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HomeMy WebLinkAbout2001-11-14 AfternoonNovember 14, 2001 (Afternoon Adjourned Meeting) (Page 1) An adjourned meeting of the Board of Supervisors of Albemarle County, Virginia, was held on November 14, 2001, at 4:30 p.m., Room 235, County Office Building, McIntire Road, Charlottesville, Virginia. This meeting was adjourned from November 7, 2001. PRESENT: Mr. David P. Bowerman, Mr. Lindsay G. Dorrier, Jr. (arrived at 4:51 p.m.), Ms. Charlotte Y. Humphris, Mr. Charles S. Martin (arrived at 5:15 p.m.), Mr. Walter F. Perkins and Ms. Sally H. Thomas. ABSENT: None. OFFICERS PRESENT: County Executive, Robert W. Tucker, Jr., County Attorney, Larry W. Davis, Clerk, Ella W. Carey, and, Assistant County Executive, Roxanne W. White. SCHOOL BOARD MEMBERS PRESENT: Mr. Kenneth C. Boyd, Mr. R. Madison Cummings, Jr., Mr. Gary W. Grant, Mr. Stephen H. Koleszar (arrived at 4:54 p.m.), Ms. Diantha H. McKeel, Ms. Mary C. Rodriguez and Dr. Charles M. Ward. SCHOOL BOARD OFFICERS PRESENT: Superintendent, Dr. Kevin C. Castner; Assistant Superintendent for Support Services, Dr. Frank E. Morgan; Assistant Superintendent for Instruction, Dr. Jean S. Murray; and Deputy School Board Clerk, Tiffany Townsend. STAFF MEMBERS PRESENT: Director of Human Resources, Kimberly Suyes, and, Human Resources Compensation and Benefits Director, Lorna Gerome. Agenda Item No. 1. The meeting was called to order at 4:34 p.m., by the Board Chairman, Ms. Thomas, and by the School Board Chairman, Mr. Ward. _______________ Agenda Item No. 2. Compensation Recommendations for Adopted Compensation and Benefits Strategy, Discussion of. Ms. Thomas said that Ms. Kimberly Suyes, Director of Human Resources, would make the presentation of this item. Ms. Suyes said last fall, the School Board and the Board of Supervisors approved a Strategy for Total Compensation and Benefits. Today, she will review the strategy and the process adopted to insure that employee salaries are competitive with the market. She will talk about the steps taken last year to reach that market figure. She will give the Boards some market data and a recommendation for FY 2002- 03 salary increases. Ms. Suyes said that when the joint Boards adopted the Compensation and Benefits Strategy, several goals were identified. They were: support its mission, goals and interests; attract and retain high- performing employees; motivate employees; reward innovation and performance; maintain internal equity and external competitiveness; support teamwork; and, promote ease and flexibility. Ms. Suyes said the first thing that had to be done was to define the market. The market was established by a committee which included staff members, Board members, and citizens. The competitive market was identified as 30 organizations. They looked at counties and school systems of similar size within the State of Virginia, they looked at counties and school systems located in the same geographic region of the State of Virginia, and they looked at local private employers within the Charlottesville area for positions that are not unique to government and/or education sector. After identifying the market, the base salary was targeted at market. They needed to study internal equity, but also needed to target benefits at slightly above market. This was what the two Boards agreed to last fall. Ms. Suyes said there are two things she will talk about today: scale and merit pool. She said that in July, 2001, steps taken to achieve the adopted strategy were: for classified employees the scale was adjusted by 4.5 percent to reach market, realizing that market continues to move. The only people impacted by this are new hires and those employees whose salaries are below minimum. They also identified those employees whose salaries are below market and their salary was moved up to the midpoint (market) based on the number of years in that position. Ms. Suyes said the two Boards agreed to a 4.2 percent merit pool and funded that. She said not everybody gets 4.2 percent because it is based on several factors: performance, salary to midpoint ratio, and the pool amount that is allocated for a department. In regard to teachers, a new teacher scale was crafted based on detailed market data, and also on the salary increase for that year. Ms. Suyes said those are the steps that were taken last year on the way to reaching market. In order to maintain this momentum, there needs to be an annual survey of the market, and salary increase projections need to be obtained from a nonprofit compensation association (the Boards agreed to an organization called WorldatWork). This organization has 28 years experience providing this type of data A@ to organizations. It is also widely utilized in the private sector. Ms. Suyes said in order to stay at market, the County needs to attract, retain and motivate; to stay externally competitive; to be internally equitable; to be flexible enough to bring in talent, and if necessary, do in-range adjustments; have a plan that is simple to administer and communicate; and be compatible with November 14, 2001 (Afternoon Adjourned Meeting) (Page 2) performance-based pay. Ms. Suyes said the market shows for the classified scale that the adjustment of 4.5 percent helped in closing some of the gap, but the scale is still lagging behind market by 2.5 percent. The