Financial & Planning Summary

Transcription

1 Fund Structure Lane County s financial activities are accounted for on a fund basis. A fund is a fiscal and accounting entity of self-balancing accounts to record cash and other financial resources and related liabilities all segregated for specific regulated activities and objectives. The County uses fund accounting to ensure compliance with state and federal laws and rules, charters, local government resolutions and ordinances, and the principles of good accounting. The County creates funds to control the use of restricted or dedicated revenues. The County adopts a balanced, annual appropriated budget for all of its funds. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. A fund structure chart is included at the end of this discussion. The chart reflects those funds for which the County has an appropriated budget, which then is followed by a complete list of each fund with descriptions. Governmental Funds Governmental funds are those through which most governmental functions of the County are financed. These include the General Fund, Special Revenue Funds, Capital Project Funds, and Debt Service Funds. The purpose of a General Fund is to record financial transactions relating to all activities for which specific types of funds are not required. This fund is used for all receipts not dedicated for a specific purpose. In most counties, this includes such activities as law enforcement, youth services, assessment and taxation, and general administration. Special Revenue Funds are set up for special tax levies and other dedicated revenues when required by federal law, Oregon statutes, charter provisions, or terms under which revenue is dedicated. The largest special revenue funds for Lane County are Road Fund, Health & Human Services Fund, and Title III Projects Fund. Capital Project Funds record all resources used to finance building, rehabilitating, or acquiring capital facilities non-recurring, major expenditures. Resources include the proceeds from the sale of general obligation bonds, grants, transfers, or other revenues authorized for financing capital projects. A separate fund is often established when a capital project or series of projects is authorized by the voters, such as those that require indebtedness. The fund is closed when the project is completed. Several related projects financed from one bond issue may be accounted for in one fund if there are no provisions to the contrary in the authorization to sell the bonds. Taxing districts use Debt Service Funds to account for indebtedness as a result of borrowing money or issuing bonds. A voter-approved ballot measure authorizing a municipal corporation to sell bonds for a specific purpose is required if property taxes will be the source or repayment. The measure also authorizes a tax levy to pay off the bond principal and interest. The Debt Service Fund and a tax levy pay the principal and interest. Any cash on hand or unused working capital in the fund must be invested and the earnings used to pay bond principal and interest. Resources cannot be diverted or used for any other purpose. Transfers from a Debt Service Fund are only allowed in two situations. (1) Transfer to repay an interfund loan. (2) If a surplus remains after all interest and principal are paid, the fund may be dissolved and the balance transferred to any fund originally designated by the governing body, or as included in the bond contract. A taxing district may set up Reserve Funds to accumulate money for specified purposes. A municipality, by ordinance, is permitted to set up a financial reserve fund. A question doesn't have to be submitted to the voters if the taxes levied, or other revenue used to establish the fund, are within the tax base. If it is necessary to exceed the tax base to obtain revenue for a new reserve, the voters must approve a tax levy question. The County does not have any Reserve Funds in effect at this time. 51

2 Proprietary Funds The County maintains two different types of proprietary funds enterprise funds and internal service funds. Enterprise Funds are used to finance and account for acquiring, operating, and maintaining facilities and services, which are self-supporting from user charges and fees. The County uses enterprise funds to account for its fairground operations, solid waste disposal utility, land management activities, corrections commissary operations, and regional information systems activities. Internal Service Funds are used to account for operations that provide services primarily to the other departments or agencies of the County, or to the other governments, on a cost-reimbursement basis. The County uses internal service funds to account for its self-insurance and employee benefits activities, motor pool operations, intergovernmental services activities, information services and computer replacement activities. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the County. The accounting used for fiduciary funds is similar to that used for proprietary funds. The County maintains one fiduciary fund, the Retiree Benefit Trust Fund. Basis of Budgeting and Accounting Lane County maintains its budget using the current financial resources measurement focus and the modified accrual basis of accounting as defined by Generally Accepted Accounting Standards (GAAP) and interpreted by the Governmental Accounting Standards Board (GASB), with certain exceptions. Under the current financial resources measurement focus revenues are recorded when they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recognized when the liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and vested compensated absences. Exceptions between the budget and modified accrual basis of accounting are as follows: Unrealized changes in the fair value of investments are not recognized on a budget basis Investment earnings are not accrued on a budget basis Intrafund transfers are recognized on a budget basis Prepaid expenditures for the Lane Events Center are reported on a budget basis GAAP basis financial statements require governmental funds be recorded on the modified accrual basis of accounting and proprietary funds be recorded on the full accrual basis of accounting using the economic resources measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Therefore, additional adjustments are required to convert proprietary fund types from the budget basis/modified accrual basis of accounting to the full accrual basis of accounting. For example, disbursements for the acquisition of proprietary fund capital assets would be considered expenditures under Oregon Local Budget Law and the modified accrual basis of accounting, but are capitalized as capital assets under full accrual reporting. Conversely, receipts of proceeds from proprietary fund debt financing are a budgetary resource under Oregon Local Budget Law and the modified accrual basis of accounting, but are reported as liabilities under full accrual reporting. Differences between the budget basis, modified accrual basis, and full accrual basis of accounting are reported at year-end in the Comprehensive Annual Financial Report (CAFR) in the Required Supplementary Information and Other Supplementary Information sections. You can view the CAFR at the Lane County website: es/ 52

3 General General Fund 124 Governmental Funds Special Revenue Parks and Open Spaces Fund 216 Law Library Fund 222 General Road Fund 225 Liquor Law Enforcement Fund 231 Public Land Corners Preservation Fund 240 County School Fund 241 Extension Service Fund 242 County Clerk Records Fund 244 Title III Projects Fund 250 Special Revenue Fund 260 Animal Services Fund 283 Intergovernmental Human Services Fund 285 Health & Human Services Fund 286 Trillium Behavioral Health Fund 287 Local Option Tax Levy Fund 290 Debt Service Lane Events Center Debt Service Fund 323 Special Obligation Bond Retirement Fund 333 Notes Payable Fund 341 Capital Projects Capital Improvement Fund 435 Juvenile Justice Center Construction Fund 454 Proprietary Funds Internal Services Enterprise Self Insurance Fund 612 Lane Events Center Fund 521 Employee Benefit Fund 614 Solid Waste Disposal Fund 530 Pension Bond Fund 615 Corrections Commissary Fund 539 Motor & Equipment Pool Fund 619 Land Management Fund 570 Intergovernmental Services Fund 627 Technology Replacement Fund 653 Technology Services Fund 654 Fiduciary Funds Retiree Benefit Trust Fund

4 County Funds Overview GENERAL FUND 124 The primary operating fund for the County, this fund consists of discretionary revenues from tax collections, O&C timber receipts, investment earnings, cigarette and liquor taxes, and other state and local revenue sources. The remaining revenues are generated by activities such as grants and contracts, recording and election fees, and other revenues generated by department activities or services. SPECIAL REVENUE FUNDS Parks and Open Spaces 216 This fund receives revenue from State and local sources for operations, maintenance and enhancement of County parks, campgrounds, and open spaces. Law Library Fund 222 Revenues collected by the Courts as part of civil litigation filing fees support the Law Library. The library provides legal reference materials and assistance to patrons (attorneys, litigants, and public). General Road Fund 225 Revenues are designated for the maintenance, preservation, and construction of the County road-andbridge system. The major revenues are the state gas tax and highway user fees, along with National Forest timber receipts. These revenues are mandated by Federal and State law for road purposes. Presently, State law allows the use of National Forest timber receipts for police road patrols. Liquor Law Enforcement Fund 231 Revenues are received from County Justice Courts, city municipal courts, and the District Court for fines on traffic violations related to the Liquor Control Act. Funds are administered by the District Attorney and are used for liquor law enforcement activities as well as for alcohol abuse prevention campaigns. Public Land Corner Preservation Fund 240 Revenue from a Deeds and Records filing fee is dedicated to corner preservation activities. This program researches the records, locates government corners in the field, and re-establishes and records available to public on section, donation-land claim, and meander corners. County School Fund 241 Revenue from this fund is distributed to County schools through the Lane Education Services District. State law requires that funding from 25% of the National Forest timber receipts received by the County and a portion of state timber sales receipts be paid by this fund. Extension Service Fund 242 This fund was created following the passage of a five year local option levy of $0.015 per $1,000 assessed value in May, 2016 for operations and capital. While part of County s budget, the funds will be remitted directly to the Oregon State University (OSU) Extension Service in order to provide services specified within the ballot (4-H programs, Master Gardener, Master Food Preserver, secure local Extension positions, etc). This current levy expires after the FY tax year. County Clerk Records Fund 244 Revenues received from recording of legal documents, including contracts, deeds, and other conveyances of real property for archival, indexing, and retrieval on computer and microfilm by the public. Marriage licenses are issued, ceremonies performed, and records indexed and maintained. The program also operates the County Record and Archive Center, administers the Records management program and 54

