ANNUAL BUDGET FORFY94 VOLUME 1: EXECUTIVE SUMMARY

Transcription

1 ANNUAL BUDGET FORFY94 VOLUME 1: EXECUTIVE SUMMARY

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3 GOVERNMENT FINANCE OFFICERS ASSOCIATION Distinguished Budget Presentation Award PRESENTED TO Hillsborough County, Florida For the Fiscal Year Beginning October 1, 1992 The Government Finance Officers Association of the United States and Canada (GFOA) presented an award for Distinguished Budget Presentation to Hillsborough County for its annual budget for the fiscal year Beginning October I, In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communication device. The award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award.

4 HILLSBOROUGH COUNTY, FLORIDA BOARD OF COUNTY COMMISSIONERS ED TURANCHIK DISTRICT I CHAIRMAN JIM NORMAN DISTRICT2 SYLVIA KIMBELL LYDIA MILLER DISTRICT 3 DISTRICT 4 JAN PLATT COUNTYWIDE PHYLLIS BUSANSKY COUNTYWIDE JOE CHILLURA COUNTYWIDE FREDERICK B. KARL COUNTY ADMINISTRATOR CONSTITUTIONALLY ELECTED COUNTY OFFICIALS Richard Ake, Clerk of tbe Circuit Court Ron Alderman, Property Appraiser Cal Henderson, Sheriff Pam Iorio, Supervisor of Elections Melvin B. Smith, Tax Collector Presented here are the elected officials in office at the time the Board of County Commissioners adopted the FY94 budget in September Commissioner Chi/lura was elected Chairman in November 1993, and Commissioner Norman was elected Vice Chairman.

5 A DESCRIPTION OF HILLSBOROUGH COUNTY GOVERNMENT Hillsborough County is geographically located midway along the west coast of Florida. The County's boundaries embrace I,048 square miles of land and 24 miles of inland water for a total of 1,072 square miles. The unincorporated area encompasses 931 square miles or 87 percent of the total area. The municipalities of Tampa (the connty seat), Temple Terrace and Plant City account for the remaining 141 square miles. Seven-Member Commission Elected to Govern County Hillsborough Connty, a political subdivision of the State of Florida, is guided by an elected seven-member Board of County Commissioners. Through partisan elections, three are elected to represent the entire connty as a district and four are elected to represent single-member districts. Under a Charter Ordinance effective May 1985, the Board is restricted to performing the legislative fnnctions of government by developing policy for the management of Hillsborough Connty. The. County Administrator, a professional appointed by the Board, and his staff are responsible for the implementation of those policies. Commissioners Serve on Other Boards The Board of County Commissioners also serve as the Environmental Protection Commission. Individual Board members serve on various other boards, authorities, and commissions, such as the Hillsborough Area Rapid Transit Authority, Tampa Bay Regional Planning Council, West Coast Regional Water Supply Authority, Aviation Authority, Expressway Authority, Sports Authority, Board of Criminal Justice, Arts Council, Drug Abuse Coordinating Council, Metropolitan Planning Organization, Council of Governments and the Committee of I 00 of the Greater Tampa Chamber of Commerce. Constitutional Officers In addition to the members of the Board, citizens also elect five Constitutional Officers: Tax Collector, Property Appraiser, Clerk of the Circuit Court, Sheriff, and Supervisor of Elections. The Board funds all or, in some cases, a portion of the operating budgets of these Constitutional Officers. The Constitutional Officers, with the exception of the Supervisor of Elections, maintain separate accounting systems and budgets. Other Government Agencies Based on the degree of budgetary authority, taxing authority, the ability to obligate funds tu finance any deficits and the ability tu fund any significant operational subsidies, several other governmental entities also have their budgets reviewed and approved by the Board of County Commissioners: the Environmental Protection Commission, the Civil Service Board, the Planning Commission, the Legislative Delegation, and Law Library Board. The budgets of these offices and the Constitutional Officers are included in this document. Role of the County Administrator The County Administrator is an appointed official who is responsible for cartying out all decisions, policies, ordinances and motions of the Board. The departments under the County Administrator are responsible for providing road construction and maintenance, solid waste disposal, parks and recreation, emergency services and water and wastewater treatment for residents of unincorporated Hillsborough Coonty. The departments also are responsible for providing social services and public assistance to residents countywide. These departments are grouped into four offices: Support Services, Community Services, Fmancial Services, and Municipal Services.

