County Manager Budget Remarks Good morning Chairman Fuller, members of the Board of County Commissioners, the residents of Mecklenburg County, department directors and County staff, and distinguished guests. It is an honor and privilege to present to you my recommended budget for Fiscal Year 2015. This is my first budget since becoming County Manager on January 1 st and I believe that it reflects a balanced, affordable spending plan that preserves the fiscal discipline that has served us so well over the past three years, while at the same time strategically places additional resources in areas that were either reduced during the recession and/or are needed in areas where there is an increased demand for services. When I accepted the position of County Manager, I made a commitment to the Board of County Commissioners that community engagement would be a key component of my leadership style; that I would listen to and communicate with the community. I have honored that commitment. Since January I have appeared at more than fifteen community meetings, spanning all demographics and reflecting a variety of constituencies. This has truly informed the recommended budget before you today. As County Manager, it is my responsibility to ensure that my recommended budget balance the needs of the entire community, even for those whose voices are not as loud or well organized as others. The budget I am presenting to you for consideration encapsulates a balanced approach for responsibly allocating resources to the needs of the entire community. My remarks will serve as an overview and highlight the most important initiatives, and afterward, Michael Bryant, Interim Budget Director will provide a more in-depth review of my recommended budget. A Unique Opportunity Mecklenburg County finds itself in a very fortunate fiscal position. We are now post-recession and the growth and prosperity this County has historically enjoyed is beginning to return. We are experiencing growth in assessed valuation which is evidenced by the many new residential subdivisions rising up from what was once 1
vacant land, to the return of the cranes in uptown Charlotte, an indication that development in our center city, both residential and commercial is rallying. We are also experiencing growth in sales tax revenue. This revenue source which had plummeted during the recession has rebounded, an indication that our residents are finding jobs once thought elusive, tourism has returned to the County, and that consumer confidence is on the rise. While the improved economic condition is beginning to pay dividends for the County, the fiscal discipline adhered to by the Board of County Commissioners over the past three years has also paid off. Mecklenburg County s financial position is stronger than before the recession. We are poised for greatness, and to ensure that we do not squander the fortunate position we find ourselves in, we want to continue those practices that have made this County strong. How do we leverage the results of our fiscal discipline and economic growth, and strategically allocate our resources to move the County forward, while not harming our long term financial future by making financial decisions that may prove unsustainable? I believe my recommended budget balances current and mediumterm service needs with long-term financial sustainability. At the Board s budget retreat in February I presented an update on the status of our fund balance, the performance of our debt service fund, and options for consideration relative to the property tax rate. The County s Fund Balance policy recommends that the County maintain a combined fund balance of 28 percent of prior year revenues. A portion of the remaining fund balance that exceeds that amount can be allocated to fund the capital, technology, and fleet reserves with a cap equivalent to 1.75 cents on the property tax rate. At June 30, 2013 combined fund balances exceeded 40 percent of revenue, and our current year forecast indicates that number will grow. When reserves reach a certain level and are projected to grow, we have the opportunity and responsibility to use a portion of those dollars to fund critical needs. Hence a unique opportunity presents itself. 2
My recommended budget includes an appropriation of fund balance in the amount of $15 million to support non-recurring expenses. These funds have been allocated for deferred maintenance, technology and fleet purchases, and other one-time, non-recurring items. I am confident that this one-time appropriation will not threaten the County s coveted AAA bond rating or our ability to maintain fund balance levels consistent with our policy targets. In addition, an appropriation for one-time expenses will ensure that the County does not incur a $15 million structural deficit in its budget in FY2016. In Fiscal Year 2012, the County created a debt service fund designed to dedicate revenue for debt service and other capital expenses. The fund has performed extremely well over the past three years and has achieved our desired results more quickly than anticipated. The level of property tax and other revenue allocated to the fund exceed our immediate and medium-term capital needs. Adjusting the property tax appropriation to the debt service fund provides additional flexibility, while maintaining our commitment to fiscal discipline. Therefore, this year, I am recommending an adjustment to the annual debt service fund contribution from 21 cents on the property tax rate to 20 cents. This recommendation will provide an additional $11.5 million in revenue to support County funded services in FY2015. As a result of the positive financial position the County finds itself in and the flexibility provided by the performance of the debt service fund, the option of lowering the property tax rate was considered. A recommendation of whether or not to reduce or increase the property tax rate must be based on the costs and benefits of each. After analyzing the many requests I have received for additional funding and the relative relief that would be provided by a small reduction in the property tax rate, I am recommending that the property tax rate remain at its current level of 81.57 cents. This will ensure that the most significant revenue stream the County controls will remain constant, and provide flexibility to fund needed services in the community. Strategic Agenda Earlier this year the Board of County Commissioners adopted a strategic agenda designed to guide the County s activities over the next 18 months. My recommended budget aligns funding recommendations to the four themes in the strategic agenda. 3
