Okaloosa County BOCC — April 9, 2013 (meeting #1123) — reading text

designated “Output”, Efficiency Measures are designated “Efficiency”, Effectiveness measures are designated “Effective”. Although performance measures are reviewed and evaluated, currently they are not rigorously used in the County’s budgeting process to allocate resources. Regardless, they are considered a vital part of the budget document for communicating results to citizens. Page 40 Packet Pg. 47  1.b Attachment: Budget Policy Document FY14 (1578 : Budget Policy Document) Okaloosa County Board of County Commissioners Potential Budget Reduction Strategies March 28, 2013 Kay Godwin, Human Resources Director Page 41 Packet Pg. 48  1.b INTRODUCTION Florida counties may continue to be faced with budget shortfalls for the 2013-2014 fiscal year. Over the past several years, Florida counties have faced revenue reductions due to decreasing property assessments, losses in sales taxes and development fees, and other declining revenue. Statewide counties have critically assessed programs and services in an effort to cut expenses instead of positions where possible, while maintaining acceptable levels of service. BACKGROUND As we move toward the 2014 fiscal year, the County will continue to face increased costs and continued Attachment: Budget Policy Document FY14 (1578 : Budget Policy Document) demands for services with limited financial resources. All departments have been asked to review their budgets and expenses and find ways to cut costs and expenditures, ideally without sacrificing services to the community and loss of personnel. Reductions made over the past several years included major cost cutting measures and efficiencies whose goal was to minimize the impact on direct citizen services. Among these reductions were downsizing our fleet, implementing tighter controls on vehicle usage, reducing overtime, energy and water consumption strategies, negotiating reduced rates on contracts, materials and supplies, and reducing leased office space. These strategies will continue. In addition, county staff have reviewed organizational models of other Florida counties while assessing staffing priorities across county departments. In the 2012 fiscal year, the overall county structure was reorganized in an effort to streamline the number of department directors for greater efficiency and cost effectiveness. Significant cost savings were realized through the reassignment of duties and elimination of high level positions such as the Assistant County Administrator and Corrections Director as well as nearly the entire Administrative Services Department. In May 2008 and April 2010, the Board of County Commissioners approved Voluntary Separation Incentive Programs in an effort to eliminate or minimize the need for a reduction in workforce. With these programs, an eligible employee could voluntarily resign or retire from county employment and their position, or similar positions in the same funding source, was permanently eliminated. These programs allowed a one-time payment of six months salary or $25,000, whichever was greater, to eligible employees plus payment for one- half the employees’ health insurance premiums for 18 months. A total of 48 positions were deleted through these two programs resulting in an estimated savings of $2,923,304 in the third and subsequent years of the programs through the elimination of salaries and benefits for the 48 positions that were deleted. In July 2011, legislators amended Florida Statute 215.425, thereby affecting the County’s ability to offer the same type of VSIP to employees. The Statute amendments eliminated bonuses not specifically tied to performance and capped severance pay to an amount not greater than 20 weeks of compensation. In an effort to continue to shrink operations, a VSIP was developed and implemented in April 2012 that provided increased annual and sick leave payouts and payment for one-half the employees’ health insurance premiums for 18 months. A total of three positions were eliminated. Positions deleted through the Voluntary Separation Incentive Programs combined with layoffs and not filling positions vacated through attrition reduced Okaloosa County’s budgeted positions by 137 positions over the past six budget years. Offset by some added positions, the County experienced a net decrease of 89 positions during this period. Page 42 Packet Pg. 49  1.b As the County looks for alternatives to layoffs during these tough economic times, there are other options to cut costs that could be considered. Some of those options explored in this report include work furloughs, reduced work-weeks and reduced salaries. However, unless carefully planned and regulated, they can expose the County to liability for wage and hour violations. Furloughs In the context of budget cuts, the “save money” furlough is a planned event by an agency which is designed to absorb reductions necessitated by