6 HILLSBOROUGH COUNTY Organization Chart BOARD OF COUNTY COMMISSIONERS County Attorney - County Administrator I Management Services ' I l I Community Services Financial Services Municipal Services Aging Services Budget Deportment Animal Services Children s Services Convnerce Deportment Building Deportment CommunitY Action Debt Management Development Services & Planning Agency Cente1 Insurance & ClaimS Community Health & Management Emergency Medical Human Services Services Purchasing & Con1rocts Cooperofive Extension Fire Deportment Real Estole Employment & Training Housing & Convnunity Development Head start Medical Examiner LibiOtY Services Parl(s & Recreation Museum ot Science & Industry Planning & Development Management SOcial Services Public Safety Dolo Management Legislative Liaison Convnunity Affoils l Support Services Administrative Services Coble Corrvnunicotlons Ci1izens Assislonce & lnlomnotlon Engineering &. Construction Services Focnilies Management Fleet Management Hunnon Resources & Equal Opportunity lntornnotion Tectvlology Public Utilities Road & S1reet Solid Waste

7 Table of Contents Introduction to the County Budget Documents for FY I The Process of Adopting the FY 94 Budget... 3 County Administrator's FY 94 Budget Message... 5 Additional Explanation of the FY 94 Budget... 9 FY 94 Budget Summary Sources and Uses Chart Sources and Uses Table Departtnent Budget Summary Comparison... l6 Capital Projects Budget: Sources and Uses offunds... I8 Debt Service Budget l9 Funded Positions Summary Economic Indicators Graphs of Selected Economic Indicators Basic Information on Property Taxes Chart: Total Property Valuation Chart: New Construction Valuation Millage Comparison Chart: Use of the Countywide 10-mill Cap Chart: Use of the MSTU 10-mill Cap Impact of Local Taxes Major County Revenues Chart: Changes in Hillsborough County Property Values Chart: Current Ad Valorem Taxes Cbart: Indigent Care Sales Surtax Chart: Voted Gasoline Tax Chart: Local Option Gasoline Tax Chart: Local Option Tourist Development Tax Chart: EMS Ambulance Service Fees Chart: Local Goverrunent 1/2-Cent Sales Tax Chart: State Revenue Sharing Chart: County Gasoline Tax Chart: Federal Revenue Sharing Chart: Building Department Fees Glossary History This document, including its cover, is printed on recycled paper in order to aid in preserving our natural resources. We ask that you "recycle" this document by sharing it with others. Special thanks to Gerri Freeman, Printing Services Manager of the Hillsborough County Print Shop, for production advice and assistance, and to Alan Braiser, Graphics Supervisor for the City of Tampa Publications Department,Jor cover and title page design. Printed December, 1993.

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9 Introduction to the County Budget Documents for FY 94 This is the financial plan adopted by the Hillsborough County Board of County Commissioners for Fiscal Year 1994 (FY 94), which began October l, 1993, and ends September 30, This plan encompasses all funds appropriated by the Board of County Commissioners (BOCC) to fund departments under the County Administrator as well as the BOCC and the Constitutional Officers (Sheriff, Clerk of the Circuit Court, Property Appraiser, Tax Collector, and Supervisor of Elections); the County's judicial system; other boards, commissions, and agencies; and other governments and private, non-profit organizations. Some of the organizations included in this budget receive substantial additional support through other sources of funds: the Tax Collector, Property Appraiser, and Clerk of the Circuit Court each receive funding from taxes or fees levied separate from the budgets presented in this document. The judicial system also receives significant funding directly from the State of Florida; particularly for judges' salaries, the Public Defender's Office, and the State Attorney's Office. The budget is printed in five parts, each published as a separate document. Each is intended for specific types of users. This multi-volume approach is used to tailor the material to different needs. Each budget document is briefly described below. A separate document, produced in July 1993, the Taxpayers Guide to the Hillsborough County Budget is available to explain the day-to-day operating budget and how -- and why -- it has changed over the past few years. The document also helps explain the budget process used to adopt the FY 94 budget and why the budget stmcture is so complex. Additional information may be obtained by contacting the Hillsborough County Budget Department directly at (813) Annual Budget for FY 94 Volume 1: Executive Summary - This document is intended to communicate the broadest picture of the County budget to a diverse group of readers. It begins with a budget message conveying what strategies were used in developing the budget, portraying significant aspects of the budget in simple charts and graphs, and providing a glossary of key terms to assist readers in understanding some of the "accountingese" that inevitably finds its way into a budget document. This document conveys where the County stands, financially, and what steps are being taken to manage the County's finances. Annual Budget for FY 94 Volume II: Operations and Funding Guide - This document crossreferences key detail for the budget, breaking the budget out by funding source, organizational stmcture, and number of positions. In large part, it provides County managers and others with a gnide to the resources provided to, and the results expected from each organization funded by the County. It is comprised of three sections: a funding section, an organizational section, and a positions section. The funding section provides the reader with an introduction to the complicated financial stmcture required of an urban county to match revenues against their eligible uses. The stmcture shows how each fund is appropriated to different organizational units. The organizational section provides the reader with a matchup of resources and armual objectives and performance measures -- the output of each organization. It also cross-references staffing levels and funding sources. The positions section provides detail on the specific positions funded within each organization along with information on pay ranges. Adopted Budget for FY 94 Volume ill: Capital Budget - This document provides an outlook for the capital program for the new budget year and the following five years. It is oriented towards those who want a better understanding of the capital component of the budget and future projections. The Capital Budget document matches funding sources against programs and ties the armnal budget process to the Capital Improvement Program, which

