HomeMy WebLinkAbout1996-09-16 I I .", A I
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1. Call to Order.
2. loint Meeting ~vith School Board
a. Overview of Long Range Fiscal Planning 1. Current financial positiox~/policies.
2. Future revenue and expenditure prolections.
3. State/local comparisons of revenues and expenditures.
b. Identification of Issues for Future Discussion.
c. Identification of Additional Information Required.
d. Scheduling of Future Meetings.
e. QUIP Video.
3. Adjourn to September 18, 1996, 7:00 p.m., for joint meeting with Charlottes-
ville City Council, the Rivanna Solid Waste Authority Board of Directors and
the Solid Waste Task Force.
COUNTY OF ALBEMARLE
MEMORANDUM
TO:
FROM:
DATE:
RE:
Robert W. Tucker, Jr., County Executive
Ella W. Carey, CMC, Clerk ~
September 17, 1996
Board Actions of September 16, 1996
At the joint meefmg of the Board of Supervisors and School Board on September 16, /996,
the Boards scheduled their next joint meeting for Monday, October 14, 1996, 4:30 p.m.. in Room
235. At the meeting, the Board will continue their discussion on possible short and long term
solutions to address projected shortfalls in FY 1998-2001 revenues. The Boards eliminated as a
possible long term solution "taxing authority for School Boards," and added for discussion "raising
the transient occupancy tax" and "changing bus schedules". Madison Cummings asked for all infor-
mation staff has on a "meals trax". Dr. Castner is to put together a presentation on School Board
goals to be included in the Board of Supervisors' packets for the next meeting.
The Board adopted the attached resolution expressing appreciation to all the persom~el who
worked beyond the call of duty during Hurricane Fran.
At 7:45 p.m., the Board adjourned to September 17, 1996, 5:00 p.m., in the County
Executive's Conference Room to continue its discussion on legal matters pertaining to reversion.
/ewc
Attachments (1)
cc: Richard E. Huff, II
Roxanne White
Kevin C. Castner
Larry Davis
File
COUNTY OF ALBEMARLE
EXECUTIVE SUMMARY
AGENDA TITLE: AGENDA DATE:
F/nanciai Planning Work Session September 16, 1996 '
SUBJE CT/PROPOSAL/REOUEST: ACTION: INFORMATION: X
Joint Work Session with tho School Board on Financial
Harming Issues CONSENT AGENDA:
ACTION: INFORMATION:
ATTACHMENTS:
BACKGROUND:
During FY96/97 budget work sessions, tho Board of Supervisors requested that a joint meeting be held with tho School Board to dbenss long
range financial issues.
DISCUSSION:
Attached for your information prior to the work session are two documents:
Financial Condition Evab~atk,~t: This document presents a series of financial trend indicators that together present a picture of the County's
~aneial eolld~'t~ ~ indicato~ pllll together infurelation from budgetary and fimmeiai reports as well as economic and deal!ographic data
tlmt relate to various important aspects of the County finance: gXte~llai revenues, expenditures, fund balances, liquidity, nefuud~ liabilities
and business activity. These indicators of financial health, wkieh were developed by the International City Managers Association (ICMA) for
their handbook '~EValllathlg Financial Condition'S, form the basis of our ana~s. The publication of this document fulfills one of the goals of
file Collaty's adopted financial policies ~ "lbo enllll~ will develop alld al~nnaHy llpdate a final tt~ond monitoring system that will e~amlne fisCal
trends from the preeeAing five years."
Five-Yenr Fiaanchl Forecast: The attached Five-Year Financial Forecast also marks the first step in meeting one of tl~ stated goals ia the
County's Financial lVhna~aanent Policy, which is to "develop and annually update a long-range (3-5) year financial forecasting syste~ which
willinclude projections ofreveames and expend, as well as future costs and financing of capital improvements and other projects that are
included in the capital budget~" ~ repori is intended to help both the Board of Supervisors and the ~chool Board take a comprehensive look
at the financial condition of the County in order to weigh the impact of future decisions and policies in light of projected revenues and
expenditures.
This report provides the details and background material for the s, mmary information that will be presented ia a more general context at
Monday's work session. The proposed agenda for the financial plannbg work session is:
L Overview of Long-Range Fiscal Plann/mg
Current financial posi~on/policies
Future revenue and expenditure projections
State/Local Comparisons of Revenues and Expenditm'es
II, Identification oflssnes for Future Discussion
]I. Identification of Additional lnftnraatien Required
IV. Scheduling of Future Meetings
CO1V/ME,-, ATI :N:
The information is attached for your review prior to the work session ami does not require any action at this time.
96.175
Albemarle County,
Virginia
Financial Condition
Evaluation:
Fiscal Years
1991-1997
Prepared
September, 1996
Acknowledgments:
County of Albemarle staff wish to acknowledge the usefulness of the "Evaluating Financial Condition"
handbook for local governments published by ICMA (copyright 1986)to use in developing both its financial
policies and the f'mancial condition indicators included in this document. Much of text used to preface each
section, describe the indicators, and to identify any warning trends has been borrowed t~om this publication.
Introduction
Table of Contents
Revenues
Revenues Per Capita
Restricted Revenues
Intergovernmental Revenues
Property Tax Revenues
Assessment Ratios
User Charge Coverage
Revenue Surplus/Shortfalls
5
8
10
12
14
16
17
18
Expenditures
Expenditures Per Capita
Employees Per Capita
Operating Position
Operating Surplus/Deficit
Unreserved Fund Balances
Liquidity
Debt & Unfunded Liabilities
Currem Liabilities
Long-Term Debt
Per Capita Long-Term Debt
Debt Service
19
22
24
25
27
28
29
31
34
35
36
37
Accumulated Employee Leave
Capital Plant
Capital Outlay
School Debt & Capital Outlay
Community Profile
Population Growth
Median Age
School Enrollment
Personal Income Per Capita
Unemployment Rate
Families in Poverty
Property Values
Residential Development
Business Activity
Appendix
Financial Management Policies (Full Text)
38
39
41
42
43
45
46
47
48
49
50
51
52
53
55
Introduction
Introduction
What is Financial Condition and Why Evaluate it?
The term "financial condition" can have many meanings. In a narrow, accounting sense, it means "cash solvency," or a government's
ability to generate enough cash over a thirty to sixty day period to pay all of its bills. In a budgetary sense, financial condition refers
to the ability to generate enough revenues to meet expenditures during a normal budget period and not to incur budget deficits. In a
still broader sense, financial condition may mean "long-nm solvency," a government's ability to adequately meet the costs of doing
business over time, or "service level solvency," the ability ro provide services at the level and quality desired for the health, safety and
welfare of the community and that its citizens desire. However, in a general sense, financial condition is synonymous with financial
'health,' and may be summarized as a government's ability to finance services on a continuing basis, to withstand local and regional
economic dismptious, and to meet the demands of natural growth, decline and change.
The County of Albemarie has a responsibility to its citizens to ensure that the County ~s in good financial condition. This means
accounting for public funds, managing the County's finances wisely and allocating resources efficiently and effectively in order to
provide desired services. To accomplish this, the Board of Sopermsors edopted Financial Management Policies that provide financial
practice guidelines and goals for the long term betterment and stability of Albemarle County. (These policies are presented in full in
the Appendix to this document. Additionally, relevant section(s) ofthese financial policies are reproduced in each chapter.)
One of these aforementioned policies states that "It]be County will develop and annually update a financial trend monitoring system
that will examine fiscal trends from the preceding five years. Where possible, trend indicators will be developed and tracked for
specific elements of the County's fiscal policy." By systematically monitoring and evaluating this trend informatien, the County will
be able:
to gain a better understanding of its financial condition;
to identify previously unrecognized or emerging financial problems before they reach serious proportions;
to present a picture of the County's financial strengths and weaknesses to the Board of Supervisors, citizens, and other
groups with a need to know;
to introduce lung-range considerations into the budgeting process; and
to evaluate whether established financial policies are effective and are being adhered to.
In fulfillment of this established objective, this document presents a series of financial trend indicators that together present a picture
of the County's financial condition. These indicators pull together information from budgetary and financial reports as well as
economic and demographic data and relate to various important aspects of County finances: external revenues, expenditures, fund
balances, liquidity, unfunded liabilities and business activity. Where possible, these indicators also address specific elements of the
County's financial policies.
What is Albemarle County's Overall Financial Condition?
Overall, the financial position of the County with respect to revenues, expenditures, operating position, debt. unfunded liabilities and
capital plant is positive.
Albemarle County enjoys a large, growing revenue base that has enabled it to provide services to citizens without increasing tax rates.
Since FYgl, real per capita net operating revenues (defined as revenues available for general municipal operations, prior to any inter-
fund transfers, and net of revenues collected from the split bilking of property taxes and for the revenue sharing agreement with
Charlottesville) have increased by 12.2% - faster than the combined effects of inflation and population growth. This increase is due
_1
primarily to the 28% increase in real, per capita general property tax revenues that has occurred since FY91 despite reductions in the
real properS, the personal preperty and the machinery und tools tax rates. Additiunally, greater than anticipated total revenue
receipts for most of this six year period have been used to build the County's financial reserves.
The County also maintains a relatively flexible, diversified and stable revenue base that permits adjustments to changing conditions.
and protects the County against shurt-term fiuctoatiens in any one revenue year. Restricted operating revenues (i.e., revenues legally
earmarked for specific nses] account for only about 20% of the County's total net operating revenues. However. since FY92.
restricted operating revenues, as a percentage of total net operating revenues, have increased, particularly to finance General
Government operations. Additionally, the revenue base is diversified. In FY97, local property tax revenues (net of split billing and
revenue sharing funds) accounted for about 45.2% of all net operating revenues, while other local taxes provided an additional 25%
and State and Federal funds contributed the remaining 29%.
However, the County remains relatively dependent on property tax revenues, particularly real estate tax revenues, to finance
operations, despite its stated commitment to reduce this dependency. Since FYgl, net property tax revenues have increased fi.om
39.8% of total net operating revenues to 45.2% in FY97. During the same period, State and Federal funds, as a percentage of total net
operating revenues, declined fi.ora 33% (FYgl) to 29.3% (FY97.) This relative decline in inter-governmental revenues has been
most pronounced for the School Division, where State and Federal aid has fallen fi.om 38.9% of total School Division operating
revenues, to 34.7% (a decline of 4.2%). On the other hand, State and Federal funding has increased slightly for General Government
-- rising fi.om 19.9% of total net operating revenues in FYgl to 20.1% in FY97.
Finally, as part of maintaining a healthy revenue base. the County also is committed to maintaining adequate user charge coverage.
That is, fees and user charges should cover a target amount of the cost of related services provided. However, since FY91, coverage
has declined slightly for both the development departments (Inspections, Planning, Zoning, and Engineering - Erosion Control) and
the Department of Parks and Recreation. In FY91, permit and fee revenues offset 42.5% of all development activities, compared to
35.5% in FY97, a decline of 7%. User charges offset 24% of parks activities in FY91, compared to 20% in FY97 -- a 4°/0 drop.
Since FY91, real per capita net operating expenditures (net of split billing and revenue sharing costs) also have increased. However,
growth in real per capita operating expenditures generally has kept pace with residents' ability xo pay. Between FYgl and FY97, per
capita net operating expendimras (in constant dollars) ere projected to increase by 12.4% -- a rate slightly less than the anticipated
14.5% growth in real personal incomes per capita for residents of the Charlottesville - Albemarle area.
However, expenditure growth has not occurred uniformly across all sectors of local government: real per capita General Govemmem
expendituras have grown faster than real per capita expanditures un fue Sehools. BetweenFY91 andFY97, real per capita net
operating expenditures on School needs increased by 6.3%, while real per capita expenditures on General Government programs grew
by 28.90/0.
Differences in the relative growth rates of real per capita net operating expenditures basically reflects the impact of differential growth
rares in State and Federal funding for School Division and General Government operations. In the School Division, the 8.2% decline
in real per capita State and Federal funding assistance since FYgl has offset increases in real per capita debt service (53.7%), the
General Fund transfer to the School capital budget (100%). and the operating transfer to the Schools (13.9%). By euntrast, real per
capita funding fi.om the State and Federal governments for General Government increased by 33% between FYgl and FY97.
Another indicator of total expendiVaras per capita is total employees per capita, since personnel costs (salaries and fi.inge) are a major
portion of a local government's operating budget. Since FY91, total municipal employees per capita (measured in terms of Full Time
Equivalent positions, or "FTE's"), have grown from 24.7 in FY91 to 28.6 in FY97 -- an increase of 15.6%. Most of this growth is
due to increases in the number of School Division employees (including teachers, central office staff, and other employees.) Between
FY91 andFY97, totalpercapitaSchoolDivisinnFTE'srose from 19.9 to 23.3, aninereaseof17.4%. Byenntrast, per capitaGaneral
Government FTE's grew by only 8%, from 4.9 to 5.3~ The fact that growth in the total number of employees per capita has exceeded
the overall increase in net County operating expenditeres since FY91 indicates that personnel costs (salery and fringe) are a driving
force behind increases in operating expenditures.
Operating Position:
Albenaarle County's operating position is quite favorable. Between FY91 and FY95, the County has run end-of-year operating
surpluses, indicating that currant revenues have been sufficient to support ~xrant operations. In addition, 'surplus· revenues have
provided a steady source of funds to be held in reserve against unanticipated events, emergenmes, unexpected capitalor non-recurring
expenditares, and/or uneven cash flow. Correspondingty, fund balanees have bean sizeable. BetweenFY91andFY95,
undesignated fund Balances exceededthe required minimum of 10% of total net operating revenues, rising steadily to ahigh of almost
17% of total net operating revenues in FY95. Finally. the cash position of the County is quite favorable. Between FYgl and FY95.
the County held more than twice the amount of cash and short-term investments than it incurred in current liabilities, demonstrating
sufficient liquidity to meet short-term obligations, and providing substantial and-of-year cash reserves.
Debt & Unfunded Liabilities:
Albemarle County has a relatively healthy debt profile. Between FY91 and FY95, current liabilities, as a pereent uf net operating
revenues, declined -~ a signal that the County has been able to finance its short-term obligations from cra'rem revenues instead of
borrowed funds. (Of course, short-term debt may be used to'smooth' uneven cash flows during the year.) Additionally, long-term
debt has stayed within the County's ability to pay: both long-term debt and the associated debt service payments have remained
within the target ratios set in the Finuncial Policies. Since FY91, net direct bonded long-term debt has amoutued to less than one
percent of the estimated market value of taxable property - well I~low the 2% maximum established by the Board of Supervisors.
Additioualty, net long-term debt per capita has remained below the $t,000 maximum. Finally, the ratio uf debt service expanditares
to net General Fund revenues has not exceeded the 10% cap.
However. it is clear that long-term debt levels are increasing. Based on future projects approved as part of the FY 96/97 - 00/01
Capital Improvement Plan, long-term debt, as a percentage of assessed valuation, is expected to grow by .2% to .97% in FY01. Per
capita net direct bonded long-term debt is projected to rise to $943, and debt Service, as a percentage of nat General Fund revenues, is
projected to grow to a high of 9.2% in FY99. Although debt and debt service costs are projected to remain within the target ratios,
care must be exercised when designing future capital plans, to avoid incurring debt beyond that which is manageable, given the
projected tax base and existing tax rates. Although the County potentially may incur much more lung-tarm debt (given the current
debt to assessed value ratio), the County is nearing the limit on its ability to pay for borrowed funds g~van the existing revenue strearm
However, unlike per capita long-term debt, the level of accumulated uncompensated absences per employee (an unfunded liability for
the County) has decreased sinee FYgl Batween FY91 and FY95. the total value of unused vacation and sick leave per FTE declined
fi.om $777 in FY91 to $703 in FY95. The majority ufthis decrease was due to a change in personnel policy which no longer
permitted an employee to receive payment for unused sick leave upon termination or rctiremem.
Capital Plant:
Albemarle County is committed to maintaining, replacing, and enhancing its physical plant both to protect its capital investments and
to minimize future maituananee and repair costs. Part of this commitmant includes increased funding for maintananee/repair projects
fi.om currant revanuas, as opposed to borrowed funds. Sinee FY91, the level uf capital outlay, as a percentage of General Fend
operating revenues (net ufrevenue sharing revenues), has increased dramatically, from 1.9% to 3.3% in FY97. CThe level of capital
outlay in FY97 .jumps to 17.6% of General Fun d net operating revenues with the addition of the one-time proceeds fi.om the split
billh~g of personal property taxes in FYgl and real property taxes in FY96 -- all of which has been earmarked for School capital
needs.)
The County's commitment to protecting and enhancing its physical plant also is illustrated by the ongoing operating budget impact of
providing for School Division capital needs, which typically constitute the largest portion of annual capital budgets.. Together, debt
service payments on the School Division's long-term debt and the operating budget transfer to the School Capital Improvement
Program (capital outlay) have increased from 5.8% of total expenditures on Schools to 7.7% in FY97 (excluding split billing funds for
School capital projects). With split billing, constant dollar capitat untlay jumped to more than $14.6 million in FY97, und the
combined cost of debt service and capital outlay rose to 24.6% of total School costs.
3
Community Profile:
Albemarle County is a vibrant, growing community with a young and middle-aged population, rising personal incomes per capita a
s~rung employment base and a robust business sector. These demographic characteristics have shaped, and will continue to shape, the
demand for services in the County.
Since 1990, the population of Albemarle has increased by almost 1 I% -- from 69.500 residents in FY91 to a projected 76,932
residents in FY97. Population growth hasbeen relatively smooth and steady, averaging about 1.9°/dyear. School enrollment also
has increased smoothly and steadily since FY91, at an average rate of about 2.4% per year. If current conditions persist, both general
population and school enrollment growth are projected to continue in a smooth and steady manner into the next century, albeit at
slightly slower rates. Not surprisingly, new residential development, as a percentage of total new development, also has been
increasing. Since the mid 1980%. the market value of new residential development, as a percanmge of the value of total new
development, has increased from 75°/$ to 86% -- an average annual increase of about 1.3%.
Albemarle also is a relatively young community ~- nearlyahalfof all residents are under 30 year of age, Only 15% of residents are
over 60 years of age. However, the fastesl growing segmem of the population has been, and will continue to be. the 40-60 and 65~-
age groups. By FY 2010, the 40-60 population is expected to have grown by 60% since FYgl, and the 60+ group is expected to have
increased by 88%. (By contrast, the number of penple undcr the age of 20 is expected to have grown by 22%, while the population
aged 2040 is expected to have grown by only 4%.)
As previously mentioned, real, per capita personal incomes also have increased since the early 1990% growing an average of about
1,4°/dyear, from $15,694 in FY91 to an estimated $17,734 in FY97. This increase occurs in conjunction with a consistently low
unemploymeut rate in the County, relative to the Cit~ of Charlottesville, the State of Virginia, and the Nation as a whole. Since the
mid-1980's, the County's unemployment rate has remained relatively steady -- at about 2-3°/dyear (except during the mcessianary
period of the early 1990's which increased unemployment nationwide.)
Property values also have been on the rise. The values ofresidantial and commercial property in the County have increased annually
since FY86. However, the growth rate of residential and commercial property values has slowed since the mid 1980's, dropping from
a 5-6% increase over the prior year in FY87 to only level (0%) growth in FY95 (ftscal non re-assessmem years.)
Finally, business activity in the County has picked up since the early 1990%. In FY91. sales tax revenues accounted for aborn 6% of
net operating revenues. By FY97, that percentage had increased to 6,6
Given the inter-relatiunships between demographic and economic factors andrevenues and expenditure growth, it is l~kely that
population growth, increasing property values, rising personal incomes, low unemployment and a s~ong business sector have
conlributed to the growing revenue base of the County. As evident in the fa'st chapter, net operating revenues have been increasing,
despite reductions in both the real property and personal property mx rates. However, the growing population and increasing numbers
of school children have put pressure on County government to meet the demands of growth, while maintaining current sea-vice levels,
particularly in the area of education.
4
Revenues
Revenue Indicators
Why are Revenaes Important?
Revenues determine the capacity of a government m provide services to its citizens. Important indicators of'~revenue health" are
growth, flexibility, diversity and good administration. Under ideal conditions, revenues should grow at a rote greater than or equal to
the combined effects of inflation and population growth, and should be sufficiently free from spending restrictions to permit
adjustments to changing conditions. Additionally, therevenue base should be diversifind -- not overly dependant on residential,
commercial or industrial land uses, or on external funding sources or discretionary state aid. Finally, user fees should cover increases
in the cost of related services provided.
What are Albemarle County's Revenue Policies?
1. Reassessment of real property will be made every two years.
2. The County will maintain sound appraisal procedures to keep property values current. The County's goal is to achieve an
annual assessment to sales ratio of at least 95% under current real estate market conditious, when the January 1st assessment
is compared to sales in the succeeding calendar year when that year is a reassessmom year.
3. The County will mffmtaln a diversified and stable revenue structure to shelter it from short-term fluctuations in any one
reveuue year.
4. The County will estimate its annual revenues by an objective, analytical process.
5. The County will monitor all taxes to insure that they are equitably administered and collections are timely and accurate.
6. The County will follow an aggressive policy of collecting mx revenues. The annual level of uncollected carmot property
taxes should not exceed 4% unless zaased by conditions beyond the County's control.
7. To the extent possible, the County shall attempt to decrease the dependency on real estate taxes to finance the County's
operating budget.
8. The County will, where pos§ible, institute user fees and charges for specialized programs and services in the county based on
benefits and/or privileges granted by the County or based on the cost of a particular service. Rates will be established to
recover operational as well as capital or debt service costs.
9. The County will regularly (at least every 3 years) review user fee charges and related expenditures to determine if
pre-established recovery goals are being met.
10. The County willidentify all inter-governmental aid funding possibilities. However, before applying for or accepting either
State or Federal funding, the County will assess the merits of the program as if it were m be funded with local dollars. No
grant will be accepted that will incur management and reporting costs greater than the grant.
11. Local tax dollars will not be used to make up for losses of inter-governmental aid without first reviewing the program and its
merits as a budgetary increment.
12. The County will attempt to recover all allowable costs - both direct and indirect - associated with the administration and
implementation of programs funded through inter, governmental aid. In the case of state and federally mandated programs,
the County will atmmpt to obtain full funding for the service from the governmental entity requiring that the service be
provided.
5
Why develop Revenue Indicators?
Revenue indicators provide information by which a local govemmem may assess the growth, fiexibiliw, diversity and adequacy of its
revenue base. These issues are addressed by following indicators contained ia this section:
Indicator.
Revenues Per Capita
Restricted Revenues
Intergovernmental Revenues
Property Tax Revenues
Assessment Ratio
User Charge Coverage
Revenue Surplus/Shortfalls
Descr~vtion: Page
Net operating revenues (in constant dollars) divided by County population. 8
Revenues legally restricted to specific purposes as a percentage of total net operating 10
revenues,
Revenues received from State and Federal sources as a percanmge of net operating 12
Property tax revenues (ia constant dollars.) 14
Assessment to sales ratios. 16
Revenues from fees and user charges collected as a percentage of expenditures for 17
related services.