market survey done in July, 2001 of the 30 organizations she mentioned, gave a median salary increase of 4.0 percent. Based on the projected increase data received from WorldatWork, the two Boards funded a 4.2 percent merit pool, but the County is still lagging the market for classified employees. Of the organizations studies, 14 gave increases last year in the 3.5 percent to 4.5 percent range, 12 gave increases of 3.4 percent or less, and five gave increases of 4.6 percent or greater. In reference to teacher salaries, Ms. Suyes said a teacher scale was crafted based on market data and projected increase. It was right on the money. The A@ teacher scale at every step is virtually at market, and this is good news. Ms. Suyes said she would like to review the process the two Boards agreed to for establishing salary increases. They are utilizing: WorldatWork to get the data necessary to establish the salary increase; the eastern geographic region of Virginia; they are using education services and public administration industries for data. Based on all the information gathered, a total salary increase of 3.3 percent is proposed for FY 2002-03. She said this figure was arrived at using the same process as that used for FY 2001-02 in making the recommendation for a 4.2 percent increase. She showed a chart entitled WorldatWork Salary Increase Projections. Their initial data showed the eastern region at a 4.3 A@ percent increase, and national data at a 4.2 percent increase. Staffs initial recommendation to the two = Boards was to have been a 4.3 percent increase, but, after September 11, and after further data collection from WorldatWork, the data showed that the eastern and national levels had dropped to 3.3 percent, so that is the reason for a 3.3 percent recommendation for Albemarle County. Ms. Suyes said she would like to mention the Benefits Strategy the two Boards agreed to last fall. It was agreed to target slightly above market levels with benefits, so it was decided to put together a cross functional planning team to assess benefits and, if applicable, recommend cost neutral changes. This team consisted of Board members, staff members and citizens. The team met and looked at benefits, and then decided to benchmark them against other organizations. This team identified areas for review: the Virginia Retirement System (VRS), our 403(b), the Countys part-time pension annuity, and the Countys == VERIP (Voluntary Early Retirement Incentive Plan). She said there needs to be continued analysis of medical insurance for part-time employees, and the dental plan. The Team looked at medical insurance claims over the last year, and based on that claims data along with national trend projections, they anticipate a 16 percent increase in medical premiums. She said this is consistent with the national trends of rapidly escalating medical costs. Ms. Suyes said the Team recommends that the two Boards adopt a 3.3 percent Merit Pool for FY 2002-03; adopt a teachers scale increase of 3.3 percent (to include a step increase); adopt a 3.0 percent = salary scale adjustment for classified employees for FY 2002-03; plan on a 16 percent increase in the medical insurance plan; and, develop a communications plan. She then offered to answer questions. Ms. Thomas mentioned the decreased salary projections that came about after September 11. She asked if that is a steadily falling projection. She wondered if this were studied next month if the amount would be even lower. Ms. Suyes said the number given was actually from the end of October. WorldatWork resurveyed organizations and asked them what they expected to do now. The percent decrease seen is a very recent number. Mr. Boyd asked if the economic trends indicate it will decrease between now and July, 2002. He thinks it will. Ms. Suyes said it is as volatile as the stock market is at this time. Projections are hard to predict. Mr. Boyd said inflation rates are dropping each month, so he would assume these figures track inflation. New figures will be coming out at the end of this week which will probably be lower. Mr. Tucker said it might be a good idea for staff to check figures again. This could be done when staff looks at revenue projections again in January. Mr. Ward said WorldatWork normally only does an adjustment in July of each year. They did this survey in October because of the events of September 11. No new survey is expected. Ms. Gerome said that is true. They did this survey based on the sudden change. There will be no new data from WorldatWork, but staff could get general trends from other organizations. Mr. Perkins said he assumes these surveys were made sometime after the entire fiscal year was completed for the counties which were surveyed. He said a lot has happened since then. He thinks the Board needs to know what revenues will be. The Board will not be able to do this if the State does not come up with some revenues. He thinks the County revenues will be fairly stable except for things like the Sales Tax which is a good indicator of what the economy is doing based on peoples ability to pay for things, = including taxes. Just to go out and survey these 30 entities is sort of like the dog chasing its tail. Look at A=@ what has happened in the private sector the last year, and what has happened in the last three or four months. He just heard on the radio this