oakland county executive’s recommended fy 2018 – fy 2020 ... · july 19, 2017 . l. brooks...

Oakland County Executive’s Recommended FY 2018 – FY 2020 Triennial Budget Presentation to the Board of Commissioners

July 19, 2017

L. Brooks Patterson Oakland County Executive

A Budget Based on Recognized Best Practices

AAA Rated for 20 Years

Award Winning Documents Recognized by the Government Finance Officers Association

Award for Outstanding Achievement in Popular Annual Financial Reporting

Since 1997

Distinguished Budget Presentation Award

Since 1984

Certificate of Achievement for Excellence in Financial Reporting

Since 1991

Reduced and Reorganized

Maintained and Stabilized

Resiliency, Sustainability

2008 through 2011

2012 through 2015

2016 and Beyond

BUDGETARY FOCUS HAS TRANSITIONED

Oakland County’s Elected Officials

Special thanks to . . .

LEADERS WORKING TOGETHER

Board of Commissioners

Jessica Cooper

Prosecutor

Michael Bouchard

Sheriff

Lisa Brown Clerk

Andy Meisner Treasurer

Jim Nash Water

Resources Commissioner

L. Brooks Patterson

County Executive

Nanci Grant Circuit Court

Linda Hallmark Probate Court

Julie Nicholson District Court

Gerald Poisson Chief Deputy County Executive

RECOMMENDED BUDGET HIGHLIGHTS

Balanced recommended budget for the next three years, FY 2018 through FY 2020

Balanced Triennial Budget

Stability Sustainability

Long-term planning provides fiscal stability for operational sustainability and resiliency

10 year plan for building improvements, funded with current resources

Capital Improvement Plan

Continued investment in security enhancements to protect visitors and employees

Security Enhancements

Significant investments planned to maintain and improve technology

Technology Investments

3% recommended for FY 2018 1% for FY 2019 and FY 2020

General Salary Increase

1% contingency recommended in FY 2019 for potential classification adjustments

Compensation Study

Oakland County’s pension and retiree health care plans continue to be fully funded

Retirement Plans Fully Funded

Laurie Van Pelt Director, Management & Budget

The County Executive Recommended Triennial Budget is balanced for the next three fiscal years.

FY 2018 – FY 2020 Recommended Budget

Property tax revenue is approximately 54% of total GF/GP ongoing revenue (excluding use of fund balance).

GROWTH IN TAXABLE VALUE IS INTENTIONALLY LIMITED BY STATE LAW

% CHANGE IN SEV (STATE EQUALIZED VALUE) % CHANGE IN TV (TAXABLE VALUE)

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

2007-2012 2013-2017

-34.26%

-23.93%

35.74%

11.15%

12.10%

18.30%

Additional Increase Needed to Reach 2007 Levels

Limitations on Property Tax Revenue

As a result of Headlee and Proposal “A”: it is estimated that Oakland County will not return to 2007 Tax Revenue levels until the year of 2022

Variables include: Market Conditions Annual IRM / CPI Property Transfers New Construction Statutory property tax exemptions

ESTIMATED CHANGE IN TAXABLE VALUE

3.6000

3.7000

3.8000

3.9000

4.0000

4.1000

4.2000

4.3000

4.4000

4.5000

4.6000

Mill

s

Oakland County History of County General Operating Millage Rate

Maximum Millage

4.19

Proposal A was approved in 1994. Beginning in 1996, properties with ownership transfers became “uncapped” which accelerated the effect of the Headlee millage rollback calculation.

COUNTY GENERAL OPERATING MILLAGE RATE

2018 -2023 EST. PROJECTION

2019 ESTIMATED THAT 4.04 MAY BE AFFECTED BY HEADLEE ROLLBACK

4.3805 4.3505

4.09 4.04

Millage Reduction Before Rollback The County now levies and collects its property taxes in arrears as

a result of the passage of Michigan Public Act 357 of 2004. Thus, the County is required to levy its property taxes in July for its fiscal year which began on October 1 of the preceding year.