downsizing, reduced funding or any other event which requires an agency to save money. Attachment: Budget Policy Document FY14 (1578 : Budget Policy Document) Mandatory furloughs can be a viable alternative to layoffs if implemented correctly. However, a furlough must be carefully planned and implemented when it comes to exempt employees covered by the Fair Labor Standards Act (FLSA) and other laws. Exempt employees under federal law and many state laws must be paid the same minimum salary for each pay period worked. According to the law, if an exempt employee performs any work during a workweek, that person must receive his or her entire salary for that week. Thus, failure to pay an exempt employee for a week where any work is performed — even very minimal work such as writing an email from home — can jeopardize that employee’s exempt status. However, in contrast, the Fair Labor Standards Act does include a special provision for employees of public agencies due to a budget-required furlough as long as the exempt employee is converted to an hourly status during the furloughed work week. This means the employee may not work additional hours during that week without being compensated at the overtime rate for those additional hours, the same as a non-exempt, or hourly, employee. Furloughs are easier to implement with non-exempt employees. Under federal and most state wage and hour laws, non-exempt employees must be paid only for actual hours worked. Consequently, an employer may send them home for lack of work or to otherwise save payroll costs, and need not pay them for their regularly scheduled hours if they have not actually worked. In an effort to keep the current Okaloosa County Board of County Commissioners workforce employed, an analysis was done to determine the impact of furloughs on the budget and is reflected in the following chart. Page 43 Packet Pg. 50  1.b Attachment: Budget Policy Document FY14 (1578 : Budget Policy Document) All Employees (744) 1 - 8 hour 3 - 8 hour 5 - 8 hour 10 - 8 hour day days days days Governmental Fund (423) $76,056.53 $228,169.58 $380,282.63 $760,565.25 Enterprise Fund (218) $39,449.44 $118,348.32 $197,247.21 $394,494.41 Public Safety (103) $14,831.40 $44,494.20 $74,157.00 $148,314.01 Total $130,337.37 $391,012.10 $651,686.84 $1,303,373.68 *Savings on Total Payroll: Data Excludes County Commissioners and Part-time, Relief and Temporary Employees Additional Okaloosa County furlough scenarios are outlined on Attachment A. For example, if employees within the Governmental Fund, whose salaries are $60,000 or higher, were furloughed for five days, the savings to the County would be approximately $64,674. Over the past several years, many states, counties, cities and universities nationwide have either contemplated or implemented voluntary or involuntary employee furloughs in an effort to save money. This year, Congress failed to stop automatic budget cuts that were set to take effect March 1, 2013; therefore, the Department of Defense notified all civilian employees nationwide that they would begin observing 22 furlough days from April 2013 to September 2013. This 22 day furlough is estimated to save $4 billion to $5 billion towards a $46 billion deficit. Page 44 Packet Pg. 51  1.b Reduced Work-Week & Decreased Salaries A reduced work week — for example, a four-day, 32 hour work week — can be even more difficult to implement than furloughs. For example, if an employer wants to implement a four day work week, with 20% pay cut, such a pay reduction could threaten the exempt status if the 20% pay cut brings the employee’s salary below the required threshold amount, which is $455 per week under federal law. In this example, one Okaloosa County employee in an exempt status would fall below the $455 per week threshold. An employer also may not deduct 20% of pay from an exempt employee’s paycheck during a current pay period based on a reduction in work time (unless under the furlough provision described earlier). It is generally accepted that the least risk is taken by reducing the pay of exempt employees without dictating the hours they work. Attachment: Budget Policy Document FY14 (1578 : Budget Policy Document) SUMMARY We’ve all heard the phrase, “tough times call for tough decisions.” While many employers argue that it may be less harmful to cut all employees’ salaries rather than layoff a number of employees, this theory does not necessarily hold true in Okaloosa County. There are currently about 117 employees or 15.7% of the current workforce who are at, below, or within 20% of the federal poverty guideline of $23,050. In the Fort Walton Beach, Crestview and Destin market area, the HUD “very low income limit” for a family of four is $34,200. Using this localized data, there are currently about 506 employees or 68% of the current workforce who are at, below, or within 20% of the very low income limit. 1 In an organization where employees are paid a salary far above