5 micrographics program, and provides public assistance in the Records Research Room. These functions are performed in accordance with state and local mandates. (Commissioners' orders, ordinances, resolutions, and minutes are filed and maintained in the form of Commissioners' Journals). Title III Projects Fund 250 This fund holds the Title III revenue received from P.L (2000), P.L (2008), P.L (2012), and P.L (2013), also referred to as the Federal Secure Rural Schools (SRS) legislation. There are specific allowable uses for these funds as detailed in the legislation and the BCC reviews requests and awards funds each fiscal year according to those uses. Fund 260 Special Revenue This fund consists of several dedicated revenue sources and programs. Transient Room Tax funds the Tourism program. Revenue generated from the sale of tax-foreclosed real property supports the management of these properties. Funding is also included for the Short Mountain Training Facility, Drug Enforcement, and rural and community development projects. Court fines fund Courthouse Security operations. Animal Services Fund 283 Animal regulation services are provided for unincorporated Lane County and other small cities. Funding is provided by General Fund. As of July 1, 2014 animal regulation services will be provided through the General Fund and the use of the Animal Services Fund will be discontinued. Intergovernmental Human Services Fund 285 This fund is a cooperative intergovernmental effort between Lane County and the Cities of Eugene and Springfield to provide pooled human services and homeless resources and coordinated policy. This also provides for leveraging of State and Federal funds. Services are provided through a mix of contracted services provided by public and non-profit organizations, direct services provided by County staff, and involvement in community initiatives. Programs include Human Services Administration, Family Mediation, Energy & Conservation Services, Human Services Management Information System, Human Services and Housing, and Veterans Services. Health & Human Services Fund 286 Revenues are received from Federal, State and local resources, enabling Lane County to provide a wide variety of health and human services to the community. Programs funded include, but are not limited to, Public Health, Adult & Child Behavioral Health services, Developmental Disabilities, and Environmental Health services. This fund also contains sub-funds to provide the services of the Community Health Centers and Juvenile Detention and Youth Services. Trillium Behavioral Health Fund 287 This fund was originally established in October 2003 for LaneCare, which was the mental health managed care organization for Lane County through August The fund name has been changed from LaneCare to Trillium Behavioral Health to coincide with the change of the managed care organization role moving from Lane County to Trillium Community Health. This fund now includes revenue to provide the administration of the behavioral health benefits to Oregon Health Plan members, which are funded through a contract with Trillium Community Health. Local Option Tax Levy Fund 290 This fund was created following the passage a five year local option levy tax for the restoration of jail beds and critical youth services in May, This fund contains property tax revenue received from the approved levy of $.055 per $1,000 assessed value. The current levy expires after the FY tax year. 55

6 DEBT SERVICE FUNDS Lane Events Center Debt Service Fund 323 This fund accounts for the accumulation of resources for and payment of debt service for the construction and renovation of facilities at the fairgrounds site. Fund resources come from transient room tax revenue funds, grants, and donations. Special Obligation Bond Retirement Fund 333 This fund provides for the interest and principal payments to retire bonds sold to finance capital improvements and equipment purchases, using pledged revenue as the source of repayment. For the Capital Project Debt Retirement, the revenues are pledged from building rental income and an annual general fund appropriation. Notes Payable Fund 341 This fund provides for the interest and principal payments to retire promissory notes sold to finance capital improvements and equipment purchases, using pledged revenue from the Capital Improvement Fund as the source of repayment. CAPITAL PROJECTS FUNDS Capital Improvements Fund 435 The sale of County property, rental and parking revenue, and payments through the Indirect Cost Allocation Plan provide the resources for major capital equipment projects. Juvenile Justice Center Construction Fund 454 In 1995, the Lane County voters approved a $38.9 million bond measure for the construction of a Juvenile Justice Center. This project includes a new detention facility, courtroom and two residential facilities. The project may include land acquisition. The fund was closed in FY with the last year of actuals showing up in FY ENTERPRISE FUNDS Lane Events Center Fund 521 The fund receives revenue from local resources and user fees generated by activities at the Lane Events Center. The principal revenues are Convention Center rental fees, County Fair admission and amusements, and building use fees during the remainder of the year. The fund also receives Transient Room tax funds, which are designated for capital improvements and operations as approved through the budget process. Solid Waste Disposal Fund 530 This fund operates solely on revenues generated from user fees. As of July 1, 1993 a portion of the user fees collected are allocated for the integrated solid waste management system through waste prevention, reuse and recycling, waste diversion and operation of outlying transfer sites throughout the County as well as the development, replacement, closure, and post closure requirements of County solid waste landfill sites and the Central Receiving Station in Glenwood. Corrections Commissary Fund 539 The fund provides for the purchase of sundries by corrections facility inmates. Items offered for purchase are for personal use or consumption and do not duplicate necessities issued to inmates. Commissary profits provide recreational equipment for inmate use within the corrections facility. All revenues are received from inmates. 56

7 Land Management Fund 570 This fund contains revenue for the Land Management Division of Public Works that is generated from building permit, zoning fees, and user fees for land use planning, building, electrical subsurface sanitation, and code compliance services to the public and cities within the county. INTERNAL SERVICE FUNDS Self-Insurance Fund 612 Lane County is self-insured for both Workers Compensation and general liability, including property, equipment, employee faithful performance, and certain special coverage. Revenues are provided by departmental contributions made from other funds based on a combination of exposures and experience. Employee Benefit Fund 614 The fund receives payments from all County departmental budgets to pay for all negotiated and statutory employee benefits such as FICA (Social Security), PERS, Unemployment, Health Insurance, and services including employee assistance, health promotion, and training. Pension Bond Fund 615 The Pension Bond Fund is an internal service fund established to account for the receipt of the payroll surcharge assessed against operating departments and used to make Public Employee Retirement System (PERS) bond payments. Motor and Equipment Pool Fund 619 This fund provides vehicles and equipment for use by County departments and other governmental agencies. The payments to this fund are for vehicle operation and maintenance, as well as vehicle replacement. Intergovernmental Service Fund 627 This fund provides administrative support services to all County departments and other agencies. Services are provided on a cost-reimbursement basis. Technology Replacement Fund 653 This fund receives payments from all Lane County departments who intend to replace their personal computers, servers, copiers, and printers based on a scheduled replacement cycle. Monthly payments are made based upon the number and type of equipment. Once sufficient funds have accrued, the paying department can use the proceeds to purchase replacements. The Technology Services department manages this fund. Technology Services Fund 654 This fund accounts for information technology core infrastructure and support services provided to County departments and regional customers on a cost-reimbursement basis by the Technology Services department. This fund was established with an effective date of July 1, Prior to the creation of this fund, the Technology Services department was budgeted within the General Fund. TRUST AND AGENCY FUNDS Retiree Benefit Trust Fund 714 The County has an obligation for medical benefits for certain retired employees. This is a limited obligation in that no employees hired after 1997 are eligible to receive it. The Retiree Benefit Trust Fund was established to adhere to governmental accounting standards that require the County to provide dedicated funding for this defined liability for the duration of its existence and to place those funds in a trust fund. Monies will be placed into this fund each year to meet the obligation based upon an actuarial analysis. The Retiree Benefit Trust Fund will account for the receipt of the payroll surcharge assessed against operating departments and to account for the medical benefit payments. 57