The First is Economic Development The investments we make in economic development today will pay dividends in the future. The recommended budget includes increased resources to all of the departments in the economic development arena to support current and future growth. The Economic Development Office will receive additional funding to support on-going business investment grant and economic development agreements; as well as increased funding for the Charlotte Regional Partnership and the newly reconstituted film commission. The recommended budget also includes increases for amateur sports most notably the Belk Bowl and the CIAA Championship which has solidified its commitment to Charlotte and Mecklenburg County for the next six years. The three amateur sports events included in my recommended budget generate $92.2 million in economic impact for the area each year. The increase in economic activity in the County has placed an increased demand for services on the Code Enforcement Division of Land Use and Environmental Services. Inspection and plan review wait times are on the rise. In response to that increased demand, 24 fee-funded positions have been included in my recommended budget. These positions include inspectors, plan examiners and customer service coordinators. Additional funds have been added to the County Assessor s Office to support the on-going revaluation review process, as well as efforts to create a state-of-the-art office that reflects professionalism, pride, and credibility. These investments will begin to position the Office for the next property revaluation and well into the future. The Next Theme is High Performing Organization Mecklenburg County strives to be a best in class organization that values its most valuable resource its employees. My recommended budget includes funding for a pay-for-performance merit increase equivalent to 2 percent of payroll for County employees. We cannot achieve the Board s goals for this community without high-performing employees. And to have high-performing employees, we need to invest in employees. 4
The recommendation also includes additional funding for the Internal Audit Department which continues to evolve as we recognize the need to manage our risk. Two additional auditor positions will allow Internal Audit to have a larger presence in the organization, and assist departments in improving internal controls, and regulatory and financial compliance. I have added resources to the Business Support Services Agency which is critical to supporting the on-going operations of the County. Of particular note is funding for 16 positions for the next phase of the County s new Procurement Division. This initiative will pay dividends in the future as we implement strategic sourcing programs that will ultimately save the County significant dollars. My recommended budget also includes funding for a new facilities maintenance contract that will ensure proper management of the County s assets. Resources in the Office of the Tax Collector will be reduced. As we transition to the new tax and tag program, the County s role in collecting current year motor vehicle taxes will be significantly curtailed. This allows me to realign resources to other critical needs in the County while maintaining sufficient resources to maintain aggressive collection of property tax revenue. The Third Theme is Human Services Strategic Planning While we recognize that the economic climate in Mecklenburg County is more favorable than in the past few years, we cannot forget that many in our community still suffer and need the valuable social services we provide. My recommended budget includes several funding enhancements designed to ensure we can provide not only immediate assistance, but also services that can move adults and families along the continuum from dependency to self-sufficiency. The Department of Social Services has historically suffered from high staff turnover rates which impacts morale and service quality. There are fewer staff to manage larger caseloads, and the benefits of training and developing staff is not realized as they move on before reaching their full potential. To assist the County in reversing this alarming trend we will be embarking on a comprehensive staffing study in FY2015. With the help of UNC Charlotte, we will identify strategies to recruit and retain staff in these critical positions, to ensure consistency, high quality service delivery, and improve outcomes for our clients. We want to 5
understand why the turnover rates are so high, and what best practice tells us about the how to retain qualified, high-performing employees. While that study is underway, staffing needs in the department remain high. Additional federal funding will allow for the hiring of 115 positions in the Economic Services Division in response to an increased demand for services. Other County funded social worker positions in Youth and Family Services and Services for Adults will also be filled in an effort to align caseloads to State standards. In addition to addressing critical staffing needs in DSS, my recommended budget includes increased funding for foster care contracts, adoption assistance, emergency assistance, and senior nutrition. The Provided Services Organization has a reputation for providing innovative services in the areas of child development, substance abuse, and trauma and justice services. Of particular note is the staff who work closely with law enforcement to provide intervention services for children exposed to violence. The Child Development-Community Policing program is a national model which goes mostly unnoticed but its impact on the community and the children it touches is timeless. I am proud that my recommended budget includes an expansion of this program from seven police patrol divisions to nine and will also provide intake and Spanish-speaking clinicians. My goal is to ultimately have this program in all 13 patrol divisions in the City. My recommended budget includes enhanced funding to several programs in Community Support Services. In the area of domestic violence, we will be opening a Supervised Visitation and Safe Exchange Center. The Center will provide a safe place where non-offending parents and children can go for visitation exchange without the threat of trauma and abuse. In the area of homelessness, additional funding will be provided to support the newly implemented coordinated intake and assessment program for homeless individuals and families, the housing stability and supportive services partnership which provides wrap-around services in conjunction with permanent housing, and the Salvation Army s shelter expansion. The County s funding will provide for additional operational costs to support the third floor shelter expansion. Prior to the County resuming management for the Health Department on July 1, 2013, the environmental health division was housed in the Department of Land Use and Environmental Services. My recommended 6
