1 long-range financial & service forecast fy 2011-12 thru fy 2015-16

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1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015- 16

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Page 1: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

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Long-Range Financial & Service ForecastFY 2011-12 thru FY 2015-16

Page 2: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Overview

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• Financial Forecast• FY 2010-11 Estimates• FY 2012 -16 Forecast

• Outstanding Strategic Issues• Employee Compensation• Employee Healthcare• Unfunded Federal and State Mandates• Increased demand for services

• Recommendations

Page 3: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Background

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• In the Fall of 2008, first impacts of the Global Financial Crisis began to be felt in Bexar County

• Commissioners Court adopted Expenditure Balancing Strategy:

– FY 2008-09: Directed mid-year 3-5 % expenditure reductions

– FY 2009-10: Additional budget reductions of 3-5%

– FY 2010-11: Maintain FY 2009-10 department budget levels

Page 4: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Background

• Targeted Hiring Freeze

• No salary increases (other than CBA)

• No across the board salary cuts, furloughs, etc.

• In December 2010, one-time, non-recurring $500 salary adjustment awarded to employees

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Page 5: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

General Fund Background

• Before corrective actions were taken the General Fund Operating Budget was $341,076,864

• FY 2010-11 General Fund Operating Budget is $327,961,935

• General Fund Savings is $13,114,929 from cost savings strategies, this represents a 4% reduction in operating expenses from FY 2008-09

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Page 6: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

One-time Revenues

Even with these measures, one time money used for last two years:

•In FY 2009-10: $6 million in one-time revenue was used to fund recurring expenditures

•In FY 2010-11 Budget identified an additional $2 million in recurring revenues to offset the previous year one-time revenues

•Therefore, $4 million of the revenue is still one-time, causing the County to draw down on Fund Balance to provide a balanced Budget.

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Funds Needed

Funds Available

Fall 2010 Forecast • Adopted Budget projections assumed 1.5% increase

in Ad Valorem revenue for FY 2011-12

• Also assumed a 3% increase in subsequent years

Page 8: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

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Current Budget Estimates

RevenuesFY 2010-11 Budgeted Revenues: $323,561,404

PRM Projected Revenue for FY 2010-11: $319,626,152

Less than Budgeted: ($3,935,252)

ExpendituresFY 2010-11 Adopted Budget: $327,961,935

Current Estimate FY 2010-11: $322,701,688

Savings: $5,260,247

Page 9: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

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Revised Forecast Assumptions

Based on preliminary tax rolls, ad valorem revenues for FY 2011-12 are less than the FallProjection

Result: this forecast lowers projected property taxrevenue growth from previous forecasts:

Current Previous

• (1.6%) in FY 2011-12 1.5%

• 1% in FY 2012-13 3%

• 2% in FY 2013-14 3%

• 3% through FY 2016. 3%

Page 10: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Long Range Forecast

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Funds Needed

Funds Available

Page 11: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Budget Needs

• Based on the current forecast adjusted for the loss in ad valorem, the County needs to:

– Identify an additional $2 million to maintain a balanced baseline budget over the forecast period

– Will NOT address Strategic Issues (following slide)

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Baseline LRFF w $2M Before Addressing Strategic Issues

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Strategic IssuesCost not included in forecast

• Employee compensation programs (including New Collective Bargaining Contract)

• Healthcare Costs

• Unfunded Federal & State Mandates/Budget cuts

• Increasing demand for County Services due to Population Growth

All are not included in the previous projections

Page 14: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Employee CompensationEmployee Compensation

• Over the last ten years, the County has provided competitive wages for our employees through various compensation programs

– Regularly scheduled Pay table studies

– 6 month pay increase

– Hiring and promoting above minimum

– Progressive pay model

– Merit Award programs

– Cost of living increases

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Page 15: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Employee CompensationEmployee Compensation

• This program has largely succeeded in keeping Bexar County competitive with the market

• However, given the revised lower forecast growth rates in real estate, employee compensation will not be able to grow as fast as in the past

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Page 16: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Employee CompensationEmployee Compensation

• 74% of County Operating Revenue is provided by property taxes

• Employee salaries and benefits account for 71% of County Operating Expenses

• 1% salary increase for all County employees =$1,834,713, about equal to one percent growth in property tax revenue

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Page 17: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Employee CompensationEmployee Compensation

• As part of Commissioners Court Expenditure Balancing Strategy there were no across the board salary increases during the past three years.