8 Fund Name GENERAL FUND Assessment & Taxation County Administration County Counsel District Attorney Health And Human Svcs FY ADOPTED DEPARTMENT EXPENDITURES AND REQUIREMENTS BY FUND Human Resources Information Services Public Works Sheriff's Office Non- Departmental (General Expense) Debt Service Transfers Contingency Total Appropriations Reserves TOTAL 124: General 5,993,346 8,428,118 1,629,642 10,300, ,473, ,743,576 34,762, , ,617, ,500 79,898,367 13,984,034 93,882,401 Total 5,993,346 8,428,118 1,629,642 10,300, ,473, ,743,576 34,762, , ,617, ,500 79,898,367 13,984,034 93,882,401 SPECIAL REVENUE FUNDS 216: Parks & Open Spaces ,420, , ,865 3,987,520 89,027 4,076, : Law Library 0 229, , , , , : General Road ,917, ,000 5,342,042 38,104,543 17,698,488 55,803, : Liquor Law Enforcement , ,613 85, , : Public Lnd Crnrs Preserv , , , ,411 1,215, : County School , , , : Extension Services Fund , , , : County Clerks 0 51, ,842 12, , , , : Title III Projects , ,346 1,537,825 2,475, : Special Revenue 0 10,248, , ,616 8,254,506 6,600, ,827 2,034,141 27,756,260 5,703,121 33,459, : Animal Services Fund , , ,597 38, , : Intergov. Human Svcs ,731, ,477,335 1,338,377 16,547, ,547, : Heath & Human Services ,293, ,953,504 7,852,552 98,100, ,100, : LaneCare ,120, ,449,193 8,166,777 22,736, ,736, : Local Option Tax Levy ,806, ,518, ,075,813 19,400,826 17,387,959 36,788,785 Total 0 10,529, , ,953, ,010,451 21,773,065 8,682, ,097,576 29,574, ,647,277 43,513, ,160,870 DEBT SERVICE FUNDS 323: Lane Events Ctr Debt Svc , , , : Spec Oblig Bond Retiremt ,305, ,305,467 5,136,596 8,442, : Notes Payable Debt Svc , , ,083 Total ,188, ,188,268 5,136,596 9,324,864 CAPITAL PROJECT FUNDS 435: Capital Improvement 0 6,937, , ,405 8,337, ,500 9,156,704 Total 0 6,937, , ,405 8,337, ,500 9,156,704 ENTERPRISE FUNDS 521: Lane Events Ctr ,832, ,056 1,031,965 5,259,070 1,555,283 6,814, : Solid Waste Disposal ,052, ,200,000 3,160,506 21,412,812 16,378,066 37,790, : Corrections Commissary , , , , : Land Management ,039, ,216,081 8,255,847 2,685,901 10,941,748 Total ,924, , ,595,056 6,439,742 35,551,529 20,619,250 56,170,779 INTERNAL SERVICE FUNDS 612: Risk ,004, ,000 3,304,464 6,866,042 10,170, : Employee Benefit ,356, ,350,000 56,706,649 10,282,309 66,988, : Pension Bond ,985 7,036, ,042,550 3,610,726 10,653, : Motor & Equipment Pool ,694,528 3,121, ,000 3,598,030 15,013,781 23,553,739 38,567, : Intergovernmental Svcs 0 588, , ,980 92, , : PC Replacement ,317, ,500 1,714,085 1,286,859 3,000, : Technology Services ,229, ,500 13,906, ,906,770 Total 0 588, ,546,855 7,694,528 3,121,223 58,367,098 7,036, ,000 6,371,030 98,326,279 45,692, ,018,751 TRUST FUNDS 714: Retiree Benefit Trust ,081, ,000 3,581,676 10,623,177 14,204,853 Total ,081, ,000 3,581,676 10,623,177 14,204,853 TOTAL ALL FUNDS $ 5,993,346 $ 26,483,435 $ 1,629,642 $ 10,327,151 $ 112,953,145 $ 2,473,671 $ 14,546,855 $ 75,372,676 $ 60,248,929 $ 70,567,678 $ 11,224,833 $ 24,811,813 $ 43,897,426 $ 460,530,600 $ 140,388,622 $ 600,919,222 58

9 Understanding the County s Budget General Highlights The Fiscal Year Adopted Budget including expenditures, transfers and reserves for all funds is $600,919,222. Resources overall are down by $27,206,268 or 4.33%. This decrease is a combination of reducing fund balances due to the elimination of the Secure Rural Schools federal payments and a decrease in internal costs including health insurance and fleet charges. Change in fund size by type of fund across the County are shown below: CHANGE IN TOTALS BY FUND TYPE FY FY Amount of % of Curr Bdgt Adopted Change Change General 92,474,331 93,882,401 1,408, % Special Revenue 289,898, ,160,870 (15,737,245) -5.43% Debt Service 16,918,089 9,324,864 (7,593,225) % Capital 10,343,595 9,156,704 (1,186,891) % Enterprise 54,271,899 56,170,779 1,898, % Internal Services 149,764, ,018,751 (5,745,250) -3.84% Fiduciary 14,455,460 14,204,853 (250,607) -1.73% TOTAL $628,125,490 $600,919,222 ($27,206,268) -4.33% Major Revenue & Resource Trends Revenues Revenues have been adjusted based upon anticipated or reported funding and current financial projections. The County also relies heavily upon comparisons to historical actuals for both revenue and expenditure projections. Major categories of revenue are described below. Current Year Property Tax Current Year Property Tax revenue is anticipated to represent 14.08% of the County s total revenue and 8.50% of all resources in FY Lane County's permanent tax rate under voter approved Measure 50 is $ per $1,000 of Assessed Value (AV). The current AV is increased by a constitutionally restricted limit of 3% plus additions for estimated new construction. It is estimated that the County will receive $38.9 million from its permanent rate and a total of $51.1 million from all of its property tax levies. In 59

10 addition to the permanent rate, the County currently also currently has two local option levies appearing within its budget. The first consists of an authorized rate of $.055 per $1,000 AV passed by voters in 2013 and renewed in 2017 for restoration of jail beds and critical youth services. The second levy, passed in May 2016, is for 4H Extension Services at a rate of $0.015 cents per $1,000 AV. The reduction in revenue shown on the chart above in FY17 Bdgt was due to a reduction in the assessed rate for the jail and youth services levy down to a rate of $0.38 cents. That decreased assessment continues in FY It should also be noted that the 4H Extension Service levy funds pass through the County s budget and are paid directly to the OSU Extension Service which is a separate entity from Lane County government. Despite the chart showing the decreasing trend explained above, the County is expecting to see property tax revenues grow by approximately 3.5% due to a strong housing market. Other Taxes & Assessments In addition to Current Year Property Tax receipts, the County also collects other taxes related to Prior Year Property Taxes, Car Rental, Transient Room occupancy and other miscellaneous taxes and assessments. This portion of Taxes & Assessments will represent 3.05% of total County revenue and is projected to increase by 3.9% overall in FY based upon the relatively strong economy. Payments in Lieu of Taxes (PILT) is not currently budgeted in FY due to the lack of an authorization of the funding by the Federal Government. In past years, the County has received approximately $700,000 in PILT into its General Fund. A new 3% local marijuana tax passed by voters in November 2016 is projected to bring in limited funds due to there currently being only one dispensary within unincorporated Lane County. Projections for that revenue source will be updated once more data is available. Federal Revenues Federal revenue to the County continues to decline and will represent 12.8% of overall County revenue in FY The decrease is primarily due to the elimination of the Secure Rural Schools Payments, which have not been renewed by the U.S. Congress. In place of that funding, the County now receives a shared portion of timber harvest revenue from logging activities occurring on specific U.S. National Forests and Oregon & California (O&C) Forestland. The decline in Federal Revenue to the County began long before the chart shown to the right. For comparison, FY Federal Revenue totaled $72.2 million. The resulting decrease over the past 7 years is over 35%, not adjusted for inflation. This reduction in revenue has the largest impact on the General Fund and Road Fund as discussed throughout this document. 60

11 State Revenues State revenue consists of 23.5% of total County revenue and comes primarily in the form of specific use grants. Total State Revenue is decreasing by $3.9 million or 4.42% as compared to FY State shared revenues (cigarette, liquor, and amusement device tax, video lottery proceeds and a recreational vehicle fee) will total $4.7 million or 5.5% of total state revenues. Video Lottery, which must be spent on economic development, is projected to grow by 2%. Cigarette Tax revenue continues to decline in recent years, while Liquor Tax shows modest increases. The State distribution of a recreation vehicle fee is projected to grow by almost 3%. The State Marijuana Tax, implemented in calendar year 2016, has been collected by the State but not yet distributed to local governments. The County is assuming this revenue will remain flat at $120,000 annually, until we receive further data to verify a change in projection. Fees and Charges External Fees The County charges fees for services rendered to residents in areas such as Short Mountain Landfill fees, Land Management permit fees and recording fees within Deeds & Records. These fees will total $41.3 million in FY 17-18, which is less than 1% growth from FY Fees are currently stable following a recent increase at the Short Mountain Land Fill and higher fee collection in Land Management due to the strengthening economy. Recording fees for real estate transactions, which saw a substantial decrease during the Great Recession, have rebounded and returned to prior revenue amounts due in part to continued low mortgage interest rates and a strong local real estate market. The trend for that revenue source is dependent on decisions made by the Federal Reserve and long-term interest rates. Internal Fees The County budget also accounts for fees charged internally between departments and internal service funds for benefit costs, finance, human resources and administrative services as well as legal and technology services necessary to enable departments to provide services to the public. Internal fees will total $85.6 million in FY 17-18, which is a 2.05% decrease from current year. This decrease is due to a continued focus on reduction of internal cost drivers, including fleet and technology charges, in order to spend the County s limited funds on critical services to the community. 61

