Okaloosa County BOCC — September 3, 2015 — September 3, 2015 Transmittal Letter

County Administrator’s Office 100 YEARS . 1915 ._ 2015 Loynt State of Florida September 3, 2015 Honorable Members of the Okaloosa County Commission: By this letter, your budget staff formally transmits the proposed revised 2015-2016 Okaloosa County Budget. The revisions included herein are the result of direction received from the Board during a series of budget workshops spanning the past several weeks. As proposed by the Administrator and endorsed by the Board, the Fiscal Year 2015-2016 County Budget does not contemplate a tax increase. The trend of moderate growth locally and throughout the State has allowed staff to balance the budget through revenue increases from three sources: Ad Valorem Taxes, State Revenue Sharing, and State Sales Tax revenue. Based on the projected 4.52% increase in property values, we forecast ad valorem revenue to grow by approximately $2,142,200. In addition, we anticipate State Revenue Sharing to increase by $450,000 and State Sales Tax revenue to increase by $700,000. Collectively, these three revenue sources are expected to contribute $3,292,200 in additional revenue for Fiscal Year 2015-2016. Budget development began in earnest several weeks ago during a series of budget reviews with the various County departments and Constitutional Officers. Initial requests for funding far exceeded the projected additional revenue by $3,500,000. After several rounds of cuts necessary to balance against projected revenues, the total budget across all funds for FY 2015- 2016 is $331,339,247. The spending plan for next year represents an increase of $21,328,477 or approximately 6.9% above the approved budget for FY 2014-2015. Budget Drivers and Unanticipated Expenses Legislative Impacts: Medicaid expansion will disproportionally affect Okaloosa County in the coming year. Repeated attempts were made through our lobbyist and the Florida Association of Counties to appeal to the Legislature to cap increases for Medicaid at 3% across all of Florida’s 67 Counties. We were not successful in this regard and, as a result, our County’s Medicaid costs are projected to jump by 16%, or $252,000. Inmate Health Care: Due to the rising inmate population at the County Jail, certain escalators are triggered in the inmate health care contract with Corizon. As a result, health care costs for our inmate population will increase by $200,000. Okaloosa County Administration Building 1804 Lewis Turner Blvd., Suite 400 Fort Walton Beach, FL 32547 (850) 651-7515 * FAX: (850) 651-7551 e-mail: jhofstad@co.okaloosa.fl.us Life and Health Insurance: Over the past few years, the County has elected to offer a stipend to those individuals who chose not to take advantage of coverage through the County’s health insurance plan. By not funding the full cost of health coverage for all employees, the County has saved approximately $450,000 annually in the General Fund alone. Recently, staff learned that Federal regulations prohibit the current practice of offering a stipend to some employees in lieu of funding the full cost of insurance. Asa result, the proposed FY 2015-2016 budget includes funding insurance costs for all employees. It bears mentioning, that a number of counties and cities throughout Florida continue to offer a stipend to those employees who elect insurance coverage elsewhere. As an alternative, the County will offer a Health Reimbursement Account (HRA) to those employees who elect health insurance coverage outside of the County’s program. The results of this alternative will not be known prior to finalizing the FY 2015-2016 budget; therefore, the proposed budget still includes the full cost of health coverage for all employees. Department of Juvenile Justice (DJT) Claw Back: For the past two years, the County elected to fund only a portion of annual costs associated with juvenile incarceration. As was the case with many counties across the State that overpaid annual DJJ fees, Okaloosa County paid a lesser amount annuall