The difference between revenue estimates and actual revenues received during a 18
fiscal year, as a percentage ofuet operating revenues.
How is Albemarle County's "Revenue Health?"
Albemarle County enjoys a large, growing revenue base that has enabled it to provide services m citizens without increasing tax rates.
Since FY91, real per capita net operating revenues (defined as revenues available for general municipal operations, prior to any inter-
fund transfers, and net of revenues collected from the split billing of property taxes and for the revenue sharing agreement with
Charlottesville) have increased by 12.2%- faster than the combined effects of inflation and population growth. This increase is due
primarily to the 28% increase in real, per capita general property tax revenues that has occurred since FY91 despite reductions in the
real property, the personal property and the raachiaery and tools tax rates. Additionally, the County's efforts to meet its stated goals
of maintaining sound appraisal procedures to keep property values current, of achieving an annual assessraent ratio of at least 95%, of
monitoring taxes for equitable administration md for timely and accurate collections, and for aggressively collecting tax revenues.
have contributed to this impressive revenue growth. (Since FYgl, the County's assessment to sales ratios have been increasing, and
since FY93, have exceeded both the County's 95% target, and the overall State ratios. Additionally, the results of the annual stales
ratio studies have indicated that assessments in the County were both reasonably equitable and progressive.) Additionally, greater
than anticipated total revenue receipts for most of this six year period have been used to build the County's financial reserves.
The County also maintains a relatively flexible, diversified and stable revenue base that allows for adjnslments to changing
conditions, and which protects the County against short-term fluctuations ia any one revenue year. The relative flexibility of the
revenue base is illustrated by the fact that restricted operating revenues (i.e., revenues legally earmarked for specific uses) account for
only about 20% of the County's total net operating revenues. However, since FY92, restricted operating revenues, as a pementage
of total net operating revenues, have increased, particularly to finance General Government operations. Restricted operating
revenues now account for nearly 22% of total General Government net operating revenues, up 3.8% fi'om FY92. By contrast,
restricted operating revenues, as a percentage Of School Division net operating revenues, have declined by 3.5% since FY91, to their
current share of 17.8%. Additionally, the revenue base is diversified. In FY97, local property tax revenues (net of split billing and
revenue sharing funds) accounted for about 45.2% of all net operating revenues, while other local taxes provided an additional 25%
and State and Federal funds contributed the remaining 29%.
However, the County remains relatively dependent on property tax revenues, particularly real estate tax revenues, to finance
operations, despite a commitment to reduce this dependency. Since FYgl, net property mx revenues have increased from 39.8% of
total net operating revenues to 45.2% in FY97. During the same period, State and Federal funds, as a percentage of total net operating
revenues, declined from 33% (FY91 ) to 29.3% (FY97.) This relative decline ia inter-govarmnental revenues has been most
pronounced for the School Division, where State and Federal aid has fallen from 38,9% of total School Division operating revenues,
to 34.7% (a decline of 4.2%). On the other hand, State and Federal funding has increased slightly for General Government -- rising
6
from 19.9% of total net operating revenues in FY91 to 20.1% in FYg~L
As part of maintaining a healthy revenue base, the County also is committed to maintaining adequate user charge coverage. That is,
fees and user charges should cover a target amount of the cost of related services provided. However, since FYgl. coverage has
declined slightly for both the development deparunents (Inspections, Planning, Zoning, and Engineering - Erosion Control~ and the
Department of Parks and Recreation. In FY91, permit and fee revenues offset 42.5% of all development activities, compared to
35.5% in FY97, a decline of 7%. User charges offset 24% of parks activities in FY91, compared to 20% in FY97 - a 4% drop.
$1,350
$1,300
$1,250
$1,200
$1,150
$1,100
Revenues er Capita
(Constant $, 1990 = 100)
1991
I I I I
1992 1993 1994 1995 1996
F'scal Year
Net Operating Revenues Exclude Split Billing & Revenue Sharing.
1997
Description:
Net operating revenues are defineA as those revenues collected
in the general, school, special revenue and debt service funds
that are available for general municipal operations, prior to
any inter-fund lransfers and net of revenues received fi-om the
split billing of properly taxes (in 1991 and 1996) and which
go to support the revenue sharing agreement with
Charlottesville. Per capita net operating revenues divide total
net operating revenues by population to arrive at the mount
of total net operating revenues per County resident.
Theoretically, as the County's populatiun increases, revenues
should increase proportionately and that per capita operating
revenues should remain at least constant in real terms.
Decreasing levels of per capita revenues may signal possible
difficulties in maintaining existing service levels without the
addition of new revenue sources, cost cutting measures or
effiiency enhancements.
Recognizing the importance of a healthy revenue stream to
financing operations, the County has committed to:
· maintaining a diversified and stable revenue
· monitoring all taxes to ensure that they are equitably
administered and that collections are timely and
aggressively collecting tax revenues -- the annual
level of uncollected current property taxes should not
exceed 4% unless as a result of conditions beyond the
County's control;
decreasing the dependency on real estate taxes to
finance the County's operating budget.
gFarning Trend:
Decreasing net operating revenues par capita (in constant
dollars.)
Observed Trend in Albemarle County:
Since 1991, per capita net operating revenues have been on
the rise in Albemarle County, increasing fi-om $1,163 in FY91
to $1,304 in FY97 (12.2% .)
This increase has occurred largely due to growth in property
tax revenues, which have increased by almost 44% ($11.2
million) in real terms since FY91. Moreover, this growth in
property tax revenues has occurred despite reductions in the
property tax rates. (In FY92, the real property tax rate was
reduced from $0.74/$100 to $0.72/$100 of assessed value.
The personal property and machinery and tools tax rates also
was cut fi-om $4.40/$100 to $4.30/$100 in FY91, followed by
another reduction in FY93 to $4.28/$100.)
8
Revenues Per Capita
Net County Operating Revenues: 1988
(4.5%) Fecleml Revenues
State Revenues
Local property Taxes ~ /
\
Other Local Revenues
Net County Operating Revenues: 1997
(4.7%) Federal Revenues
(24.6%) State Revenues
(45.4%) Local Property Taxes
Other Local Revenues
However. increasing net operating revenues par capita masks
another important trend: that of an increased reliance on
general property taxes and the diminished importance of State
and Federal revenues, to Finance County operations. The
above pie charts illustrate this; showing the increasing share of
total County oparations f'manced by property tax revenues and
the declining share of operations financed by State and
Fedcral funds since FYg8.
This trend has been more pronounced for the School Division
than for General Government. Since FY88, local revenues, as
a percentage of total School Division operating revenues
(excluding Federal/State grant funds) have increased by nearly
10%, while the share of State and Federal funds has declined
be the same pereenrage. (State revenues have declined the
most. The share of School Division operations fmaueed by
State revenues has shrunk by about 9.6% alone since FY88.)
By contrast, the share of General Govenunent opemtinns
financed by State and Federal revenues has declined by only
about 2.9%.
9
Restricted Revenues
24%
as % of Net Operating Revenues
22% I
20%
18%
16%
1991 1992 1993 1994 1995 1996 1997
F'scal Year
General Gov't. -e- School Div. -ar Total
School Division Net Operating Revenues Include Local Tran~er.
Net Operating Revenues Exclude Split Billing & Revenue Sharing.
Description:
A restricted operating revenue is an operating revenue that is
legally earmarked for specific use, as may be required by State
law, bond covenants, or grant requiremants.
As the percentage of restricted revenues increases, a local
government loses its ability to respond to changes in
conditions and to meet citizens' needs and demands.
Increases in restricted revenues also may indicate an over-
dependence on external revenues and signal a future inability
to maintain existing service levels.
Recognizing the importance of maintaining a flexible revenue
base, the County has committad to maintaining a diversified
and stable revenue structure.
Warning Trend:
An increasing amount of restricted operating revenues as a
percent of net operating revenues.
Observed Trend in Albemarle County:
Overall, restricted opemt'mg revenues as a pement of total net
operating revenues in the County have remained relatively
constant between FY91 and FY97, averaging about 19% over
the seven year period. However, restricted operating revenues
as a share of net General Government operating revenues have
increased by about 3.8% since FY91. On the other hand,
restricted revenues as a percentage of School Division
operating revenues have declined by about 3.5%
These divergent tendencies may be attributed to relatively
faster growth in State and Federal funding for General
Government operations than for School Division operations,
since FY9I. (Since FY91, real per capita State and Federal
funding for General Government operations has increased by
15% and 35% raspectiveiy. However, the School Division has
experienced a decline in real per capita State and Federal
funding during the same period, in the amounts of -8,3% and
-2.4%, respectively.)
The large increases in general government restricted revenues
since FY93 are due mainly to a 9.7% increase in restricted
Social Service revenues, and 100% growth in recordation fees
(which the County began collecting in FY93). However,
some of the increase in Social Service revenues since FY96
reflects the re-sWacturing of several large programs from a
County-only direct payment to an up-fi'ont payment of the
State share to be reimbursed by State revenues.) Moderate
Rehabilitation [HUD) and Medicaid funds posted more
moderate gnins of 57% and 42%, respectively. These
increases are depicted in the chart at the top of the next page.
10
Restricted Revenues
$2.500
$2,ooo
$1.000
$500
$0
Increase in Selected Restricted Revenues
General Government
1991 1992
1993 1994 1995 1996 1997
Fiscal Year
Social Services .~. Recordation Fees
HUD - ModRehab -is.- Medicaid
However. despite the relative increase in General Government restricted revenues, in many program areas, State and Federal funding
assistance has not kept pace with required expenditure increases. Increasingly, local dollars are used to fund the programs and
operations of State Constitutional Officers and the Registrar (also a State officer). The following charts exemplify this trend.
$800
$600
$4O0
$200
$0
Sources of Funding: Sheriffs Office
FY88 F~89 FY90 FY01 FY92 FY03 FY94 FY95 FY96 FYfl7
Rscal Year
Comp. Board r--~ Local
Sources of Funding: Director of Finance
$2.500
$1.000
$500
$0
FY88 P(89 FYg0 FY91 F'Y92 FY93 FY94 FY95 FY96 FY97
RscalYear
~Comp. Board rmLocal
11
Intergovernmental Revenues
40%
35%
._=
~ 30%
~_ 25%
2O%
15%
I I
1991 1992
as % of Net Operating Revenues
I I
1993 1994
Fscal Year
I I
1995 1996
.~. General Gov~t. -e- School Division .~. Total
School Division Net Opetling Revenueslnclude Local Transfer.
Net Operating Revenues Exclude Split BiLling & Revenue Shadng,
1997
Description:
Intergovernmental revenues are revenues received from
another governmental entity, such as the State or Federal
governments. An over-dependence on such revenues may be
harmful if the external source withdraws its funding or
reduces its share of costs, end the local government must
either cut programs or pay for them out of the general fund.
Nevertheless, inter-governmental revenues may be an ideal
source of financing for federal or state-mandated services or
to fund one-time operating costs.
The County will attempt to recover all allowable
costs associated with the adminislration and
implementation of programs funded through
intergovernmental aid. The Connty will seek full
funding from the State and Federal governments for
mandated services.
Warning Trend:
An increasing amount of inter-governmental revenues as a
percentage of net operating revenues.
Recognizing the need to minimize dependence on State end
Federal funding to finance operations, the County has
committed to the following operating budget policies:
The County will identify end evaluate all inter-
governmental aid funding possibilities end no grants
will be accepted that incur management end reporting
costs greater then the grant.
Local tax dollars will not be used to make up for
losses in inter-governmental aid without first
reviewing the program end its merits as a budgetary
increment.
Observed Trend in Albemarle County:
Since FY91, State and Federal revenues as a percent of overall
ne[ operating revenues have declined slightly, from 33% to
29.3%. This general decrease is due mainly to a 4.3% decline
in State end Federal funds as a share of School Division
operating revenues, which has more than offset a slight (.22%)
increase in General Government intergovernmental aid. as a
percentage of its net operating revenues. These changes
correspond to the general Irends discussed on page 7 of this
document.
12
This page is intentionally blank.
13
Property Tax Revenues
as % of Net Operating Revenues
309'0
25%
20%
15%
991 1992 1993 1994 1995 1996
RscalYear
1997
.~. General Gov't. -e- School Division .~. Total
School Division Net Operfing Revenueslnclude Local Tran~er.
Net Operating Revenues Exclude Split Billing & Revenue Shadng.
Description:
Gan~ral property taxes are ad valorem taxes based on the
assessed value of real and personal property owned by
businesses, individuals and public service corporations in thc
County. Net general property tax revenues are property tax
revenues, net of revenues received fi.om the split billing of
property taxes (in 1991 and 1996) and ofthosa revenues that
go to support the revenue sharing agreement with
Charlottesville.
Both real and personal property are assessed every two years
at 100% valuation with tax rates being applied per $100 of
assessed value. Re~assessments are completed during odd
fiscal years on a December -December basis. However.
adjusunents to the tax base are not reflected until the following
fiscal year.
General property tax revenues are derived primarily from real
estate, personal property, public service, mobile home and
machinery and tools taxes.
Since property taxes are heavily relied upon by most local
governments to finance operations, a decline or a diminished
growth in these revenues may signal coming fiscal difficulties.
To ensure an adequate su'eam of personal property mx
revenues, and to avoid an over-dependence on these revenues
to £mance operations, the County has establlshad the following
property tax revenue policies:
Reassassmant of real property shall be made every
two years.
The County will maintain soUnd appraisal procedures
to keep property values current. The County's goal is
to achieve an annual assessment m sales ratio of at
least 95% under current real estate market conditions,
when the January 1st assessment is compared to sales
in the succeeding calendar year when that year is a re-
assessarent year.
The annual level of uncollected current property taxes
shall not exceed 4%, unless caused by conditions
beyond the County's conlrol.
To the extent possible, the County will decrease its
dependence on real estate taxes to f'mance the
County's operating budget.
Warning Trend:
A decline in net property tax revenues (in const,ln_ t dollars.)
Observed Trend in Albemarle County:
Since 1991, real general properly tax revenues (net of Split
Bilrmg and revenue sharing) have risen steadily, growing fi.om
$31.6 million in FY91 to a projected $44.9 million in FY97.
Of these, net personal property tax revenues have grown the
fastest, increasing by 76.4% in real terms between 1991-97,
followed by net real property tax revenues (34.9%).
(Continued on next page.)
14
Property Tax Revenues
The overall growth in property tax revenues is attributed to
increases in the number and purchase value of new vehicles,
new construction activity and high reassessmant rotes that have
occurred since the early 1990's. Moreover. this growth has
occurred despite decreases in the real, personal property and
machinery and tools tax rates. In FY92, the real property mx
rate was reduced from $0.74 to $0.72/$100 of assessed value,
and the personal property and machinery and tools tax rates
were reduced from $4.40 to $4.30/$100. These taxes were
further reduced to $4.28/$100 in FY93.
However, general property mx revenues (net of Split Billing
and Revenue Sharing funds) have increased from 39.8% to
45.2% of net operating revenues, indicating an increased
reliance on this revenue stream to finance operations, despite
the County's established goal of reducing its dependency on
these revenues.
15
Assessment Ratios
100%
95%
90%
85%
80%
I I I
1990 1991 1992 1993
Fiscal Year
~.Virginia -e- Albemarle
1994
Descriptiom
The County's assessment ratio relates assessed property values
to the value of new property sold. and is an indicator of sound
appraisal procedures to keep property values c~t.
Declining assessment ratios raay indicate that property value
assessments are not being kept current, result'n~ in lower
property tax revenues.
To edsure a health stream of property mx revenues, the
following revenue policies relating m assessments were
established that:
Reassessment of real property shall be made every
two years
The County will maintain sound appraisal procedures
to keep property value current. The County's goal is
to achieve an annual assessment to sales ratio of 95%
under current real estate market conditions.
Warning Trend:
Declining annual assessment to sales ratios and/or ratios of
less than the prescribed minimum (95%.)
Observed Trend in Albemarle County:
Between FY91 and FY94 (the latest year for which assessment
ratio data is available), the County's annual assessment to sales
ratio has averaged 95%, the prescribed minimum, (Since
FY93, the County's assessment to sales ratios have exceeded
96%, offsetting the lower ratios in FY91 and FY92, for a four
year average of 95%.) Additiunally, the above chart shows
that since FY91, County assessment to sales ratios have been
increasing, and have State rates. Finally, results of the sales
ratio study indicated that assessments in the county were both
reasonably eqffltable and progressive.
16
50%
User Charge Coverage
as % of Total Expenditures for Related Services
~ 40%
.o
30%
CO
20%
10%
I I I I I I t
1991 1992 1993 1994 1995 1996 1997
X-Axis
.~. Parks & Recreation
-e- Development Departments
Description:
Fees and user charges are revenues collected from permits and
privilege fees and for the services of County personnel,
"User charge coverage" refers to the extent to which permit,
fee and user charges revenues collected offset the cost of
providing related services.
As developed, this indicator focuses on the two major sources
of fees and user charge revenues: development activity and
parks and recreation. The majority of permits, fees and license
revenues are developmant-related, and offset the activities of
the Inspections, Planning, Zoning and Engineering (Erosion
Control) departments, Parks and Recreation also collects user
charges to offset the cost of its core operations. If the fees and
user Charges collected offset all related expenditures, the
coverage is 100%. If charges cover only half of these costs,
the coverage is 50%. As coverage declines, the burden of
financing these operations falls on other revenues to support
these services.
To maintain adequate user charge coverage, the Board of
Supervisors have established that:
The County will. wherever possible, institute user
fees and charges for specialized programs and
services in the County based on benefits and/or
privileges granted by the County or based on the cost
of a particular service. Rates will be established to
recover operational as well as capital or debt service
COSTS.
The County will regularly (at least every three years)
review user fee charges and related expenditures to
determine if pre-established recovery goals are be'rog
met.
Warning Trend:
Decreasing revenues from user charges as a percentage of
total expenditures for related services.
Observed Trend in Albemarle County:
Since FYgl, user charge coverage has declined slightly for
both the development deparmaents and the Department of
Parks and Recreation, although the trendis more prenotmced
for development activities. In FY91, permit and fee revenues
offset 42.5% of all development activities, compared to 35.5%
in FY97, a decline of 7%. User charges offset 24% of parks
activities in FY91, compared to 20% in FY97 - a 4% drop.
This overall decline in user charge coverage may be an
indication that existing fees and user changes are insufficient
to cover associated expenditures at the target recovery levels.
Data obtained from the Inspections Department indicates that
since FY91, building permit activity has increased slightly in
the County. Parks and Recreation also reports increased usage
of park facilities and in park programs.
17
Revenue Surplus/Shortfalls
6%
~: 4%
o%
-4%
1991
as a%ofNetOperatingRevenues
1992 1993 1994 1995
RscalYear
.~. Gen Gov't. -e- Schools .~. Total
Net Operating Revenues Exclude Split Billing & Revenue Sharing.
Description:
An operating surplus is defined as the excess of revenues
actually received at the end of a fiscal year over initial
esthnated receipts. An operating shortfall arises when actual
revenues received full short of the initial estimates, Major
shortfalls that continue year after year can indicate a decrming
economy, inefficient collection procedures, or inaccurate
estimation techniques.
Warning Trend:
An increase in revenue shortfalls as a percentage of actual net
operating revenues.
Obseroed Trend in Albemarle County:
With the exception of FYgl and FY92, the Cotm~ has
enjoyed higher than anticipated revenue receipts resulting in
revenue surpluses. The t~nd is due principally to higher than
anticipated general fund revenues which tended to offset
revenue shortfalls on the School side.
These excess revenues have been used to build reserves for
emergency or unanticipated fmancinl needs. Operating deficits
have been funded from these reserves.
18
Expenditures
Expenditure Indicators
What are Expenditures and Why are They Important?
Expenditures are a rough measure of a local government?s service output. Generally, the more a local government spends (in constant
dollars), the more services it is providing. (Of course, this does not take into account how effective the services are, or how efficiently
they are being provided.) Two issues to consider when evaluating expenditure growth are 1 ) whether the government is living within
its revenues, and 2) how flexible the government is in its ability to adjust its service levels to changing conditions.
What are Albemarle County's Operating Budget Policies?
Recognizing the importance of both living within revenues and maintaining expenditure flexibility, the County has established the
following operating budget policies as part of its Financial Management Policies:
The annual budget will be prepared consistent with guidelines established by the Government Finance Officers Association
and will annually seek the GFOA Distinguished Budget Presentation Award.
2. The budget must be structured so that the Board and the public can understand the relationship between revenues,
expenditures and the achievement of service objectives.
The goal of the County is to fund all recttrring expenditures with recurring revenues and to use non-recurring revenues only
for non-recurring expenses.
The County will maintain an updated fiscal impact model to assess the impact of new development on the future costs of
associated county services.
Utilizing thc fiscal impact model, the County will develop and annually update a long range (3-5 year) financial forecasting
system, which will include projections of revenues, expenditures, as well as future costs and financing of capital
improvements and other projects that are included in the capital budget.
When revenue shortfalls are anticipated in a fiscal year, sp~uding during the fiscal year must be reduced sufficiently to offset
current year shortfalls.
The County will prepare the capital improvement budget in conjunction with the development of the opereting budget, in
order to assure that the estimated costs and future impact ora capital project on the operating budget will be considered prior
to its inclusion in the CIP.
The County will develop and annually update a financial trend monitoring system which will examine fiscal trends from the
preceding 5 years. Where possible, trend indicators will be developed and tracked for specific elements of the County's fiscal
policy.
The County shall establish a Memorandum of Understanding with the School Board regarding the amount ofmmual getlaral
fund support received each year, which has curremly been established at approximately 60% of all new available local tax
revenues. Available revenues are revenues that can be used for County and School Division operations after uny mcreasas in
debt service, capital improvement program funding, City of Charlottesville revenue sharing, and the Board reserve fund have
been funded. This guideline will be reviewed annually.
10. The operating budget preparation process is conducted to allow decisions to be made regarding anticipated resource levels
and expenditure requirements for the levels and types of servicas to be provided in the upcoming fiscal year. The following
19
11.
budget procedures will insure the orderly and equitable appropriation of those resources:
Operating budget requests are initiated at the department level within target guidelines set by the County
Executive. Priorities of resource allocation of divisions within a deparunent are managed at the department
level. In formulating budget requests, priority will be given to maintaining the current level of services.
New services will be funded through identification of new resources or reallocation of existing resources.
Proposed program expansions above existing service levels must be submitted as a budgetary incremem
requiring detailed justification, Every proposed program expansion will be scrutinized on the basis of its
relationship to the health, safety and welfare of the community to include analysis of leng term fiscal
impacts.
Proposed new programs must also be submitted as budgetary increments requiring detailed justification.
New programs will be evaluated on the same basis as program expansions to include analysis of long term
fiscal impacts.
Performance measurement and productivity indicators will be integrated into the budget process as
appropriate.