afternoon that 2600 employees in Martinsville are losing their jobs because their employer is closing down. He talked about stability and job security last year, and the consultant said that factor does not enter into this market. It certainly does enter into this market. Ms. Suyes said she has no response other than to say the 3.3 percent increase being looked at is based on pay-for-performance. How it is to be funded is not her area of expertise. Mr. Ward mentioned the 16 percent for rapidly escalating medical costs. He said the County cannot continue to absorb these costs. He asked if there are any long-term thoughts of what could be done; HMOs have not come into vogue in this area. Ms. Suyes said that is part of what this Team is = November 14, 2001 (Afternoon Adjourned Meeting) (Page 3) challenged with. They are to look at current benefits and do some analyses. They talked as a group about looking at this from a strategic prospective, long-term, not short-term. There will be a move in that direction as they anticipate changes in the market with the numbers of people who will be retiring. The County needs to take a more strategic approach as to how benefits are managed, instead of looking at changes that can be made this year which are cost neutral. The Team has decided to pull back, reconvene, and do some more analysis of what the County is currently doing and its ultimate goal. Mr. Grant said when the two Boards met last fall, he asked if there was a need to continue funding the Countys VERIP program in an era when people are voluntarily retiring. He asks that question again. Is = there a need to put more money into a program to encourage people to retire when they are retiring anyway? (Note: Mr. Dorrier arrived at the meeting at 4:51 p.m.) Ms. Suyes said this cross-functional Team is addressing that question. She said there are different thoughts. They do not see the VERIP program as an incentive to retire, but more as a retention tool. If you look at the statistics of the age group currently employed that are, or will be, eligible in a short time frame, it is actually keeping them employed because they are looking forward to VERIP. She encouraged members from both Boards to come and sit with the team for that discussion. She did provide some data to the team showing that it is a retention tool. She thinks it would be a bad thing to think about losing it at this point. In response to the strategic approach to the benefits piece, it needs to play into a much bigger picture. (Note: Mr. Koleszar arrived at the meeting at 4:54 p.m.) Mr. Ward said the Communications Plan is not just for the employees but for the whole Team and the community. He asked if it will be a document or a plan of execution. Ms. Suyes said she is new to government having come from the private sector. She does not know what communication needs to involve, so she will need directions about that from Dr. Castner and Mr. Tucker. Mr. Boyd said he has not seen the actual statistics gathered from the market analysis. Last year, in some positions the salary was over the market, and in some positions, the salary was under the market. He asked what was used to calculate that the County is 2.5 percent behind the market. Ms. Gerome said they surveyed the market in terms of what kind of scale adjustment these organizations made. They got the percent that the competitive market moved its scale by, and then they were asked what total increases were given to employees (cost-of-living, merit, etc.), all of the total pieces to get a total number. They did not go back out with benchmarks. Ms. Thomas asked if there were other questions. She said the Boards are being asked to make a decision on this matter today. Mr. Bowerman said the Board has received revenue projections. He asked if the recommendations for salary increases were turned into dollars, how they would compare with the resources available to both the Schools and General Government. Dr. Morgan said the revenue increase to the Schools based on information furnished by Ms. White, shows a net increase of $2.11 million. He said that normally the Schools base their salary increase figures on actual people on the payroll for both classified and school teachers. That figure comes to between $2.5 and $3.0 million. A 16 percent health insurance increase would be between $800,000 and $900,000. Mr. Bowerman said that right now revenue projections are significantly short of what these recommendations would cost. Mr. Morgan said that is true. Ms. White said the projected revenue increase in the General Fund is probably 4.0 percent. But, when staff looked at every kind of revenue, like one-time moneys, and reductions in Federal, state, and other local revenues, it is probably more like a 3.0 percent increase. Considering some of the big increases in other costs in General Government, one of those being Landfill costs, it may be difficult to fund the 3.3 percent merit pool. She said staff is just seeking some directions based on data. Mr. Dorrier asked if the County has achieved parity with the private sector. Ms. Suyes said the goal was to reach 100 percent of market. Mr. Dorrier said he wondered if that has been reached. Ms. Suyes said market continually moves, so even with the proposed increase, the County would still lag market. Mr. Bowerman asked how badly staff would be upset if the