Okaloosa County BOCC — 2013 meeting #1123 (date undetermined) — Budget Policy Document FY14 — reading text

county, although the detention facilities remain operated by the State DJJ. During each Fiscal Year, the County receives a “reconciliation” of costs from DJJ. For Fiscal Year 2010 and Fiscal Year 2011, the reconciled amount resulted in increased costs from $828,327 to $1,014,157 and $823,203 to $1,884,390, respectively. The County has not paid the 2010 “reconciled” amount and has requested, according to procedure, to join the administrative challenge currently ongoing and enter an administrative hearing challenge for the 2011 amount, as well. The pending (unpaid) amount for Fiscal Year 2010 is $1,061,186 and the pending amount for Fiscal Year 2011 is $412,889. The State originally estimated Okaloosa County’s share for 2012 to be $1,257,575, but that amount was reconciled at State’s year end and the County received a credit of ($506,610). The State estimated the Fiscal Year 2013 amount to be $1,009,964. The County struggles to continue to meet the financial demands of this unfunded mandate. Page 21 Medicaid. Okaloosa County is required to pay a portion of the State’s share for certain Medicaid services. The County’s portion in Fiscal Year 2011 amounted to $1,315,130 and $1,293,915 for Fiscal Year 2012. During last year’s session, the Legislature passed a Medicaid Budget Conforming Bill that requires each county to pay 85.0% of all unpaid Medicaid invoices, regardless of disputes over said invoice. For Okaloosa County the final adjusted backlog of questioned invoice balances amounted to $225,970. This amount will be repaid over 4 years. These payments will go to the State by withholding the county’s state revenue sharing distribution each month. The County is currently still eligible to receive a refund for incorrect charges if they apply to the state for a credit to their Medicaid account. The bill also shifts the county’s Medicaid share for upcoming years giving Okaloosa County a Fiscal Year 2013 budgetary requirement of $1,575,500 and an estimated expenditure for the year at this time of $1,600,000. With the change in statutory definitions and the uncertainty of additional changes, the impact to the budget is somewhat unknown. Community Redevelopment Agencies (CRA). In Fiscal Year 2012 the Board of County Commissioners funded four community redevelopment agencies, the first in Fort Walton Beach, the City of Crestview being the second, the third in Destin and the fourth in Cinco Bayou. These agencies impact the budget by the incremental changes in valuation in the designated areas. For the last five years the incremental change decreased and in this past year it declined by $171,765, due primarily to the decrease in valuation of all of the CRA areas. These decreases bring the total annual amount distributed to these agencies to almost $1,135,000. With the decrease in incremental value and the uncertainty of additional areas, the impact to the budget is somewhat unknown. Social and Community Service Agency Appropriations. After several years of 10.0% reductions, last year the Board of County Commissioners decreased funding to most social service agencies by 50.0%. This was the fourth year in a row for funding reductions. These social service agencies included Shelter House ($3,645), Head Start ($3,645), Day Care Services ($36,450), Elder Services ($11,847), and the Ben Gordon Visitation Center ($12,500). Additionally, the Child Protection Team ($57,402), Economic Development Council ($120,933) and the Soil Conservation District ($45,215) each had a 4.0% reduction in Fiscal Year 2013. With the continuing decline in available revenues, budget staff is proposing further reductions or elimination of funding to social and community service agencies. Library Cooperative Support. In existence since 1997, the Library Cooperative (OCPLC) provides free and easy access to information, ideas, books and technology that enriches, educates and empowers the residents of Okaloosa County. Member cities of the Cooperative (Crestview, Destin, Fort Walton Beach, Mary Esther, Niceville, Valparaiso) operate public library facilities that serve all municipalities and the unincorporated county. Since the establishment of the Cooperative, all six libraries have either constructed new facilities or added additional footage to meet the needs of their enlarged service area. The county does not operate any library facilities. The Cooperative office administers county-wide programs, serves as liaison to the State Library and applies for grants and aids, and operates The Library Spot, a self-service lending machine in Baker, which was secured through a grant awarded in Fiscal Year 2013. Each library is funded by its municipality, and the Board allocates funds to assist the municipalities in serving county residents. Through the Cooperative’s interlocal agreement, 80% of Board funding passes through to the cities. Over the past five years, the Board has provided the following amounts for the respective Fiscal Years: 2009 - $1,004,000; 2010 - $900,000; 2011 - $535,000; 2012 - $585,500, and 2013 - $513,600. Concurrent with decreases in funding, economic pressures on residents have resulted in increased demands upon libraries, especially for technology-related services that assist in education, career and business development, job search, Page 22 acquiring social services