This requirement for counties to collect property taxes in arrears adds greater uncertainty for budgetary planning, since property taxes and the millage rollback must be estimated approximately 18 months prior to the levy date for timely adoption of the annual General Appropriations Act.

It is important to continue to monitor the variables that impact the Headlee rollback calculation and to continue the County’s prudent past practice of maintaining a millage rate which remains below the maximum authorized rate.

The major variables that impact the Headlee rollback calculation include: Taxable value uncapping from property transfers (“pop-ups”)

The greater the number of pop-ups, a greater impact on rollback

Change in CPI The lower the CPI, a greater impact on rollback The higher the CPI, a lesser impact on rollback

Losses in personal property (recent tax exemption) will have a greater impact on rollback

Variables Affecting Millage Rollback

RECOMMENDED MILLAGE REDUCTION IN 2019

The Recommended Budget includes a millage reduction in 2019 from the current 4.04 mills down to 4.00 mills.

Annual operations

Technology system replacements

Continued building security enhancements

Local road improvements

General Fund Balance, Five Year Outlook

Attention to Fund Balance

A healthy fund balance is an essential ingredient for long-term budget flexibility, sustainability, and adequate cash flow

Past increases in General Fund equity reflect the County’s deliberate, planned approach to balance future years’ budgets for continued sustainability

Over the next several years, fund balance will be drawn down gradually as planned

PROJECTED USE OF GENERAL FUND EQUITY

The recommended budget includes use of fund balance to support ongoing operations with amounts that decline over the next 5 years


All positions are budgeted for full employment; vacant and under-filled positions result in favorable operating surplus.


It is anticipated that General Fund equity will be used as a one-time source of funding for several major technology projects.


The long-term forecast fund balance projection assumes continued use for discretionary local road improvement projects.

This chart compares prior years’ adopted budgeted use of fund balance to actual amounts.

HISTORICAL CHANGE IN GENERAL FUND BALANCE

This chart reflects the successful planned build-up and subsequent planned spend-down of General Fund equity. Actual future use will be dependent on maintaining the minimum targeted amount of 20% of total annual operating expenditures.

GENERAL FUND BALANCE – HISTORICAL AND LONG-TERM FORECAST AMOUNTS

Jordie Kramer Director, Human Resources

Oakland County: A Great Place to Work County Workforce Recruitment & Retention Retirement Readiness Benefits & Wellness

HUMAN RESOURCES

A great place to live, WORK, and play! OAKGOV.COM

County Workforce

Over the next three to five years the Baby Boomer generation will continue to exit the workforce.

COUNTY WORKFORCE YEARS OF SERVICE 3,400 Full-time Eligible 1,199 Less than 4 years

1,600 Part-time non-eligible 1,409 5-19 years

35 College interns 667 20-29 years

407 Summer employees 154 30-39 years

27 40+ years

Employee recruitment & retention becoming a greater concern

Lower unemployment rate Greater competition in the job market Shortage of skilled and qualified workers Skilled Maintenance Law Enforcement Information Technology

Labor Force participation is trending downward

Recruitment & Retention


Recruitment Efforts Michigan Veterans

Affairs Agency Increased use of

social media Building relationships

with colleges, universities and high schools

Disabled Worker Pilot Program Partnership with MORC and other local agencies Macomb Oakland Regional Center

Health Division first to participate with 5 placements in 2015 15 placements as of Summer 2017 among seven County

Departments By Summer 2018 we anticipate an additional

5 placements bringing the total up to 20 placements


Employee Retention

Talent Management Advisory Team – TMAT 35 county employees – representing county departments

A diverse group by age, race, gender, years of service as well as job classification level

Initial TMAT meeting March 2017 Countywide employee satisfaction survey – conducted Spring 2017

50% of the workforce completed the survey Human Resources management is anticipating the recommendations

from the TMAT that may enhance recruitment and improve retention efforts.

How do we grow our employees? Employee development is a critical part in retaining Oakland County’s most treasured asset – its employees. Through Employee Training and Development we strive to enhance

performance and foster an environment of excellence in public service

Training programs are available to meet the needs of Oakland County employees across all departments at no cost other than the time invested

Updated course catalog Increased marketing efforts – increased participation

Tuition Reimbursement $1,400 per semester/session with the fiscal year

maximum of $4,200

Career Development = Career Growth Internal job career opportunities

How do we grow our employees?