Boards decided not to go forward with the percent number recommended. He said once a percent number is chosen, everything after that is a fight. No one knows what will happen with revenues. He would like to have the flexibility to look at additional revenue projections as they are received, especially in January. He would then like to revisit the amount the County can afford, rather than move forward with an amount and know that revenues are short all ready. It puts the Boards in a real box. It gives the employees an expectation that might not be A@ realized. Dr. Castner said the Schools start their budget preparations in December. If in January revenues change, the School Board would still have time to also find out if market has changed. He does not think this is the time to go away from the philosophical discussion both Boards have had. The goal is to reach market. The realism Mr. Bowerman is suggesting is well-taken, but in the middle of this five-month budget process, there are still some other corrections that can be made. He said there may be another indicator in January which will show that the market is not 3.3 percent, but 2.3 percent, and that might help with some of the other choices to be made. November 14, 2001 (Afternoon Adjourned Meeting) (Page 4) Mr. Bowerman said he does not disagree with having a consistent philosophy. He said if the Boards go forward today with a number, they are going forward with an expectation which gives him pause. He said the Boards met last year, but still ended up with two different recommendations for salary increases. The Board of Supervisors adjusted their salary increase in order to keep parity. He does not want that to happen again. He wants to leave this meeting with an understanding that whatever is to be done will be done collectively the same for classified employees. He said the more the Boards are locked in the more trouble there will be later, because the Supervisors have a lot of other issues facing it other than salaries. Ms. Thomas said the only way the Boards were able to make the present salary scale was to use some one-time moneys. She, personally, assumed that the budget debacle in Richmond was a one-time thing, so using one-time moneys was not that unreasonable. That debacle has now turned into an economic down-turn. The one did not cause the other, but that is the reality of the situation at this time. The one-time money that got the County to this point on the salary scale is not available for another year, and to expect the state to come forward with more money to either adjust that in this years budget, or have = more money for next years budget, is totally unreasonable from everything being heard from Richmond. = The financial situation is getting worse and is more grave than it appears even looking at the present budget because it is partially based on money that will not be received this current year. Mr. Ward said he took the $3.0 million increase in salaries mentioned by Dr. Morgan and added to that the $900,000 increase in health benefits. That is $3.9 million, yet there is only $2.11 million for the School Board to work with initially. That leaves $1.8 million short going into budget work sessions. Also, the School Board does not know what their revenues for the current year will end up being. He thinks that $3.9 million will be very hard to achieve without some fundamental changes in how the School Board budgets. Mr. Boyd said there is also about $800,000 needed in start-up costs for a new school next year. He agrees with Mr. Bowerman in that he does not think the Boards should start at the higher figure and then give the perception that something is being cut during budget work sessions. He knows staff has to have some figure to build the budget on, but he wonders if a more reasonable figure would be closer to inflation, or 2.5 percent. Ms. Suyes said the 3.3 percent was recommended in order to make salaries more attractive. They are finding it difficult to attract talent. Mr. Boyd said he does not see that from the retention reports the School Board has received. Also, the Schools have a declining student enrollment, and that impacts the amount of state funds received. Ms. Humphris said she agrees with Mr. Bowerman. It would be difficult for the Boards to start with higher expectations that could not be met as it would be hard to decrease the percentage later. She would rather start with a lesser expectation and see what can be done as new numbers are received. She does not want to see the situation happen again where the School Board gives a different increase from that of the Board of Supervisors. She said it put the Supervisors in a very awkward situation last year. Mr. Dorrier said if the School Board recommended a 3.3 percent increase in salaries, it should say where the money will come from to fund the rest of its budget. Mr. Koleszar said he shares the concern about saying at this point what the percentage will be. He does not want to say it will be 2.5 or 3.3 percent. The data says that the goal to reach market should stay at 3.3 percent; that is the stated target. He thinks that after School staff starts to work on the budget and comes to a number in January, that is when the reality of a 3.3 percent goal is faced with the actual amount of money available. He does not think the Boards should abandon today their