10 is published separately with specific detail on each capital project. It also provides information on how future projects will impact the County's operating budget as each project is completed. This latter component, for example, addresses the issue of maintenance needs for a new park or staffing and utilities for a new library or fire station. Adopted Budget for FY 94 Volume IV: Financial Detail - This document breaks out detail on other non-operating components of the annual budget that don't deal with day-to-day operation of County programs -- debt and reserves. The level of detail provided tends to be oriented towards readers with finance or business backgrounds. In past years when a single document contained all of the budget information, some readers were overwhelmed by the detail provided -- particularly on debt. At the same time, management understood the importance of documenting this information for those interested in the County's financial health and its long-term obligations. The documentation of the County's reserves allows readers to see how the County has prudently set aside funds for catastrophic emergencies, financial commitments that must be carried forward to the next year ("reappropriations"), potential debt service requirements, renewal and replacement of capital, etc. are used by County Administration to run alternate scenarios to test the sensitivity of the model to changes in any of the basic assumptions (known as "sensitivity analysis 11 ). Examples are provided to show the impact of changes to some of the basic assumptions. An update to this document will be prepared in January 1994 to establish budget priorities for the FY 95 budget adoption process. Environmental Awareness in Publishing Budget Documents This multi-volume budget, including covers, is printed entirely on recycled paper. In order to minimize waste, covers are interchangeable between documents and only covers and title pages are preprinted. All internal pages are reproduced on demand so that excess copies are not printed. Copies with printed covers are intended primarily for elected officials, senior County managers, libraries, the news media, and other users who will reference the document over an extended period. Plain cover copies are reproduced in large quantities, on demand, for civic organizations and other interested parties to maximize distribution of budget information to the residents of Hillsborough County. Proforma Budget: FY 93 - FY 98 - This final budget document takes as a starting point, the FY 93 budget for key operating funds, and projects them out an additional five years. This long term financial planning document allows elected officials, County Administration, the public and others a view of operating budgets for the next several years based on a small number of key assumptions about what will drive revenues and expenditures. This document was produced in January 1993 and was used to establish budget priorities for the FY 94 budget adoption process. It is important to note that the purpose of this document is to provide advance notice of whether steps must be taken to prevent future deficits, and to examine the effects of timing of future events such as opening new facilities. This process moves the County from reactive, stop-gap solutions to planned, long-term strategies. The Proforma, therefore, does not show what will be, but what could be without appropriate actions. The computer spreadsheets that are summarized in the tables and charts that appear in this document 2

11 The Process of Adopting the FY 94 Budget The process for adopting Hillsborough County's FY 94 budget consisted of four distinct stages or phases: 1. Planning, 2. Preparation, 3. Review, and 4. Public Adoption. The Planning Phase began October 1, 1992 with the development of a financial planning tool -- a "Proforma" budget extending the FY 93 budget for three major operating funds five years into the future. The plauning phase continued with departmental feedback on the FY 93 process (a budget "post mortem"), writing budget instructions and examples, obtaining direction from the Board of Counly Commissioners based on the five year outlook, and preparing training materials. The Preparation Phase began with a budget kickoff meeting on March 26, 1993, by the Counly Administrator where directions for the budget process were provided and written budget instructions and forms were distributed. The process included training departments in using the Counly's new automated budget preparation system. This system is linked to departroents' microcomputers through connection of the mainframe computer to multiple local area networks (LANs). Budget staff assisted departroents in preparing two line item budgets: a continuation budget that re-priced the FY 93 budget into FY 94 dollars, and a "target" budget that showed what FY 94 costs could fit, on a priorily basis using zero base budget techniques, into the same dollars budgeted for FY 93. Finally, departments were provided assistance in preparing documentation for the prioritization of programs from the bottom up using "decision units" to describe each component Those decision units with the lowest priorily were those that could not fit within the target budget, but which would be funded within the continuation budget Because of the recognized shortfall to fund all agencies at a continuation level, the budget documentation did not provide an opportunily for departroents to ask for new programs nuless they could be documented as "mandates" as defined in the budget instruction materials. This last aspect of the process is intended to head off the problem when departroents put their prime focus on documenting new programs rather than justifying the continuing need for existing programs. The FY 94 process generally dampened expectations early in the process until revenue projections could be finalized. The Review Phase began with scheduled work sessions of selected departments with the Counly Administrator. Departroents reviewed were: Solid Waste, Public Utilities, Public Safely. Fleet Management, Communily Health and Human Services, Social Services, Communily Action and Planning, Road and Street Maintenance, and Cooperative Extension. These work sessions, which began in April and ran through May, were videotaped (with the exception of Road and Street Maintenance, which prepared a separate videotape presentation) and open to the public. They consisted of a presentation of departroental programs followed by a review of the department's budget submission as detailed through decision unit summaries. Tapes of the reviews are available to the public for review. Upon completion of the selected departroental reviews, all remaining departments under the Counly Administrator were examined in June in less detail during a review of each assistant counly administrator's departments. Simultaneous to the formal reviews of departroents within the Counly Administrator's organization were individual and/or group discussions of the Counly Administrator with the Chief Judge and Constitutional Officers (the Clerk of the Circuit Court, the Tax Collector, the Property Appraiser, the Sheriff, and the Supervisor of Elections). These meetings coordinated the submission of budget requests by all organizations funded by the BOCC. A Taxpayer's Guide to the Hillsborough County Budget was produced in July for use as an educational tool for those interested in Counly budgets. This document was first produced in 1992 and received the Government Finance Officers Association Award for Excellence in Financial Management The review phase ended with a series of final 3