budget aligns this function with the Health Department consistent with the statutory authority given to the Public Health Director. The budget also includes funding for four additional environmental health inspectors to meet the increasing demand for restaurant and facility inspections. Since becoming County Manager I have consistently heard from parents across this County about the need for additional nurses in our public schools. Children with food allergies and chronic medical conditions have become more prevalent and can require school staff to step in when needed. I am pleased that my recommended budget includes funding for 33 school nurses and three school nurse supervisors and will ensure that every CMS public school in Mecklenburg County will have a dedicated school nurse. The Final Theme in the Strategic Agenda is Cost of Living and Quality of Life Quality of life is often cited as a priority by the residents of this County. Too often many services in this category are discretionary and fall victim to budget reductions during periods of retrenchment. The Park & Recreation Department is one of those services. In FY2011 full-time positions in Park & Recreation were reduced by 48 percent. Recreation centers were closed, programs eliminated and maintenance activities severely curtailed. While some positions have been restored we still have 167 fewer full-time staff in the department than four years ago. We have brought new facilities on line and our four year capital plan includes over $100 million in park projects which will impact future operating budgets. We need to continue restoration of funding to the department if we expect our first class park assets to be maintained at the levels this community has come to expect. My recommended budget provides funding for 18 park maintenance positions, increased funding for mowing contracts, and operational funding for new facilities. My budget also includes one-time funding of $1.1 million for deferred maintenance at parks and playgrounds. Additionally, funding has been included to implement the transfer of operations of the Charlotte- Mecklenburg Senior Centers into the Department of Park & Recreation. This transfer will allow for the future expansion of recreational opportunities for all seniors in Mecklenburg County. I hope this is another step in a larger community conversation around the needs of our aging population. 7
Our public library system was also subject to significant reductions as a result of the recession. Staffing was reduced by 49 percent, hours were reduced, branches were closed and library collection materials not maintained. Public libraries play a critical role in workforce development and fighting literacy. They are an important partner to Charlotte-Mecklenburg Schools. My recommended budget includes funding for 24 positions to move the entire library system to six-day service, provides $1,000,000 in one-time funding to increase the collection, and funding for the implementation of the library s digital strategy, a key component of its recently adopted strategic plan that will help move the system into the digital age. Included in the Quality of Life & Cost of Living Theme is Education. Let me start by saying that Mecklenburg County has consistently made education a priority in its annual budget. County funding for education has consistently consumed in excess of 40 percent of the County budget. This year the community has engaged in a healthy dialogue around the need to retain the top performers in our public school, to ensure that our children have every chance for success. I have not heard anyone in this community disagree with the basic premise that teacher salaries in North Carolina are not competitive, and we are losing ground compared to surrounding states. Traditionally, funding for education has been in partnership with the State of North Carolina. Whether it be Charlotte-Mecklenburg Schools or Central Piedmont Community College, there has been a clear distinction in what the County has funded and what the State has funded. It is this partnership that has served this community so well. My recommended budget maintains that tradition and includes funding increases to both CMS and CPCC consistent with state statutes. Maintaining that distinction will ensure the financial sustainability of the County over the long term. My recommended budget includes an increase to Charlotte-Mecklenburg Schools operating budget of $26.8 million, an increase of 7.4 percent over the current year appropriation. This reflects 100 percent of CMS budget request, excluding the $19.4 million for salary increases for staff. It does however, include funding for a 2 percent salary increase for locally funded employees, and the funds necessary to fully realize the increase in starting pay for locally funded new teachers. 8
This appropriation provides resources for all program continuation needs, enrollment increases and additional space, as well as costs for programs related to academic choice, personalized learning, additional psychologists and social workers, and the expansion of CMS literacy initiative for students in grades one through three. I have also allocated one-time funding to CMS totaling $5,040,000 to be used for either deferred maintenance or the acquisition of technology. The additional $5 million brings the total appropriation, excluding debt service to $391 million or an increase of 8.8 percent. Funding for Central Piedmont Community College will also increase. My recommended budget includes an increase of 7.2 percent including one-time funding. My recommended budget, excluding debt service includes funding dedicated directly to education totaling $424 million. When the cost of County funded debt service is included, that number increases to $535.7 million. I will say that again $535.7 million dedicated directly to education. But more importantly, we must never lose sight of the fact that every successful interaction and/or intervention with children and families, whether it be by the Department of Social Services, the Provided Services Organization, the Health Department, Community Support Services, Child Support Enforcement, or any one of the numerous non-profit organizations the County funds, contribute to success in the classroom. My recommended budget addresses many unmet needs for services to children and families. It allows us to continue serving the needs of County residents while being good stewards of taxpayer resources. Also, it includes several strategic investments in education, literacy, and health. My recommended budget will ensure that Mecklenburg County will remain a quality place to live, work, and recreate. I am committed to helping the Board achieve all of the key initiatives listed in the strategic agenda and meeting the needs of the community that we serve. I want to take this opportunity to thank all of my staff who worked so hard on this recommended budget. This includes the members of my executive team, Interim Budget Director Michael Bryant and the Office of 9
Management and Budget staff, Financial Services Director Wanda Reeves and all of the Financial Services staff, and all of my department directors and their staff. I also want to thank the residents of Mecklenburg County who have communicated with me, provided their thoughts and insights, and have helped inform the recommended budget being presented today. I also want to thank the Board of County Commissioners for selecting me to serve as your County Manager and affording me the opportunity to present this recommended budget. With that I will turn the presentation over to Michael Bryant to provide some additional information about the FY2015 recommended budget. 10