12 Fines Forfeitures & Penalties This revenue source will total $1.5 million for FY A modest rebound has occurred following a change from three County justice court districts down to the current one district seated in Florence. In addition, State changes to the criminal fine assessments and the lack of County funding available to provide additional Sheriff Patrol and traffic enforcement services both resulted in an overall decreasing revenue to the County within this category. Total Revenue In FY 17-18, the County is projecting other revenues related to Property and Rentals of $6.7 million, Local Revenues of $8.4 million, Administrative Charges of $19.3 million and Interest Earnings of $1.9 million for Total Revenue of $362,853,953. Revenue accounts for 60.4% of all County Resources within the County s budget. The revenue amount is important because in the event it is lower than ongoing expenditures, the County may experience a Structural Deficit. Other Resources In addition to the revenue that will be received by the County in FY 17-18, the County also maintains fund balances in each of its funds, and transfers money between funds which are then available as a Resource in the budget year and beyond. Beginning fund balances maintain the same spending restrictions as the original source that paid the funds to the County. In addition, many of the County s Funds are required to maintain reserve levels for self-insurance, bond ratings, maintenance of assets, as well as events such as the future closure of the Short Mountain landfill or disaster preparedness for roads and bridges. Fund Balance The County s Fund balances represent the amount of money that will be unspent and carried forward from the prior year. These funds are either spent or reserved based upon reserve policies for the type of fund and service. In some cases the County also relies on these funds to maintain stable service levels from year to year as revenues fluctuate. The most important thing to remember when reviewing fund balance is that these funds provide a one-time use. This means, they do not replenish themselves once spent unless funds are taken from another revenue source. In FY 17-18, the total beginning fund balance for all County funds is estimated at $213.2 million, which is a decrease of $15.8 million or 6.93% from current year budget. While in some cases this reduction is anticipated due to planned spending, this decrease also demonstrates an overall decrease of resources available to the 62

13 County for use in providing services to the community. In FY 17-18, neither the Road Fund nor General Fund will spend any of their beginning fund balance to provide ongoing services. This structural balancing is occurring for the first time in seven years and is the result of the budget goals set by the County Administrator in FY as detailed in the Budget Message. Total Resources All available Resources for FY are budgeted to total $600,919,222. This is a decrease of $27.2 million from the current year s budget of $628,125,490. This decrease is due in part to the decrease in Revenues as described above, as well as due to the internal expense reductions related to the continued focus on decreasing internal expenses wherever possible. Major Expenditure Trends Personnel Services An additional $68.3 million in expenses is budgeted for employer taxes such as social security and Medicare as well as benefit costs associated with medical insurance, retirement, and other employer paid benefits. Health insurance costs are projected to be flat for the third year in a row due to the change to a self-funded model and lower than projected medical claims in FY The County is experiencing a 20% increase in pension expenses in FY related to the biennium increase in Lane County's services, like most governmental agencies, are labor intensive. The total wages for both regular and temporary employees (total of 1, FTE) are budgeted at $98.3 million for FY 17-18, an increase of 1.35% from current year. These wages account for 25.1% of all County expenditures. The County also hires Extra Help employees throughout the fiscal year in various service areas for short-term needs. 63

14 employer rates from the Public Employee Retirement System (PERS). PERS increases are anticipated to continue for the next several bienniums due to a large unfunded liability within the PERS system. Lane County reserved funds in FY in anticipation of the increasing PERS rates and will begin to use a portion of those reserves as the increases occur to help decrease the overall impact. All personnel expenses are projected to total $170.5 million, or 43.5% of the County s total expenditure budget. This represents growth of 1.54% when compared to the FY budget. The County has adjusted vacancy variance projections in the FY budget within several funds which results in decreasing budgeted salaries as we account for wages not anticipated to be paid due to position vacancies. This effort will continue to be refined in future budget years. Materials & Services This category totals $191.7 million and represents 48.92% of the County s overall expenditure budget. The FY budget represents a decrease of $16.7 million, or 8%. The decrease is attributed to one-time expenses in FY 16-17, as well as a continued focus on reduction of internal expenses and other material and services to maintain the personnel needed to provide direct services to citizens. The continued decrease within the Road Fund of available funding for road improvements and maintenance due to the loss of Secure Rural Schools also impacts this expense category. Capital Outlay Capital Outlay expenditures are budgeted at $5.9 million for various equipment purchases that make up 1.53% of the County s overall expenditure budget. The major types of equipment purchased include heavy equipment for the Public Works department along with vehicles and data processing equipment for a variety of departments. County policy provides that equipment should be on a scheduled replacement cycle with appropriate funds reserved for future replacement. Dollars are budgeted in various operating funds and transferred to the replacement funds for holding until sufficient funds have built up to replace the equipment. For this reason, capital outlay expenditures are cyclical and 64

15 can vary greatly from year to year. When compared to FY 16-17, the capital outlay budget will decrease by 19% in FY Capital Projects Capital projects are budgeted at $12.5 million and represent 3.19% of the County s total expenditure budget. Many of the projects in this category are based upon the Five-Year Capital Improvements Plan prepared by the Department of Public Works. FY reflects a reduction of $2.6 million or 17.19%, primarily due to shrinking Road Fund resources and completion of projects. Debt Service The County pays debt service payments on various bonds issued for a variety of projects. Specific details on the bonds can be found in the General Expense section of this document. The payments consist of both principal and interest payments and are budgeted in FY at a total of $11.2 million. On May 31, 2017, the County Issued $8,870,000 in Full Faith and Credit Refunding Obligations, Series 2017, which was used to advance refund a portion of the County s Series 2009A bonds. Net proceeds of $9,897,864, along with County funds of $6,258,709, were used to purchase Open Market Securities U.S. Treasury notes that were placed in an irrevocable trust with an escrow agent to provide for the payment of the remaining principal and interest due on the Series 2009A bonds. The advance refunding will result in reducing the County s principal and interest payments by $3,033,405 over the next 12 years to obtain an economic gain of $1,843,462 (i.e. difference between the present value of the debt service payments on the refunded debt and the refunding debt). Including the County s cash contribution to buy down the debt of $6,258,709, the advance refunding will reduce total principal and interest payments by $9,292,114 through Payments are currently being made for the following major bonds: Heating, Ventilating and Air Conditioning (HVAC) and Fairgrounds capital improvements bonds; Mental Health Building; Public Health Building, the PERS Limited Tax Pension bond, and 2011 Improvements (Riverstone, Marina, Customer Service Center, Lane Events Center Roof and PSB HVAC). Total Expenditures In FY 17-18, the County is projecting total expenditures of $391,821,361. Expenditures account for 65.2% of all County budget requirements. This figure is important because it is compared to Total Revenue when reviewing the budget for structural balancing. The County continues to have a goal of structurally balancing all funds. Other Budget Requirements In addition to the expenditures described above, the County has other requirements detailed in the budget pursuant to budget law. These include fund transfers (transfer of monies from one fund to another) as well as contingencies and reserves. 65

16 Fund Transfers Transfers between County funds will total $24.8 million in FY A large percentage of that total is a transfer of General Fund into Special Revenue Funds to pay for services such as Public Safety, Public Health, Mental Health, Developmental Disabilities and Juvenile Justice Services. Funds are also transferred from Departments into Debt Service funds to make the payments referenced above. More detail on Transfers between Funds is available in the Appendices section of this document. Reserves & Contingencies The County is currently in the process of revising its financial policies related to reserve levels and the Adopted Budget has been built under the new recommendations. The changes include determining the necessary reserve levels for funds based upon the service activity and type of fund, and changing the minimum General Fund reserve policy to a goal of 20% of operating revenues. The Adopted Budget achieves a General Fund reserve of approximately 17%. Reserves for all funds combined will total $140.4 million overall next year and an additional amount of $44 million in contingencies. Total Requirements Total Requirements for FY total $600,929,222. This is a decrease of $27.2 million from the current year s budget of $628,125,490 or 4.33%. This amount matches available resources and therefore meets Oregon State Budget Law requirement for a balanced budget. 66