12 reviews of departmental submissions by the County Administrator, and receipt of official information on the County's ad valorem tax base for the FY 94 budget from the Property Appraiser. At this point, a County Administrator's Recommended Budget for FY 94 was produced for presentation to the BOCC by July 15, in accordance with Florida Statutes. The Public Adoption Phase began with the formal receipt of the County Administrator's Recommended Budget on July 15, At this point the BOCC began its review of the budget and the public process of review, change and formal adoption. A second milestone in the phase was the setting on August 4 of proposed millage rates, which are used to prepare Truth in Millage or "TRIM" notices for distribution in August. TRJM notices advise County taxpayers how tax rates proposed by all local taxing authorities, combined with current information on assessed value of real property, will affect the taxes on each taxed parcel of land. The TRIM notice also serves as the official notification of the time and place of the first Public Hearing for adoption of tentative millage rates and a tentative budget by each taxing authority. The third milestone in this phase of the budget process was the first public hearing, which was held September 9. At this meeting the BOCC, after hearing public testimony, adopted tentative millage rates and a tentative budget. The fourth and final milestone in the budget process for adoption of the FY 93 budget was the second public hearing on September 23. The second public hearing was advertised by a published notice and a published breakdown of the tentative millage rates and the tentative budget. As with the first public hearing, the BOCC heard public testimony prior to adopting final millage rates and a final budget for FY94. In accordance with Florida statutes, the adopted budget was subsequently filed with the Florida Department of Revenue, effective October I, FY 94 Budget Process Milestones: Planning December 1992 Executive Team Long Term Financial Planning Retreat January 22, 1993 BOCC Planning Retreat Discussion of Long Term Financial Planning Preparation March 26, 1993 Budget "Kickoff" Meeting May 1, 1993 Budget Submissions Due Including Data Entry to Budget System by On-Line Departments Review May 1993 Departmental Worksessions With County Administrator June 1 -July 14, 1993 County Administrator Review by Team and Finalization of the Administrator's Recommended Budget Public Adoption July 15, 1993 County Administrator's Presentation of the FY 94 Recommended Budget to the BOCC August 4, 1993 BOCC Workshop to Set Proposed Millage Rates September 9, st Public Hearing to Adopt Tentative Millage Rates and a Tentative Budget September 23, nd Public Hearing to Adopt Final Millage Rates and the FY 94 Budget 4