Employee Retention Compensation Study Salary Administration Plan – Point Factor Job Evaluation

Method established in 1986 Technology has significantly changed and job tasks have

evolved Increasing requests for Job Audits/Salary Grade Reviews Recruitment of certain classifications becoming

increasingly difficult

Employee Retention Compensation Study

Consultant has been selected and the anticipated start is Fall 2017 Review of current point factor plan – non-represented

classifications Consultant will gather information from employees regarding job

duties Employees will be informed of process through employee

meetings Review of total compensation – salary and benefit package Consultant will make recommendation for a new plan Ensure the County’s salary structure maintains internal equity and

that our total compensation is competitive in the labor market

Incremental Changes in Retirement & Benefits

Retirement Readiness

New 401(a)/457 Plan Investment Advisors – Graystone Consulting. Services available “free of charge” to employees to ensure they

have the resources needed to prepare for a good financial health and security during retirement.

On-site consultations with ICMA and Fidelity Deferred Compensation 457(b) Plan Enhancement - Fidelity

Voluntary Deferred Compensation Plan Available to full-time eligible employees Currently 2,108 out of 3,400 employees participate Pre-tax employee contributions Employer/Employee $500 match (January 1, 2017)

OakFit Wellness Program

Robert Daddow Deputy County Executive

State and Federal issues could have an impact on future budgets

Indigent Defense The Michigan Indigent Defense Commission (MIDC) was

established with the passage of 2013 P.A. 93 as amended by 2016 P.A. 439

The first four standards developed by the MIDC were approved the Michigan Department of Licensing and Regulatory Affairs (LARA) on May 22, 2017

Compliance plans from every judicial funding unit must be submitted to the MIDC by November 20, 2017; the MIDC has 60 days to approve the plan Oakland County is the funding unit for the 6th Circuit Court

and the 52nd District Court

If the County’s compliance plan covering the first four standards is approved, the State is required to provide funds in the form of a grant for the increased costs

After the County receives the grant funds, the County has 180 days to comply by implementing the approved changes to meet the first four standards

There are three additional standards under development: independence from judiciary; indigent defense workloads; and attorney qualifications and review.

Indigent Defense (cont.)

If a Public Defender office were created, the County’s annual operating costs are estimated to be $18 million or more, before capital costs

The capital costs for a new building and equipment to support a Public Defender’s office is estimated to be $25 million or more

Given the unmet demands on the State’s current resources, where will the new funding come from? Diversion of current reimbursements to the County?

Indigent Defense (cont.)

Other State Issues For over 100 years, under Michigan law 17 year-old criminal

offenders may be sentenced as adults; recent efforts to increase the age limit to 18

Statewide infrastructure for transportation, water and sewer, and communications needs additional new governmental funding of $4 billion annually

The statewide road funding plan approved in 2015 is intended to provide $1.2 billion annual State appropriation by FY 2022 Recent concerns: difficult to attain that level of funding and

$1.2 billion is not enough

Combined unfunded liability for State and school pension systems and retiree healthcare plans exceeds $51.5 billion

Additionally, unfunded liability for individual local governments across Michigan are estimated at $10 to $14 billion

Discussion at both Federal and State level regarding tax policy revisions, including the tax exemption involving municipal debt

Significant cuts to Federal grants proposed by the Administration for redirection to other spending needs – CDBG and Workforce Development among others.

Other State and Federal Issues

In Closing The recommended budget is balanced through FY 2020

The longer term five-year includes continued but diminishing use of General Fund Balance through FY 2022

Fund balance will continue to be closely monitored prior to recommending use of fund balance to fund future capital projects

Actions at the Federal and State levels will continue to be closely monitored for their potential future impact on the County’s budget

POSTSCRIPT: A detailed overview of the Recommended Budget will be presented by Fiscal Services at the August 3rd Finance Committee meeting

Questions?