17 RESOURCES & REQUIREMENTS - ALL FUNDS COMBINED ADOPTED BUDGET FY Actuals FY Actuals FY Cur Budget FY Adopted $ Chng from Curr % Chng from Curr % of Total Bdgt Taxes & Assessments 61,748,419 62,630,160 59,999,815 62,141,298 2,141, % 10.34% Licenses & Permits 3,896,079 4,462,005 4,200,967 4,131,099 (69,868) -1.66% 0.69% Fines, Forf., Penalities 1,524,765 1,540,122 1,328,850 1,517, , % 0.25% Property & Rentals 6,962,587 6,993,935 6,408,111 6,663, , % 1.11% Federal Revenue 48,637,140 49,982,439 47,189,432 46,547,924 (641,508) -1.36% 7.75% State Grant Revenue 50,072,081 56,880,330 57,410,827 54,743,171 (2,667,656) -4.65% 9.11% Other State Revenue 29,820,277 29,735,504 31,816,294 30,541,465 (1,274,829) -4.01% 5.08% Local Grants 1,667,761 1,698,768 1,735,708 1,718,649 (17,059) -0.98% 0.29% Local Revenues 6,336,805 6,499,035 6,132,498 6,700, , % 1.11% Fees & Charges 121,686, ,600, ,432, ,977,193 (1,455,666) -1.13% 21.13% Administrative Charges 18,557,531 19,688,808 18,552,563 19,272, , % 3.21% Interest Earnings 1,529,856 1,763,006 1,387,452 1,899, , % 0.32% Resource Carryover 177,218, ,021, ,627, ,253,457 (16,374,038) -7.13% 35.49% Interfund Loans 35,077 20,000 20,000 0 (20,000) % 0.00% Fund Transfers 26,021,687 31,148,828 33,882,619 24,811,812 (9,070,807) % 4.13% Total Resources 555,714, ,665, ,125, ,919,222 (27,206,268) -4.33% 100% Personnel Services 140,831, ,883, ,879, ,460,297 2,580, % 28.37% Materials & Services 166,196, ,603, ,335, ,669,521 (16,665,769) -8.00% 31.90% Capital Outlay 3,886,388 3,388,779 7,398,511 5,985,798 (1,412,713) % 1.00% Capital Projects 5,460,217 11,458,027 15,072,387 12,480,912 (2,591,475) % 2.08% Debt Service 13,261,575 10,540,463 18,979,281 11,224,833 (7,754,448) % 1.87% Fund Transfers 26,021,687 31,148,828 33,882,619 24,811,813 (9,070,806) % 4.13% Interfund Loan 35,077 20,000 20,000 0 (20,000) % 0.00% Operational Contingency ,476,488 43,897,426 (19,579,062) % 7.31% Total Reserves ,081, ,388,622 27,307, % 23.36% Total Requirements 355,692, ,042, ,125, ,919,222 (27,206,187) -4.33% 100% 67

18 Department Name General RESOURCES BY FUND TYPE & DEPARTMENT Special Revenue Debt Service Capital Projects Enterprise Internal Services Trust Total Dept Assessment & Taxation 1,411, ,183 1,672,683 County Administration 8,273,809 12,638,422 9,156, ,777 30,799,712 County Counsel 1,670,938 1,670,938 District Attorney 3,083,543 90,258 3,173,801 Health & Human Svcs 141,640, ,640,036 Human Resources 2,423,943 2,423,943 Public Works 3,537,650 63,324,534 55,546,979 32,397, ,806,323 Sheriff's Office 10,280,176 41,838, ,800 6,170,360 58,912,748 Technology Svcs 16,907,714 16,907,714 Total Fund Resources 30,681, ,792, ,156,704 56,170,779 56,206, ,007,898 Department Name General EXPENDITURES BY FUND TYPE & DEPARTMENT Special Revenue Debt Service Capital Projects Enterprise Internal Services Trust Total Dept Assessment & Taxation 5,993,346 5,993,346 County Administration 8,428,118 10,529,232 6,937, ,980 26,483,435 County Counsel 1,629,642 1,629,642 District Attorney 10,300,506 26,645 10,327,151 Health & Human Svcs 112,953, ,953,145 Human Resources 2,473,671 2,473,671 Public Works 3,743,576 37,010,451 26,924,121 7,694,528 75,372,676 Sheriff's Office 34,762,031 21,773, ,610 3,121,223 60,248,929 Technology Svcs 14,546,855 14,546,855 Total Fund Requirements 67,330, ,292, ,937,105 27,516,731 25,951, ,028,850 68

19 Revenue FY ADOPTED RESOURCES BY SERVICE CATEGORY ALL FUNDS COMBINED Culture & Community Gen Public Roads & Public Non- Recreation Development Gov't Health Infrastructure Safety Operating Taxes & Assessments 2,586,506 3,959, , ,548 14,000 11,869,932 42,831,568 62,141,298 Licenses and Permits - 1,883,800 68,000 1,136, , , ,799 4,131,099 Fines, Forf, Penalities 35,000 20, ,000 5, , ,550 1,517,750 Property & Rentals 3,959,917 13,000 1,280,037 80, , ,972-6,663,658 Revenue Other Agencies 621,000 3,879,360 4,549,357 73,168,268 25,459,253 26,886,904 5,687, ,251,257 Fees & Charges 501,476 3,407,562 20,502,713 13,114,163 19,092,456 2,605,404 67,753, ,977,193 Administrative Charges - 22,500 15,691,029-3,250,571 4, ,100 19,272,500 Interest Earnings 9,634 37, ,875 9, , , ,000 1,899,198 Resource Carryforward 2,983,540 7,728,636 35,076,979 29,157,444 44,093,600 35,572,098 58,641, ,253,457 Interfund Loans Fund Transfers 307, ,070 12,008,485 1,200,000 8,437,493 2,293,956 24,811,812 Total Revenue: 11,004,881 20,952,102 78,953, ,154,589 94,647,407 87,208, ,998, ,919,222 Total Expenditures FY ADOPTED REQUIREMENTS BY SERVICE CATEGORY ALL FUNDS COMBINED Culture & Community Gen Public Roads & Public Non- Recreation Development Gov't Health Infrastructure Safety Operating Personnel Services 3,001,091 3,945,121 27,281,029 54,210,184 23,125,132 58,897, ,460,297 Materials & Services 4,114,561 8,872,917 17,671,446 49,060,664 19,105,142 29,288,638 63,556, ,669,521 Capital Outlay 152,147-7,697,942-7,160,865 3,124, ,950 18,466,710 Debt Service ,224,833 11,224,833 Fund Transfers 464,931 22,865 1,614,536 11,880,510 2,453,689 7,388, ,189 24,811,813 Interfund Loans Reserves/Contingencies 3,272,151 8,111,199 29,734,515 17,267,371 43,242,790 27,038,109 55,619, ,286,048 UEFB Total Total Expenditures: 11,004,881 20,952,102 83,999, ,418,729 95,087, ,737, ,719, ,919,222 Full Time Equivalents ,

20 FY Adopted Resources All Funds FY Adopted Requirements All Funds 70

21 Lane County, Oregon Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds FY16 Actuals General Fund FY17 Estimated FY18 Budget FY16 Actuals Road Fund FY17 Estimated FY18 Budget Revenues Taxes and assessments 39,921,109 41,570,652 42,213,115 19,750 13,272 14,000 Licenses and permits 1,202,885 1,079, , , , ,000 Intergovernmental 19,745,899 17,497,795 17,877,701 30,083,497 24,864,883 25,457,253 Charges for services 3,246,249 3,488,882 2,962,422 1,471,395 1,776, ,140 Fines, forfeitures and penalties 992, , , Administrative and facility charges 11,432,890 11,331,170 12,167,894 3,663,695 3,413,725 3,412,918 Investment earnings 158, , , , , ,643 Sale and rental of property 529, , , , , ,577 Interfund transfers in 728,316 1,117,924 1,381,032 1,392, ,000 - Intrafund transfers in , Bond premium Refunding bonds issued Total revenues 77,957,158 77,847,917 79,155,063 37,854,838 31,902,794 30,525,531 Expenditures Current - departmental: Assessment and taxation 5,876,143 5,734,802 5,993, County administration 7,487,849 7,749,019 8,428, County counsel 1,445,943 1,446,431 1,629, District attorney 9,559,330 9,843,909 10,300, Health and human services Human resources 2,231,095 2,326,969 2,473, Public safety (sheriff's office) 34,846,780 34,309,014 34,762, Public works 3,983,831 3,584,584 3,743,576 31,117,370 30,081,992 31,917,501 Not allocated to organizational units: Materials and services 405, , , Capital expenses , Debt service Transfers out 14,291,132 11,368,960 11,617,487 5,272, , ,000 Contingency , ,342,042 Total expenditures 80,127,795 76,729,582 79,898,367 36,389,733 30,926,992 38,104,543 Net change in fund balances (2,170,637) 1,118,335 (743,304) 1,465, ,802 (7,579,012) Fund balances, beginning of year 17,302,529 15,131,892 14,727,338 25,500,798 26,965,903 25,277,500 Fund balances, end of year $ 15,131,892 $ 16,250,227 $ 13,984,034 $ 26,965,903 $ 27,941,705 $ 17,698,488 71