23~e operating budget is approved and appropriated by the County Board of Supervisors at the Department level. Total
expenditures cannot exceed total appropriations of any department within the General Fund. Changes to the approved
operating budget during the fiscal year can be accomplished in any of the following ways:
Transfers between Divisions and line-item expenditures within a Department are approved by the Director
of Finance
Transfers between expenditure accounts in different departments are approved by the Board of
Supervisors.
Encumbered funds for active purchase orders will be carried forward into the next fiscal year with the
approval of the Board of Supervisors.
The County Executive will require monthly budget reports, monthly financial statements, and annual
financial reports.
The Board of Supervisors will adopt the budget no later than April 30.
Why Develop Expenditure Indicators?
By developing and tracking evaluating expenditure growth and flexibility indicators over time, the County is able to determine the
extent m which it has been able to live within its revenues, and to adjust service levels to changing conditions. The two indicators
included in this section relate to expenditure growth, and to assessing how well Albemarle has been able to live within its revenues.
Other indicators of expenditure flexibility ~ not presented here. due to difficulties in collecting data on fixed costs and fringe benefit
expenditures.
The expenditure indicators included in this section are:
Indicator Description
Expenditures Per Capita Total net operating expenditures per County resident.
Employees Per Capita Total municipal employees per County resident.
Page
22
24
20
How is Albemarle Coun~d's Expenditure Health?
Since FY91, real per cap~ta net operating expenditures (net of Split Billing and Revenue Sharing costs) have increased. However_
gr~wthinrealpercapitanet~peratingexpendimresgenera~yhaskeptpaeawithresidents~abi~ityr~pay. BetweenFYgl andFY97.
per capita net operating expenditures (in constant dollars) are projected m increase by 12.4% - a rate slightly less than the anticipated
14.5% growah in real personal incomes per capita for residents of the Charlottesville - Albemarle area.
However, expenditure growth has not occurred uniformly across all sectors of local government: real per capita General Government
expenditures have grown faster than real pcr caplta expenditares on the Schonls. BetweenFY91 andFY97, real per capita net
operating expenditures on School needs increased by 6.3%, while rea[ per capita expenditures on General Government programs grew
by 28.9%. (This difference becomes slightly less pronounced when looking only at expenditures for operatinns -- net of debt service,
capita/outlay and grant fund expenditures. During this period, real per capita expenditm-es on School operations increased by 2.7%,
compared to 19.2% for General Government.)
Differences in the relative growth rates of real per capita net operating expenditures basically reflects the impact of differential growth
rates in State and Federal funding fur School Division and General Government operations. In the Schodi Division, the 8.2% decline
in real per capita State and Federal funding assistance since FYgl has offset increases in real per capita debt service (53.7%), the
General Fund transfer to the School capital budget (100%), and the operating I~msfcr to the Schools (13.9%). By contrast, real per
capita funding from the State and Federal governments for General Government increased by 33% between FYgl and FY97.
Another indicator of total expenditures per capita is total employees per capita, since personnel costs (salaries and fringe) are a major
portion of a local government's operating budget. Since FY91, total municipal employees per capita (measured in terms of Full Time
Equivalent positions, or "FTE's"), have grown from 24.7 in FY91 to 28.6 in FY97 -- an increase of 15.6%. Most of this growth is
due to increases in the number of School Division employees (including teachers, cctitral office staff, and other employees.) Between
FY9~andFY97~t~talpercapitaSch~~~DivisiunFTE'srosefr~mI9.9to23.3~anincrease~f~7.4%. By enntrast, per capita General
Government FTE's grew by only 8%, from 4.9 to 5.3. (Moreover, almost half of this 8% growth rate was due to increases in the
number of public safety persormal per capl. ta~) The fact that growth in the totul number of employees per capita has exceeded the
overall increase in net Coon~y opcrating expenditures sinceFY91 indicates that personnel costs ~salatyand fi'inge)are adriving force
behind increases in net operating expenditures.
21
Expenditures Per Capita
4000
3000
2000
1000
0
1991 1992 1993 1994 1995 1996 1997
Fiscal Y ear
ma Gen, Gov't- No Fub Sar ~ Gert Gov't,
E~ Schools ~ Total
Net Operating Expenditures exclude Split Billing and Revenue Sharing costs,
Debt Service. Capital Outlay. and Grant Fund Expenditures are included.
Description~
Net operating expenditures are expenditures for operations in
the general, debt service and special revenue funds, net of split
billing and revenue sharing costs. Net operating expenditures
per capita are the ratio of total net operating expenditures to
population -- giving total net operating expenditures per
County resident.
Increasing net operating expenditures per capita (in constant
dollars) may indicate that the cost of providing services is out
pacing the community's ability to pay, especially if spending
~s mcreasing faster than residents' collective real incomes.
Warning Trend:
Increasing net operating expenditures per capita (in constant
dollars.)
Observed Trend in Albemarle County:
Total net operating expenditures per capita (In constant
dollars) have increased by about 12.4% since FY91. This
growth in real per capita expenditures has kept pace with
increases in real per capita personal incomes in the area.
Since FY91, real per capita personal incomes in
Charlottesville and Albemarle have grown by approximately
I4.5% (assuming a 1.73% real growth rate for FY96 and
FY9~. based on trend infonnatinn from the early 1990%)
Despite this overall increase, per capita expenditure growth
has not occurred uniformly between General Government and
the School Division, Since FY91, real per capita expenditures
in the School Division have grown much more slowly than
real per capita General Government expenditures. Between
FY91 and FY97, real per capita expenditures on School needs
increased by 6.3%. However, real per capita expenditures on
General Government programs increased by 28.9%. (This
difference becomes slightly less pronounced when looking
only at expenditures on operations-- net of debt service and
capital outlay. During this period, real per capita expenditures
on School operations increased by 2.7%, compared to 19.2%
for General Government.) The chart below illustrates the
relatively rapid growth in general govemmem operating
expenditures relative to school division operating
expenditures.
Per Capita Net Operating Expenditures
22
Expenditures Per Capita
Differences in the relative growth rates of real per capita net
operating expenditures are basically due to the impact of
differential growth rates in State and Federal funding for
School Division and General Govemmant operations.
In the School Division, the 8.2% decline in real per c~ita
assistance from the State and Federal Govemmants has offset
local dollar Increases real per capita debt service (53.7%), the
General Fund lransfer to the School CIP [100%), and the
operating transfer to the Schools (13.9%). By contrast, real
per capita funding from the State and Federal government for
General Government has increased by 33% since FYgl.
The fastest growing sectors of General Government have been
public safety and human services, where real per capita
expenditures grew by 24.9% and 34.7% between FY91 and
FY97. respectively, Additionally, the per capita transfer to
general government CIP projects has increased by 49.3%.
23
mployees Per Capita
4O
3O
20
10
1991 1992 1993 1994 1995 1996
Fscal Year
General Gov't. ~ Schools
1997
Descriptior~~
Employees per capita relates total municipal employees to
population, for a measure of the total number o£mtmicipal
employees serving each County resident.
The number of municipal employees is measured by the
number of Full-Time Equivalent positions (FTE's), which
converts part-time positions pm-time positions into the
decimal equivalent of a full-time position based on 2,080
hours worked per year. A full-time employee working 2.0g0
hours/year is counted as I FTE. A part-time employee
work'mg 1,040 hours per year is counted as .5 FTE.
Changes in the number of employees per capita is a good in
measure of changes in total expenditures per capita, since
persouneI costs (salaries and fxinge) are a major portion of a
local government's operating budget.
Warning Trend:
Increasing number of municipal employees (in FTE's) per
capitg.
Observed Trend in Albemarle County:
Since FY91, the number of municipal employees per capita
has grown by 3.85 FTE's, or 15.6%.
Most of this increase is due to the relative growth in the
number of School Division employees (including teachers,
central office staff, and other School Division employees.)
Since FY91, the number of per capita School Division
employees has increased form 19.9 in FYgl to 23.3 in FY97 -
- an increase of 17.4%. By conuast, the number of per capita
general government employees grew fi'om 4,9 FTE to 5.3 FTE
-~ an increase of only 8%. (Growth in public safety personnel
such as police officers and fire/rescne personnel alone
accounted for almos~ half of this increase -- about 3.4%.)
24
Operating Position
Operating Position Indicators
What is "Operating Position" and Why is it Important?
The term "operating position" refers to a government's ability 1 ) to balance its budget on an annual basis, 2) to maintain reserves for
emergencies and 3) m ensure sufficient liquidity to pay all of its bills on time.
Although Albemarle County is required by law to set a balanced budget, it is rare that current expenditures exactly equal current
revenues during the year. Usually, a local government generates either an operating deficit or surplus, An operating defici! occurs
when current expenditures exceed revenues. If revenues exceed expenditures, an operating surplus arises. However, operating
re lt' " '" " "
deficits or surpluses do not necessarily sa m budget deficits or budget sttrplusas. If expenditures exceed revenues, reserves (or
fund balances) from prior years arc used to cover the difference and balance the budget. Operating surpluses generally increase fund
balances. In fact, operating deficits or surpluses may be created intentionally, m achieve a particular policy goal, or unintentionally,
due to the difficult task of predicting revenues and expenditures exactly.
Reserves provide a financial cushion against unexpected events such as the loss of a revenue source, an economic downturn.
unanticipated operating expenditures due to a natural disaster (for example), unexpected capital expenditures or other non-reearring
expenditures, or an uneven cash flow. Reserves are built through accumulating operating surpluses and may be budgeted in a
contingency a¢counk or carried as part of one or more fund balances. Albemarle County maintains both "designated" and
"undesignated" fund balances. Designated fund balances are reserves set aside for a particular use - such as capital or inventory.
Undesignated fund balances are available for general appropriation.
Liquidity refers to cash inflow and ouffiow. Since governments often receive their revenues in large installments and at infrequent
intervals during the year, revenues may be received before they are actually needed to be spent, resulting in a positive liquidity or cash
flow position. Excess liquidity, or "cash reserves" also provide a valuable cushion against financial pressures.
What are Albemarle's Fund Balance or "Reserve" Policies?
Recognizing the importance of operating position to overall f'mancial condition, Albemarle County has established the following fund
balance (reserve) policies as part of its Financial Management Policies:
Thc County does not intend, as a common practice, to usc Genaral Fund equity (Undesignated Fund Balance) to fmence
current operations. The Fund balance is built over years from savings to provide the County with working capital to enable it
to finance unforeseen emergencies without borrowing.
The County will maintain a fund balance for cash liquidity purposes that will provide sufficient cash flow to minimize the
possibility of short term tax anticipation borrowing.
The undesignated fund balance, plus the designation for fiscal cash liquidity purposes, at the close of each fiscal year should
be equal to no less than 10% of the County's total operating budget.
Funds in cxeass of the required undesignated fund balance may be considered to supplement "pay as you go" capital
expenditures or as additions to the fund balance.
25
Why Develop Operating Position Indicators?
By developing and monitoring indicators of the operating position, the County can assess current mvanues are sufficient to support
current operations, whether adequate reserves are maintained for emerganc~es, and whether the government has sufficient liquidity, to
pay all of its bills on time.
The following operating position indicators are contained in this section:
Indicator Description Page
Operating DeficiffSurplus
The difference between annual revenues and expenditures, as a percentage of net
operating revenues.
27
Unreserved Fund Balances Unreserved fund balances as a percentage of net operating revenues.
28
Liquidity Cash and short-term investments as a percentage of current liabilities. 29
How is Albemarle County's Operating Position?
Albemarle County's operating position is quite favorable. Between FY91 and FY95, the County has run end-of-year operating
surpluses, indicating that current revenues have been sufficient to support current operations. In addition, 'surplus' revenues have
provided a steady source of funds to be held in reserve against unanticipated events, emergencies, unexpected capital or other non-
recurring expenditures, and/or uneven cash flow. (The operating deficit budgeted for FY97 reflects the use of fund balance and
carry-over to balance the budget. The actual experience of the County in FY97 may be that of an operating surplus.)
Correspondingly, fund balances have been sizeable. BetweanFY91 andFY95, undesignated fund balences exceeded the required
minimum of 10% of total net operating revenues, rising steadily to a high of almost 17% of total net operating revenues in FY95.
Finally, the cash position of the County is quite favorable. Between FY91 and FY95, the County held more than twice the amount of
cash and short-term investments then it had incurred in current liabilities b~ the end of each year, demonstrating sufficient liquidity to
meet short-term obligations, and providing substantial end-of-year cash reserves.
26
Operating Surplus/Deficit
3%
2%
1%
0%
I
1991
as % of Net Operating Revenues
i I I
1992 1993 1994
Rscal Year
Net Operating Revenuesexclude Split Billing and Revenue Shadng revenues
I
1995
Description:
An operating deficit occurs when the government is spending
more than it is earning, i.e., when current expenditures exceed
revenues. An operating surplus occurs when current revenues
exceed expenditures. Operating deficits are usually funded
with reserves (fund balances) from prior years. Operating
surpluses generally build up reserves.
This indicator depicts operating deficits or surpluses as a
percentage of net operating revenues.
Although an operating budget surplus or deficit in any one
year may be the result of a policy goal aimed at building
reserves, or be unintentional, due to inaccurate estimates,
frequent operating deficits may indicate that current revenues
are not sufficient to support current expenditures and that
serious fiscal difficulties lie abeacL
Warning Trend:
Increasing operating deficits as a percentage of net operating
Observed Trend in Albemarle County:
Between FY91 and FY95, the County earned more in current
revenues each year than it actually spent on operations;
generating an annual operating surplus. These "surplus"
revenues have been used to build reserves, providing an
effective cushion against emergencies or unexpected events.
The FY97 adopted operating revenues include the budgeted
useof$501,495in Genaral Fund balence for School needs,
and $ I01,500 in School Fund carry-over. However, if the past
is any indicator of future n'ends, the County may well end the
year with an operating surplus instead ora deficit.
27
Unreserved Fund Balances
1B%
16%
14%
12%
10%
8%
as % of Net Operating Revenues
13.07%
Minimum [10%)
-· $ · ·
I
1991
I I I,
1992 1993 1994
Fiscal Year
Net Operating Revenuesexclude Split Billing and Revenue Sharing revenues
16.90o/
I
1995
Description:
Positive fund balances may be thought of as "reserves," or a
financial cushion against emergencies. Some fund balances
are "designated" (reserved) for uses such or for capital
projects. "Unreserved" fund balance is fund balance that is
available for general appropriation.
The total amount of unreserved fund balances is an indicator
of a local government's ability to withstand financial
emergencies or finance unforseen or one-time expenses. The
size of a government's fund balances also may affect its
ability to aceamulate funds for capital purchases without
having to borrow. An unplanned decline in fund balances may
indicate that the government wiI! be unable to meet a future
need.
Albemarle County Financial Policies state that the amount of
undesignated fund balance, plus the designation for fiscal cash
liquidity purposes, should be no less than 10% of the County's
total operating budget at the close of each fiscal year.
Declining unreserved fund balances as a pementage of net
operafmg revenues; Unreserved fund balances of less than
10% of the County's total operating budget.
Obseroed Trend in Albemarle Count:
Since FY91, undesignated fund balances as a pement et'total
ncr operating revenues, have grown steadily, increasing from
13.1% in FY91 to 16.9% in F~95. (The large, 2.2% increase
in FY94 corresponds to the large operating surplus that also
occurred in that ftscal year.)
Additionally, between FY91 and FY95, unreserved fund
balances exceeded the required minimum of 10% of net
operating revenues, as prescribed by the County's Financial
Policies. (See above chart.)
These large fund balances have provided the County with a
sizeable "cushion" against emergency, unanticipated, or one-
time costs. Additionally, funds in excess of the required
mimmum have been used to fmanee "pay-as-you-go" capital
expend'rmras.
Warning Trend:
28
Liquidity
40O%
350% I
300%
250%
Cash & Short-Term Investments
as % of Current Liabilities
200%
'1991
1992 1993 1994 1995
Fiscal Year
Description:
"Liquidity" is synonymous with cash position. Cash position,
which includes cash on hand, cash in the bank, and other
assets easily converted to cash, determines a government's
ability to pay its short term obligations, The immediate effect
of insufficiant liquidity is insolvency-- the inability to pay
bills, Low or declining liquidity may indicate that a
government has over-extended itself in the long nm.
To measure liquidity, a standard measure of liquidity called
the "quick ratio" is used. It takes cash, short-term investments
and accounts receivable as a percentage of current liabilities
(defined as short-term debt, ctrrrent portion of long-term debt.
accounts payable, accrued and other liabilities.) If the quick
ratio is less than one, the entity is facing liquidity problems. If
it is greater than one. the entity has cash reserves (has excess
liquidity.)
Warning Trend:
'A decreasing amount of cash and short-term investments as a
percentage of current liabilities,
Observed Trend in Albemarle Count?d:
Between FY91 and FY95, Albemarle County enjcyed a very
favorable year-and cash position. Since FY91, the County has
held more than twice the amount of cash and short-term
investments as current liabilities at the end of each fiscal year.
Between FY91 and FY95, the quick ratio rose fi.om 211% in
FYgl to 270% in FY95.
These percentages indicate a healthy amount of cash reserves
for use as a cushion against unexpected financial pressures.
29
Debt &
Unfunded Liabilities
Debt & Unfunded Liability Indicators
What are Debt and Unfunded Liabilities and Why are They Important?
Debt:
When a government borrows money, ir incurs debt. Debt can be an effective way to finance capital improvements or even out short-
term revenue flows, but ks misuse can cause serious financial problems.
Generally, there are two types of debt: short and long-term debt. In short-term borrowing, a government incurs a debt that it must
repay within twelve months. Governments often use short-term debt to finance uneven cash flows. However, if revenue shortfalls or
over-expanditures prevent payment of the short-term debt during the year in which it was borrowed, this debt may be "rolled over"
into the next year. In this event, the government may choose to repay the loan and then re-borrow the money, or To pay only the
interest un the loan end not the principal. This practice effectively tums short-term debt into long-term debt and, if it continues over
a number of years, and the amount of outstanding debt increases, may be an indication that debt is being used to finance operating
deficits.
Long-term debt is debt with a maturity of more than one year after the date of issuance. The most common forms of long-term debt
are general obligation, special assessment and revenue bonds. Gencral Obligation bonds are bonds backed by the full faith, credit end
taxing power of the government. Revenue bonds are backed only by the revenues fi-om a specific enterprise or project, such as a
hospital or toll-rend. Special assessment bonds are bonds financed by special charges levied on specific properties within a special
assessment disirict.
Under ideal circumstances, a local government's debt: 1) should be proportional to the size and the rate of growth of the tax base; 2)
should not extend past the useful life of the facilities that it finances; 3) should not be used to balance the operating budget; 4) should
nor require re-payment schedules that place excessive burdens on operating expenditures, end 5) should not be so high as to
jeopardize a government's credit rating. Even a temporary inability to repay debt can damage a government's credit rating, which in
mm can increase the cost of futare borrowing or worse.
Unfunded Liabilities:
Unfunded liabilities are similar to long-term debt in that they represent a legal commiunent to pay at some point in the future.
However, an unfunded liability is simply a liability that has been incurred during the current or a prior year, which does not have to be
paid until a furore year, and for which reserves have not been set aside.
Two major types of tmfundad liabilities are pension liability end employee leave (uncompensated absences) liability. Unfunded
liabilities have the potential to significantly effect a government's financial condition because they usually don't show up in ordinary
financial records in a way that makes their impact easy m assess, and because they tend to accumulate slowly overtime. These types
of liabilities may grow unnoticed until they create sever problems.
What are Albemarle County's Debt Policies?
Recognizing the impommce of underlying debt to overall financial condition, Albemarle County has established a number of debt-
related financial policies:
1. The County will not fund current operations from the proceeds of borrowed funds.
2. The County will manage its financial resources in a way that prevents borrowing to meet working capital needs.
3. The County will confine long-term borrowing and capital leases to capital improvements or projects that cannot be financed
by current revenues.
31
5.
6.
7.
To the extent feesinle, any year that the debt service payment falls below its current level, those savings will be used to
fmence one-time capital needs.
When the County finances capital improvements or other projects through bonds or capital leases, it will repay the debt
within a period not to exceed the expected useful life of the projects.
The County's debt offering documents will provide full and complete public disclosure of fman¢ial condition and opemung
results and other pertinent credit information in compliance with municipal finance industry standards for similar issues.
Recognizing the importance of underlying debt to its overall financial condition, the County will set target debt ratios, which
will be calculated annually and included in the annual review of fiscal l~ends:
· Net Debt per capita should remain under $1.000.
· Net Debt as a pementage of the estimated market value of taxable property should not exceed 2%.
· The ratio of debt service expenditures to General Fund revenues should not exceed 10%.
Wind Develop Debt and Unfunded Liability Indicators?
By developing and.monitoring indicators of debt and unfunded liabilities, the County can assess whether current debt levels are
affordable given existing resource levels, and whether unfunded liabilities are at a manageable level.
The debt indicators included in this section are:
Indicator Description Page
Current Liabilities Current liabilities as a percentage of net operating revenues. 34
Long-Term Debt Long-term debt as a percentage of assessed valuation 35
Per Capita Long-Term Debt Long-term debt per County resident. 36
Defu Service Net direct debt service as a percentage of General Fund net operating revenues. 37
The unfunded liability indicator included in this section is:
Indicator Description Page
Accumulated Leave The dollar amount of accumulated (unpaid) employee vacation and sick leave, per 38
employee,
Other unfunded liability indicators relating to pension liability have not been developed.
What is Albemarle County's Debt and Unfunded Liability Profile?
Albemarle County has a relatively henlthy debt profile. Between FY91 and FY95, currant liabilities, as a percent of net operating
revenues, declined -- a signal that the County has been able to finance its short-term obligations from current revenues instead of
borrowed funds. (Of course, short-term debt may be used to 'smooth' uneven cash flows during the year.) Additionally, long-term
debt has stayed within tho County's ability to pay: both long-term debt and the associated debt service payments have remained
within the target ratios set in fue Financial Policies. Since FYgl. net direct bonded long-term debt has amounted to less than one
percent of the estimated market value of taxable property - well below the 2% maximum established by the Board of Supervisors.
32
(In FY97, the ratio of long-term debt to assessed valuation is .79%)~ Additionally, net long-t~'m debt per capita has rema'med below
the $1,000 maximum. (Per capita long term debt in FY9? is $655.) Finally, the ratio of debt service expenditures to net General
Fund revenues has not exceeded the 10% cap. (In FY97, debt service represents 8.5% of net Gencra~ Fund revenues.)
However, it is clear that long-term debt levels are increasing. Based on future projects approved as part ofthe FY 96/97 - 00/0!
Capital Improvement Plan, long-term debt, as a percentage of assessed valuation, ~s expected to grow by .2% to .97% in FY0 I. Per
capita net direct bonded long-term debt is projected to rise to $943. Debt Service, as a percentage of net General Fond revenues is
projected to grow to a high of 9.2% in FY99. Although debt and debt service costs are projected to remain within the target ratios,
care must be exercised when designing future capital plans, to avoid incurring debt beyond that which is manageable, given the
projected tax base and existing tax rates.