goal of staying at market. Mr. Bowerman suggested the Boards adopt the goal, and not pick a percentage. Ms. Suyes said that was the original goal. Mr. Koleszar said when the budget book is put together is when the Boards find out if that goal can be reached. Ms. Thomas asked if that is copping out on the Boards responsibilities. A@= Does that give the staff sufficient guidance? Dr. Castner said if the Boards do not establish a figure today, but want to go to market, then market will be reevaluated later, and that still is the spirit of what is trying to be done for the employees. He agrees with the commonality issue, that the two Boards should be on the A same page. @ Mr. Ward said he does not want to tie the hands of the School Board. They will meet at the end of November and give some generic guidance to Dr. Castner. Budgeting is a long-term process and in January, the proposed figures may be less. He thinks that setting a number at this time would be bad. Ms. Thomas asked if the Boards should say the goal is to meet market knowing there is not the money necessary to meet the market figure, even if it moves. Ms. Humphris said the Boards are dealing with both market and revenues. Neither are known at this time. Ms. Thomas asked if the Boards passed a resolution stating: they want to meet market; they want to know what market is in January; they recognize they may not be able to meet market goals this year; would that be sufficient as guidance for staff to build a budget on, or as an alternative, do what Mr. Boyd suggested and set a figure today? Mr. Dorrier said the Technical Committee decided last year to recommend that the increase meet market, and the Boards agreed at that time to meet the market. They did not set a time limit in which to do November 14, 2001 (Afternoon Adjourned Meeting) (Page 5) so. The Boards only said they would move in that direction, so nothing has changed. If Mr. Tucker says the revenues are not there, to try for the full 100 percent funding this year would be irresponsible due to the revenue shortfall. Mr. Bowerman said he would like to have the flexibility to look at the whole revenue picture. Salaries are the Countys largest part of the budget, but there are some major capital needs on the horizon, = some of which are not just automatic VPSA bond issues. The Board might have to go to the public, or raise funds in other ways in order to get the capital moneys needed. He just wants to keep as much flexibility as possible. Ms. Thomas asked if the Superintendent would like to respond to her question. Dr. Castner said in order to begin the budget, he needs a number. If the School Board wants him to put in a number which is less than market at this time, and adjust it later, that is fine. The number to be used is not his decision to make; he needs guidance from the School Board. He recommends that the figure be 3.3 percent with an asterisk. He will need an exact number to use when calculating the budget. Mr. Koleszar said he is a little confused as to why there has to be a number. He suggests that this number be determined more by revenue than by barter. He said the School Board cannot give a number because it does not know what the revenue will be. Once the revenues are known, they will have to live with that number. (Note: Mr. Martin arrived at the meeting at 5:16 p.m.) Dr. Castner said he understands what Mr. Koleszar is saying, but he looks at it differently. With the cost of opening a new school, there is the possibility of needing $4.0 or $5.0 million in new money. The staff is never that exact in January, and there are never any guarantees in the Superintendents budget = before he passes it to the School Board; the figures are still moving. The assumption Mr. Koleszar just made is that the target is more fixed than it actually is. Mr. Dorrier suggested using two or three scenarios. Dr. Castner said he could do that if requested to do so by the School Board. Mr. Ward said he thinks 2.0 or 2.5 percent is more reachable at this time, and he would rather start with that number and add to it in January rather than give the impression that 3.3 percent is achievable. That does not seem possible based on projected revenue streams. Mr. Tucker said a motion to that effect would be something staff could work with. That number can be looked at again in January. Mr. Boyd said if there is no number, he does not know how Dr. Castner and Mr. Tucker would establish commonality. Ms. Thomas asked Ms. Suyes to comment on this number. Ms. Suyes said she comes from the private sector, and does not know what employee reaction will be. She is not familiar with ever having an increase that low. Of course, the events of September 11 have never happened before. Mr. Bowerman said he would rather work with a lower number, and suggests using 2.0 percent. He said that at 2.5 percent all of the projected revenue would be used for just salaries. Mr. Ward said there is an increase in medical premiums also. Mr. Bowerman said if the Boards have to pick a number, he would rather pick a number as low as possible and still be realistic even though it has never happened before. He would favor 2.0 percent. He said he has to leave the meeting for a medical procedure, so he would ask that a decision be made before he leaves. He then offered motion to go forward with a 2.0 percent merit pool. He does not