• Going forward, the County will need to identify ways to fund Cost of Living Adjustments to keep up with future inflation growth and maintain market competiveness with other employers

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Page 18: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Collective BargainingCollective Bargaining

• County entered into collective bargaining agreement with Deputy Sheriffs Association of Bexar County in Aug 2006

• Contract expired in Sep 2009 – currently in “evergreen” status

• Negotiations for new contract started Apr 2009 - no final agreement yet

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Page 19: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Collective BargainingCollective Bargaining

• $531,729 budgeted in FY 2010-11 for Deputy Sheriff “step” increases required by the collective bargaining agreement

• Bargaining unit members pay FY 2006-07 health insurance premium rates, per the collective bargaining agreement

– For FY 2010-11, this benefit is estimated at $882,795

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Page 20: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Medical Plan FundingMedical Plan Funding

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County Contribution $22,570,609

Employee/Retiree Contribution $9,730,491

Total Contributions $32,301,100

Total Contributions $32,301,100

Total Expenditures $37,668,274

Medical Plan Shortfall * $5,367,174

* This is the amount in additional funding (or savings from plan design) that is needed to ensure sustainability of the Medical Plan

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Contributions/ExpendituresContributions/Expenditures

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non-CBA Employees

CBA Employees Retirees

2010-11 Contributions

$5,675,657 $2,374,720 $1,710,510

2010-11 Expenditures

$20,378,100 $9,255,265 $8,034,909

Difference (County Contribution)

$14,702,443 $6,880,545 $6,324,399

% Employees 28% 26% 21%

% County 72% 74% 79%

Page 22: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Medical Inflation TrendsMedical Inflation Trends

• Medical inflation trends are expected to be 10% per year over the forecast period

– Segal Company: 10.6%source: 2011 Segal Health Plan Cost Trend Survey

– Mercer: 10% source: Wall Street Journal, “What’s Happening to Your Health Plan?”, 10/9/2010

– Bureau of National Affairs: 8.4% - 12.7%source: “Surveys Predict Health Care Costs Will Rise 8.2 to 12.7% in 2011,” Managing Benefits Plans, Issue 13-2, February 2011

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Medical Claims Cost PyramidMedical Claims Cost Pyramid

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% Claimants % Costs

7.9% 60.4%

9.3% 16.6%

12.1% 10.7%

19.2% 8.0%

51.4% 4.4%

Claims Group (total 2010 claims)

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Five Year Forecast

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Page 25: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Medical Plan OptionsMedical Plan Options

• County and employees pay more for same coverage

• Reduce benefits to match current contributions

• Decrease costs through healthy lifestyle, preventive care, plan incentives

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Unfunded Mandates

• Expect decline in State and Federal funding • Unfunded mandates are a growing concern

• State is considering cutting mental health beds, which will impact jail population

• Other issues such as voter identification, immigration, and appraisal caps are anticipated

• Medical Reform

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Long Range Service Forecast

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Long Range Service Forecast

Planning tool for use in preparing for increased service demand as a result of:

Increases in overall Bexar County population

Increased population in unincorporated area

A more urban-like and developed unincorporated area

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Population Drives Demand for Services

Some services are driven by the unincorporated area population

County Roads, Fire Marshal, etc.

Others are driven by demographic factors, such as age

Citizens 18 and over drive the demand for Elections, Adult Criminal Justice, etc.

Population 17 and under drives the demand for

Juvenile Services

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Forecast Methodology

Analyzed recent trends in the population of Bexar County based on US Census data

Utilized historical information and what is known already about the future to project future population

Results provide the drivers for County services

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Population Trends

Overall Population

Bexar County’s population increased by 23.1 percent from 2000 through 2010

Increase of around 320,000 citizens

Annual increase of 2.1 percent, higher than the annual increase over the past four decades

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Population Trends

Unincorporated Area Population – “Balance of Bexar”

Unincorporated area population increased by 79 percent from 2000 through 2010

Increase of around 110,000 citizens

Annual increase of 6 percent

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Population Trends

Population in the unincorporated area now makes up a greater percentage of the total population

Census Year Incorporated Area Unincorporated Area

2000 1,253,568 90.0% 139,363 10.0%

2010 1,465,022 85.4% 249,751 14.6%

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Population Trends

34.3 percent of the increase in the total population occurred in the unincorporated area

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Population Trends

82 percent increase in the number of housing units in the unincorporated area from 2000 to 2010

