.
>> 2%, okay.
and looking at, you know, the next coming year, fiscal year, something that -- and it would be one time, not ongoing, though?
>> well, this would be -- if you were giving a cola, it would be ongoing.
>> what could you call it other than a cola?
is there anything you can call it other than a cola, a one-time event?
>> you obviously could call -- if it were not ongoing, it would be an increase in lieu of a market, a one-time increase.
>> a one-time increase?
okay.
well, let's don't call it a cola, then.
I'm looking for a way to deal with the rest of the employees who -- here in Travis County, one-time funding for that, and I'm just trying to figure out what umbrella it could come up under, whatever you guys want to call it.
>> there are a couple of things to consider, though, when you do
>> [inaudible] --
>> somebody talk to me.
>> and one would be, first of all, the market is just the market salary survey.
so of the jobs, we did look at all the jobs except for pops, the auditor's office and the purchasing agent's office.
about 72% -- excuse me, about 75%, would you say, of the people, did see some increase, so about 25% of the people did not see an increase.
we are trying to find a consistent way to fund these market salary surveys that doesn't vary from year to year.
there's always going to be somebody who falls out that's probably not going to move, so again we're looking at a consistent way, and I believe it was fun funded using 3.5% of the new grade for the ones that moved up.
we have not looked at pops yet so that's another cost that will probably come up with the new year, and also we haven't looked at the auditor's office or the purchasing agent's office yet.
so that's a couple of considerations there.
when he was talking about the 500 something thousand, that does not include those offices, am I correct?
>> correct.
>> those are -- the 500,000 just refers to the 25% of the people of the market salary survey that did not get an increase.
>> also the one-time
>> [inaudible] next year, they would have a salary decrease, or it would be perceived as a salary decrease.
>> I'm not sure I understand --
>> well, that's -- that's the disadvantage of giving one-time money, is that it doesn't continue on.
you might recall that several years ago, the discussion about one-time performance pay come up, and it was real clear that in order to give that, and I'd defer to the county attorney, but as I recall, it was very clear that you needed to set out specific criteria before the period that you were considering one-time performance raise.
and so there's some work to do if, in fact, the court would like to pursue any of those ideas.
do you have a timetable, diane, that you're probably in March going to bring the market salary results to the court?
>> we're just waiting for the costing right now and there's a couple of meetings that we have left just to do some reclasses, but yes --
>> when do you expect that to come?
because I'm getting inquiries, not daily but repeatedly.
>> I look at the first week of March as --
>> first Tuesday in March.
>> first Tuesday is the 6th.
yes, the first Tuesday.
>> okay.
let me back up.
the $500,000, I'm not sure I understood the explanation for it.
>>
>> [inaudible] asked for us --
>> I understand the market
>> [inaudible] survey and whether we fund it.
and I understand there were three groups taken out, not covered by the market salary survey.
so is there another group at the 500 -- that the 500,000 would cover?
>> those classifications that under the market salary survey did not recommend an increase.
>> because they --
>> because they are --
>> their market --
>> because they're at market.
>> and I should have emphasized that some of those actually went back in the market because of the recession, so some of them went down a grade.
we're not recommending that those people would lose any money, but they're certainly not going to gain any unless you were looking to fund this some way.
>> but $500,000 has been budgeted to cover them?
>> no.
no.
that was just a calculation as to how much it would cost to give all the employees that didn't receive a market salary increase a 1% increase, and the estimate is about 541,000 for the general fund.
>> all right.
now I understand.
>> okay.
>> are you ready for another question-related conversation?
>> yes.
>> okay.
I understand the $11 million on page 2.
>> okay.
>> but you also referenced the allocated reserve, and the possibility of having $5.9 million available there.
now, is that in addition to $11 million?
>> no.
what -- when I mentioned that the beginning fund balance that I have shown on the budget parameters, that actually represents the September 30, '11 certified fund balance.
so that $111 million is what we had at the end of the last fiscal year, or the best that we have estimated.
if, in fact, the court does not use the 5.9 million in the fy '12 budget to do some type of funding, then that 5.9 million will go into the fund balance, so it will automatically go up about $6 million.
>> but if we want to we can use that $6 million fund balance for compensation?