However, unlike per capita long-term debt, the level of accumulated uncompensated absences par employee (an unfunded liability for
the County) has decreased since FY91. Between FY91 and FY95, the total value of unused vacation and sick leave per FTE decIined
from $777 in FY91 to $703 in FY95. Most of this decrease was due to a change in personnel policy which no longer permitted
employees to receive payment for unused sick leave upon termination or retirement.
33
8.2%
~ 8.0%
"~ 7.8%
0
7.6%
7.4%
as % of Net Operating Revenue
I
1991
I I
1992 1993 1994
RscalYear
Net Operating Revenues Exclude Split Billing and Revenue Sharing revenues
!
1995
Descriptiom
Current liabilities are defined as the sum of all liabilities due
at the end of the year, including short-term debt, current
portion of long-term debt, all accounts payable, accrued
liabilities and other current liabilities.
The ratio of current liabilities to net operating revenues is an
unportant indicator of potential liquidity and future operating
budget health. Although short-term debt may be used to
'smooth' uneven cash flows, an increasing amount of short-
term debt outstanding at the end of successive years may
signal liquidity problems, deficit spending or both.
Warning Trend:
Increasing current liabilities at thc end of the year as a
p~rcentage of net operating revenues.
Observed Trend in Albemarle County:
Since FY91, the ratio of current liabilities to net operating
revenues have fallen, despite slight upswings in FY92 and
FY95. In FYgl, current liabilities as a percentage of net
operating revenues were 8%. By FY97, this percentage had
dropped to 7.60/0.
34
Long-Term Debt
2.50%
Net Direct Bonded Long-Term Debt as % of Assessed Valuation
(School Bonds & Literary Fund Loans)
2.00%
0.50%
Debt to A~e~sed Value C~p (2%)
0.94% 0.93% 0.96% 0.97%
199l 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Fiscal Year
Estimated Mariet Valuesfor FY 96 - 0t Based on projected 5% Increase.
Description:
Net direct debt is bonded debt for which the local government
has pledged its full faith and credit, net of any self-supporting
debt, i.e., bonded debt that the government has pledged to
repay from a source other than general tax revenues.
An increase in net direct bonded debt as a percentage of
assessed valuation can signal a diminishing ab'flity to repay on
the part of the government - especially for localities such as
Albemarle that depend heavily on property tax revenues to
repay its debts.
Recognizing the importance of underlying debt to its overall
financial condition, Albemarle County requires that net long-
term debt not exceed 2% of the estimated market value of
taxable property.
Warning Trend:
An increasing amount of net direct bonded long-term debt as a
percentage of assessed valuation; a ratio of debt to assessed
o
valuation in excess of 2
Observed Trend in Albemarle Countnj:
Between FY91 and FY97, long-term debt as a percentage of
th0 estimated market value of taxable property has remained
relatively constant at about .79% (average) -- well below the
2% maximum.
Based on projects approved as part of the County's FY 96/97
00/01 Capital Improvement Program. the ratio of long-term
debt to assessed value is expected to rise hy .18% to .97% in
FY01. Almost all of this increase is due to projected
borrowing for the new Monticello High School in FY98.
However, despite this increase, the ratio of debt to assessed
valuation is expected to remain well below the 2% cap.
35,
Per Capita Long-Term Debt
$1,200
Maximum Long-Term Debt Per Capita ($1,000)
$800
$600 5
$400 ~
$200
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Fiscal Year
Description:
Another indicator of a government's ability to repay its long-
term debt is the ratio of net direct bonded lung-term debt to
population, i.e., the amount of net lung-term debt per capita.
Under ideal circumstances, the level of net debt per capita
should remain constant over time, since, as the population
increases, capital needs end, therefore, long-term debt should
increase proporQunataly. If debt levels are increasing faster
than the population is growing, the level ofleng-term debt per
person is increasing. If, on thc other hand, population is
growing faster than long-term debt levels, per capita debt
would be falling. Increasing levals of per capita long-turin
debt may be a signal that debt levels are reaching or
exceeding the government's ability to pay.
Recognizing thc importance of underlying debt to its overall
f'mancial condition, Albemarle County has established that
net per capita debt should remain under $1,000.
Warning Trend:
An increasing level of net direct bonded long-term debt per
capita; per capita long-term debt in excess of $1,000.
Observed Trend in Albemarle County:
Since FY91, per capita net direct bonded lung-term debt has
increased, although the level of debt per capita has remained
below the $1,000 maximum. In FY91, per capita long~term
debt was $363. By FY97, the level of long-term debt per
capita had grown to $655 (un increase of 80.4%.) The large
increases in per capita debt during FY92 and FY94
correspond to the construction of Agnor-Hurt Elementary and
Sutherland Middle Schools.
Based un the new capital projects approved as part of the FY
1996/97 - 2000/01 Capital Improvement Program, the level of
per capita debt is expected to continue to rise through the end
of the century -- increasing by 44% to approximately $943 in
FY01. Most of this increase is due to borrowing for the new
Monticello High School in FY98. However. as the above
graph reveals, per capita debt is projected to remain below the
$1,000 cap established in the f'mencial policies.
36
Debt Service
11%
10%
9%
8%
7%
6%
as % of Net General Fund Revenues
Debt Service Maximum (10%)
~'-,,,9.1% 9.2% 9.1%
7.1~Z'
1991 1992
I I I I I I I I I
1993 1994 1995 1996 1997 1998 1999 2000 2001
Rscal Year
Net General Fund revenuesexclude Split Billing and Revenue Shadng receipt&
Descriptiom
Debt Service is thc amount of principal and interest that a
local government must pay each year on its net direct bonded
long-term debt. Debt service is a fixed cost paid out of the
operating budget.
Increasing debt service payments add to the government's
obligations, thereby reducing expenditure flexibility. They
also may indicate excessive debt or financial strain on the pan
of the government, since debt service is a major component of
a local government's fixed costs.
Recognizing the importance of underlying debt to its overall
financial condition. Albemarle County has established that the
ratio of debt service expenditures to General Fund revenues
should not exceed 10%.
Warning Trend:
An increasing net direct debt service as a percentage of net
operating revenues; proportional debt service in excess of
10% of General Fund revenues.
Observed Trend in Albemarle. County:
Between FYgl and FY97. debt service payments as a
percentage of net operating revenues, have increased,
although they have remained below the 10% cap established
in the Financial Policies. In FYgl, debt service amountedto
approximately 6.5% of General Fund nec operating revenues.
By FY97, debt service payments had risen to a high of 9.6%
in FY95, and then settled down again to 8.5% in FY97.
Based on projects approved as part of the County's FY 96/97 -
00/01 Capital Improvement Program, debt service is expected
to again rise to a high of 9~2% of General Fund net operating
revenues in FY99, and then fall to a new level of 8.6% by
FY01.
The large increases in debt service in FY93 and FY95, and the
large projected increase in FY99 correspond to additional
leng-term debt incurred for the construction of the Agnor-
Hurt Elementary, Sutherland Middle and the new Monticello
High Schools, respectively.
37
Accumulated Employee Leave
800
780
760
740
720
700
680
,777
1991
~ $710
$703
1992 1993 1994 1995
Fiscal Year
Description:
Accumulated employee leave represents the total unused
vacation and sick leave of all County employees at the end of
each fiscal year. Although uncompensated absences initially
represent the oppommity cost of work not having been
completed, these benefits become a real cost when paid during
employment or upon termination or retirement. (Unlike
unused vacation days, however, unused sick leave balances
are forfeited at the end of employment and may not be paid
om.)
This indicator divides the total constant dollar value of
cumulative, uncompensated absences by the number of Full-
Time Equivalent positions ("FTE's") to get the total value of
unused vacation and sick leave per full-time employee.
Increasing leave balances per capita may indicate that
vacation and sick policies are conltibuting m an excessive
increase in unfunded liability.
Warning Trend:
An increasing cost ofunnsed vacation and sick leave days per
FTE (in constant dollars.)
Observed Trend in Albemarle County:
Between FY91 and FY95, the total constant dollar value of
unused vacation and sick leave days per employee (FTE)
declined from $777 in FY91 to $703 in FY97. The majority
of this decFme occurred between FY91 and FY92, when the
constant dollar value of total uncompensated absences per
FTE dropped from $777 to $687, reflecting a change in
parsounel policy that no longer permacal employees to
receive payment for unused sick leave upon retirement or
termination.
38
Capital Plant
[
Capital Plant Indicators
What is "Capital Plant" and Why is it Important?
Most ora local government's wealth is invested in its physical assets or "capital plant" - slreets, buildings, land, utility networks,
and/or equipment. Deferring maintenance of such assets can create safety hazards and potential liability risks, can result in a loss of
operating efficiency, can depress property values, can increase the cost of repairs (particularly if maintenance of a project has been
delayed for so long ~at it must be replaced entirely), and can create the potential for a huge future financial obligation ifa backlog of
maintanance and repair needs persists. Additionally, the ara'activeness of the community as a place to live or to do business may
decline.
What are Albemarle County's Capital Budget and Asset Maintenance, Replacement and
Improvement Policies?
Capital Budget Policie~
1. The County will approve an annual capital budget in accordance with an adopted Capital Improvements Program.
2. The Board of Supervisors will accept recommendations fi-om the Planning Commission for the five-year Capital
Improvements Program that are consistent with identified needs in the adopted Comprehensive Plan and Capital Facilities
Plan.
3. The County will coordinate the development of the capital budget with the development of the operating budget so that
future operating costs, including annual debt service, associated with new capital projects will be projected and included in
operating budget forecasts.
4. Emphasis will continue to be placed upon a viable level of"pay-as-yun-go" capital construction to fulfill needs in a Board
approved Capital Improvement Program.
5. The County believes in funding a significant portion of capital improvements on a cash basis and will, therefore, increase
ineremantally the percentage of its capital improvements financed by current revenues. The County's goal will be to dedicate
a minimum of 3% of the annual General Fund revenues allocated to the County's operating budget to the Capital
Improvement Program.
6. Financing plans for the five-year capital program will be developed based upon a five-year forecast of revenues and
expenditures coordinated by a capital improvements technical management team.
7. The CoUnty will begin to inventory capital facilities and estimate remaining nseful life and replacement costs.
8. Upon completion of any capital project, remain'rog appropriated funds in that project will be returned to the undesignated
capital project fund. Any transfer of remaining funds fi-om one project to another must be approved by the Board of
Supervisors.
9. The County will develop a Memorandum of Understanding with the School Board regarding the developrsant and
coordination of the County's Capital Improvement Program, which will address the following areas: a) plan for required
cap/Iai improvements; b) debt ratio targets; c) debt issuance schedules.
Asset Maintenance, Replacement and Enhancement Polices:
The County will maintain a system for maintenance, replacement and enhancement of the County's and School Divisiun's physical
plant. This system will protect the County's capital investment and minimize future maintenance and replacement costs:
1. The operating budget will provide for minor and preventive maintenance.
Within the Capital Improvement Program, the County will maintain a Capital Plant and Equipment
Maintenance/Replacemant Schedule, which will provide a five-year estimate of the funds necessary to provide for the
structural, site, major machanical/electrical rehabilitation or replacement to the County and School physical plant requiring a
total expenditure of $10,000 or more with a useful life often years or more.
To provide for the adequate maintenance of the County's capital plant and equipmem, the County intends to increase the
percentage of maintenance/repair and replacement capital improvements financed with current revenues. (Unofficially, the
~rgct amount of increase is $500,000 after every re-assessment year.)
Why Develop Capital Plant Indicators?
Capital plant indicators are important for assessing how well the capital assets of a community are maintained. The indicators
included in this section show the relative amount of capital outlay devoted to maintaining and/or adding to the existing capital stock.
as well as the operating budget expanditores devoted to School Division capital and debt service, relative to total expenditures on
School needs.
The capital plant indicators include in this section are:
Indicator Description Page
Capital Outlay Amount of capital outlay fi.om the operating funds as a percent of General Fund net 41
operating revenues.
Expenditures on School Deb; Total expenditures on School Division debt and capital needs, relative to total
and Capital Needs expenditures on Schools.
42
What is Albemarle County's Capital Plant Profile?
Albemarle County is committed to maintaining, replacing, and enhancing its physical plant both to protect its capital investments and
to minimize futore maintenance and repair costs. Part of this commitment includes increased funding for maintenance/repair projects
fi.om current revenues, as opposed to borrowed funds. Since FY gl, the level of capital outlay, as a percentage of General Fund
operating revenues (net of revenue sharing revenues), has increased dramatically, from 1,9% to 3.3% in FY97. With the addition of
the one-time proceeds fi.om the split billing of personal property taxes in FY91 and real property taxes in FY96, all of which has been
earmarked for School capital needs, capital outlay jumps to 17.6°/6 of General Fund net operating revenues in FY97.
The County's commitment to protecting and enhancing its physical plant also is illustrated by the ongoing operating cost of providing
for School Division capital needs, which typically constitutathelargestportionofannanlcapitalbudgets. BetweenFY91 andFY97,
debt service payments on the School Division's long-term debt obligations rose from ~3,4 million in FYgl to 5.8 million in FY97 (in
1990 constunt dollars) -- an increase of72%. Capital untlay also inereased significantly. BetweenFY91 andFY97, theopemting
budget transfer to the School capital fund increased by 100% to nearly $571,454, (in 1990 constant dollars and net of split billing
funds for School capital projects.) With the addition of split billing revenues for Scimol capital projects in FY97, the level of capital
outlay jumped to $14.6 million in FY97. Togcther, expenditures on debt service and capital untlay, as a percantage of total
expenditures on Schools, have increased fi.om 5.8% in FY91 to 7.7°/6 in FY97 (or 24.6% with split billing in FY97.)
40
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
Capital Outlay
as % of Net General Fund Revenues
3.6%
/ ~'"~2.9% 3.0%
2.0% ~
:.9%
f I I I t I I I I I I I
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Fiscal Year
Net General Fund operating revenues exclude Split Billing & Revenue Sharing receipt[
Description:
"Capital outlay" is defined as operating budget funds used for
capital expenditures. These funds are mainly used to finance
repair and maintenance expenditures on existing assets with
current revenues instead of borrowed funds, although capital
outlay also may be used to help f'mance the purchase or
construction of new facilities or equipment.
This indicator relates capital outlay (net of Split Billing funds)
to net General Fund net operating mvanues. Under ideal
circumstances, this ratio should remain constant over tune,
However, a persistent decline (of three or more years) can
indicate that capital needs are being deferred, which can result
in the use of inefficient or obsolete equipment.
Recogniz'mg the importance of funding capital improvements
on a cash basis, particularly maintenance end replacement
projects, Albemarle County's Financial Policies establish that:
The County will dedicate a minimum of 3% of the
annual General Fund revenues allocated to the
County's operating budget to the Capital
Improvement Program (CIP); and that
The County will increase the percentage of
maintenance/repair and replacement capital
improvements financed with current revenues.
Warning Trend:
A persistent decline in capital outlay from the General Fund as
a percentage of net General Fund operating revenues; Capital
outlay of less than 3% of General Fund operating revenues.
Observed Trend in Albemarle County:
The annual operating budget transfer to the Capital
Improvement Program (net of Split Blllinglh as a percentage
of General Fund net operating revenues, has almost doubled
since FYgl. In FYgl, the capital outlay from the General
Fund was $1,000,000, or 1.9% of net operating revenues. By
FY97, the n'ansfer had increased to almost $2.7 million, or
3.3% of operations. Given planned future increases of
$500,000 following every re-assessment year, the annual
capital Iransfer is expected to be $3.5 million in FY02. 2.9%
of projected General Fund net operating revenues.
Since FY95, the County has met its established goal of
dedicating a minimum of 3% of budgeted General Fund
operating revenues to the CIP. However, since actual
revenue receipts tend to exceed budgeted projections, the
actual ratio of capital transfer to General Fund revenues fell to
2.3% in FY95. Based on revised expenditure end revenue
estimates for FY96, and FY97 budgeted dollars, capitol outlay
is expected to exceed the 3% target for FY96 and FY97.
41
School Debt & Capital Outlay
as % Total Expenditures on Schools
30%
25%
20%
15%
10%
5%
~ 0%
14.92%
10.24% 9.75~
8,67% .,
I I I I I I I
1991 1992 1993 1994 1995 1996 1997
Rscal Year
Total expenditureson Schoolsinclude General Operations Debt Service, Capital Outlay
(including Split Billing), and use of Grant Fund&
Descriptiorc
School Division capital needs constitute a large portion of
annual capital budgets. In FY97, School Division projects
totaled $23,154,385, or 91% of ali County capital projects.
The majority of these projects are financed by borrowed
funds, which are repaid gradually through annual debt service
paymenm These payments cover interest and principal on the
School Division's inng-tarm debt, and are expenditures of the
General Fund operating budget. However, School projects
also are funded in part by capital outlay from the General
Fund. This capital outlay primarily funds maintenance and
replacement projects, but may be used to fund other capital
projects as well.
The combined costs of debt service payments on School
Division long-term debt plus capital outlay for School
projects, as a percenuage of total expenditures for School
needs, is an indicator of the ongoing operating budget costs of
funding School capital needs.
A rapid increase in School debt service and capital outlay, as a
percent of total expenditures on schools, may be a signal that
annual .School Division capital budgets have placed an
excessive burden on the operating budget, eSPecially since
debt service is a fixed cost. 3. rapid decrease may signal that
School capital facilities are not being adequately maintained
or that the existing capital stock is insuffieiant to meet the
needs of the community.
Warning Trend:
A rapid increase or decrease in School debt service and capital
outlay, as a percentage of total School Division expenditures.
Observed Trend in Albemarle County:
Since FY91, the combined costs of debt service payments and
eepital outlay for School projects have risen steafffly.
Between FYgl and FY9~, expenditures on debt service and
capital outlay grew from $3.4 million, or 6% of total
expenditures on Schools, to $24 million (25%). The majority
of this growth is due to increased debt service payments,
which have grown by about 72% (in constant dollars) since
FYgl. By conWast, School capital outlay (excluding split
billing) grew in real terms by only 15.7% between FY92 and
FY97. With SplitBilling, capital outlay is 17.6% in FY97.
The large increases in FY92 and FY97 coincide with the
construction of Agnorq-Iurt Elementary and the new
Monticello High School. respectively. These fac'ffities were
Fmancad both by borrowed funds and the use of one-time
property tax revenues resulting from the split billing of
personal property taxes in FY91 [$5.1 million) and real
property taxes in FY96 ($16.5 million). The increased debt
service and use of split billing revenues are reflected in the
chart above.
42
Profile
Community Profile
What Defines Community Profile and Why is it Important?
In the same way that the tax base determines a community's ability to generate revenues, the economic and demographic
characteristics of a community shape its demand for services. In fact, changes in community needs and resources are related in a
continuous cycle of cause and effect. For example, a decrease in population may lowar the demand for housing, causinga
corresponding decline in the market value of housing, which in turn, reduces property tax revenues. However, since it is not always
possible for a government to balance declIning revenueswith equivalent reductions in expenditures, the government may be forced to
raise property taxes to make up for lost revenues, thereby placing an even greater burden on the remaining population. As economic
conditions decline, the community becomes a less attractive place to live, and as a result, the population may decline further.
Why Develop Economic and Demographic Indicators?
The economic and demographic characteristics of Albemarle County have shaped, and will continue to influence, the County's
£mancial condition. The economic and demographic indicators included in this section describe some of these characteristics. The
indicators included in this section are:
Indicator
Population Growth
Median Age
Enrollment Growth
Personal Income Per Capita
Unemployment Rate
Descr~vtion
Population growth of County residents.
Families in Poverty
Changes in Property Value
Market Value of New
Development
Business Activity
Median age of County population.
School enrollment growth (Kindergarten-12).
Per Capita Personal Income (in constant dollars.)
Ratio of unemployed workers to total potential work force in Albemarle, 49
Charlottesville, the State of Virginia and the Nation aa a whole.
County families living at or below the poverty level, as a pereenmge of total families. 50
Changes in property values as a percentage of the prior year property value. 51
Market value of new development es a percanmge of total new development. 52
Local sales tax revenues as a percentage of total net operating revenues.
Page
45
46
47
48
53
Albemarle County Profile:
Albemarle County is a vibrant, growing community with a young and middle-aged population, rising personal incomes per capita, a
strong employment base and a robust business sector. These demographic characteristics have shaped, and will continue to shape the
demand for services in the County.
Since 1990, the population of Albemarle has increased from 69,500 residents in FY91 to a projected 76,932 residents in FY97, an
increase of uearly 11%. During this period, the population has grown relatively smoothly and steadily, averaging about 1.9% each
year - a trend which is expected to continue into the next century, albeit at a slightly slower rate (about 1.1°A, if current conditions
persist.) School enrollment also has increased smoothly and steadily since FY91, at an average rate of about 2.4% per year. If current
conditions persist, school enrollment growth is projected to continue in this manner into the next century, although at a slightly slower
43
average growth rote of about 1.3%. Not surprisingly, tbe pereentage of new development that is residential in the County has been
increasing also. Since the mid 1980's, the market value of new residential development, as a percentage of the value of total new
development, has increased from 75% to 86% -- an average annual increase of about 1.3%.
Albemarle is also a relativaly young community - nenrly halfofallresidents areunder 30 year of age. Only 15% of residents are
over 60 years of age. However, the fastest growing segment of the population has been, and will continue to be, the 40-60 and 65+
age groups. By FY 2010, the 40-60 population is expected to have grown by 60% over FYgl, and the 60+ group is expected to have
inereased by 88%. (By con~rast, the number of people trader the age of 20 is expected to have grown by 22%, while the population
aged 20-40 is expected to have grown by only 4%.)
Since the early 1990's real, per capita personal incomes have increased, and the unemployment rote has remained consistently low.
Real personal income per capita has increased from a figure of $15,694 in FYgl to an estimated $17,734 in FY97 -- an increase of
almost 1.4% per. Additionally, Albemarle has enjoyed a low unemployment rate, relative to the City of Charlottesville, the State of
Virginia and the nation as a whole. Since the mid-1980's, tbe County's unemployment rate has remained relatively staady -- at abeut
2-3%/year (except during the recession of the early 1990's, when unemployment rates increased nationwide.) Albemarle's
unemployment rate also has been typically lower than the rates in the City of Charlottesville, across the State of Virginia as a whole,
and in the National as a whole.
Property values also have been on the rise. The values of residential and commercial property in the County have increased annually
since FY86. However, the growlh rote of residential and commercial property values has slowed since the mid 1980's, from about a
5-6% increase over the prior year in FY97 to only a level (0%) growth rate in FY95 (fiscal non-reassessment years.)
Finally, business activity in the County has picked up since the early 1990's. In FY91, sales tax revenues accounted for about 6% of
net operating revenues. By FY97, that percentage had increased to 6.6%.