13 The County Administrator's Budget Message For FY 94 The budget process for developing the Fiscal Year (FY) 94 annual budget began in January 1993, with the development of a "proforma" budget for the years FY 93 through FY 98. The Proforma Budget for FY 93 - FY 98 is a financial planning document that projects revenues and expenditures for three major components of the Hillsborough County's day-to-day operating budget. The projections showed the potential for a large cumulative shortfall in funds in the County's main operating fund, the General Fund, if certain assumptions were correct, such as moderate growth in the tax base, and the opening of a new jail in FY 97. Armed with that information, senior County management met in January 1993 to begin the process of heading off future deficits. Information from the Proforma Budget was provided to the Board of County Commissioners (BOCC) in a BOCC retreat as the basis for taking actions to head off impending deficits in the operating budget. One action has been to enlist the assistance of a consultant to seek opportunities to defer the need to open new detention facilities. In preparing for FY 94, we refined our budget preparation process to ensure that material was prepared in a format that would allow examination of the funding for each department and organization from the ground up -- zero-base budgeting. We also established a "target budget" for each organization that was based on its adopted day-to-day operating budget for FY 93. These steps allowed us to head off expectations for larger budgets while collecting information that could be used to focus budget cuts in nonessential services. Our Mission The theme for our budget exercise this year was "Looking to the Future" That theme manifests the approach taken in developing this annnal budget for FY 94. It describes the process in which we keep one watchful eye on the future as we address our current needs and decide to what extent we can afford to provide for them. The wisdom of "looking to the future" is self-evident, but because it is so important, and so relevant to our short -term decisions, I am moved to discuss it. In the near future, we must comply with what has become known as GASB 10 requirements (from the Goverrunental Accounting Standards Board). These are new accounting standards that reqnire us to calculate our incurred, future liabilities and then reserve funds now to pay them. No longer will we be able to fund only actual, current payments for workers compensation claimants, actual pay-outs for liability law snits, vacation time and sick days, and other similar liabilities. We will have to quantify them and set aside now the professionally calculated amounts required to fund them when they mature. We have made a good start, but the quantification process is not complete and we don't yet know the actual requirements. Although it would be tempting to invade those reserves for our immediate needs, we must look to the future and realize how painfully difficult it will be to replace them all at once. Moreover, we must sacrifice some of our current needs to enable us to increase the reserves and minimize the financial trauma we will experience when the fateful day arrives. Another example of looking to the future relates to our infrastructure requirements. Over the July 4th weekend, two aging stormwater structures in Sun City Center failed. It is estimated that approximately $2 million is needed to repair or replace other structures in Sun City Center that are old and in similar condition to those that failed. The failing stormwater infrastructure in Sun City Center is just one example of aging infrastructure throughout the County. Current estimates have assessed rehabilitation needs in excess of $30 million for roads, $27 million for stormwater projects, and $4 million for sidewalk projects. This backlog is increasing annually, because current capital and rehabilitation funding is not keeping pace with the need to replace deteriorating infrastructure. 5

14 The primary focus of this message is the operations component of the budget, as opposed to the capital budget (or the six-year capital improvement program -- the "CIP"). Nevertheless, the two are interrelated. In the operations budget, we provide for the preventive maintenance and repair, as well as operational expenses, for all of our jails, courtrooms, office space, roads, parks, libraries, and the like. If we skimp on maintenance and repairs, we pay a heavier price in the future. If we build a facility and don't operate it, we are wasting taxpayers' money and breaking faith with them. And, of course, if we neglect today the legitimate needs for capital projects, we aren't properly fulfilling our service responsibilities to the citizens, and we could be responsible for having development restnctmns imposed under the concurrency provisions of state growth management legislation. The operating budget provides only a "bare bones" plan for maintaining what we already have in place. The capital budget allocates available funds to a variety of program areas -- transportation, parks and recreation, goverrunent bnildings, water/wastewater, environmental land, stormwater, solid waste, libraries, fire, correctional facilities and others. Adding another five years of plarmed capital projects to the FY 94 capital budget generates the CIP. Over that six year period, however, the capital needs that carmot be funded through existing resources equates to $486 million. I urge that these needs be scrutinized over the next year so that we may begin consideration of a comprehensive capital funding solution. At the same time, we must also look to future operations and maintenance needs related to that program. Patently, there are many examples of the wisdom and logic of "Looking to the Future," but one stands out and cries for attention -- our library system. It would be a gross error for the County, which operates all libraries within the City of Tampa and the entire unincorporated area, to do nothing about the future. The book supply requires enhancement; buildings reqnire maintenance and repairs; the use of these treasure houses should be maximized by increased staffing; and a few more, strategically located libraries should be constrocted, furnished and staffed. "Looking to the Future" reqnired action this year. The Board of County Commissioners wisely embarked on a multiyear program to build tlnee new libraries through a nominal increase in the library district rnillage rate. This pay-as-you-go approach in fiscal years 94 through 97 will provide funds as they are needed in the design, land acquisition and constroction cycles. By maintaining the higher millage rate once the libraries are completed, we should have sufficient funds to operate and maintain those and other facilities. At the same time, the Board also committed to expand the book budget for the library system through an associated small increase in taxes. This action illustrates the Board's commitment to quality services. A Word About FY 93 In FY 93, we took many steps calculated to help us with the budget for FY 94. For example, the administration's reorganization effort not only reduced the nmnber of funded positions, but reduced somewhat the total cost of basic compensation to be paid in FY 94. The Board's approval of the recommendations concerning self-insuring our health insurance holds our premimn cost to the same level as last year, despite increasing health care costs and reported increases in similar premimns in the private sector. And in the last quarter of the year, I tightened further the restrictions on new hires (both temporary and permanent) and virtually stopped purchases of items not already ordered. We worked throughout the year to improve efficiency and productivity, in part by supporting the Total Quality Management Program in two major departments, and, also, by using the Pay for Performance approach to compensation, and other management techniques. Fiually, we managed conservatively throughout the year. We regret the instances in which our responses were slower than they should have been; and we regret we couldn't serve as many citizens, or serve them as well as we could have, if finances had not been so tight. But, all things considered, County goverrunent functioned fairly well, and the cost-saving steps we took during the year helped us toward our goal of finishing in the black, and easing just a bit, the budget -balancing problem for FY 94. Where programs expanded during FY 93, it largely represented investment by federal and state agencies in County programs through grants awarded to the County. 6