>> you could use the $6 million in fy '12.
you obviously have it and it's ongoing.
however, the total -- the total ongoing money is represented here in the tax revenue and the other revenue.
so it's not that you -- if, in fact, you don't fund compensation in fy '12, it doesn't mean you have 5.9 plus 11 million additional ongoing funds because we have projected what your total ongoing funds independent of the fund balance.
does that answer your question?
here, let me see if I can explain it another way.
if you were to use the 5.9 million in your fy '12 budget, that would increase your base -- if you look on page 2 you've got departmental-based budgets projected for fy '13 at the top of 435,665,331.
if you implemented the 5.9 million in fy '12, that base budget would go up about $11 million because there's a ratchet -- there's another $6 million ratchet if you did it midyear.
so what you'd do, the transaction would be you'd increase your departmental-based budgets and you wouldn't have the 11 million.
it still is a balance in what we've presented here because I wasn't sure exactly what -- what the court is going to do in '12.
>> well, explain to me why if we say we're not going to use this $5.9 million in fy '12, we will fund -- we will use it to fund compensation in fy '13, why wouldn't we have $5.9 million?
>> you will.
you will -- go back to the first page.
let's see if I can explain this.
>> it will increase our beginning fund balance.
>> it's going to go into the fund balance if you don't spend it in fy '12, but I think the judge's question, why isn't it ongoing in fy '13, if I understand.
>>
>> [inaudible] my question.
>> [laughter]
>> the answer to that is I kind of did a zero-based budget on the top part of this on the revenue.
>> okay.
>> with the help of the auditor's office, the current property taxes are estimated at 381,533,865.
that's ongoing money.
the other revenue is estimated at the same level as fy '12.
that's ongoing money.
now, those are the only two elements of ongoing money for fy '13 that you're going to have.
the others are -- the fund balance, which is -- would increase, obviously, by 5.9 or however many million that you have.
>> but the fund balance is real money?
>> it's real money.
>> in the county's bank account.
>> it is in the county's bank account.
>> so if we don't use it in 2012 why can't we use it in 2013?
>> you can.
you can, but if you use fund balance it's one-time money.
>> okay.
we can use -- it's not ongoing, it's one time.
>> that's right.
you can use it, and I think that's where Commissioner Davis was coming from on looking at ways of looking at utilizing some one-time compensation, was the fact that you're going to have significantly more fund balance than what I have projected here, but that is one-time money, and that's the caution.
and the majority of the governments through the recession have gone to using fund balance for ongoing expenses, and that's the reason they're in the position they're in and we're in the position that we are.
>> let me ask this question.
it will be my last one.
let's say that we say, okay, we'll bite the bullet, take the risk.
we will use this $5.9 million, one-time money, to fund compensation, and in the 2014 budget we will take that into account as we do our planning.
do you see what I'm saying?
and if -- $5.9 million in the grand scheme of things is a modest amount of money, when you look at our overall budget.
am I correct on that?
>> that's correct.
>> so we can have some of that.
we just have to understand that's got to be dealt with next year because it's not ongoing money, right?
>> that's correct.
and what we would do -- if the court decides to use one-time money in a fiscal year, then what we would do, it would ratchet the ongoing commitment for the following year.
>> exactly, 2014.
>> if you used -- if you used one-time money for compensation in fy '13, let's say, then you would be making a commitment to fund the ratchet that's required from that in fy '14, that's correct.
and, you know, we've noted in our cover all right on the new construction, that new construction obviously is down from the heydays of three years ago.
it is increasing in the numbers -- and the numbers we've submitted in that cover letter show the net of the samsung new construction because we do have a rebate agreement where we rebate 80% of that, so we've attempted to show it.
we are improving, but people believe -- economists believe that this could be two more years, and ben bernanke has said he's anticipating the next two years he will not move interest rates up.
so he's concerned.
>> I'm still scratching my head.
so I'm just going to say this and tell me if I understand what that conversation illuminated.
that we've got 5.9 if we want to use that in our current budget year to fund half a year worth of market salary survey?
>> the 5.9 is actually ongoing this year.
it's ongoing this year.
>> okay.
so hold that thought.
>> okay.
>> we've got that 5.9.