Given the inter-relationships between demographic and economic factors end revenues and expenditure growth, it is likely hat the
rising populations, increasing property values, growing personal incomes, low unemployment and su~ung business sector have
contributed to the favorable financial of the County. As evident in the first chapter, net operating revenues have been increasing,
despite reductions in both the real property and personal property tax rates. However, the growing population, mereasing numbers of
school children have put pressure on County government to meet the demands of growth, while maintaining current service levels,
particularly in the area of education.
Population Growth
90.000
80.000
70,000
60,000
50,000
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
Fiscal Year
Descriptiom
Population growth is an important determinant of financial
condition because sudden changes in population size can have
an adverse impact on a local government's expenditure and
revenue profile,
Expenditures may increase ff a sudden increase in population
requires higher levels of service and/or additional capital outlay.
A decline in population may appear to relieve the pressure on
expenditures, because the population requiring serv~cas is
smaller. However, in practice, local governments raay be unable
to raake proportionate reductions in expenditures for a variety of
reasons. First, fixed costs such as debt service, pensmns, and
governmental mandates must be paid regardless of population
size. Second, if the out migration is composed of middle- and
upper-income households, then those remaining in the
community are likely to be the poor and the aged, who rely most
heavily on govemmant services.
Additionally, population decline can have a negative effect an
revenues, where the greater the decline, die more adverse die
effects on employment, income, housing, and business activity.
Warning Trends:
A rapid change in population size,
Observed Trend in Albemarle County:
Since the early 1980's, the population of Albemarle County has
grown smoothly and steadily, averaging a little over 2% per
year. (The most intensive population growth during this period
occurred between 1988-1991 and between 1993-1995, when
growth rates approached or exceeded 3°Ydyear.) Population
growth since FY91 has bean slightly less rapid, averaging about
1.9%/year.
If current conditions continue to exist, analysts predict that this
pattern of smooth, steady growth will continue into the. next
century, albeit at a slightly slower rate. By FY02, the population
of Albemarle County is expected to reach approximately 80,188,
an increase of 4.2% over FY97. Between FY97 and FY02, the
annual population growth rate is expected to slow to about 1%
annually.
45
Median Age
4O
30
2O
10
~' 31.6 31.6 31.6 31.6 31.6 31.7 31.7 31.7
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Fiscal Year
Description:
This indicator shows the median (middle) age of the population
in Albemarle County over time. A high median age of fifty or
more indicates that a community is comprised primarily of
senior citizens or older families without children.
This indicator is important because evidence suggests that an
aging population, and an increase in the number of senior
citizens residing in a community, may depress revenue growth
and increase the level of governmental expenditures. For
example, revenue growth may slow if incomes, which for many
seniom take the form of social security and pension payments,
do not grow at the same rate as the general economy. Moreover,
senior citizens often have full or partial exemption fi.om property
rexes and user charges. Finally, sales tax revenues may mpar off
since older persons tend to spend less money than younger
persons. Additionally, expenditures on services may increase
as the number of senior residents grows, since elderly citizens
tend to require a more expensive mix of services, especially in
the area of health and welfare.
However, an aging population may have the opposite effect of
boosting revenues and reducing expenditures, particularly if the
increasing median age is caused by a drop in the number of
families with young children, since older families reduce the
need for school, recreation, and related programs.
Warning Trends:
An increasing median age of the population
Obse~ed Trend in Albemarle County:
Since FY86. the median age of the population has increased by
approximately 9.7% fi.om 28.9 years in FY86 to 31.7 years in
FY97. However, since FYgl the median age of the population
has remained relatively steady at approximately 31 years of age.
As the table below illustrates, Albemarle is a relatively youthful
community. In FY9?, about 28% of the population is under 20
years of age. and another 31% is between 2040 years of age.
Only 15% of the community, is over 60 years of age.
However, since FY91, the fastest growing age groups have been
the 40-60 and 60+ populations. By 2010, the 40-60 population
is expected to have grown by more than 60%, while the 60+
population is expected to have increased by about 88%. (By
conuast, the number of people under 20 years of age is expected
to have grown by 22%, while the population of residems
between 2040 years of age is expected to have grown by only
4%.)
Ag~C'',rm~n FY 1991 FY 1997 FY 2(3C~ FY 2010
0-19 t9.325 21.589 22.510 23,581
20-39 24,807 23,609 23,094 25.717
~ 14,746 19.616 21,619 23,602
60+ 9,162 11.077 11.858 17,248
A? C',roun FY?l-?7 FYgl-O0 FY91-?O
O-19 11.72% 16.48% 22.02%
20-39 -4.83% -6.91% 3.67,%
40-60 33.03% 46.61% 60.06%
60+ 20.90% 29.43% 88.26%
46
School Enrollment (K-12)
13,000
12,000
11,000
10,000
9.000
8.000
1987 1988 19891990 19911992 1993 19941995 19961997 1998 19992090 20012002
Rscal Year
Description:
This indicator shows actual and projected public school
enrollment in the County for grades Kindergarten ("K") - 12,
from FY97 to FY02.
Since expenditures on education account for nearly 70% of the
total County budget in FY97, changes in enrollment can have a
g~gnificent impact on the expenditm-e profile of a coromunily, lu
general, enrollment growth requires ever increasing expenditures
on education. Sharp increases, however, may require
expenditures that eXceed available resources without the addition
of new sources of revenue, efficiency gains or reductions in other
areas. Although declining enrollment may relieve some of the
pressure on expenditures, governments may not be able to
produce corresponding reductions in expenses, due to the
presence of f'med costs in the budget.
Warning Trends:
A significant increase m enrolled pupils.
Observed Trend d in Albemarle County:
Since lm[87, school enrollment has increased by approximately
27%. rising fi.om 8,962 in 1987 To 11.360 in 1997. During this
period, the rate of increase has been relatively steady, averaging
about 2.4°/dyear, with the exception of FY91, when enrollment
growth nearly doubled to 4.7%. (The level growth rote in FY92
is attributed to the recessionary hiring freeze at State agencies
and the University of Virginia in 1991, which reduced in
migration to the County.) Enrollment Growth rates are depicted
in the chart below.
ffcurrent conditions persist, enrollment is expected to continue
growing at this slow, steady pace into the next century, albeit at
a slightly slower rate. By FY02, the student body of Albemarle
County is expected to be 12, 143. The average annual increase
between FY97 and FY02 is predicted to be about 1.3%.
Enrollment Growth
47
Personal Income Per Capita
26~000
(in Constant Dollars 1990 = 100)
24,000
22,000
20,000
18,000
I I I I I I I I I I ! I
'991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
FscalYear
(Assumesa 1.73% real per capita annual growth rate after FY94 based on FY90-94 average,)
Description:
This indicatnr measures personal income per capita (in constant
dollars) for residents of Charlottesville and Albemarle. Real,
personal income per capita is one measure of a community's
ability to pay taxes: since the higher the per capita income, the
more proper~ tax, sales tax, income tax, and business tax
revenues the community can generare.
A decline in real per capita incomes may cause a drop in
consumer purchasing power and can provide advance notice that
businesses, especially in the retail sector, will suffer a decline
that can ripple through the rest of the local economy and depress
Warning Trends:
A decline in the level or growth rate of personal income per
capita (in constant dollars.)
Observed Trend in Albemarle County:
Real personal income per capita in the Charlottesville -
Albemarle area has grown stcadily since FY91. Between FY91
and FY97, real per capita incomes in the two localities grew at
an average of 1.73°/dyear, from $20,073 in FY91 to $22,974 in
FY97. This represents a total increase of 14.7% over the 6-year
period.
If real per capita incomes continue rise at the same average rate
of 1.74°/dyear (the annual rate of increase between FY90-FY94,)
then real per capita incomes in the Charlottesville-Albemarle
arca may reach $25,031 by FY02.
48
Unemployment Rate
8%
o
~ 4%
£ 2%
0%
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
Fiscal Year
.~_ Albemarle .-e- Charlottesville ~ Virginia ~ National
1996
Description:
The unemployment rare, or number of unemployed people
actively seeking work as a percentage of the total potential
workforca, is an indicator of the employment base of a
community. Additionally, since changes in the unemployment
rate are related to changes m personal income, the unemployment
rate also is an indicator of a community's ability to support its
bu~mass sector and a government's ability to generate revenues.
An incre~ing proportion of unemployed people in a community
may lead to declining personal incomes, and ultflnataly to slower
revenue growth. A declining employment rate, on the other
hand, may have a positive effect on personal incomes and.
ultimately, revenue receipm.
Warning Trend:
An increasing rate of loenl unemployment.
Observed Trend in Albemarle County:
Albemarle County's unemployment rote has remained relatively
steady s'mce FY86, at between 2-3O/dyear, with the exception of
the recessionary period of the early 1990's when unemployment
rates across the nation nearly doubled.
Additionally, unemployment rates in Albemarle County generally
has been lower than those in the City of Charlottesville, across
the State of Virginia, and in the Nation as a whole. Since the
mid 1980's, Albemarle's unemployment rate has been unifm'mly
lower than the State and national averages, and has been either
less than or equal to that oftbe City.
49
F ®le n '1"'1 ·
amllles in I'overty
0.4
0.3
0.2
0.1
0
as % of Total Families by Race
1970 1980
Year
[:z]White ~ Black
1990
Description:
This indicator illustrates the proportion of families living ar or
below the poverty threshold in Albemarle County, by race.
This indicator is important because an increase in the number of
families in poverty, as a percentage of total families, is a signal
of declining personal income, as well as an indicator of possible
future increases in the level and unit cost of assistance services,
particularly in the areas of health and welfare services.
Warning Trend:
An increasing proportion of poverty households.
Observed Trend in Albemarle County:
Although data is unavailable for calendar year 2000, the number
of families in povemd, as a percent of total families, by race, has
declined since 1970. This decline has been evident for both
white and black families in the area. The data below also shows
that, as a group, whites were more likely than blacks to leave
poverty in the 1970's, while relatively more blacks than whites
escaped poverty in the 1950's.
Percentage of Families in Poverty, 1970 - 1990:
FY White Black
1970 10.90% 30.80%
1980 5.50% 21.60%
1990 3.80% 13.30%
% Decrease White Black
1970 - 1980 -49.54% -29.87%
1980- 1990 -30.91% -38.43%
50
Property Values
Growth in Property Values: Residential & Commercial
as % Change over Prior Year (in Constant Dollars, 1990 = 100)
20%
15%
10%
-5%
1986 1988 1990 1992 1994 1996
Fiscal Year
.~. % hc. Residential -e- % Inc. Co.:,ercial
Descriptiom
This indicator measures ~e percenzage increase or decrease in
residential and enmmercial propert7 values f~om year to year.
Changes in property values are important since many local
governments, Y~ke Albemarle County, depend on property taxes
for a substantial porfiun of their revenues. This is especially u'ue
in communitie~ like Albemarle with a stable or fixed tax rate,
since in those areas, the higher the aggregate property value, the
greater the revenues em'ned.
Warning Trend:
Declining growth or a drop in the market value of residential,
commercial, or industrial property (in constant dollars.)
Observed Trend in Albemarle County:
~mce FY86, the value of resklantial and commercial property in
the County has increased annually (with the exception of FY93,
when residential property values declined and commercial
values were unchanged.)
The uneven, "up-and-down" growth rate corresponds to the
County's fiscal re, assessment cycle, with property values
mcreaffmg signifieunfly in the fiscal year following a re-
assessment, then slowing the following year. However, the
general orientation of ~rend lines tatted to the above data
indicates that since the late 1980% the rate of increase in the
value of both commercial and property has slowed. In FY91, the
percentage increase in residential property values over the prior
year was 4.9%, and the percentage increase in enmmereial
property values was 5.9%. By FY95, however, these respective
rates of increase had slowed to a nearly level (0%) growth rate.
5
Residential Development
9O%
85%
80%
75%
70% I
1986
I I I I I
1987 1988 1989 1990 1991
Rscal Year
I I I I
1992 1993 1994 1995
Description:
This indicator relates the market value of new residential
development to the total value of all new development.
Knowing the proportion of new development that is residential
is ~raporren! because the net cost of serving residential
development is typicallyhigher than the net cost of serving either
commercial or industrial development, since residential
development typically creates more expenditure demands then
revenue receipts. Conversely, commercial end industrial
development tend either to pay for themselves or result in
revenue surpluses. Although the impact of new residential
development on financial condition is best evaluated through
fiscal impact enalysis, this indicator may signal the extent to
which new development is likely to effect the fmencial resources
of a community.
Warning Trends:
An increasing market value of residential development as a
percentage of the market value of total new development.
52
Observed Trend in Albemarle County:
Since FY86, the value of new residential devalopmenr, as a
percentage of the value of total new development, has increased
from approximately 75% to nearly 86% (in FY95.)
The "up's" and "down's" in the trend line generally correspond
to upswings end downtams in the general economy that have
effected residential housing construction. (For example, the
downturn in FY91 corresponds to the recessionary period of the
early 1990's that bottomed out in 1991 end which depressed
housing starts.)
Business Activity
7.0%
6.8%
6.6%
6.4%
6.2%
6.0%
5.8%
1991
Local Option Sales Tax Revenues
as % of Total Net Operating Revenues
I I I I I
1992 1993 1994 1995 1996
Fiscal Year
Net Operating Revenues exclude Split Billing and Revenue Sharing.
I
1997
Description:
Local sales and use taxes are revenues received by the County
fi.om the I cent of the 4 ~ cents sales tax generated within the
County. The ratio of local sales tax revenues to total net
operating revenues is an indicator of the strength of business
activity in the community.
Increasing sales mx revenues, as a percent of net operating
revenues, nnply robust sales and a strong business sector. A
strong business sector typically has a favorable impac~ on
demographic and economic factors such as personal income,
property value, and the employment base. However, declining
sales tax revenues reflect weak business activity and a possible
decline in personal incomes, property values and employment.
Warning Trend:
A decline in business activity as measured by declining retail
sales tax revenues, as a percent of net operating revenues.
Observed Trend in Albemarle County:
Local option sales tax revenues, us a percent of net operating
revenues, have inereased steadily since FYgl. In that year, sales
tax revenues accounted for about 6% of net operating revenues,
or $4.7 million dollars. In FY97, these revenues represent 6.6%
of budgeted net operating revenues, or $7.7 miilion. These
receipts indicate growth in business activities in the County.
53
Appendix
Financial Management Policies
Approved by the Board of Supervisors
October, 1994
Statement of Purpose:
The County of Albemarle has a responsibility to its citizens m account for public funds, to manage its finances wisely, and to allocate
its resources efficientiy and effectively in order to provide the services desired by the public. The primary -objective of establishing
Financial Management Policies is to provide a framework within which sound financial decisions may be made for the long term
betterment and stability of Albcraarle County. This financial policy will provide these guidelines and goals to guide the f'mancial
practices of Albemarle County.
Policy Goals:
A fiscal policy that is adopted, adhered to, and regularly reviewad is recognized as ~ cornerstone of sound financial munagemanc
An effective fiscal policy should:
Insulate the County fi'om fiscal crises;
- Enhance the County's short term and long term financial credit ability by help'rog to achieve the highest credit rating and
bond rating as possible;
· Promote long term financial stability by establishing clear and consistent guidelines;
· Provide the total financial picture of the County rather than concentrating on single issue areas;
· Provide a link between long-range financial planning and current operations; and
· Provide a framework for measuring the fiscal impact of government services against established fiscal parameters and
guidelines.
Operating Budget Policies:
1. The annual budget will be prepared consistent with guidelines established by the Government Finance Of['lcers Association
and will annually seek the GFOA Distinguished Budget Presentation Award.
2. The budget must be structured so that the Board and the public can understand the relationship between revenues,
expenditures and the achievement of service objectives.
'3. The goal of the County is to fund all recurring expenditures with recurring revenues and to use non-recurring revenues only
for non-recurring expenses.
4. The County will maintain an updated fiscal impact model to assess the impact of new development on the future costs of
associated county services.
5. Utilizing the fiscal impact model, the County will develop and annually update a long range 0-5 year) f'mancial forecasting
55
10.
11.
system, which will incinde projections of revenues, expenditures, as well as future costs and financing of capital
improvements and other projects that are included in the capital budget
When revenue shortfalls are anticipated in a fiscal year, spending during the fiscal year must be reduced sufficiently to offset
current year shortfalls.
The County will prepare the capital improvement budget in conjunction with the development of thc operating budget, in
order to assure that the estimated costs and future impact ora capital project on the operating budget will be considered prior
to its inclusion in the CIP.
The County will develop and annually update a financial trend monitoring system which will examine fiscal trends f~om the
preceding 5 years. Where possible, trend indicators will be developed and wacked for specific elements of the County's fiseal
policy.
The County shall establish a Memorandum of Understanding with the School Board regarding the amount of annual general
fund support received each year, which has currently been established at approximately 60% of all new available local tax
revenues. Available revenues are revenues that can be used for County and School Division operations after any increases
in debt service, capital improvemem program funding, City of Charlottesville revenue sharing, and the Board reserve fund
have been funded. This guideline will be reviewed annually.
The operating budget preparation process is conducted to allow decisions to be made regarding anticipated resource levels
and expenditure requirements for the levels and types of services to be provided in the upcoming fiscal year. The following
budget proeeduras will insure the orderly and equitable appropriation of those resources:
Operating budget requests are initiated at the department level within target guidelines set by the County
Executive. Priorities ofresoorce allocation of divisions within a department are managed at the
department level, In formulating budget requests, priority will be given to maintaining the current level of
services. New services will be funded through identification of new resources or reallocation of existing
resources,
Proposed program expansions above existing service levels must be submitted as a budgetary increment
requiring detailed justification, Every proposed program expansion will be scrutinized on the basis of its
relationship to the health, safety and welfare of the community to include analysis of long term fiscal
impacts.
Proposed new programs must also be submitted as budgeua'y increments requiring detailed justification.
New programs will be evaluated on the same basis as program expansions to include analysis of long term
ftscal impacts.
Performance measurement and productivity indicators will be integrated into the budget process as
appropriate.
Thc operating budget is approved and appropriated by the County Board of Supervisors at the Deparlment level. Total
expenditures cannot exceed total appropriations of any department within the General Fund. Changes to the approved
operating budget during the fiscal year can be accomplished in any of the following ways:
Transfers between Divisions and line-item expenditures within a Department are approved by the Director
of Finance.
Transfers between expenditure accounts in different departments are approved by the Board of
Supervisors.
Encumbered funds for active purchase orders will be caused forward into the next fiscal year with the
approval ofthe Board of Supervisors.
56
The County Executive will require monthly budget reports, monthly financial statements, and annual
financial reports.
The Board of Supervisors will adopt the budget no later than April 30.
Capital Budget Policies:
[. The County will approve an annual capital budget in accordance with an adopted Capital Improvements Program.
The Board of Supervisors will accept recommendations from the Planning Commission for the five-year Capital
/mprovemants Program that are consistent with identifiedneeds in the adopted Comprehensive Plan and Capital Facilities
Plan.
The County will coordinate the development of the capital budget with the development of the operating budget so that
future operating costs, including annual debt service, associated with new capital projects will be projected and included in
operating budget forecasts.
4. Emphasis will centhme to be placed upon a viable level of "pay-as-you-go" capital construction to fulfill needs in a Board
approved Capital Improvement Program.
The County believes in funding a significant portion of capital improvements on a cash basis and will, therefore, increase
incrementally the percentage of its capital improvements financed by current revenues. The County's goal will be to
dedicate a minimum of 3% of the annual General Fund revanuas allocated to the County's operating budget to the Capital
Improvement Program.
Financing plans for the five-year capital program will be developedbased upon a five-year forecast of revenues and
expenditures coordinated by a capital improvements technical management team.
7. The County will begin to inventory capital facilities and estimate remaining useful life and replacement costs.
Upon completion of any capital project, remaining appropriated funds in that project will be returned to the undesignated
capital project fund. Any transfer of remaining funds from one project to another must be approved by the Board of
Supervisors
The County will develop a Memorandum of Understanding with the School Board regarding the development and
coordination of the County's Capital Improvement Program, which will address the following areas: a) plan for required
capital improvements; b) debt ratio targets; c) debt issuance schedules.
Asset Fvlaintenance, Replacement and Enhancement Polices:
The County will maintain a system for maintenance, replacement and enhancement of the County's and School Division's physical
plant. This system will protect the Counys capital investment and minImize future maintenance and replacement costs:
The operating budget will provide for minor and preventive maintenance;
Within the Capital Improvement Program, the County will maintain a Capital Plant and Equipment
Maimanance/Replacemant Schedule, which will provide a five-year estimate of the funds necessary To provide for the
structural, site, major mechanical/electrical rehabilitation or replacement to the County and School physical plant requiring
a total expenditure of $10.000 or more with a useful life of ten years or more.
57
To provide for the adequate maintenance of the County's capital plant and equipment, the County intends to increase the
percemage of mafutenance/repait and replacement capital improvemenls financed with current revenues.
Revenue Policies:
11.
12.
Reassessment of real property will be made eve~ two years.
The County will maintain sound appraisal procedures to keep property values current. The County's goal is to achieve an
annual assessment to sales ratio of at least 95% under current real estate market conditions, when the lanuaty 1st assessment
is compared to sales in the succeeding calendar year when that year is a reassessment year.
The County will malnta'm a diversified and stable revenue structure to shelter it fi.om short-term fluctuations in any one
The County will esfunate its annual revenues by an objective, analytical process.
The County will monitor all taxes to insure that they are eqffltably administered and collections are timely and accurale.
The County will follow an aggressive policy of collecting tax revenues. The annual level ofuncollected current property
taxes should not exceed 4% unless caused by conditions beyond the County's control.
To the extent poss~le, the County shall attempt to decrease the dependency on real estate rexes to finance the County's
operafmg budget.
The County will, where possible, institute user fees and charges for specialized programs and services in the county based
on benefits and/or privileges granted by the County or based on the cost of a particular service. Rates will be established to
recover operational as well as capital or debt service costs.
The County will regularly (at least every 3 years) review user fee charges and related expenditures to determine if
pre-established recovery goals are being met.
The County will identify all inter-governmental aid funffmg possibilities. However, before applying for or accepting either
State or Federal funding, the County will assess the merits of the program as if it were to be funded with local dollars. No
grant will be accepted that will incur management and raporting costs greater than the grant.
Local tax dollars will not be used to make up for losses of inter-governmental aid without first reviewing the program and
its medis as a budgetary increment,
The County will attempt to recover all allowable costs - both direct and indirect - associated with the administratien and
implementation of programs funded through inter-governmental aid. In the case of slate and federally mandated programs,
the County will attempt to obta'm full funding for the service from the governmental entity requh4mg that the service be
provided.
Investment Policies:
The County will invest County revenue to maximize the rate of return while maintain~mg a low level of risk. The County
will conduct an analysis of cash flow needs on an annual basis. Disbursements, collections, and deposits of ail funds will be
scheduled to insure max'unum cash availability and investment potential.
2. The Director of Finance shall maintain a system of internal controls for investments, which shall be documented in writing
58
and subject m review by the County's independent auditor.