15 The Process As I indicated, this process of adopting a budget for FY 94 began in January The process was open, thorough and fair. The zero base budgeting process was further refined and departments and agencies received specific training on how to prepare documentation for Jheir FY 94 needs. Once again, I met wiih ten major departments for two hours each, and wiih Jhe remaining departments in shorter sessions. We videotaped about 20 hours of Jhese budget conferences so that Jhe material discussed would be available to the Board, its staff, and members of Jhe public. The approach we used to balance Jhe budget was based on "decision unit" forms prepared by Jhe departments. These forms outlined functions and resources required to perform them. They were prioritized by the departments in a zero base budget approach Jhat established a foundation on which each increment of service was built. We compared this process to building a pyramid -- one layer on anoiher. The lowest priorities appeared at Jhe top of Jhe departments' pyramids. We examined Jhem and eliminated many of Jhe lowest priorities, based on Jhe availability of funds. In June, when we had collected detail on Jhe funding needs for County government, Jhere was a $31 million gap between requirements and revenue in Jhe funds Jhat rely on property tax revenues. By July 15, when I presented my budget message to Jhe BOCC, revenues had improved somewhat and our zero base budget process had whittled Jhe gap to within $2.7 million of balancing wiihout a tax rate increase. On August 4, Jhe BOCC adopted a tentative millage rate Jhat was high enough to cover Jhe shortfall and to fund some of Jhe most pressing items I had not recommended due to Jack of funds. As Jhe Summer progressed, we continuously reexamined our revenue projections for FY 94 as well as our progress in reducing FY 93 expenditures. When Jhe financial picture for FY 94 improved, based on evidence Jhat we would carry forward more funds from FY 93, we were able to readdress priorities and add back several of Jhe programs cuts Jhat had been proposed in Jhe July 15 draft budget. The improved financial picture allowed Jhe Board to avoid tax rate increases to save several of the proposed cuts. Program Changes With this budget we are able to maintain a decent level of service -- not all the services we have provided in Jhe past -- but a decent level of service, and we can do so within our means. One of the commitments we were able to make late in the process was a $200,000 match of County funds to obtain use of more than a million dollars in grants for a new Head Start center. The County considered turning Jhe grant dollars over to the School Board, which could match Jhe grant wiih inkind services. However, Jhe County's approach to operating centers serves the needs of parents who need a year-round program with long enough hours each day so Jhat parents can hold jobs. We were able to invest in a few other program enhancements such the expansion of the Bakas Equestrian Program, which provides therapeutic benefit for disabled residents. We continued our commitment to "steering," instead of "rowing." The FY 94 budget extends our past practice of funding cultural services and social services agencies, although we could not accommodate all requests. Many of these awards to outside agencies are through a competitive process. Programs that are self sufficient received similar scrutiny to those reliant on property tax revenue. However, we were able to accommodate some service enhancements in these areas wiihout fee changes. The Building Department, for example, is self supporting through user fees. Based on findings in the wake of Hurricane Andrew, which devastated Dade County, Jhe budget includes two new code compliance inspectors and three additional roofing inspectors. While we accommodated the armualized cost of the Sun City Center fire station, which converted to a career station from a volunteer station dnring FY 93, we were unable to meet oiher needs. The budget does not re-establish staffing for training and arson investigation that was cut in earlier budget cycles. It also does not extend benefits to volunteer firefighters. When the Board expressed an interest in funding levels for travel and training and for overtime, we 7