46,770 in 2000

85,452 in 2010

Page 36: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

Population Trends

Bexar County’s population has gotten older

Census Year 17 and under 18 and over Total

2000 396,473 28.5% 996,458 71.5% 1,392,931

2010 465,286 27.1% 1,249,487 72.9% 1,714,773

Most County services are delivered to those 18and older 36

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Overall Population Projection

Used annual growth rate in the 2000s to project the growth through 2017 using 2010 population as the baseline

DecadeAnnual PercentagePopulation Increase

1960-1969 2.09 %1970-1979 1.91 %1980-1989 1.99 %1990-1999 1.75 %2000-2009 2.10 %2010-2019 2.10%

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Overall Population Projection

Bexar County’s population projected to increase by 13.3 percent through 2017

Increase of 268,000 citizens

Estimated Bexar County population in 2017 of 1.9 million citizens

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Unincorporated Area Projection

Used “Balance of Bexar” figures from US Census 2010 as baseline

Projected growth rate of about 4.9 percent

Census Year Incorporated Area Unincorporated Area

2000 1,253,568 90.0% 139,363 10.0%

2010 1,465,022 85.4% 249,751 14.6%

2017 1,631,126 82.2% 352,167 17.8%

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Unincorporated Area Projection

Bexar County’s unincorporated area population projected to increase by 33.9 percent through 2017

Increase of 102,000 citizens

Estimated unincorporated area population in 2017 of 352,000 citizens

Estimate 5,000 plats each year

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Age Group Projections

Utilized 2010 Census numbers as baseline

Applied percentages by age group utilized in projections prepared by the State Demographer

Bexar County population will continue to get older

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Age Group Projections

Bexar County’s population will continue to get older

Census Year

17 and under 18 and over Total

2010 465,286 27.1% 1,249,487 72.9% 1,714,773

2017 520,003 26.2% 1,463,290 73.8% 1,983,293

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Service Forecast

Population growth impacts the level of demand for Bexar County services

Given limited resources, the County needs to plan so that it can effectively deal with the challenge of providing more and potentially different services

First step is to forecast what the demand will be – Service Forecast

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Service Forecast Methodology

Identified service driver (population segment) for each core mission

Utilized projected population segment to forecast workload demand for each core mission

Allocated staff to core missions

Separated out administrative and support staff

Projected costs/staffing based on future workload demand

Page 45: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

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Service Forecast Cost

Six Service Areas and unadjusted 5-year impact:

Adult Criminal Justice Services $11.1M Juvenile Criminal Justice Services $2.2M External Government Services $2.1M Roads and Capital Program $3.2M Social Services $252K** Internal Government Services $502K

**Does not factor in losses of Federal or State Funding

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Service Forecast Results

Summary If cost-effective service delivery methods aren’t identified, the cost of serving our growing County population could be $19.2 million over the next five years.

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Service Forecast Results

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Service Forecast Results

County will need change our way of delivering services:

E-gov, technology, automation

More efficient business processes

More cost-effective staffing models

Proactive service delivery planning program

Focus on Core Service Delivery

The “New Normal”

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LRFF Recommendations

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FY 2010-11

• Commissioners Court direct PRM to identify:

• Additional $1 million in recurring mid-year savings/revenue enhancements ($2 million

when annualized) for Commissioners Court consideration to address base budget imbalance

• Target recommendations to Commissioners Court in May 2011

Page 51: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

FY 2011-12 Budget

Commissioners Court direct PRM to:

– Develop FY 2011-12 Proposed Budget to recommend an additional $5-10 million in savings or revenue enhancements

– 1.5 - 3% of GF $327 million Operating Budget

This will require hard choices

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Page 52: 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

FY 2011-12 Budget

Direct staff to:

• PRM: Identify Changes to employee Medical plan for next Plan Year (January 2012)

– Plan design changes (covered benefits, co-pays, deductibles, out-of-pocket maximums)

– Healthy lifestyle / healthy outcome incentives

• Target is to reduce annual County cost growth to 3% ($2 million cost avoidance/savings per year)

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5 Year Plan for Service Delivery

• PRM: Work with each office and department to develop 5-year Service Delivery Plans. Presentation date to Court in Summer 2012

• BCIT/PRM: Work with Offices and departments to identify and prioritize I.T. projects that generate highest return on investment.

Goal should be $5 million identified in annual R.O.I. savings by FY 2012-13.

Direct staff to:

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5 Year Plan for Service Delivery

• All Offices and Departments: Identify improvements in current business practices

Goal of this 5 year plan is to allow the County to deliver services to our growing population while still being able to compensate our employees as cost of living and inflation increases

Direct staff to:

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Adjusted Forecast

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