22 Lane County, Oregon Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Special Revenue / Services Fund FY16 Actuals FY17 Estimated FY18 Budget Health and Human Services Fund FY16 Actuals FY17 Estimated FY18 Budget Revenues Taxes and assessments 3,465,953 3,610,721 3,959, Licenses and permits , , ,500 Intergovernmental 16,769,561 16,353,193 16,600,191 53,586,534 49,050,774 56,725,027 Charges for services 2,224,063 2,147,614 1,640,650 9,493,952 12,096,798 12,648,205 Fines, forfeitures and penalties 398, , , , , ,500 Administrative and facility charges Investment earnings 58, ,010 63,691 58,312 62, Sale and rental of property 111, , , , , ,607 Interfund transfers in 1,142, , ,082 9,584,556 9,437,414 10,336,452 Intrafund transfers in 102,702 61,200-4,215,442 4,792,255 5,359,128 Bond premium Refunding bonds issued Total revenues 24,273,367 23,426,738 23,456,895 78,227,891 76,755,050 86,347,719 Expenditures Current - departmental: Assessment and taxation 33, County administration 9,069,535 10,322,373 10,248, County counsel District attorney 6,597 4,132 4, Health and human services ,968,968 76,836,265 84,293,980 Human resources Public safety (sheriff's office) 6,840,032 7,082,125 8,254, Public works 332, , , Not allocated to organizational units: Materials and services 5,682,163 5,150,450 6,400, Capital expenses 38,753 19, , Debt service Transfers out 289, , ,827 5,114,942 6,024,193 5,953,504 Contingency - - 2,034, ,852,552 Total expenditures 22,291,996 23,226,368 27,756,260 77,083,910 82,860,458 98,100,036 Net change in fund balances 1,981, ,370 (4,299,365) 1,143,981 (6,105,408) (11,752,317) Fund balances, beginning of year 9,011,762 10,993,133 10,002,486 14,873,846 16,017,827 11,752,317 Fund balances, end of year $ 10,993,133 $ 11,193,503 $ 5,703,121 $ 16,017,827 $ 9,912,419 $ - 72

23 Lane County, Oregon Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Trillium Behavorial Health Fund FY17 Estimated FY16 Actuals FY18 Budget FY16 Actuals Local Option Levy Tax Fund FY17 Estimated FY18 Budget Revenues Taxes and assessments ,895,487 11,585,821 11,869,932 Licenses and permits Intergovernmental 6,569,105 6,316,420 6,329, , , ,750 Charges for services 5,003, Fines, forfeitures and penalties Administrative and facility charges Investment earnings 114, ,195 7, , , ,000 Sale and rental of property Interfund transfers in Intrafund transfers in Bond premium Refunding bonds issued Total revenues 11,687,096 6,489,615 6,336,796 16,277,618 12,106,427 12,214,682 Expenditures Current - departmental: Assessment and taxation County administration County counsel District attorney Health and human services 2,991,018 3,514,260 13,120,826 1,582,220 1,416,600 1,806,454 Human resources Public safety (sheriff's office) ,538,381 11,421,619 13,518,559 Public works Not allocated to organizational units: Materials and services Capital expenses Debt service Transfers out 323,158 6,850,493 1,449, Contingency - - 8,166, ,075,813 Total expenditures 3,314,176 10,364,753 22,736,796 10,120,601 12,838,219 19,400,826 Net change in fund balances 8,372,920 (3,875,138) (16,400,000) 6,157,017 (731,792) (7,186,144) Fund balances, beginning of year 12,751,207 21,124,127 16,400,000 19,378,906 25,535,923 24,574,103 Fund balances, end of year $ 21,124,127 $ 17,248,989 $ - $ 25,535,923 $ 24,804,131 $ 17,387,959 73

24 Lane County, Oregon Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds FY16 Actuals Other Governmental Funds FY17 Estimated FY18 Budget FY16 Actuals Total FY17 Estimated FY18 Budget Revenues Taxes and assessments 1,863,232 2,339,648 2,462,797 61,165,531 59,120,114 60,519,588 Licenses and permits 17, , ,700 2,282,645 2,404,088 2,247,299 Intergovernmental 14,964,098 15,941,212 13,416, ,941, ,284, ,626,623 Charges for services 3,725,980 2,023,619 1,883,703 25,165,169 21,533,410 19,959,120 Fines, forfeitures and penalties 19,895 14,017 44,200 1,529,306 1,567,644 1,497,250 Administrative and facility charges 3,021,347 3,041,695 2,927,446 18,117,932 17,786,590 18,508,258 Investment earnings 96, ,060 76, ,889 1,288, ,032 Sale and rental of property 1,187,605 1,726,780 1,284,800 2,989,432 3,476,512 2,793,771 Interfund transfers in 11,259,275 10,912,373 4,781,798 24,106,760 22,579,864 16,768,364 Intrafund transfers in 473, , ,377 4,792,068 5,328,910 5,958,505 Bond premium - 1,027, ,027,864 - Refunding bonds issued - 8,870, ,870,000 - Total revenues 36,628,411 46,739,963 27,599, ,906, ,268, ,635,810 Expenditures Current - departmental: Assessment and taxation ,909,787 5,734,802 5,993,346 County administration 3,482,851 1,389,596 7,217,770 20,040,235 19,460,988 25,894,455 County counsel ,445,943 1,446,431 1,629,642 District attorney 10,103 21,160 22,187 9,576,030 9,869,201 10,327,151 Health and human services 13,174,937 15,202,906 13,731,885 89,717,143 96,970, ,953,145 Human resources ,231,095 2,326,969 2,473,671 Public safety (sheriff's office) ,225,193 52,812,758 56,535,096 Public works 3,974,573 4,364,471 4,668,334 39,407,790 38,437,066 40,754,027 Not allocated to organizational units: Materials and services 3,403,591 2,225,498 2,082,269 9,491,446 7,741,842 8,787,954 Capital expenses 423, ,734 19, ,950 Debt service 4,143,604 20,295,635 4,188,268 4,143,604 20,295,635 4,188,268 Transfers out 1,683,441 2,920,482 2,561,746 26,974,292 28,251,288 22,616,757 Contingency - - 2,601, ,586,654 Total expenditures 30,297,081 46,419,748 37,074, ,625, ,366, ,071,116 Net change in fund balances 6,331, ,215 (9,475,164) 23,281,087 (8,097,616) (57,435,306) Fund balances, beginning of year 14,471,536 20,802,866 18,155,285 Fund balances, end of year $ 20,802,866 $ 21,123,081 $ 8,680,121 $ 136,571,671 $ 128,474,055 $ 63,453,723 74

25 General Fund Analysis The General Fund is the County s primary operating fund and supports a multitude of the County s core services including public safety, public health and general government services such as elections, assessment & taxation and internal support services. For FY the total General Fund budget is $93,882,401, which is an increase of $1.4 million or 1.52% from FY A Historical Perspective on Federal Timber Revenue For well over 95 years, Lane County citizens have relied on timber harvest revenue from federal Oregon & California (O&C) railroad lands to fund a significant portion of critical county services. These services include Sheriff s patrols, the adult jail, criminal prosecution, youth detention, public health, and elections. However, revenue from federal timber harvests began a significant decline with the change in federal forest policies in the early 1990 s. From 1992 through 2000 the County was forced to make numerous budget cuts as seen below while trying to preserve essential services. Congress helped stabilize the situation by approving a federal timber revenue guarantee in 1993, but it did this on a declining basis through General Fund reductions during this period were $9.6 million and over 181 positions were cut. This occurred despite the fact voters approved special public safety serial levies on four separate occasions. Secure Rural Schools Legislation Congress enacted a federal guarantee called the Secure Rural Schools (SRS) and Community Self- Determination Act in This Act provided a new six-year guarantee at a much higher level than previously granted. However, the Act restricted annual growth to half the national inflation rate (CPI-U) and was set to sunset in the fall of The Act was renewed for one additional year in In FY 07-08, this revenue made up nearly 25% of unrestricted or discretionary revenues. In late 2008, the SRS Act was extended for an additional four (4-year) but at a reducing level based on FY funding levels. In mid-2012, the Act was again extended for one (1-year) at 95% of the FY funding levels. In the General Fund, the continued step down has caused funding to go from a high of $15 million in FY 06-07, down to $4.6 million in FY In addition, federal sequestration in 2013 resulted in a decrease of an additional 5.1% of the amount, bringing the actual revenue received down to $4.46 million. In mid-april, 2015, Congress passed an additional two-year extension of the SRS payments, at a continued 5% step down each year. The payment to be received by Lane County government in FY 15-16, will be approximately $13.66 million which is $36.26 million less than was received in FY before the step down of payments began. At this point there is no reauthorization for the Secure Rural Schools payments and they have not been included in the FY budget. 75