16 cut back in those areas. W c also trimmed our staffing for roadside maintenance, and eliminated most replacement and new equipment for road construction and maintenance. Overall, an increasing portion of our road maintenance is funded by gasoline taxes as property tax revenues have shifted to other programs. We have not funded all of the costs that may be needed to maintain new parks and landscaped medians that are scheduled to be completed during FY 93. Similarly, we did not budget for the operation and maintenance of street lights that may be installed by the Florida Department of Transportation. These costs will need to be addressed though use of the Reserve for Contingency as they occur. I could not recommend cuts in existing programs to fund new costs that may be delayed, and therefore reduced in their impact on FY 94. The Constitntional Officers were most cooperative in bringing the budget process to a successful conclusion. While my initial recommendations failed to accommodate all of the requests of these officials, we were able to work together to balance needs against resources. Employee Salaries The budget includes an average salary increase of 4% for most employees. Actual increases will range from 0% to 6%. Certain salaries, such as those of the County Commissioners and Constitntioual Officers, are prescribed by state law. There are those who suggested the elimination or reduction of the increase. The Board institnted a Pay for Performance Program that increases most employees' pay only when deserved. Inherent in such a pay plan is the commitment to fund it. It is terribly unfair to induce extra effort and assumption of additional responsibilities with the representation there will be regards for doing so, and then fail to provide the rewards. Should this happen, our employees would be justified in demanding cost-ofliving increases or some other pay plan. employees generally are not overpaid for what they do. I have told the employees each year that with a tight budget, there may be fewer employees, but those who are retained can expect to be paid more. I observe the same approach in many companies in the private sector. New Financing The County has actively pursued refinancing of existing debt to take advantage of low interest rates. Several refinancings are contemplated that are not reflected in this budget because sufficient data was not available prior to finalizing the budget. Our goal is to reduce debt service requirements and free up funds that can be used to meet our requirements for funding long term liabilities (GASB 10). We also see opportunities to acquire facilities such as the County Center rather than pay escalating rent in a variety of facilities less conducive to efficient service delivery. Summary We have continued to refine the budget process. With the leadership and support of the Board of County Commissioners, we have come a long way in the management of the financial affairs of the County. While we could not accommodate all requests, we have crafted a financial plan for FY 94 that continues essential services, and enhances selected service areas where the needs were great. I appreciate the diligence of the Board of County Commissioners in seeking a balance between needs and resources. I also appreciate the assistance of all of the individuals who participated in the process of developing this budget. Special thanks go to Edwin J. Hunzeker, Assistant County Administrator for Financial Services, and the Budget Department staff. /]:t -"'teu;"/ P. ;ci~ Frederick B. Karl County Administrator A presentation by the Civil Service staff showed our pay plan declining in relation to the private sector. Our starting pay levels are generally below those in other government entities in this area. Our 8

17 Additional Explanation of the FY 94 Budget As indicated earlier in this document, a variety of overlapping standards result in the budget format presented. Unfortunately, the result is that readers frequently don't know all of the factors that account for changes in the budget from year to year. The County Administrator's budget message outlines many of the policy decisions that are reflected in the FY 94 budget. This section lays out several other considerations that should be useful to readers in order to understand the numbers presented in this Executive Summary and in the other volumes of the FY 94 budget. Understanding Tables Before providing specifics on what factors were behind the growth in the FY 94 budget, I should point out something about tables presented in the budget documents. Many of the tables on budget by organization and budget by fund present two years of historical actuals and two years of adopted budgets. The intent is to allow readers to see what has actually been spent in the past, so we provide actual revenues and expenditures for FY 91 and FY 92. At the same time, to understand how FY 94 compares with FY 93, we present the adopted budget for FY 93 next to the adopted budget for FY 94. Actuals for FY 93 are not available until the completion of an independent audit several months into FY 94. Readers interested in more data on historical expenditures and budgets may review detailed material available in the Budget Department. In many cases, actual expenditures will be below budget because budgets are expenditure ceilings. In other cases, however, the County receives larger grant awards than anticipated, or receives a new grant. When that happens, the budget is amended to increase an organization's original budget ceiling. Grants also explain why some organizations have staffing increases mid-year. To reject a grant means the money will be awarded to another jurisdiction. As long as any reqnirements for the County to contribute "matching funds" are reasonable, we tend to accept grants and increase budgets and staffing. Checking the titles of columns should prevent a reader from confusing data on actuals with data on budgets. Line Item Detail is Not Provided in the Budget Documents Some people may review these documents looking for line item detail. With very few exceptions, line item detail is not available in the County's budget documents. The County budget process is based on an evaluation of the cost of providing selected services. How much of that cost is budgeted in a specific line item usually does not matter if the cost of the service is reasonable and management is prudent in how it spends available funds. Detail is developed by each department and agency for each cost center used. The FY 94 budget is comprised of 12,060 line items. Revenues are broken out into detail based on any restrictions that apply to their use. Expenditures are divided based on any funding restrictions and based on how different types of expenditures must be reported to the State of Florida. Depending on how the data is organized, a computer printout of line item detail takes from 1,100 to 2,100 pages. Control of budgeted expenditures is not by line item, but by classification of expenditure (compensation, operating expenses, equipment, etc.) for an organization. That means, for example, that a department with a vacancy can pay another employee to work overtime, as long as total compensation costs do not exceed the compensation budget. even though regular compensation costs are budgeted in a different line item than overtime costs. Another example would be a department spending more than its line item budget for maintenance of office equipment by spending less on printing services (both are budgeted as operating expenses). The budget is a plan, developed months in advance 9