ConU-actual consolidated banking services will be reviewed regularly.
Accountinb Auditing and Financial Reporting Policies:
The County will establish and maintain a high standard of accounting practices in conformance with the Uniform Financial
Repor~ng Manual of Virginia and Generally Accepted Accounting Principals (GAAP) for governmental entities as
promulgated by the Governmental Accounting Standards Board.
Regular monthly financial statements and annual financial reports will present a summary of financial activity by
governmental funds,
An independent firm of certified public accountants will perform an annual fmencial and compliance audit according m
generally accepted auditing standards; Government Auditing Standards issued by the Comptroller General of the United
States; and Specifications for Audit of Counties, Cities and Town issued by the Auditor of Public Accounts of the
Commonwealth of V'~rginia.
The County will maintain an audit committee comprised of the County Executive, or his designee, the Director of Finance
and two membem of the Board of Supervisors. The committee's responsibility will be to review the financial statements end
results of the independent audit and to communicate those results to the Board of SuperVisors.
5. Annually seek the GFOA Certificate of Achievement for Excellence in Reporting.
Debt Policies:
1. The County will not fund current operations from the proceeds of borrowed funds.
2. The CoanEv will manage its financial resources in a way that prevents borrowing to meet working capital needs.
3. The County will confine long-term borrowing and capital leases to capital improvements or projects that cannot be financed
4. To the extent feasible, uny year that the debt service payment falls below its c~t level, those savings will be used to
finance one-time capital needs.
5. When the County finances capital improvements or other projects through bonds or capital leases, it will repay the debt
within a period not to exceed the expected useful life of the projects.
6. The County's debt offering docments will provide full and complete public disclosure of finencial condition and operating
results and other pertinent credit information in compliance with municipal fmance industry standards for similar issues.
7. Recognizing the importance of underlying debt to its overall financial condition, the County will set target debt ratios,
which will be calculated annually and included in the annual review of fiscal trends:
Net Debt per capita should remain under $1,000.
Net Debts as a percentage of the estimated market value of taxable property should not exceed 2%.
The ratio of debt service expenditures as a percent of General Fund revenues should not exceed 10%.
59
Fund Balance or Reserve Policies:
t. The County does not intend, as a common practice, to use General Fund equity COndasignated Fund Balance) to finance
current operations. The Fund balance is built over years fi.om savings m provide the County with working capital to enable
it to finance unforeseen emergencies without borrowing.
2. The County will maintain a fund balance for cash liquidity purposes that will provide sufficient cash flow to minimize the
possibility of short term tax anticipaflon borrowing.
3. The undesignated fund balance, plus the designafun for fiscal cash liquidity purposes, at the close of each fiscal year should
be equal to no less than 10% of the County's total operating budget.
Funds in excess of the required undesignated fund balance may be considered to supplement "pay as you go" capital
expenditures or as additions to the fund balance.
60
C
Five-Year
Financial Forecast
Fiscal Years
1998-2002
Cap~a~ P ¢o~ec~s
FY ,~99019~ - ~9951cj6
S5
$0
F¥92
F¥cJB
F¥95
F¥94
F¥93Fisca[ year
· ~} Storm W ate~
General G°~'t; proiectS
Prepared
September; 1996
Table of Contents
Introduction 1
Executive Summary 2
Economic and Growth Assumptions 2
Difference Between Revenues & Expenditures (Growth & Inflation Costs Only): 4
FY91 - FY02
Difference Between Revenues & Expenditures (with Added Fixed Costs: 5
FYgl - FY02
Financial Overview: FY91 - FY96 7
Overview 7
History of Revenues & Expenditures: FY91 - FY96 7
History of Revenues & Expenditures with Capital Projects: FYgl - FY96 7
Revenues 8
History of Revenues: FYgl -FY96 8
Significant Changes in Revenues 8
Comparison of Local Revenue Sources 9
Expenditures 10
History of Actual Expenditures: FY91 - FY96 10
Per Capita/Constant Dollar History of Actual Expenditures: FY91 - FY96 10
Five-Year Expenditure Trend 11
Significant Changes in Expenditure Patterns 11
Financial Forecast: FY98 - FY02
Overview
15
15
Five-Year Projection of Revenues & Expenditures - Growth & Inflation 15
Costs Only: FY98 - FY02
Five-Year Projection of Revenues & Expenditures With Fixed & 16 -
Expanded Costs: FY98 - FY02
Revenue Projections 16
Five-Year Revenue Projections: FY98 - FY02 16 _
Projected Revenue Assumptions 17
Projected State School Revenues 18
Expenditure Projections 19
Five-Year Expenditure Projections (Growth & Inflation Costs Only): 19
FY 98-02 --
Projected County Expenditures (Including Baseline, Fixed & Expanded 19
Costs): FY98 - FY02
Breakdown of Projected County Expenditures (Including Baseline, Fixed 20
& Expanded Costs): FY98 - FY02 _
Projected Expenditure Assumptions 21
Projected Net Direct Debt Service 21
Projected Transfer to Capital Improvement Projects from General Fund 22
School Division Projected Expenditures 23
L
Appendix
Debt Service Schedule: FY 94-02
Reserve for Debt Service/Capital Projects
FY 98-02 Requested Capital Improvement Program Operating Budget
Impact
Revenues - Description of General Fund Revenue Sources
,%5
pro~eCtS ~ Sm;~ v~ateT
INTRODUCTION
This Five-Year Financial Forecast marks the frrst step in meeting one of the stated goals in the County's
Financial Management Policy, which is to "develop and annually update a long range (3-5) year financial
forecasting system, which will include projections of revenues and expenditures, as well a~ future costs and
financing of capital improvements and other projects that are included in the capital budget". In conjuncuon
with the FY 1990/91 - FY 1996/97 Financial Condition Evaluation, published separately, this report is designed
to help both the Board of Supervisors and the School Board take a comprehensive look at the financial condition
of the County, and to weigh the impact of future decisions and policies in light of projected revenues and
expenditures. Recognizing that five-year estimates, particularly in years four and five, are subject to
fluctuations in the economy and changing policies and needs, it is the intention that this report will be updated
on an annual basis.
This five-year forecast is also designed to provide information and guidance to a diverse set of interests. First, it
is hoped that it will provide a framework for County staff, both in general government and the school division,
to review current and future services in light of projected available revenues. Second. it can provide a
framework around which the Board of Supervisors and School Board may want to consider necessmy policy
changes that would affect the County's future financial picture. Third, it is hoped that this report will enable the
citizens of Albemarle to better understand future policy and budget decisions if they are more knowledgeable
about the fiaure of the County's resources.
This report is divided into four sections: an executive summary; a financial overview of the past five years
FY90~91- FY95/96; a financial overview of projected revenues and expenditures for the next five years FY97-
98 - FY01/02; and an Appendix.
September, 1996
Five-Year Financial Forecast
EXECUTIVE SUMMARY
This first long-range financial forecast for Albemarle County projects that desired expenditures will exceed
projected revenues for the first four years: FY 97/98, FY 98/99. FY 99/00 and FY 00/01, with the highest negative
imbalance occurring in FY 97/98 of $2.2 million, or 1.6% of revenues, The primary causes of imbalance are the
fixed costs and capital-related operating costs of the school division, and the declining school revenues from the
State. What the imbalance illustrates is that, unless some expenditures are deferred, or other external factors,
including more positive State revenue projections, cause the growth, rates for revenues and/or expenditures to
change, the County must decide how lo address this upcoming shortfall in the next four years. This forecast will
hopefully provide the framework around which financial policies, service levels and revenue sources may be
evaluated to address this irnbalance.
This forecast is based on several critical assumptions in the four major areas off economic characteristics, tax rates
and revenues, expenditures and demographic characteristics, and future expenditures.
Economic Characteristics
The rate of intlation is based on the National Annual Average CPIU figure, which represents the Consumer
Price Index (CPI) for all urban residents. The CPI index used in the projections is a combined average of
the estimates ofthe Congressional Budget Office (CBO) and the Office of Management and Budget (OMB).
The average rate of inflation for FY97 - FY02 is projected to be 2.75%, which is only slightly lower than
the historical average CPI for FY 1991-FY96 of 2.78%.
Tax Rates and Revenues
· Tax rates and tax structures are not expected to change.
The Department of Finance projects General Fund revenues based on a combination of historical trend
analysis and deterministic factors that show an average 7.9% increase in revenues over the next five years
compared to an average annual rate of 8.3% for the prior five year period. More detailed revenue
assumptions for specific revenues are found in the overview section.
The School Division's Finance Office projects revenues more determinlstically, based on the County's
estimated composite index, rather than relying upon a historical trend analysis. Projected revenues for the
next five years are estimated to increase by only 1.8% compared to the past five year state revenue average
annual increases of 4.5%.
Expenditure Assumptions
Baseline General Governmem operating expenditures are projected to increase by a Cost of Government
Index, which is a combined factor ofinfiation and population growth. For general government, the average
annual factor for the past five years has been 4.8%; for the next five year period, this factor is projected to
be 3.9% per year.
Baseline School Operations are projected to increase by a Cost of Education factor, which is a combined
factor of inflation and projected school enrollment growth. The average annual increase in the cost of
education from the prior five years was 5.2%; for the next five years this factor is projected to increase at
an average at 4.2% per year.
~Five-Year Financial Forecast
2 September, 1996
Expanded fixed costs for general government and the school division are based on required expenditures
or costs associated with capital projects in the proposed FY97/98 - FY01/02 Capital Improvement Program.
Debt service costs are determined by existing debt retirement schedules and bonded school division projects
in the approved Five-year Capital Improvement Program. Projected costs for debt service in this analysis.
however, are based on an annual contribution to the debt reserve fund, to eliminate large fluctuations in the
budget allocation.
Capital improvement expenditures for the next five years are based on the County's financial policy
guidelines of transferring no less than 3% of current General Fund revenues to the capital program.
Revenue Sharing projections from the Department of Finance are based on the projected fair market value
of all real estate and the 10% cap.
Demographic Characteristics
Estimated population growth between FY 96/97 and FY 99/00 is based on a calculated trend using the
Center for Public Service estimates of 75,500 in FY 95/96, 79,081 in FY 00/01 and 90,148 in FY 10/11,
resulting in an average annual increase of less than 1% through FY02. Although tlfis forecast uses the
official population projections, the historical trend in population growth over the past five years has been
approximately 2.06%.
School enrollment data is based on school division projections updated in July, 1996 which shows a 1.35%
average annual increase from FY98 to FY02 with the highest increases in the first two years
Economic & Growth Assumptions
FY 1996/97 - FY 2001/02
FY96/97 FY97/98 FY98/99 FY99/O0 FYO0/01 FY01/02 Inc.
hflat/on Ct) 2.18% 2.93% 2.91% 2.89% 2.87% 2.70%
Population Gmw~Ra~e 0.535% 0.94% 0.93% 0.92% 0.91% 1.40%
~ of Government 3.13% 3.87% 3.84% 3.81% 3.78% 4.10% 3,88%
$ choolGmwfft Ra~ 2.13% 1.95% 1.61% 1.71% 1.11% 0.35%
~at]a lion 2.18% 2.93% 2.91% 2.89% 2.87% 2.70%
Coat of F,.dtl~atdon 4.31% 4.88% 4.52% 4.60% 3.98% 3.05% 4.21%
['o pula ~ton Growth {2)
chool Enmllment 0t
76,210 76,932 77,649 78,365 79,081 80,18sI
11360 11381 11,767 11,968 12,101 12,1431
(1) Based onavemge ofCBOawiOMB eslima~es. FY02 based onavg2.7% grow~ over pfiorfive yearn,
(2) FY97-FY00 populationbased on Center f~r Public Service Estimates. FY01 &FY02 based on estimales
for 2000 and 2010 g~Ven constant growlt~
(31 School Enm~mentbased on8/96 projections faoom School Div/s~orr
September, 1996 3
Five-Year Financial Forecast
When these assumptions are applied to both revenue and expenditure data in the forecast, they produce an annual
revenue increase of 5.1% compared to a 6.6% rate over the past five years. The expenditure increase rate for the
past five years has been 6.8% compared to a projected expenditure rote for the next five years of 4.7%, although the
increased rate is higher in the first two years at 5.5% and 5.1%, respectively, compared to an average of 3.6% for
the last three year period
The chart below shows the actual difference between revenues and expenditures for the past five years (FY 91-
96), the current budget year and the projected difference for the next five years (FY 98-02) based on an
expenditure model that assumes only growth and inflation in both general government and the school division.
This model projects a surplus of revenues over expenditures for the next five years.
Difference Between Revenues & Expenditures
Growth and Inflation Only
FY 1990/91 - FY 2001/02
$10.000
$8.000
$6.000
= $4,000 $3,482 $3,348
0
~" $1 85952'101
e~ $2.000 $1,609 · $1,745
$411 $225
$0
($o)
($2,000)
$8,685
$5.647
FYgl FYg2 FYg$ FYg4 FYg5 FY96 FY97 FY98 FY99 FYO0 FY01 FY02
Five-Year Financial Forecast
4 September, 1996
The chart below shows the negative balance over the first three years when other known fixed costs and facility
related operating costs, i.e. new high school and northern elementary school, are added to the growth and
inflation assumptions. Adding the fixed costs associated with VRS payment, establishing a textbook and a bus
replacement fund and adding all the operating costs impacted by new capital facilities causes a shortfall of $2.t6
million in FY98, $2.13 in FY99, $0.876 million in FY00, and $0.393 million in FY01.
Difference Between Revenues & Expenditures
(Growth and Inflation with Added Fixed Costs)
FY 1990/91 - FY 2001/02
$4,000
$2,000
($2,000)
($4,000)
~ ~ 2'i94
1,609 1,859 2,101
861
B (393)
(876)
(2,160)(2,1,27)
I I I t t
FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FYO0 FY01 FY02
Fiscal Year
The primary reasons for a negative imbalance in the first three years are attributed to the continuing real dollar
loss of state revenues, but more specifically to the school division's initiation of the bus replacement fund, the
textbook fund, and the operating costs associated with the new high school, plus the mandated VRS COLA
payments for both the school division and general government.
September, 1996 5 Five-Year Financial Forecast
FY 91 -,96
FY ,,tggOIg'~ ' ,tgOSIg6 ~~
~:¥g~
~:~sCa~ear
~ Ge~erat Oo,~,t'
FINANCIAL FORECAST OVERVIEW
A VIEW OF PAST
Albemarle County has experienced healthy fmaneial growth over the past five years. Revenues have increased
by 7.04% on average, due mainly to increasing property values, new construction and a growing sales tax base.
Expenditures have increased at an annual average of 6.76%. Albemarle's healthy economy and resulting cash
revenues have allowed the County to meet annual expenditures without the use of fund balances. Each of the
past five years has seen a surplus of revenues over required expenditures with ail surpluses being returned to the
undesignated fund balance currently at approximately $13 million.
History of Revenues and Expenditures
FY 1990/91 - FY 1995-96
(in Thousands)
FY90/91 FY 91192 FY 92/93 FY 93194 FY 94/95 FY 95~96
Average
Annual
Growth
Revenues $80,94~ $84,760 $91,688 $98,394 $104,463 $113.702 7.04%
Expendflmes $80,530 $83399 $90,079 $94,912 $I02,603 $111,601 6.76%
Surplus $41~ $861 $1,609 $3,482 $1,859 $2,101
In addition to the operating revenues and expenditures shown above, there has been an increasing invesmaent m
infrastructure, particularly in new and expanded school facilities, which has significantly increased the County's
total expenditures. As evident in the chart below, adding annual capital costs to operating expenditures brings
the average annual increase in expenditures to approximately 8%. Capital projects have been financed through
growing transfer of ongoing revenues from the General Fund and increased debt financing through the Virginia
Public School Authority (VPSA) bonds.
History of Revenues and Expenditures With Capital Projects
FY 1990/91 - FY 1995-96
(in Thousands)
Ave ra ge
FYg0/91 FY 91/92 NY 92/93 FY 98/94 FY 94/95 FY 95/96 Growth
Revenues 80,941 84,760 91,688 98394 104,463 113,702 7.04%
Ope raiing Expenditme s 80~530 83,899 90,079 94,912 102,603 111,601 6.76%
CapitalPmje c~ 10,207 15,968 8383 13,171 5,804 19,631 49~7%
Total Expenditures 90,737 99.866 98,462 108,083 108,408 131,232 7.96%
September, 1996 7
Five-Year Financial Forecast
The table below shows growth in the major categories of local and intergovernmental revenues over the past
five years. Real estate taxes, which comprised 30% of the revenues in FY91 now constitute approximately 33%
of the revenue stream with the percent of personal property revenues increasing from 11.7% to 14.6% of total
revenues in FY96. Total local revenues comprised 63.4% of revenues in FY91 and 67,6% in FY96. While the
share of intergovernmental (state/federal) revenues has remained fairly constant for general government, school
intergovernmental revenues have decreased from 31.7% of the total budget in FY91 to 27.4% in FY96.
Intergovernmental revenues for general government have increased approximately 8% each year. compared to
approximately 4% per year for the school division.
History of Revenues
FY91 - FY96
(in Thousands)
Some of the significant changes in revenues are highlighted below:
Real Property Taxes
Real property taxes have shown a strong growth with an average annual increase of 8.8% with no increase in the
tax rate. Higher revenue increases of 15.5% in FY92, 9.2% in FY94 and 11.1% in FY 96 reflect the biennial
reassessment of property values which have inereased 22%, ll% and 5% respectively. The average annual
increase in new construction has been approximately $122 million, from a high of $141 million in 1990 to a
low of $75 million in 1993. The County' s growing reliance on real estate property taxes is reflected in the
increased percent of real property taxes to total revenues increasing from 30% in FYgl to almost 33% in FY96.
Personal Property
Personal property taxes have witnessed a strong growth of 11.7% over the past five years as a result of a healthy
economy in vehicle sales, plus a significant increase in the cost of vehicles during this fane period. The average
estimated value of a new vehicle increased 9.5% over the five-year period. Similar to real estate taxes, personal
property taxes have taken on a larger percent of the total revenue stream from approx'anately 11.7% in FY91 to
14.6% in FY96.
Sales Tax
The growth in sales tax revenues has been healthy in Albemarle, particularly in the retail and grocery industries,
as more of these businesses locate in the County. During this five-year period, several large franchise stores
have located in Albemarle, adding substantially to the total sales tax base, rather than simply transferring sales
Five-Year Financial Forecast
8 September, 1996
tax revenues from one retail outlet to another.
Other local taxes, which include utility taxes, Business, Professional, Occupational Licenses (BPOL), vehicle
license, recordation taxes and transient taxes have averaged approximately 4.6% annual growth, although the
higher growth rotes of 6% and 7% were seen in the first two years.
Other Local Revenues
Other local revenues, which consist of pcamits/fees, fines/forfeitures, rents, charges for services and recovered
costs from other entities, have been increased annually at an average rate of 4.2%. Ail categories of these
revenues have shown relatively weak increases and, if measured in constant dollars, would show only a .g2%
average annual increase.
Intergovernmental Revenues
State and Federal revenues for general government have shown an average increase of approximately 7.7%, the
largest increase being in social services. However, these increases reflect revenues for additional programs, as
well as several changes in the way state dollars are reimbursed to the County. Whereas the State formerly paid
program costs outside of the County budget, they now reinaburse the County for paying the upfrunt costs.
Therefore, this increase should not be seen as increased revenues, but simply funds matched by increased
expenditures. For local government, State revenues continue to comprise approximately 5% of the total
revenue stream
Imergovemmental revenues to the school division show an average increase of 4.1%, but they also reflect a
O O
smaller share of the total revenue stream from 31.7% in FY91 to 27.4 % in FY96.
The chart below reflects how Albemarle County compares with other Virginia counties and cities in the percent
of local revenues collected by various local taxes, charges and licenses.
Comparison of Local Revenue Sources
Albemarle County, Counties and Cities
Revenue Source Albemarle Counties Cities
Real Estate Taxes 4S,00% 50.00% 41.00%
Personal Property 21.72% 15.00% 11.00%
Sales Tax 9.56% 7.00% 8.00%
Business License 5.53% 3.65% 5.40%
Cha~ges for Services 1.00% 9.40% 8.80%
Utility Taxes 6.66% 3.54% 6.90%
Use of Money & Property 2.07% 1.95% 1.60%
Permits and Fees 1.02% 1.74% 0.90%
Motor Vehicle Licenses 1.59% 1.30% 1,20%
Transient Taxes 0.47% 0.48% 1.00%
Total Local 67.59% 65.00% 62.00%
State/Federal Revenues
32.41% 36.00% 39.00%
Note: More detailed descriptions of revenue sources are found in the Appendix.
September, 1996 9 Five-Year Financial Forecast
EXPENDITURES
Overall expenditures during the past five years have been less than the mount of revenues actually collected.
and less than the amounts budgeted each year with savings being returned to the general fund and school fund
balances. Actual expenditures have averaged 6.8% over the five year period.
History Of Actual Expenditures
FY1990/91 - FY1995/96
(in millions)
Avg
% TL % TL Annual
FY 91 FY91 FY 92 FY 93 FY 94 FY 95 FY 96 FY96 Increase
General Govt Oaerations 23.21% 19.8~t5 20.298 21.609 22.373 24.182 26.503 23.75% 7.25%
School Division Operat~ns 67.84% 54.634 55.232 58.542 6! 133 65.468 70,117 62.83% 5.14%
Capital Transfer 1.24% 1.000 1,000 1.273 1.519 1.643 2,728 2.44% 24.13%
Debt Servise 4.22% 3,399 4.092 5.229 5.567 6.836 6.957 6.23% 15.84%
DebyCaoita[ Reserve 0.00% 0 0 0 0 0 250 0.22%
Revenue Sharing 3.43% 2.802 3.277 3.426 4.319 4.475 5.050 4.53% 12.80%
Tota 100.00% 80,530 83.899 90,079 94.912 102.603 111.602 100.00% 6.76%
General govemmem operations have experienced an annual increase of 7.3% while school division expenditures
increased an average of 5% per year. While general government operations have remained at approximately
23% of the total budget during the five year period, school expenditures have decreased from approximately
68% of the budget to 63% of total expenditures. As the above chart indicates, the largest average percentage
increases overall have been in the capital transfer (24.1%), in the debt service (15.8%) and in the revenue
sharing paymem (12.8%.)
These changing expenditure patterns often are difficult to interpret without looking at the dual impact of
inflation and growth on the expenditure increases. The following chart reflects the actual dollar value of the
expenditures over the past five years, based on 1990 dollars divided by the yearly population.
History of Actual Expenditures Per Capita
(Constant Dollars, 1990 = 100)
FY 1990/91 - FY 1995/96
FY91 FY92 FY93 FY94
General Govt Operations $274 $283 $290 $284
School Division Operations $801 $771 $785 $775
Capital Transfer $15 $14 $17 $19
Debt Service $50 $57 $70 $71
Debt/Capital Reserve $0 $0 $0 $0
Revenue Sharing $41 $46 $46 $55
Total $t,181 $1,171 $1,208 $'l,203
Per Capita
FY 95 FY 96 $ Inc
$291 $306 $32
$788 $810 $8
$2O $31 $17
$82 $80 $30
$0 $3 $3
$54 $58 $17
$1,234 $1,288 $107
Avg.