26 As shown below, the elimination of the secure rural schools legislation and payments has had dramatic impacts on the County s revenue. These funds were critical to providing adequate levels of public safety (through the General Fund) and maintaining County roads and bridges (through the Road Fund). Permanent Property Tax Rates and Limitations In 1990 Oregon voters approved Measure 5 restricting taxation for government services to $10 per $1,000 of assessed value. In the late spring of 1997, Oregon voters approved Ballot Measure 50, a revision of Ballot Measure 47, to significantly change the entire property tax system. Prior to Measures 47/50, Oregon counties imposed taxes based upon the amount of tax to be levied. Increases in assessed value and any value added as a result of new construction meant that everyone else s taxes would go down slightly to compensate for the new money coming in. Measure 47/50 changed the system to a rate based one of so many dollars per $1,000 of assessed value. Now as the value grows, so does the revenue. The new system also allows for the first time the inclusion of the assessed value of new construction, thereby generating additional revenue for the county each year. Upon enactment, Measure 50 also rolled back assessed values to the level assessed two years prior, a 17% reduction, and then placed a constitutional restriction on future growth to a 3% annual increase in assessed valuations as opposed to the 6% growth allowed under the previous tax levy system. This growth restriction has created a structural deficit within the General Fund. Annual expenditure growth has averaged between 5% and 6% while growth in overall General Fund revenue has been closer to 3% to 3.5%. Measure 50 also locked in all of the then current property tax rates, thereby establishing a permanent tax rate for each taxing district. So while Lane County services had been subsidized by federal timber revenue for many, many years, the subsequent decline in timber revenue meant that asking the voters to increase the property tax base to support critical services as many other Oregon cities and non-timber supported counties have done was no longer an option. In May, 2013, voters passed a limited local option levy property tax in the amount of $0.55 per $1,000 assessed value to restore jail beds and critical youth service for a period of five years. This levy is the 76

27 first step in working to rebuild the public safety system and find funding sources other than the decreasing timber funds to provide critical services to County residents. This levy was renewed in May of 2017 for a second five year period through FY Comparable County Comparison In the table below, Lane County s permanent property tax rate is compared to five counties most similar: Washington, Clackamas, Marion, Jackson, and Deschutes. Data was gathered for FY 15-16, the most recent fiscal year in which data is available. In previous years, Washington County was very comparable; however, Washington has now exceeded the other counties in almost every category. It is left in as a comparator to balance the average when including the smaller counties of Jackson & Deschutes. Lane Washington Clackamas Marion Jackson Deschutes 2014 Population 1 365, , , , , ,635 Area (Square Miles) 2 4, ,879 1,194 2,801 3,055 Perm. Rate/1,000 (Rural) $1.28 $2.25 $2.98 $3.03 $2.01 $1.28 Perm. Rate/1,000 (City) 3 $1.28 $2.25 $2.40 $3.03 $2.01 $1.28 Net Assessed Value 4 $30.0 bil. $56.6 bil. $42.7 bil. $21.9 bil. $18.1 bil. $20.7 bil. Average Tax Rate/1,000 4 $15.63 $16.84 $16.24 $16.03 $14.45 $15.08 Property Tax Imposed (All Dist) 5 469,38 mil mil mil mil mil Adopted FY Budget mil mil mil mil mil mil. 1 Annual Oregon Population Report dated Portland State University, College of Urban & Public Affairs, Population Research Center. 2 State of Oregon Blue Books. 3 Tax rate paid within the city limits. Clackamas County has a split rate for Rural and City residents. 4 Net Assessed Value (NAV) includes nonprofit housing, state fish & wildlife value, but excludes urban renewal excess value. Average countywide rate for local governments including special levies and GO bonds outside Measure 5 limit./dor-property Tax Statistics Taxes to be paid by taxpayers after the Measure 5 rate limits have been applied./dor-property Tax Statistics FY Adopted Budget totals obtained at each County's website. FY COUNTY COMPARISON In addition, the Rate and Value Information for Oregon s Counties table in the Appendix shows that in that year Lane County continues to be near the bottom of Oregon s 39 counties as far as overall comparable tax rate is concerned, even when you convert the O&C federal revenue into a comparable tax rate and add it in. It is also interesting to note in the table above, that while Lane County government s individual property tax rate is very low, the average property tax rate for each county is fairly close. This means the other taxing districts within Lane County have raised their rates to fill in the difference. This results in individual residents in each county paying a similar total property tax bill, but the amount of money received by county government to cover the cost of services is very different. 77

28 General Fund Revenues/Resources Taxes and Assessments In FY 17-18, Taxes and Assessments will make up 45% of General Fund resources and will total $42.2 million. This category includes both current and prior year property taxes along with county car rental tax, the Western Oregon Severance Tax offset and payments inlieu-of taxes (PILT) from utilities and tax penalties. This revenue overall is up 2.89% next year. A strong housing economy is resulting in an increase in Property Tax revenue of 3.5% for FY Car rental tax also continues to see strong increases. Fees and Charges User fees and charges for services are budgeted at $2.9 million and represent approximately 3.2% of the General Fund budget. This revenue source remains stable, with a slight decrease for FY Federal Revenue Federal revenues are decreasing by $600 thousand bringing the total to $7.3 million or 7.8% of the total General Fund. This decrease is due to elimination of the Secure Rural Schools payments due to the lack of a renewal from US Congress. The County has returned to a revenue share of actual timber harvest on Bureau of Land Management lands, which is much more unpredictable and much lower than prior SRS payments due to low logging activity. State Revenue State revenues make up 9.8% of the General Fund and are budgeted at $9.2 million, a decrease of almost $300 thousand from prior year which is primarily attributed to a decrease in projected harvest on State Timber lands as compared to the current budget year. Other state revenues are staying relatively flat. As the chart to the right shows, State revenues fluctuate year to year, with the second year of each biennium typically showing some increase from the first in recent years. Administrative Charges 78

29 Internal administrative charges are based upon a federally approved indirect cost allocation plan. A full cost plan and a Uniform Guidance plan for federal programs are prepared each year. These plans allocate the cost of central support services to all direct service departments and programs based upon specific cost drivers. The General Fund departments also receive an allocated cost based upon the County s financial policy to reflect the true cost of doing business in order to fully recover all allowable costs from grants and contracts. Some departments are also able to recover some of the overhead expenses for services provided to programs not in the General Fund. Administrative charges are budgeted at $12.2 million or 13% of General Fund total for FY Fund Balance The fund balance carryover from the prior year is projected to be $14.6 million, which is a slight 0.57% increase from the prior year. Included in this amount is the required reserve being carried forward from the prior year. In FY 17-18, no fund balance will be used to pay for ongoing services, which results in a structurally balanced budget within the General Fund for the first time in 7 years. Other Resources Licenses and Permits $966,099 Fines, Forfeitures & Penalties $835,550 Property Rentals $456,250 Interest Earnings $200,000 Fund Transfers of approximately $1.4 million Local Revenues of $1.4 million. Total General Fund Resources General Fund resources will total $93.8 million for FY 17-18, which is an increase of $1.4 million or 1.52% from FY

30 General Fund Expenditures/Requirements Personnel Services Personnel Services, which make up 53.2% of total requirements of the Fund, are budgeted at $49.9 million. The trend shown on the chart to the right occurs in spite of increasing PERS expenses and an increase in FTE of A flat personnel budget was achieved by reviewing vacancy variances occurring within the fund and making those adjustments during the budget development process. This is a change from prior years when the General Fund had a lapse policy that required funds be returned to the fund balance at the end of the year, rather than decreased at the time of budget adoption. This change from budgeting at full employment rates will continue to be refined in future years. Materials and Services Materials and Services are budgeted at $17.7 million, increasing by1.3% from prior year. This increase occurs primarily in the areas outside of the County s control, such as contracts and general commerce prices. The County continues to focus on decreasing internal charges such as fleet and computer replacement expenses to keep costs as low as possible in order to maintain critical services to the community. Capital Outlay/Capital Projects The General Fund has one capital outlay expenditure for FY in the amount of $130,950 for the replacement of the telephone system. This project will be paid for over the course of several years. Fund Transfers Fund transfers out of the General Fund represent 12.4% of total General Fund requirements and total $11.6 million. The decrease from prior year is due to the change in budgeting of vacant positions which results in a lower transfer out of the fund to services provided in Health and Human Services, Public Works, and Sheriff s Office to support services such as Public Health, Mental Health, Animal Services, Developmental Disabilities, Parole & Probation, and basic needs for Lane County s most vulnerable residents. 80

31 Reserves & Contingencies General Fund reserves are budgeted at $14.5 million. This is a slight increase from prior year, and represents a change in policy for the General Fund to a goal of obtaining a reserve equal to 20% of operating revenues. This change in reserve levels will provide cash flow needed prior to receipt of property tax revenue and safeguard the County s strong bond rating. Total General Fund Requirements General Fund requirements overall are $93.8 million, up $1.4 million from FY