know what to say about teacher salaries. Mr. Tucker said they need to be kept the same. Mr. Bowerman said that would also be a 2.0 percent increase in the teachers salary scale. He asked what the salary scale adjustment = would be in terms of total dollars. Ms. Gerome said they would need to make a new recommendation because everything is tied together. Ms. Suyes said the salary scale adjustment only affects new hires and employees whose salary is below market. Ms. Gerome said the amount of the merit pool impacts the salary scale otherwise new hires are brought in at salaries which are higher than those of current staff members. Mr. Dorrier asked if this is the figure that Mr. Bowerman wants to take to public hearing. Mr. Bowerman said this is the figure that staff would use for budgeting. Mr. Dorrier said he will second the motion. Mr. Bowerman said it would 2.0 percent across-the-board. Ms. Thomas said it is recognized that this does not meet the goals established last year. But, it may meet available revenues. Mr. Grant said having been a coach, he never sent his kids out to go 98 percent on the field. Having been labeled as stingy and considering himself thrifty, he is bothered by going back on what the Boards agree on last year that the goal was to reach and stay with market. He does not know what revenues are, but he also does not back off up-front. He is reluctant to vote for a motion that might come forward from the School Board for something less than what has been recommended. In addition, regarding the Superintendent, the State Code says the superintendent must provide the School Board with an estimate of what he believes are the needs of the School Division. If a figure is set now, that takes that away from him in doing his job. He thinks staff needs to bring the School Board the figure they need to do the job. He is not comfortable with a number. Mr. Cummings asked if Mr. Bowerman would add to his motion the recommendation for 3.0 and November 14, 2001 (Afternoon Adjourned Meeting) (Page 6) 3.3 percent. Mr. Bowerman said the motion can recognize that staff has recommended to the Boards that they adopt a 3.3 percent. He said to Mr. Grant that he does not have to stand up and face people after reducing their expectation. He has done that, and it is extremely unpleasant. It is still an increase, but it is looked at as a decrease. He does know that the analogy of 98 percent is fair. The Supervisors could be talking about 10 to 15 percent on the tax rate to fund that percentage. He is just trying to keep expectations as low as possible so the Boards have flexibility to deal with the issue. He does not disagree philosophically with Mr. Grant. He is just trying to be practical. Ms. Humphris said it does not mean the goal has changed. The goal is still there, this would just be a recognition that the revenue shortfall will probably be such that there is no chance of reaching that goal. Last year, revenues looked rosy. It is surprising how things can change in a moment. She agrees with Mr. Bowerman and will support his motion. She realizes that this must be hard for the new human resources person to understand, but government is a great deal different from the private sector. She cannot imagine that the Board would entertain the thought of a tax increase. Without a tax increase, and based on the revenues projected so far, the Board would be foolish to set expectations higher than what it is able to achieve. Mr. Tucker asked if the motion passes, is it the intent for staff to bring back information in January or February about the market. Mr. Bowerman said if there are new figures then, they should be made available to the Boards. Mr. Martin said he missed a great deal of this discussion. He asked if the 3.3 percent keeps the County at market, which was the agreement reached last year. Ms. Suyes said yes and that figure came A@ from the survey by WorldatWork. Mr. Martin asked about revenues. Ms. Thomas said there is a little over $2.11 million available for the Schools, and this recommendation comes in at about $3.0 million. Mr. Martin said he tends to agree with Mr. Grant. The Boards agreed to try and stay at one hundred percent market. At this point, the Boards are talking about a moving target. He knows that if the Boards start with a 3.3 percent and have to lower that, there will be a huge fire. He would rather go into this looking at a 2.0 percent increase, but from the A@ perspective that the goal continues to be the 3.3 percent, and that the Boards do whatever is possible, short of a tax increase. Mr. Dorrier said there are two factors which need to be recognized. There is a recession, and a war. Over 200 people were just laid off from Comdial. The situation has changed since last year. Mr. Martin said he thinks the market will also have to change. Mr. Cummings said there is also a new administration in Richmond who purports to be more in favor of public education, and in supporting the localities. That is another variable. He would prefer that whatever figure is picked, the Boards say at the beginning that the goal is to stay with the projected market figure. Ms. Thomas said that today to stay with market might require the 3.3 percent, but by January that might be lower. She would like that to be part of the motion, that the goal is to be at market. However, the figure that the