>> right.
>> but in your budget guidelines you have pre-identified 11 million for the ratchet of that 5.9?
>> yeah, it would be that 5.9 plus the other half, which is
>> [inaudible] $12 million.
>> yeah, the other half.
okay.
I wanted to make sure I fully understood that.
and that only goes to rank and file.
it does not include pops, does not include auditors, doesn't include purchasing.
>> in the 11 million, that's a high number, and we put an estimate in for pops and we put an estimate in for the market salary and we put an estimate in for the auditor and the procurement -- I mean, the purchasing department.
those are just high-level numbers right now.
we believe that 11 million at this point should cover all of the -- what's the number that we estimated?
>> 11 million, that would be through the market salary survey.
it's not quite apples to apples but we included a 3.5% increase for the auditor's office, 3.5% increase for purchasing and 3.5% for pops.
if they're not quite apples to apples to the market because the market, how that would be implemented, if you go up one pay grade you get 3.5% the midpoint but for simplification those are the numbers we used in the 11 million.
>> the 11 million includes three 1/2% for those three departments you just --
>> that's correct.
what we were attempting to do is -- as I said before, the purpose of these parameters was to give you a high-level projection that if, in fact, you wanted to fund compensation, that you could do it within what we're recommending as a ceiling on the tax rate, and that's really the purpose of this discussion and to give you some idea as to what those guidelines, if we have to, go up to the ceiling on the tax rate, what type of anticipated increase on the average homestead, and it's less than $30.
and one of the things Commissioner Davis asked me, and I have to say I did not get the answer back yet, these average homestead values in these guidelines are for how they impact Travis County.
you recall that last year Commissioner asked me to get these and I will get the information to you, the best idea about what the average homestead in the east part of Travis County would be the manor isd average homestead, and I recall that that average --
>> also del valle.
>> what?
>> also del valle.
>> and del valle to the south, those average homestead values are less than half, I believe, of the overall Travis County.
but I'll get you exact, and I apologize.
>> that's all right.
>> I didn't get that information.
>> and then those west of mopac are on average twice --
>> twice the average homestead.
and I can get those i.s.d.
both west and south -- well, I don't think we have a school district south, but the east and the west are easy because we use eanes and Lake Travis i.s.d.'s.
>> one thing -- going back to the market salary survey.
so the cost we think is about $11 million.
we're still finalizing it.
if you use the 5.9 million of ongoing resources to cover more than half of that cost, you would need -- we would need to identify 5.1 million of remaining ongoing resources to fully cover the ongoing costs.
>> in fy '13.
>> yes.
>> the importance of approving the fy '13 guidelines is that we meet with all the departments.
we produce the budget manual the first part of March so that the departments know exactly what they need to fill out.
we're working on the forms, just about have them all completed.
and we hold two sessions here in Commissioners court with all the departments explaining what they need to do.
there will be a lot of questions about the conversion to the new accounting system, and I made a decision 60, 90 days ago that we would have the departments turn those budget requests in in hte, and that we would work with the auditor once we get the conversion completed and up to do a cross-walk between hde and the sap system.
so we're confident that we can do that.
>> so if a department were to ask you, what guidelines are new and different between last year's guidelines -- from last year's guidelines, what would be the answer?
that's what it boils down to, isn't it?
>> that's correct.
>> do you want me -- do you mind -- I think the biggest difference is -- and I believe the last two years we've asked for 5% reduction proposals.
this year we're asking -- I guess we're -- we're not requiring, we're just going to be reviewing those that were submitted last year, if departments want to submit a new proposal or revise previously submitted proposals, we invite them to do that and we'll review that.
the hope will be that they won't be needed, but we still want to have those available just in case, I guess, the landscape changes and requires us to revisit them and actually implement them.
I think that's the biggest change.
we've tried to make it easier for departments to prepare their budget submissions and also sap at the same time.
>> yes, the short answer is very little, very, very little change from fy '12.
>> that's why I move approval.
>> second.
>> discussion on the motion?
all in favor?
that passes by unanimous vote.
>> thank you all.
>> thank you very much.
>> thank you.
>> leroy, make sure that 5.9 million doesn't disappear between now and our next meeting.
>> [laughter]
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