32 Discretionary General Fund The majority of the resources available within the General Fund are discretionary funds, also referred to as discretionary general fund (DGF). These funds are available for distribution to any department or service without specific regulations or requirements and that are not generated by most specific department activities. DGF is primarily made up of property taxes, federal timber funds, state shared revenues and reserves. For FY 17-18, DGF totals $63,200,842, while revenue generated by department activities totals $30,611,524. Discretionary General Fund by Service Category DGF is primarily allocated to the area of public safety, but also must be used to support other services such as public health and general government services including assessment and taxation, elections and internal support functions due to lack of other funds available to pay for those mandated and/or required services. County policy and practice is that DGF is allocated after all other funds available to support a specific service, unless a general fund match or level of support is required. This means that based upon other funding available, the allocation of discretionary general fund can vary slightly from year to year. 82

33 The General Fund reserve, which represents almost 23% of the discretionary general funds, is a total of approximately 17% of operating revenues. The County is currently in the process of revising its reserves policies with a goal of establishing a minimum General Fund reserve of 20% of all operating revenues. This change in reserve policy will provide adequate cash flow prior to receipt of property tax payments in November each year, and maintain the recent bond rating increase to Aa2. The Structural Deficit The FY General Fund budget is structurally balanced for the first time in 7 years. However, due to the County s low permanent property tax rate, and limited growth under the Oregon constitution, a structural deficit continues to be projected for future years. This is due to expenditures typically growing at a faster rate than revenue. Historically the General Fund revenues have grown between 3-3.5% a year while expenses have grown at between 3% and 4%. The County will continue to focus on ways to limit expenditure growth in order to achieve a structurally balanced budget each fiscal year. Financial Forecast Model The Board of Commissioners and the Budget Committee began working with a financial forecasting model of the discretionary General Fund in 1988 to study and evaluate Lane County's financial future. The model was designed to predict the outcome of certain choices-- expenditure reductions, revenue enhancements --over a multi-year horizon. The model helps to focus the long range financial planning of Lane County's policy makers, but does not provide easy solutions. While financial models are very helpful, one must also be aware of their limitations. Each model is carefully built upon a series of assumptions that represent the best information available at that specific point in time. A tolerance of a mere one or two percent can alter the model significantly when resources are scarce. In future years, costs are expected to continue growing faster than revenues and put continual pressure on the County to reduce costs and services without additional revenue. The current General Fund forecast includes a variety of assumptions, a few of which are detailed as follows: Revenue Taxes & Assessments are projected to maintain modest growth, in large part due to Oregon s property tax system which provides for 3% growth in assessed value each year, plus additional growth for new construction. The County continues a conservative revenue growth assumption due to limited land available for new housing starts, but assumes 3.25% annual growth over the 5 years of the forecast. Federal & State Revenues continued to be budgeted conservatively due to potential change in federal and state priorities. Growth is assumed at 1%, unless specific information or outside forecasts provide additional detail. Other Revenues are dependent upon activity within each area. Fees & Charges have seen recent years of decrease due to changes in State revenue sharing and somewhat unstable changes in real estate recording fees. Administrative Charges, which are internal charges to departments for payment for internal/support services, are stable. The Fund also receives some transfers, including the largest one of $1 million to support sheriff office patrols, from other funds which helps stabilizes services. Expenditures Personnel expenses are projected out based upon the current employee population, taking into account merits based upon years of service and any approved cost of living or market adjustments. The forecast does not assume a future cost of living beyond current labor contracts. This this has the potential to decrease the ultimate accuracy of the forecast in the out years, it also serves to provide the Board of 83

34 Commissioners at good base cost from which to evaluate wage and benefit increases. Benefit cost increases associated with retirement costs (PERS) and health insurance are based upon the most up to date information at the time of forecast completion. Material & Services expenditures are split into those associated with internal services provided, such as technology, finance, human resources and other internal services, from those that experience more of an external influence. For internal services, wages and benefits for those employees are taken into account, while external charges are tied to the Oregon Economic forecast assumptions for CPI increases associated with all consumer items. Other expenditures are dependent upon the type of item such as debt payments, which are set as part of the bond issuance, or future projects and reserve levels which are determined by County policy of Board of Commissions direction. The most recent General Fund Forecast presented to the Budget Committee in May 2017 indicated a continuing structural deficit over the next five years, which has the potential to be exacerbated by wage and benefit expense demands. The County plans to continue review of internal services, with external reviews of Facilities and Fleet services occurring in FY 17-18, along with continued coordination with state and federal partners to ensure adequate funding for critical services to County residents. Additional long term financial planning will continue to be focused and refined in the coming years as the County s goal of structural balancing of the budget remains a primary focus. 84

35 Lane County Strategic Planning, Priorities, and Objectives The Board of Commissioners adopted its Lane County Strategic Plan in November of Lane County is currently in the process of developing the new Strategic Plan which will begin in The Strategic Plan laid out the long term goals for the future, focusing on the foundations that support our vision of Lane County: A Safe, Healthy County Vibrant Communities Infrastructure In an effort to have a working Strategic Plan, the Board of Commissioners agreed to review the Plan on a quarterly basis in order to report on the progress to date, identify obstacles, and make modifications where necessary. In addition, an ongoing element in this plan is to build a stable and sufficient strategy for funding the core services we all depend on in Lane County. This effort allows us to seek efficiencies, identify alternative funding sources, and leverage grants and other funding strategies. Lane County is already achieving excellent results through collaborations. The Venn diagram to the left is the symbol of our Strategic Plan with the 3 Strategic Priorities and the flywheel design incorporating financial and economic stability and growth as we achieve in each priority area. Lane County Priorities The Strategic Plan lays out a vision of the future, focusing on our priorities of a Safe, Healthy County, Vibrant Communities and safe Infrastructure. Safety and health may be fundamental, but so are good jobs, education, environmental stewardship, and maintained roads and bridges; it is how all these things work together that makes the most difference. It s also a necessity to focus on Infrastructure due to our size alone, which requires us to be in several locations throughout the county. From Solid Waste transfer stations to Public Health Clinics, we provide services to customers on a daily basis all over the county. We want to take care of our existing Infrastructure and plan wisely for future infrastructure demands. It is clear the pillars overlap one another, just as our planning efforts overlap with those from the federal, state, and local governments. Objectives, Strategies, and Action Items were also developed for each of the priority areas. 85

36 At the request of the Commissioners, this Strategic Plan actively leverages several other planning documents. They include the Ten Year Public Safety Repair Plan, the County-wide Health Improvement Plan or CHIP, the Big Look, and our Lane County Economic Development Strategic Plan. And, as the plan unfolds, key objectives will be aligned with the efforts of other governmental and non-governmental community, environmental, and business development resources. Financial and Economic Stability An ongoing element in this plan will be to build a stable and sufficient strategy for funding the core services we all depend on in Lane County. The financial and economic stability of Lane County will be achieved as we achieve in each area of the strategic plan, which will ultimately allow us to continue to repair critical local services. Some of the ways we have worked towards this priority is to focus on: Local Control for Long Term Stability A High Performing Local Workforce. These aspects were included in our budget preparation efforts these last few months. The FY Adopted Budget addressed internal cost drivers such as personal computer replacement charges and fleet charges. We also targeted our health care costs through wellness efforts, notably by opening the Live Well Health Clinic, an employee health clinic aimed at reducing overall health care costs. These changes are intended to reduce the overall burden on department budgets placed by internally driven costs in order to maximize the resources we are able to focus on our priorities. Additionally, the adopted budget includes the use of some one-time resources to fund one-time expenses, such as reducing existing debt obligations, including on the Charnelton and Customer Service Center buildings. To address the High Performing Local Workforce, Lane County has commitments to foster an environment of continued improvement that allows employees to thrive. The HR department rolled out our new employee learning management system, LEAP, created a new employee recognition program, Lanegenuity, and is working on rolling out our new performance management system. Improved internal communications was the focus in our monthly employee newsletter, Our Lane, and by sending out special all-employee updates. Public Participation The Strategic Plan is supported by input from the people of Lane County, the ideas of the County Commissioners and employees, and formal planning sessions. Residents weighed in through a variety of avenues such as surveys, planning sessions, open houses and an interactive website, entitled, Engage Lane County. Lane County asked for feedback on our strengths and weaknesses, community priorities, our vision, and other related topics. Implementation into Budget Process Throughout this budget process, the Strategic Plan has been woven into the planning, preparation, and execution of this adopted budget. From the department s budget text to presentations at the budget committee, we heard how each department was working towards the strategic plan. For more detailed information about our Strategic Plan, please stay in touch by visiting our website at: 86

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