Annual
Inc
$6
$2
$3
$6
$~
$3
$21
Five-Year Financial Forecast
10
September, 1996
The following chart shows the changing relationship between the major categories of expenditures:
Five-Year Expenditure Trend
S120.000
$100.000
$80,000
$60,000
$40,000
$20.000
$0
FY91 FY92
i C-enOperaflons
~Debt Service
FY93 FY g4 FY95
RscalYear
m School Operations ~Caff~alTransfer
r--IRevenueSharing
Other significant changes in expenditure patterns are highlighted below:
Personnel Costs
Expenditures for compensation and benefits for general government staff have increased by approximately 7.7%
per year, although that is inclusive of 51 new employees, increased overtime and overtime reimbursable
expenditures for both the police and sheriff's departments over the five-year period. Actual salary increases
from FYgl through FY96 have averaged approximately 3.8%, which includes all performance bonuses, vested
steps and scale adjustments. This mirrors the average CPI index of 3.8% forthe same five-year period. Of the 5
new employees, 40% were in the field of public safety.
O
Overall benefit costs for County employees increased by 8~ on average. The majority of this increase was
driven by health care costs, which averaged 18% per year over the five year period.
Purchased Services, which consist of professional services, maintenance and repair, cleaning, and printing and
binding with outside vendors increased on average by approximately 13% per year, from a total of $724,000 in
FY91 to $I.2 million in FY96.
Other Charges, which consist of electric, telephone and insurance costs, travel and all outside agency
contractsincluding the health department, City fire department, fire/rescue organizations, all social service
programs and non-profit agencies rose from $4.4 million in FY90/91 to $6.3 million in FY96 -- for a total
increase of approximately 42%, or approximately 8.4% per year.
Supplies, which consist of all office supplies, vehicle operations, copy supplies, educational and recreational
supplies, books/subscriptions and data processing supplies increased approximately 23%, but constitute a small
percentage of the budget for a total outlay of $686,700 in FY96.
September, 1996 11 Five-Year Financial Forecast
Joint Operations, which includes the ECC, the jail, juvenile court, the library and Darden Towe Park increased
from $1.7 million in FY91 to $2.36 million in FY96, or an average of 18% per year. The majority of the
increase was due to increased costs of the Regional Library and the start-up costs of the Northside Library.
Capital Outlay for new and replacement equipment rose by 12% over the 5-year period, or an average increase
of 2.5%o per year.
School Division
Although the school division's percent of total expenditures has decreased from 68% in FY91 to 63% in FY96,
total expenditures increased an average of 5.14% per year. The local transfer to the school division has shown
an average 6.4% annual increase and consistently averages 60% of all local revenues.
Capital Transfer
Based on growing infrastructure needs, the County's explicit policy in 1992 was to increase the current revenues
going to the Capital Improvement Program by approximately $500,000 in each reassessment year. The
historical $1 million transfer to the CIP iacreased to $2.75 million in FY96.
Capital Projects
FY 1990/91 - FY 1995/96
$25
$15
$!o
S5
$0
~91
iSchool ~o~cts
~92 ~93 ~94 ~95 ~96
Rscal Year
~ ~neral ~v~ ~o~c~s r-'3 ~orm Water
Debt Service
Debt service has grown an average of 16% per year, which reflects the ongoing utilization of VPSA bonds for
expanding and building school facilities. Since FY95, the annual transfer to debt service has been fairly stable at
approximately $7 million/year, although the actual bond principal and interest charges have been slightly lower.
From this savings, the reserve balance at the end of FY96 totals approximately $895,000, which will be used as
part of the debt service reserve for the $1.6 million debt service payment for the High School in FY99. For a
more detailed explanation of the Debt/Capital Reserve Fund, see Appendix.
Five-Year Financial Forecast
12 September, 1996
Debt/Capital Reserve
The debt/capital reserve fund was initiated with $250,000 in FY96 in anticipation of both the debt and capital
costs for the new high school scheduled to open in the fall of 1997, or FY98. The reserve fund will enable level
debt service allocations each year in order to avoid the wide swings in debt service payments that have occurred
in the past. These up and down payments have placed a burden on both general and school division operating
budgets in a large debt increase year. For example, in FY95 the annual increase in debt service was $1.3 million
for the new middle school, which reduced new operating revenues to the School Division by $780,000 (60¥05
and $520,000 (40%) from general government operations.
Revenue Sharing
Revenue Sharing saw an average increase of approximately 13% and now constitutes 4.5% of the County's
budget, compared to 3.5% in FY91.
September, 1996 13
Five-Year Financial Forecast
FY 98 -
. ~ ?roieCts
Lr ¸.
$25
$o
F¥92
~ Sct~ool Pr°iectS
F¥95
F~'93
Fiscat year
~ General GO~'t- proiectS ~ Storm
FYg6
water
A VIEW OF THE FUTURE
Albemnrle's five-year financial forecast begins with two scenarios: one that projects revenues and expenditures
based on the Board's implicit policy decision that initial budget allocations to both general government and
school operations stay within the limits of growth and inflation; and a second scenario that projects expenditures
based on rates of growth and inflation, plus known fixed costs and the expanded operating costs associated with
capital projects in the Capital Improvement Program, particularly the new high school.
In the first scenario presented below, revenues are projected to exceed expenditures in each year of the five year
plan, although refinements to both expenditures and revenues would be anticipated in the final two years.
Revenues are anticipated to increase by an average of 5.1% per year, while overall expenditures are expected to
increase by 3.8%. During this period, the budget surplus is expected to grow fxom $0.225 million in FY98, the
surplus will grow to $8.7 million in FY02.
Five Year Projection of Revenues and Expenditures
Growth & Inflation Costs Only
FY 1997/98 - FY 2001/02
F¥96197 II FY 97~98 FY' 98~99 FY 99~00 FY 00101
Revenues $118,404~ $122,786 $129,189 $136,490 $143,550
Expendilme s $118A04~ $122,561 $127,444 $133,143 $137,902
Sm'plus ($0]~ $225 $1,745 $3,348 $5.647
Avg.
Annual
FY 01102 Growth
$151,552 5.06%
$142~866 3.83%
$8.685
Revenue and expenditure growth in the above forecast is based on the following assumptions, which are critical
to the understanding of this forecast and its outcome:
County tax rates and collection procedures will not change.
Operating service levels are based on the current policy of funding CPI, plus growth.
No known fixed costs other than debt service, capital transfer, and revenue sharing are included.
School Division revenues are worst case, with an average annual increase of 1.8% for state/federal
revenues.
School Division growth is based on projected enrollment; general govemmem growth is based on
population estimates.
Projected inflation and growth rotes are accurate. (However, official population estimates ora 1%
growth rate seem iow based on the historical average annual growth rate of 2% over the past five years).
The second scenario, which is shown on the following page, includes the above growth and inflation, plus fixed
and expanded costs for both the school division and general government. Including these costs provides a more
realistic picture ofprojected expenditures for the next five years, although budget expenditures exceed revenues
by over $2 million dollars in both FY98 and FY99. The revenue shortfall is reduced to $0.876 in FY00 and
$0.393 in FY01. Revenues begin to show a surplus in FY02.
September. 1996 15
Five-Year Financial Forecast
Revenues
Expenditures
Surplus
Five;year Projection of Revenues and Expenditures
OVith Fixed and Expanded Costs)
FY 1997/98 - FY 2001/02
FY96197
$118,404
$118,404
FY 97198 FY 98~99 FY 99100 FY D010t FY01102
$122~86 $129289 $136,490 $143,550 $151,552
$124,946 $131~16 $137366 $143,942 $149S58
($2,160) ~2S27) 0876) ($393) $2~94
Average
Annual
Growth
5.06%
4.73 %
Specific cost information for this projected revenue/expenditure scenario is provided in the projected
expenditure section.
REVENUE PROJECTIONS
Overall, revenues in the next five years are projected to increase ar an average rate of 5.1% per year from $118.4
million in FY97 to $151.6 million in FY02. Real estate taxes continue to constitute the largest revenue source,
although their share of total revenues is projected to decrease from 32.3% in FY97 to 32.1% in FY02. P~rsonal
property taxes are projected to assume a relatively larger share of the revenue stream, as are other local taxes.
Intergovernmental revenues in the general fund are projected to grow at a much slower annual average rate of
1.7%. than during the prior five years when these revenues increased by 7.7% each year on average.
Intergovernmental revenues for the school division also are projected to grow at a slower rate of 1.8% per year,
compared to 4.5% between FYgl and FY96.
Five-year Revenue Projections
FY 1997/98 - FY 2001/02
Avg.
Five-Year Financial Forecast
16 September, 1996
The major assumptions behind these revenue projections are that:
Tax rates will not change.
· Historical trends and relationships will continue.
· The CPI indicators will prove to be correct.
Other assumptions behind the major revenue increases are:
Real Property Taxes
Projected real estate taxes are based on historical trends, although it is anticipated that real property values will
not continue to experience the significant increases of the past five years. Real property taxes should grow at an
average of about 5% per year over the next five-year period, based on increased reassessment values of 2% in
1997, 4% in 1999 and 6% in 2001 New construction is projected to be approximately $100 million per year.
Personal Property Taxes
Personal property taxes will continue to be a source ofincreas'mg revenue and are projected to grow by
approximately 12.7% per year. The volume of trade in vehicles is anticipated to increase by 5% with the sale o
new vehicles increas'mg by approximately 2% per year.
Sales Taxes
Sales tax revenues will continue to comprise approximately 6.5% of the total revenue stream with an annual
average increase of 5.1% State sales tax projections are 4.7% and 4.3% for FY97 and FY98 respectively.
Albemarle traditionally has been above the state average by .5% to .75%.
School Fund Revenues
School fund revenues are based on School Division Fiscal Services Office projections that anticipate only a
1.8% average annual increase in state, federal and other revenues during the next five-years -- an average of
$562,658 each year. This rate of increase, which is based on the School Division's prediction that the County's
composite index will increase in FY99 and FY01, is significantly lower than the average annual growth rate
fi.om the prior five year period of approximately 4.5%. In the Self-Sustaining Funds, only the Cafeteria Fund
revenues have been projected to increase.
A th/rd scenario, not formally presented here, would be to project school revenues based on an historical
average over the past five years, as opposed to the County's estimated composite index. The chart on the next
page shows projected school revenues for the worst case scenario of 1.8%, as well as school revenues if a
historical trend analysis were used for the projection. Based on this more positive scenario, intergovernmental
school revenues would increase by approximately $1.3 million per year or an average of 4% per year.
September, 1996 17
Five-Year Financial Forecast
$5
50
45
o 40
35
3O
25
Projected State School Revenues
Based on Historical Trend Analysis
FY 1997/98 - 2001/02
FY97
FY98 FY99 FYO0
Fscal Year
.~. School Projection -4- I~storical Trend
FY01 FY02
.~_ Local Transfer
Five-Year Financial Forecast
18
September, 1996
EXPENDITURE PROJECTIONS
The first expenditure projection scenario is based on the Board's implicit policy decision over the past several
years to keep operational increases within the rotes of growth and inflation. Under this scenario, general
govemmem operations are projected to increase by 3.9%/year and school division operations are projected to
grow by an average of 4.1% each year. The largest average annual increases are seen in revenue sharing (8.7%)
and the capital transfer (at 8.6%.)
Five-Year Expenditure Projections
Growth & Inflation Costs Only
FY97/98 - FY 01/02
% Total
FY97 FY97 FY98 FY 99 FY 00
General Govt OperatJons 24,85% 29.428 30.566 31,740 32.949
School Division Ooerations 56.73% 67,172 69.924 73.085 76.447 79.489
School Self-Sustaining Funds 5.35% 6,338 6.489 6.499 6.508 6.518
Capital Transfer 2.27% 2.687 2,500 2,900 3,200 3,500
Debt Service 5.88% 6.959 6.846 6.846 6.846 6.846
Debt/Capital Reserve 0.55% 650 400 400 450 450
Revenue Sharing 4.37% 5.171 5.835 5.975 6.742 6.904
Total 100.00% $t18,404 $122,561 $t27,444 $133,143 $137,902
Avg
% of Total Annual
FY01 FY02 FY02 Increase
34,195 35.597 24.92% 3.88%
81.914 57.34% 4.05%
6.269 4.39% -0.200/0
4.000 2.80% 8.61%
6.846 4.79% -0.33%
450 0.31% -5.19%
7.790 5.45% 8,66%
$142.866 100.00% 3.83%
The second scenario projects expenditures based on growth and inflation, plus known fixed costs and operating
expenditures linked to new and expanded capital facilities for both the school division and general governmen[
This scenario is presented in the chart below. A detailed breakdown of these expenditures is found on the
following page.
Projected County Expenditures
(Including Baseline, Fixed & Expanded Costs)
FY 1997/98 - FY 2001/02
Avg
Total % Total Annual
FY 97 FY97 FY 98 FY 99 FY 00 FY 0'1 FY 02 FY02 In crease
~~ : . -;. '--. . : o -. -~
School Division Operations 56.73% 67.172 71.371 76.060 79,577 83.524 86,102 57.73% 5.10%
School Self-Sustaining Fund 5.35% 6.338 6,489 6,499 6,508 6,518 6,269 4.20% -0.20%
Capital Transfer 2.27% 2.687 2,500 2.900 3.200 3.500 4.000 2.68% 8.61%
Debt Service 5.88% 6,959 6,846 6,846 6.846 6.846 6.846 4.59% -0,33%
Debt/Caoital Reserve 0.55% 650 400 400 450 450 450 0.30% -5.19%
Revenue Sharing 4.37% 5.171 5,835 5.975 6.742 6.904 7.790 5.22% 8.66%
Total 100.00% $118.404 $124.946 $131.316 $137,366 $143.942 $149.158 100.00% 4.73%
September, 1996 19 Five-Year Financial Forecast
Breakdown of Projected County Expenditures
(Including Baseline, Fixed & Expanded Costs)
FY 1997/98 - FY 2001/02
FY96/97
General Government
Prior Year Baseline Funding 29,427.520
~ali debt service
School Division Operations
;rior Year Baseline Funding 66.670,687
x cost of education
Baseline Funding 66.670.687
plus One-Time reven~s 501,495
Ca[~Ral p~ojeof operating costs
Textbook Fund
VRS Cola 3ayments
Bus ~eo~acernent Fund
Subtotal Projected School Expenditures 67,t72,182
29.427.520 30.666.365 31.740.113 3Z949.412 34.194.90(
103.67% 103.84% 103.61% 103.78% 104.10~
30.566.365 31,740.113 32.949.412 34.194.900 35.596,89C
444,310 634,335 729,465 11~42.862 1.739,82E
394.260 63.000 63,000 63.000 63.00C
1 O0.O00 300.000 300,000 300.000 300.00(
31,304.936 32.637,448 34,041.877 36,300.762 37,699,71E
;$2,077,41S S1,'t32,S13 $t,404,428 ~S2,'168,88G
'7.06% 3.59% 4~30% · 6,34% 4.14~;
66.670.687 69,924.217 73,084.791 76,446.692 79.489.27¢
t04.88% 104.52% 104,60% 103.98%
69.924.217 73,084.791 76.446.692 79,489.270 81.913,69~:
489.436 1.873.404 2.079.355 2,~63.235 3.102.261
200.000 209,040 213.656 227,358 234,293
326.400 460.403 400.711 411.846 419.80;
432.000 432.000 432.000 432.060 432.00(
71,37t,053 76,059,638 79,677,411 83,623,709 86,102,04~
6.845.880 6.845.880 6.545.880 6.845,860 6.845.8E
2.500.000 2.900.000 3.200.000 3.500.000 4.000.000:
400.000 400.000 450.000 450.000 450.000
5.855.100 5.974.752 6.742.268 6.903.631 7.790.471
15,S~0,980 1G,120,632 17~.38,148 17,699,5'11 19,086,3S1
1t4,247
0.74%
$118,456,968 $124,817,7t9 $130,857,436 $137,423,682 $142,868,t18
6A89A9~ 6.498.602 6,508.258 6,515.493 6.2~g.408;
Growth
3.98%
$1,233.874
$120.252
$260.000
$1,654,440
6.09%
4,21%
$3.048,601
$2,101,338
$217.869
72~,g24
4,33%
Five-Year Financial Forecast
20 September, 1996
Projected expenditure assumptions:
Personnel - Baseline personnel costs are anticipated to grow at a rate of approximately 4% to 5% or shghtly
over the rate of inflation.
Fringe benefits are not projected to increase significantly with the exception of the VRS pre-landed COLA
payments that begin in FY98 with an up-from payment of $394,260 (over the current year) and an additional
$60,000 for each fiscal year through FY 2008. Health insurance costs are not projected to increase substantially
and should stay well below the 18% average annual costs between FY91 and FY96.
Baseline operations, which include purchased services, other charges, supplies, joint operations, and capital
equipment are expected to increase at the rate of inflation and growth (an annual average of 3.88% for general
government.)
Capital-Related Operations are costs associated with new and expanded capital facilities in the proposed FY
1996/97 - FY 2000/01 Capital Improvement Program. Costs associated with general govemmem projects are
projected to add $5 million dollars in operating costs over the five year period. A majority of these costs are
associated with staffing new fire/rescue stations in the last two years of the five-year plan. A list of specific
operational costs associated with capital projects may be found in the Appendix.
Debt Service costs for the next five year period are based on projected VPSA Bond issues for school projects
approved in the FY97/98 - FY00/01 Capital Improvement Program. Debt service grows bom $6.8 million in
FY98 to $10.8 million in FY02 based on a 7% interest rare. Substantial savings may be realized if interast rates
remain as low as they have in the prior five years.
The debt service in the projected expenditure forecast uses the debt reserve conlribution for the five-year period
instead of the annual interest and principal costs in order to avoid the extreme fluctuations in funding levels,
particularly the projected $1.6 million annual increase in FY99 for the new high school. Therefore, the debt
service level remains constant at a $6.85 million. Actual debt service, shown below, remains just under the
maximum 10% cap of general fund revenues stipulated in the County's Financial Policies. A detailed schedule
of the bond issue and debt service payments are found in the Appendix.
Net Direct Debt Service
2OO2
September, 1996 21 Five-Year Financial Forecast
Capital Transfer costs were originally projected to increase by $500,000 in the massessment year of FY98,
FY00, and FY02 for a total transfer of $3.56 million in FY02. However, this original plan does not meet the
mirtimum target of 3% of general fund revenues set by the financial policies. Expanditure projections below
reflect tlfis policy decision with revised capital transfers of $2.5 million in FY98 increasing to $4 million in
FY02.
4.0%
Transfer to CIP Projects from General Fund
as % of General Ftmd Revenues
0.0%
t99~ 1992 1993 1994 1995 1996 1997 1999
Rscal Year
1999 2000 2001 2002
The FY98-FY02 Capital Improvement Program projects an increasing share of the capital transfer to be put into
the School's maintenance and repair line-items in order to adhere to the County's financial policy of increasing
current revenues instead of borrowed funds to pay for ongoing maintenance. The capital transfer for school
maintenance projects is projected to increase from $500,000 in FY98 to $1,000,000 in FY02.
Reserve Fund contributions are projected to remain at $400,000 for FY98 and FY99 and then increase to
$450,000 for FY00-FY02. A chart of the Debt Service Reserve Fund is included in the Appendix.
Revenue Sharing costs have been projected by the Department of Finance based on the anticipated rise in real
estam assessment vaiues, assuming the 10% cap. Based on the increased value ofreal estate from the FY95
reassessmenr, the FY 98 revenue sharing cost will be an additional $664,247.
School Transfer is projected to increase with the cost of education factor or the combined enrollment growth
and CPI. Assuming the local transfer is based on this factor, the average annual transfer increase will be
approximately 5.4% for the five year period FY98- FY02 or an average dollar increase of approximately $2
million.
Five-Year Financial Forecast
22 September, 1996
School Division Projected Expenditures
Operational increases for the School Division are based on combined enrollment growth and CPI, which varies
from a high of 4.9% in FY98 to a low of 3.05% in FY02, for an average annual baseline cost increase of 4.2%.
or $3 million dollars, each year.
Fixed/Expanded Costs: The following fixed and expanded costs reflect state policy decisions (VRS), operating
costs associated with new and expanded capital facilities, and replacement costs for buses and textbooks.
VRS. The School Division is mandated by the state to pay the VRS COLA increases beginning in FY98 with an
average annual payment of approximately $400,000.
Bus Replacement Fund. The School Division initiated a bus replacement fund with $200,000 in FY95/96 and
an FY 96/97 contribution of $357,288. To maintain the fund and replace buses on a 13 year cycle through FY
2008, the School Division estimates they will need an annual contribution of $432,000 to the current fund.
Textbook Replacement Fund. School Division staff estimate that an annual allocation of $200,000 is needed
to maintain a textbook replacement cycle. Textbook expenditure projections increase annually with growth and
inflation for the fiscal years FY99-FY02.
Capital Improvement Projects (operational costs)
Costs associated with new and expanded school facilities total approximately $10.5 million over the next five-
years, due mainly to the ongoing operating costs of the new high school and the proposed northern elementary
School planned to open in FY01. All operational costs for a new facility, i.e. custodians, principals,
heating/electricity, etc., not only repeat each year, but increase each year with inflation and growth. A detailed
list of CIP project operational costs is included in the Appendix.
September, 1996 23
Five-Year Financial Forecast
dix
~5
$0
FY 'llggofg~ ' ~gg51g6
FYgl
~E~ schOOl pro,eatS
FYg2
FYg6
F~g5
FYg4
~oenera% OO~'t-Prfflects ~St°rmWnter
ALBEMARLE COUNTY DEBT SERVICE FY1995196 TO FY 2020121 *
TOTAL. FISCAL CURRENT TOTAL INC PERCENT PROJECTED
BOND YEAR TOTAL DE_BT_ PRI{~R YR __ GEN' FUND GEN _OPER
11.900,0~'
450.000
7,850,000
5.884.485
15.988,120
6,176,680
9.220.700
7.634,7~.