and interacting with government agencies. Member libraries have suffered a loss of financial support from the county while struggling to maintain service levels for a growing population. For the Cooperative headquarters, funding cuts have resulted in cessation of bookmobile service, loss of one position, inability to fill an open position for almost a year, and failure to replace aging technology infrastructure. Despite the challenges of declining revenue, there is a strong desire on the part of all participating cities to continue the Cooperative in its current configuration. Museums Support. After several years of 10.0% reductions, last year the Board of County Commissioners decreased funding to museums by 50.0%. This was the fourth year in a row for funding reductions. Current Board support for museums consists of donations to Destin Fishing Museum of $6,480 and to the Baker Block Museum of $6,480. The Board also pays for Baker Block Museum’s water, natural gas, and electric utilities, estimated at $13,000 annually, from Public Works/Parks. The Board supported the Heritage Museum with funding of $13,485 in Fiscal Year 2013. With the continuing decline in available revenues, budget staff is proposing further reductions or elimination of funding for museums. Fleet Operations. The County’s fleet is aging and growing unreliable. Regular replacement of vehicles has been suspended since Fiscal Year 2007. The lack of replacement vehicles has resulted in soaring maintenance costs and not enough vehicles in an operationally reliable condition for County work crews to depend on day to day. There are 361 vehicles within the Board of County Commissioners’ departments. Currently 205 County vehicles have in excess of 100,000 miles; many of these have over 150,000 miles with some over 300,000 miles. Of the County’s 19 ambulances, 13 have over 150,000 miles. Fleet Operations recommends the Board resume a timely vehicle replacement program. Approximately 30 vehicles need to be replaced per year and would cost the General Fund Departments $626,000 and Enterprise Departments $1,295,000 in Fiscal Year 2014. Since Fiscal Year 2007, the County has also delayed replacement of construction and maintenance equipment. As with the vehicle fleet, the maintenance costs have soared while increases in downtime have caused project delays. The Road Department has nine essential pieces of equipment needing immediate replacement including a crane, a boom axe, two loaders, a tractor and four batwing mowers. Replacing these nine units in Fiscal Year 2014 will cost $1,152,500. Though fuel prices have fluctuated, on average, the cost of fuel has remained at least 20 cents per gallon under the Fiscal Year 2013 budgeted amount. At this time, Fleet Operations anticipates no increase in the budgeted cost per gallon in Fiscal Year 2014. Policy Recommendation. After six years of limited vehicle and equipment replacements, the Board should consider the implementation of a more aggressive program to begin updating county’s aging fleet and equipment. Staff recommends budgeting $1,253,500 for Fiscal Year 2014 General Fund replacements (Vehicles $626,000 and Equipment $627,500) deemed as critical needs. Reserves. The level of reserves to be budgeted is established by Board of County Commissioners policy, State law, or debt covenants. Reserves are a very important source of residual funds in case of emergency needs. Although the Board has attempted to increase the reserves at least to what is considered an “adequate level” in recent years, over the last couple of years the reserves have declined due to their necessary use for operations, in light of declining resources and budget needs. Florida Statutes cap Reserves for Contingencies at 10.0% of the total budget. All “general governmental” reserves, not just reserve for contingencies, in the Fiscal Year 2013 Page 23  budget, exclusive of debt service and enterprise operations, comprise about 19.5% of the total budget. Reserves are also utilized as a buildup of funds in anticipation of major capital projects. Major capital projects in enterprise activities are built up as anticipated through fees, fee increases and fee study reviews. Other elements of this buildup could be reductions in costs and long-term debt capital funding. Governmental fund capital projects are generally funded through some sort of long-term debt scenario. Governmental fund resources are generally more difficult to build up than enterprise fund activity due to the limited flexibility of governmental resources. Policy Recommendation. Reserve levels need to be maintained at adequate levels for a variety of reasons. Emergency needs, bond rating purposes and annual Auditor General financial condition assessments, are just a few. Many counties have policy levels related to reserves increasing from 5.0% of total budget and more. As reference to the General Fund, exclusive of Constitutional Officers, staff would recommend a target reserve of 8.0% or approximately, 30 days of “operating cash”, of total General Fund expenditures, therefore the General Fund reserve would need to equal approximately $3,015,000. Budgeted Reserves for "General Governmental" Operations $155,668,821 $154,210,620 $149,287,599 $146,550,520 $180,000,000 $141,118,141 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $30,064,995 $21,017,667 $60,000,000 $16,002,293 $21,025,055 $16,518,562 $40,000,000