18 of the period for which it will apply. Therefore, managers must have some flexibility in how they manage unexpected costs. When funds need to be moved between organizations, or between classifications of expenditure (e.g., take operating expense money to cover unexpected compensation costs), an amendment to the budget must be approved by the Board of County Commissioners. New funds received during the year frequently also require a budget amendment. More information on amending the budget may be found in Volume IV: Financial Detail. Why is the County Budget so Large? Financial reporting standards require the presentation of a bottom line that includes much more than the costs of day-to-day services. It includes long term debt payments, reserves that are set aside for future years' needs, and money set aside for capital projects that may not be completed for two or more years. It even counts twice any funds that are moved ("transferred") from one account to another. The result is a budget that far exceeds any expectations of the cost of services that will be delivered over the next year. It is also a budget that can swing widely from year to year if the County issues bonds, funds new multiyear capital projects, or moves more or less money internally to maintain good accounting of its funds.. Unfortunately, this bottom line receives undue attention -- primarily because it is more impressive to cite a large number than a smaller number. An alternative is to focus on only that portion of the budget that pays for day-to-day services. The Operating Budget: The Budget for Day-to-Day Services It is the operating budget that should receive the most focus. The operating component of the budget uses property taxes, grants, utility revenues, and other user fees to pay for day-to-day services to the residents and businesses ofhillsborough County. The following table presents a budget format that provides a better focus on the operating budget: FY 94 Budget (in million $) Beginning Fund Balance $550.4 Less: Reserves Available Fund Balance Revenue Total Available Required Debt Service 86.0 Capital Projects Budget Available for Operations Operating Budget $629.3 The $629.3 million operating budget shown above accounts for three types of expenditures: compensation of employees, operating expenses, and equipment What Affects Compensation Costs? Compensation is the major component of the operating budget, and covers the salaries and benefits for the permanent and temporary employees who deliver County services. Compensation costs change each and reflect several factors. First, they reflects employee pay raises. Merit increases averaged 5% in FY 93 and will average 4% in FY 94. These increases are far lower than several years ago when most employees received an armual 5% increase for longevity, plus a cost of living increase based on iullation. A second factor is the cost of positions added after adoption of the FY 93 budget. Positions were added during FY 93 when additional grant funds became available for various programs. While the effect was to increase the operating budget, the funds used were funds that would have been provided to other... c ; 10

19 jurisdictions if Hillsborough County did not accept them. Other positions were added when the County assumed responsibility for staffing a fire station in Sun City Center that had previously been staffed with volunteers. Partly offsetting these mid-year changes was the Cormty Administrator's reorganization of departments repotting to him. The consolidation of certain departments into others allowed the elimination of over a dozen positions -- most of which were in management. The organizational presentation in Volume D: Operations and Funding Guide, provides detail on which departments were affected by the reorganization. Finally, there are the position changes adopted for FY 94. Several additional positions were added in FY 94 using funds restricted for certain programs. For example, cable franchise fees were used to provide added permanent staffing for the Cormty's growing government access programming and special projects and to accommodate open captioning of broadcast BOCC meetings. Other positions were needed to operate new facilities coming on line. For example, the Sheriff's new work release facility requires added staffing. The addition of two judges by the State of Florida required other new support positions funded by the Cormty. In other departments, the zero base budget process was used to identify low priority positions that conld be eliminated. For the third straight year, most of the position cuts were accommodated without layoffs by keeping positions vacant where possible. Operating Expenses Operating expenses accormt for the supplies, utilities, rents, services and maintenance costs. An increase in operating expenses in the FY 94 budget is largely accormted for by the change in how the Cormty obtains health insurance for its employees. In FY 93, the Board of Cormty Commissioners approved a plan to self insure its health insurance to control cost increases. Under the self insurance program, departments and agencies pay into an internal self insurance fund, which pays for health care services. The result of this change is an inflated operating budget as the same dollars show up twice- once as a compensation cost of a department or agency and, beginning in FY 94, a second time as an operating expense of the self insurance fund. The change in how the County does business saves County taxpayers money by cutting out a layer of profit by an insurance company. At the same time, it makes the increase in the FY 94 budget appear larger. This is a good example of a management decision that saves money while making the budget look worse. Other increases in operating expenses reflect new facilities coming on line with associated costs. The Sheriff's work release center is an example of such a facility. Finally, just as increased or new grants may impact staffing levels, they also impact operating expenses. Equipment The third component of the operating budget is the cost of capital equipment. This includes the cost of vehicles, computer equipment, office furniture, and a variety of specialized equipment. One of the ways the Cormty is dealing with slow growth in property tax revenue is by slowing purchases of equipment. Equipment purchases are necessary to maintain efficient and effective delivery of services, but a temporary reduction in these expenditures has prevented staff cuts in some programs from being more severe than they have been. These reductions during a period of slow growth in the property tax base help the Cormty stabilize its budget over time. It wonld be cormterprodnctive for the Cormty to reduce social programs and major Cormty construction projects and lay off workers during the down side of an economic cycle. A slowdown in equipment purchases carmot be a long-term strategy, however. Therefore, other practices have been adopted to ensure the County optimizes its use of equipment funding To better manage equipment funds, pools have been established so that funds are provided during the year to the highest priorities. Each purchase of equipment purchased by a department rmder the Cormty Administrator is personally approved by the Cormty Administrator. Any savings when a piece of equipment costs less than anticipated is invested in other priorities, or set aside to help fund the next year's budget. 11