Superintendent and County Executive will be asked to use in their budgets at this time is 2.0 percent. Mr. Koleszar said he thinks it is important to maintain commonality, but last year, in order to meet their competitive market, Charlottesville cut some positions in the School Division to meet their salary needs. If the School Board decided it had to do that, do the Supervisors have comparable room on its side to do the same kind of thing. Ms. Thomas said the Board has much less room in which to move. Mr. Martin said making a comparison to Charlottesville is different because that is a community which is losing population. Those cuts should probably have been made years ago. But, he understands what Mr. Koleszar is saying. Although it would be hard for the Supervisors to do, it would be an option. Mr. Bowerman asked if the Board could vote on his motion before he leaves the meeting. At this time, Ms. Humphris called the question. Ms. Thomas said without going through the call a question procedure, she would ask the Clerk to call the roll on Mr. Bowermans motion. The motion carried by the = following recorded vote: AYES: Mr. Perkins, Ms. Thomas, Mr. Bowerman, Mr. Dorrier, Ms. Humphris and Mr. Martin. NAYS: None. __________ Dr. Ward asked for the same motion by the School Board. Motion was offered by Mr. Boyd that all the increases be 2.0 percent across-the-board with the intent of trying to reach market. The motion was seconded by Mr. Ward. Roll was called, and the motion carried by the following recorded vote: AYES: Mr. Koleszar, Mr. Cummings, Dr. Ward, Mr. Boyd, Ms. Rodriguez and Ms. McKeel. NAYS: Mr. Grant. (Note: Mr. Bowerman left the meeting at 5:36 p.m.) November 14, 2001 (Afternoon Adjourned Meeting) (Page 7) _______________ Agenda Item No. 3. FY 2003 Revenue Estimates, Discussion of. Ms. White said she had not intended to spend a lot of time on this subject (she referred the members to the staffs report dated November 7 which had been forwarded to all parties and was = discussed at the Supervisors meeting last week). She said the only thing that might be done today is to explain how the revenues were allocated between the School Division and Local Government. Mr. Boyd said he was having difficulty in understanding the total projected revenues. Ms. White said the shares are not based on the total budget, but on total local taxes (approximately $7.0 million); and, that is what is available for both the School Division and General Government. The 60/40 split is the division of new local revenues. It has nothing to do with the total amount of the budget. Mr. Martin said total revenues include decisions made in the past regarding how much will go to capital, etc. This is just new money and how it is split with the schools. Ms. White said the report shows the total new revenues which can be divided between the Schools and General Government. The Capital Transfer comes off of the top. After that transfer is taken off, the remaining dollars can be divided 60/40. Mr. Koleszar said the reason the Schools percentage increase is greater than Local Governments = is because in the past, the Schools have not gotten the full 60 percent. In other words, the current breakdown is that the Schools have less than 60 percent of last years revenue. = Ms. White said the Schools got 60 percent of the new money. Mr. Koleszar said that of the old revenue, the Schools had less than 60 percent, and that is why the Schools have a bigger percentage increase. Mr. Martin said that was based on decisions made in the past. Mr. Boyd said he was trying to find out how the Schools are funded totally. He wants the School Board to look at the CIP and the interest expense. If you look at that this year, there is an increase of $3.0 million in School Board Debt Service from last year. That is why he sees the School Board getting less money in operating funds because they have to pick up that extra $3.0 million. Last year, Debt Service went down and the School Board got more money. He thinks the Supervisors give the School Board more money than it gets credit for. He finds that including debt service, it is a 9.0 percent increase over last year. Ms. White said the formula was arrived at based on recommendations from the financial advisors. It does not have to do with the amount of debt service that will be in the budget, but has to do with their recommendation about increasing debt and the whole capital transfer. Mr. Boyd said he understands that, but what he is wrestling with is that the School Board is considering some sizeable changes to its CIP Budget, and he wants to know how he can project what the impact is on the Schools operating revenues. = What proportional decrease in operating funds will the Schools get as they increase their CIP costs? Maybe there is no way to calculate that number. Mr. Martin said a decision was made in the past where capital was reduced in order to fund more operating expenses. This may be a case of doing the reverse, but that will be a decision of the School Board. The County is saying there is the new money and we are splitting it as we agreed to split it. At some point, the School Board would agree to operate on less in order to put more into the CIP. Ms. Thomas said she is glad there is some thinking along that line. When the Schools go into more expensive capital projects, and the Supervisors have to take out more for debt service, it does decrease the amount left for operations. Mr. Ward said staff was asked to find the answer to the question of the cost per year for each $1.0 million of bonds. That would help the School Board know what to do when changing the CIP. Ms. White said staff actually meets tomorrow for the first look at the CIP budget. The CIP is based on five-year projections, and on the formula which goes out for five to 10 years. The lower revenue estimates will have an impact on that CIP. Revenue estimates were for the CIP based on 7.0 percent revenue. The reason for keeping a Capital Reserve is because it is based on 7.0 percent. Now, it looks more like a 5.0 percent reserve, and that will have an impact on what the CIP looks like. It is very difficult to move projects forward, or to change the CIP because some of the anticipated revenues may not be realized. Ms. Thomas said, if possible, it is good to spend the money during a recession because buildings costs are lower. The last couple of buildings were built at a bad time because building costs and expenses were at their top. If possible, money needs to be put into capital improvements even during bad times because you get more for your dollar. She said that can be seen with the new firehouse project. Although the bids were amazingly high, it had to do with rock work and site preparation, whereas the bids for construction have been lower. Mr. Dorrier asked if the CIP has a flexibility the operating budget does not have. Ms. White said not once there is a commitment to borrowing money. Once that commitment is made it runs for the next twenty years, and even with lower revenues, those obligations have to be met. Mr. Dorrier said that is not for everything in the CIP. Ms. White said that is correct. There are projects in the CIP which are funded with current one-time revenues which can be delayed or deferred, but once there is a commitment to debt service, the project goes forward. Debt Service projects make up the November 14, 2001 (Afternoon Adjourned Meeting) (Page 8) majority of the projects in the CIP. Mr. Ward asked if VPSA bonds can be refinanced. Ms. White said that would be something the VPSA would be looking to refinance. That would not be the Countys decision. There have been some = savings because bonds actually sold at a lower interest rate than what they had been budgeted for. Those savings go back into the CIP. Ms. White said the formula derived from the financial consultants is not based on the School Boards actual debt service going up and down. It is based on an on-going formula to put the same amount = into the Capital Transfer each year based on growth. It is a fairly consistent formula. Ms. Thomas said there is no action required for this item. _______________ Agenda Item No. 4. From the Board and School Board: Matters not Listed on the Agenda. Ms. Thomas asked if anyone had another matter to discuss. Mr. Ward said the School Board needs to take action similar to that taken by the Supervisors. It has to do with granting a holiday the day before Thanksgiving and a full day holiday on December 31, 2001. Mr. Grant offered motion to accept staffs recommendation to concur with the Governors decision == to grant an additional half-day holiday on November 21 and a full-day holiday on New Years Eve, = December 31, 2001, for School employees. The motion was seconded by Ms. McKeel. Roll was called, and the motion passed unanimously. __________ Ms. Thomas said that after hearing Senator Chichester (Chair of the Senate Finance Committee) and Senator Hanger (Co-Chair of a committee looking at revising the tax system of Virginia) it became clear that the Senate does not want to repay localities the money they no longer get for the car tax. She was quite depressed after hearing that. She realizes that even if there is a revamping of the tax system, there will not be more money coming to the localities for years to come. This was heard at the VACO meeting last week. She does not think the state will come up with anymore money for localities. Mr. Boyd asked if that is a preview of what the JLARC Study will say. Ms. Thomas said JLARC will say that education needs more money. Mr. Koleszar said right now the theory is that there will be a 100 percent rebate of the car tax at some point in the future. But, that means there is still the car tax in the sense that everybody still has to have decals. You have to enforce it to be sure everybody has a decal, so it is a nuisance. He thinks it would make more sense structurally to totally do away with the car tax and give localities another stream of revenue, maybe in the way of sales tax or an income tax that would make up the money currently being reimbursed for the car tax. Ms. Humphris said that was recommended by the Morris Commission which is one of four commissions which have done recent studies of tax restructuring. Ms. Thomas said that cars assessed at over $20,000 are still being taxed. _______________ Agenda Item No. 5. Adjourn. With no further business to come before the Board, the Boards = meeting was adjourned at 5:55 p.m. Mrs. McKeel offered a motion to adjourn the School Boards meeting. Mr. Boyd seconded the = motion which passed unanimously. ________________________________________ Chairman Approved by the Board of County Supervisors Date: 02/06/2002 Initials: LAB