44,904,778
1994 5,588,325 5.588.325
1995 6.829.572 6.829,572
1996 5,875.687 5.932,310
1997 5.583,117 6.458.493
1998 5.244.191 6.747,133
1999 4.991.766 8,372.488
2000 4,969.113 8,964.283
2001 4.447.077 g.388,413
2002 4,387.060 10.097.925
2003 3,804.086 9.341.582
2004 3.521,655 8.883,808
2005 3.426,840 6.611 ~674
2006 3,134.554 8.137,221
2007 2.922,967 7,745,723
2008 2,585,763 7,235.696
2009 2,449.021 6.926,110
2010 2,032,443 6.339.661
2011 1.161.947 5,293,282
2012 908.740 4.867.188
2013 158.361 3,943.910
2014 87.125 3.699.766
2015 3.439.732
2016 3.247.484
2017 2,695,840
2018 2.249.917
2019 1.317.937
2020 926,491
2,021 408.461
7.88% 70.958.787
1.241.247 9.02% 75.697.849
(897,262) 7.22% 82.159.486
526.183 7.38% 87,506,540
288,640 7.37% 91,519.454
1,625,355 8.60% 97,361.384
591.796 8.63% 103.891.773
424,130 8.51% 110.370.521
709,511 8.57% 117,840,969
(756,343) 7.55% 123,733.017
(457,775) 6.84% 129.919.668
272,134) 6.31% 136.415.652
474,453) 5.68% 143.236,434
391.499~ 5.15% 150,398.256
510,025) 4.58% 157.918,169
309,569) 4.18% 165.814.077
569,449) 3.64% 174,104.761
1,043,380) 2.90% 1~2.810.029
426,094) 2.54~/~ 191.950.521
(923,278) 1.96% 201.548.047
(244,145) 1.75% 211,625,450
(260,034) 1.55% 222,206,722
(192,249) 1.39% 233,317.058
(551,644) 1.10% 244,982,911
(445,923) 0.87% 257.232.057
(931,980) 0.49% 270.093,660
(389,447~ 0.33% 283,596.343
(520,029) 0,14% 297,778`260
· Assumes interest rate of 6.5% for FY96/97 and 7% for out years on 20.year fixed principal
* Total General Fund based on Dept. of Finance estimates through FY02. FY03 - FY21 based on 5% increase.
09/13/96 I BONDCAL.WK4
ANALYSIS
RESERVE FOR FUTURE CAPITAL PROJECTS/DEBT SERVICE
ACTIVITY
Projected Beginning Balance FY 96
FY 96 Addition
Transfer from operating budget 250,000
Savings from annual debt service cost 895,568
FY 97 Addition (transfer from General Fund) 450,000
Savings from budget transfer vs. actual debt 387,387
FY 97 Uses (increase in debt service over ~3rior year) 526,183
FY 98 Addition (from General Fund) 400,000
FY98 Uses 288,640
FY 99 Addition (from General Fund) 400,000
FY 99 Uses 1,625,355
FY 00 Addition (from General Fund) 450,000
FY00 Uses 591,796
FY01 Addition (from General Fund) 450,000
FY01 Uses 424,130
FY02 Addition (from General Fund) 450,000
FY02 Uses 709.511
CUMULATIVE
BALANCE
0
250,000
1,145,568
1,595,568
1,982,955
1,456,772
1,856,772
1,568,132
1,968,132
342,777
792,777
200,981
650,981
226,851
676,851
(32,660)
DEBTRES.WK4 , ~
09/01/96 I
FY 97/98 - 01/02 REQUESTED CAPITAL IMPROVEMENT PROGRAM -ALL FUNDS
CUMULATIVE OPERATING BUDGET IMPACT
TOTAL PRIOR ** FY 97-98 FY 9899 FY 99-00 FY 00-0~ FY 01-02 TOTAL
GENERAL GOVT. OPERATING BUDGET
CPI 102.93% 102.91% 10~.89% 102~7% 102.70%
Administration & Courts
Rev County Computer Upgrade 342.900 25.600 51,400 56.200 52.700 69.900 77.100 317.300
New Old Real Estate Building Improvements 5,553 1,800 1.852 1.902 5.553
New Old Jail I Old Jailor's House Improvements 5.553 1.800 1.852 1.g02 5,553
Rev C.O.B. Maintenance/ReDJacement 1.503 ~0 ~0 ~1 ~ 1~_5~
Subtotal Admin. & Courts 359,509 25,600 51,400 56,560 66,670 73,984 81,295 329,909
Public Safety
Rev Fire/RescueSuilding&EquipmentFand 3.360,474 74.500 174.750 236,250 399.500 1.221.250 1.254.224 3.285,974
Rev Police NCIC 2000 Upgraoe 1.670 400 412 423 435 1.670
New Police LAN Upgrade 5.000 5.0C0
New Transport Vehicle for Arrests 3.400 8,400 3,400
New Mobile Command Center 4.000 4,000 4,000
New ,~uveni~e Detention Facility 1.137.683 105.000 195.000 200.636 206.394 211.~c~6 1.032.683
Subtotal Public Safety 4,512,226 179.500 369,790 437,325 606.386 1,434,073 1,485,193 4,332.726
Highways & Transportation
Cont Route 29 North Landscaping 43.873 5.000 5,000 10.(X~0 10.289 10.584 38.873
Rev ivy Road Bike Lanes & Streeflights 24.440 5.000 9.720 9,720 24.440
Cont Greanbder/hydraulic Road Streetlights 7.200 3.600 3,600 7~.00
Cont Ivy Road Landscaping 99.500 49.750 4_9,750 ~9.500
Subtotal Highways & Transportation 175,013 5,000 8.000 10.000 15.289 73,654 63.070 170,013
Parks & Recreation
Cant Walnut Creek Park Improvements 5.040 680 3,680 ~80 5.040
Rev Scottsvitle Community Ctr. Outdoor Imp. 36.315 900 1.300 6,380 6,825 10.225 10.685 35.415
Rev R~vanna Graanway Access and Path 38.116 918 1.800 6.300 8.000 9.700 11,400 37.200
New Crozet Park Athletic Field Development 79.280 6.030 8.885 9,395 15.210 39.760 79,280
New SO. Atbemade Organization Park Dev. 21.435 6.825 7.125 7.485 21.435
Rev County Athletic Field Study / Developmenl 79.280 6.030 8.885 9.395 15.210 39.760 79,280
New Towe Lower Field Irrigation 500
Subtotal Parks & Recreation 259,968 1.818 15,160 30,450 41.120 61,150 110,270 258,150
Rev
School Projects
New High School Comm. Rec. Facilities
SUBTOTAL - GENERAL GOVERNMENT 5,302,717
SCHOOL DIVISION OPERATING BUDGET
CPI
New Cale Addition / Alterations 3.570
New High School Technology Education Labs 26.479
New Hollymead Gym / Restrooms 4.100
Cont New High School 6.359.048
Cont Administrative Technology (Schools) 167.700
Cont Instructional Technology (Schools) 2.144.880
;~e~ WAHS Building Renovations 26.700
Rev Henley Addition 190.120
:~ev Technology Education Labs 3,750
Rev ;~ed Hill Expansion 109.458
Rev Northern Area Elementary
Rev Stone Robinson Addition 70.540
Subtotal School Division 9,106,344
GRAND TOTAL 14,409,061
211,9t8 444,310 534,335 729,465 1,642,862 1,739,828 5,090,799
130.000
8,450
95.480
19,500
253,430
465,348
102.93% 102.91% 102.89% 102.87% 102.70%
3.570 3,570
5.000 5.146 5,294 5.446 5.593 26.479
4.100 4.100
148,186 1.442.314 1.503.4~6 1.546.640 1.588,406 5.229.048
19.850 25.850 31.850 37.850 43.850 159.250
279.500 352.200 415,700 471.450 530.550 2.04g 400
7.200 7.200
35,900 36.945 38.012 39.103 40.159 190,120
3.750 3,750
54,000 55.458 109,458
85.000 773.939 794.835 1.653,774
34.800 35.740 70.540
488A36 1,873,404 2,079,353 2,963,235 3,102,261 10,506,689
932,746 2,407,739 2,808,8t8 4,606,097 4,842,089 15,597,488
09110/96 ~ 5YRPLN2_WK4
Revenues
Local Revenues
General Property Taxes:
General property taxes are ad valorem taxes based on the assessed value of real and personal property owned
by businesses, individuals, and public service corporations. General property taxes and other local taxes
constitute the greatest source of local revenues, at approximately 60% of total General Fund revenues. Both
real and personal property are assessed at 100% valuation with tax rates being applied per $100 of assessed
value. Real property taxes increase due to the biennial real estate reassessment, plus new construction.
Increases in personal property reflect the increased number and purchase value of new vehicles.
General Property taxes consist of real estate, public service, personal property, mobile home, and machinery. &
tools taxes:
Real Property taxes are the largest source of revenue for the County and are based on the biennial
reassessment of real property and new construction and comprise approximately 40% of total general fund
revenues. In a non-reassessment year, revenue estimation is based on the current tax base, estimated roll back
taxes, and new construction. Estimating new construction for the upcoming year is difficnlt, since it is effected
by swings in the local economy and reai estate market. Projections are based on information from the County
Assessor, as well as information on building permit activity fi.om the Departments of Planning and Inspections.
Land use deferrals reduce available tax revenues by approximately 15% or a total of $5.5 million in FY96/97.
Tax relief exemptions for the elderly and disabled also reduce tax revenues, but only by approximately .4% or
$160,750 in FY96/97. The current tax rate levied on $100 of assessed value is $0.72. Since June, 1996, real
property taxes are required to be paid in two installments due on June 5 and December 5.
Public Service taxes are levied on the real estate and tangible personal property owned by railroads, utilities,
pipelines, and other businesses required to register with the State Corporation Commission (SCC).
Personal Property taxes are taxes levied on vehicles owned by both individuals and businesses as well as
other tangible property owned by businesses. Personal Property taxes comprise approximately 20% of General
Fund revenues. Fire/rescue volunteers receive an exemption based on the current average value of a volunteer's
vehicle of $5,700. The current tax rate levy on $100 of the property's fair market value is $4.28. Personal
property rexes are paid ia two installments due on June 5 and December 5.
Mobile home taxes are levied on mobile homes not classified as real estate that are owned by individuals and
businesses. Mobile Home taxes are projected to increase $2,400, or 3.7~, over the 1995/96 Budget.
Machinery & Tools taxes are levied on equipment used by manufacturers in the manufacturing process.
Other Local Taxes:
Other local taxes are excise taxes levied on the following categories of local transactions:
Sales and Use taxes are revenues received by the County from the 1 cent of the 4 1/2 cents state sales tax
generated with~ the County. Sales tax revenues have increased substantially in the past five years and
comprise approximately 9% of General Fund revenues.
Consumer Utility taxes are taxes collected by utility companies and remitted to the County from residential,
industrial, and commercial users of telephone, gas, and electric services. The tax rate on electric and telephone
service is 20% of the first $20. The commercial rate is t0% of the first $3,000 and 2% on the excess.
Business, Professional and Occupational License (BPOL) taxes are revenues collected from businesses,
professions, and occupations for the privilege of operating within the County. The mount of tax to be paid by
each business is calculated by multiplying the applicable tax rate by the business' gross receipts from the
previous calendar.
Utility Company License taxes are taxes collected from the public service corporations as a utility license for
the privilege of operating within the County.
Motor Vehicle Licenses are registration fees collected from vehicle owners for the privilege of operating
vehicles on the County highways. License decals are based on weight and range from $20-$25 for motor
vehicles and $6.50 - $25 for trailers. Motorcycle registrations cost $15.
Recordation Tax/Seller's Tax/Tax on Wills. The recordation tax is levied on transactions including the
recording of deeds, deeds of trust, mortgages, leases, contracts and agreements admitted to record by the Clerk
of the Circuit Court and remitted to the County.
Hotel and Motel Room rexes, often called transient or lodging taxes, are taxes assessed on the use of hotels,
motels, boarding houses and travel campgrounds by transients. The authority to levy these taxes varies greatly
among jurisdictions. Counties through general law have been limited to a maximum tax rate of 2%, although
1996 legislation now allows counties to levy a maximum transient mx rate of 5% if the increased revenues are
used to benefit tourism.
Permits and fees
Permits and fees are revenues collected from permits and privilege fees required by the County. The revenue
from permits is intended to offset the cost of inspeetious provided by the County after the permit is obtained.
The majority of permits are development-related.
Fines and Forfeitures
Fine and Forfeitures are revenues collected by the County for court and parking fines as a result of violations of
Coumy ordinances and regulations.
Revenue from the Use of Money and Property
Revenue from the use of money and property are revenues earned by the County from its investment of funds,
sale of surplus property, and rent of County facilities.
Charges for Services
Charges for services are revenues generated by the services of Connty personnel. Major categories include:
Excess Fees of Clerk are revenues collected by the local Clerk of Circuit Court and returned to the State. The
State keeps two-thirds of the revenues and returns one-third to the locality after deducting the mount needed to
operate the Clerk of Circuit Court's Office.
Sheriff's Fees are revenues collected by the Sheriffs Department for serving court papers and services
rendered by uniformed personnel. Increased service fees are balanced by a reimbursable overtime expense in
the Sheriffs budget.
Police Service Fees are revenues collected by the County when uniformed police are hired for security
purposes at private events or other functions.
Charges for Administration are administrative fees charged to agencies for carrying out the accounting,
personnel and purchasing functions of a fiscal agent. Albemarle serves as the fiscal agent for the Joint Security
Complex, Emergency Operations Center, Towe Park, and the Teen Center.
Charges for Parks and Recreation are revenues received by the County for participation in recreational
activities.
Charges for Sales and Services include revenues for the sale of publications, maps, and information reports
generated by County personnel.
Miscellaneous:
Miscellaneous revenue is revenue collected by the County that is not classified in any other category.
Payments in Lien of Taxes - Local:
Payments in lieu of taxes are payments received from tax exempt local organizations in lieu of property taxes.
Donations:
Donations are any additional monies that the County may receive from foundations, individuals, businesses and
are usually targeted for a specific purpose. Examples include a FY95/96 donation from Monticello for median
strip maintenance along Route 20 in Albemarle and a donation from Jefferson National Bank to partially fund
the expansion of the part-tirae Housing Counselor position.
Recovered Costs:
Recovered costs are reimbursements from other government entities or insurance companies for costs incurred
by the County on their behalf. Examples include E-911 revenues or the City's contribution m the Juvenile Court
and the Extension Service.
State Revenues
Payments in Lieu of Taxes:
Payments in lieu of taxes are payments received from the State for service charges incurred by the University
of Virginia in lieu of property rexes.
Non-Categorical Aid:
Non-categorical aid includes revenues which are raised by the State and shared with the County. The use of
such revenues is at the diseretion of the County. Ratios, rate and distribution formulas are subject to change
each year by the General Assembly. ABC revenue represents two-thirds of the profits of the Alcoholic
Beverage Control Commission and is distributed quarterly to counties based upon the 1990 census. Wine taxes
are also distributed based on the 1990 census; 44% of this revenue goes to the localities. Included in this
category is a 4% tax on leased vehicles.
Categorical Aid - State Shared Expenses:
Shared expenses includes revenues collected by the Commonwealth for the state's share of expenditures in
activities that are considered to be a state/local responsibility, This revenue represents the funding for the
Constitutional Officers and is determined by the Compensation Board on an annual basis.
State Categorical Aid:
State categorical aid includes revenues received from and designated by the Commonwealth for a specific use
by the County. Some revenues are received on a reimbursable basis and are principally provided through the
Department of Social Services. These funds cannot be used for any purposes other than what the State has so
designated.
Other revenues include: 599 police funds, Emergency Medical Service funds (distributed to rescue squads),
Fire Service Program Funds [distributed to volunteer fire departments), Recordation Tax (distributed for
~ransportation and/or education purposes), and specific purpose grants.
Federal Revenues
Payments In Lieu of Taxes:
The Federal Government makes payments in lieu of taxes to the County for tax-exempt park lands located
within the county. The total payment is approximately $11,000.
Categorical Aid:
Federal categorical aid includes revenues received from and designated by the Federal Government for a
specific use by the County. Such revenues usually are received on a reimbursable basis. Major categories
reflect federal grants to social service programs and the Moderate Rehabilitation funds from HUD.
Transfers:
Transfer paymems are amounts transferred to the General Fund Revenue Account for the purpose of balancing
the budgex. Transfer payments often consist of re-appropriations of encumbered and committed projects
carried over from the prior fiscal year and mid-year appropriations.
(sUO!l~) S
(suo!ll!l~l) S
(suo!ll!RI) $
suo!lt!~ $
suoHI!lN $
pun:l I~Jeue~)~o %
Charlotte Y. Humphris
Forrest R. Marshall. Jr.
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville, Virginia 22902-4596
(804~ 296-5843 FAX (804} 296-5800
September 18, 1996
Charles S. Martin
Walter F. Perkins
Sally H. Thomas
Mr. Wayne Campagna, Director
Emergency Operations Center
PO Box 911
Charlottesville, VA 22902
Dear Wayne:
At its meeting on September 16, 1996. the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the personnel at the Albemarle/
Charlottesville/University of Virginia Emergency Operations Center who worked beyond
the call of duty during and after Hurricane Fran.
Sincerely,
/ewc
· ~arey, Clerk.~C
Attachment
Printed on recycled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 McIntire Road
Charlottesville. Virginia 22902-4596
(804) 296~5843 FAX f804, 296-5800
September 18. 1996
Mrs. Angela Tucker
Resident Engineer
Department of Transportation
701 VDoT Way
Charlottesville, VA 22911
Dear Mrs. Tucker:
At its meeting on September 16, 1996, the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the personnel at the Virginia
Department of Transportation who worked beyond the call of duty during and after
Hurricane Fram
Sincerely,
ewc
Attachment
Printed on recFcled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville, Virginia 22902-4596
(804) 296~5843 FAX (804) 296-5800
September ][8, 1996
Charles S. Martin
Wal~er F. Perkins
Sall~ H. Thomas
Mr. Phil Sparks
Director of Media and Commtmlty Relations
1199 Fifth Street, SW
Charlottesville, VA 22902-6466
Dear Mr. Sparks:
At its meeting on September 16. 1996, the Board of Supervisors adopted the
attached resolution expressing its appreciation to al/the personnel at Virginia Power who
worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
Ella W. Carey, Clerk,~C C
/ewc
Attachment
Printed on recycled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
40l McIntire Road
Charlottesvi]Ie, Virginia 22902-4596
(804) 296-5843 FAX (804) 296-5800
September 18, 1996
Charles $. Martin
Walter F Perkins
Sally H. Thomas
Mr. Craig Hearn
Eariysville Volunteer Fire Co .mpany
2639 Frays Mills Road
Ruckersville, VA 22968
Dear Mr. Heam:
At its meeting on September 16, 1996, the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the members of the volunteer fire
companies who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
Attachment
Printed on recycled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville. Virginia 22902-4.596
(804) 296-5843 FAX (804) 296-5800
September 18, 1996
Charles S. Martin
Walter F. PerKins
Mr. Julian Taliaferro
City of Charlottesville Fire Department
203 Ridge Street
Charlottesville, VA 22902
Dear Mr. Taliaferro:
At its meeting on September 16, 1996. the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the members of the fire companies
who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
'ewc
Ella W. Carey, Clerk, C;C
Attachment
Printed on recycled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville. Virginia 22902-4596
(804) 296-$84~ FAX 1804] 296~5800
September 18, 1996
Charles S. Martin
Walter F. Perkins
Sally H. Thomas
Mr. DmSd Allen
North Garden Volunteer Fire Company
5627 Cove Garden Road
Covesville. VA 22931
Dear Mr. Allen:
At its meeting on September 16, ~996, the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the members of the volmqteer fire
companies who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
Ella W. Carey, ~C
/ewc
Attachment
Prinfed on recycled paper
David P. Bowerman
Char]otte Y. Humphrls
Forrest R. Marshall, Jr.
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville, Virginia 22902-4596
(804) 296-5843 FAX (804) 296-5800
September 18, 1996
Charles S. Martin
Waker F. Perkins
S~lh; H. Thomas
Mr. John Sweeney
Earlysville Volunteer Fire Company
3763 Eartysville Road
Earlysville. VA 22936
Dear Mr. Sweeney:
At its meeting on September 16. 1996, the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the members of the volunteer fire
companies who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
· ey, C ~
'ewc
Attachment
Printed on recycled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville, Virginia 22902-4596
(804) 296-5843 FAX (804) 296-5800
September 18, 1996
Charles S. Martin
WaSter F. Perkins
Sall~ H. Thomas
Mr. Pete Oprandy
Crozet Volunteer Fire Company
1230 Red Pine Court
Crozet, VA 22932
Dear Mr. Oprandy:
At its meeting on September 16, 1996. the Board of Supervisors adopted the
attached resolution expressing irs appreciation to all the members of the volunteer fire
companies who worked beyond the call of duty during and after Hurricane Fram.
Sincerely,
/ewc
Ella W. Carey, Clerk.
Attachment
Printed on recycled/~per
DaSd P. Boatman
Chark~te Y, Humphri~
Forrest R. Marshall. Jr.
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville, Virginia 22902-4596
(804) 296-5843 FAX ~804) 296-5800
September 18, 1996
Charles $. Martin
Walter F. Perkins
Sally H Thomas
Mr. Alan Norford
Stony Point Volunteer Fire Company
4024 Stony Point Pass
Keswick. VA 22947
Dear Mr. Norford:
At its meeting on September 16, 1996. the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the members of the volunteer fire
companies who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
/ewc
Ella W. Carey, C
Attachment
]Printed on recpcled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 M¢lntire Road
Charlottesville. Vkginia 22902-4596
(804) 296-584,3 FAX (8041 296-5800
September 18, 1996
Charles $. Martin
Walter F. Perkins
.Sa[l~ H. Thomas
Mr. Robie Via
Scottsville Volunteer Fire Company
Route 2. Box 336
Scottsville, VA 24590
Dear Mr. Via:
At its meeting on September 16, 1996, the Board of Su. perwsors adopted the
attached resolution expressing its appredation to all the members of the volunteer fire
companies who worked beyond the call of duty during and after Hurricane Fram
Sincerely,
/ewc
Attachment
Prin~ed on recpcled paper
David P. Bowerman
Charlotte Y. Humphris
Forrest R~ Marshall. Jr.
COUNTY OF ALBEMARLE
OlJice of Board of Supervisors
401 Mclntire Road
Charlottesville. Virginia 22902-4596
(804~ 296-5843 FAX (804~ 296-5800
September 18, 1996
Charles S. Martin
Walter F. Perkins
Sally H. Thomas
Mr. David Morris
Seminole Trail Volunteer Fire Company
2308 Wakefield Road
Charlottessville, VA 22901
Dear Mr. Morris:
At its meeting on September 16, 1996, the Board of Supervasors adopted the
attached resolution expressing irs appreciation to all the members of the volunteer fire
companies who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
/ewc
Attachment
Printed on recycled paper
COUNTY OF ALBEMARLE
Office of Board of,Supervisors
40I Mclnfire Road
Charlottesville. kr~rginia 22902-4596
~804) 296~5843 FAX (804 296-5800
September 18, 1996
Charles S. Marlin
Waller F. Perkins
Sally H. Thomas
Mr. Harry Cook
Charlottesville Volunteer Fire Company
1629 Mulberry Avenue
Charlottessville, VA 22901
Dear Mr. Cook:
At its meeting on September 16, 1996, the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the members of the volunteer fire
companies who worked beyond the call of duty during and after Httrricane Fran.
Sincerely,
/ewc
Attachment
Printed on recycled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville. Virginia 22902-4696
'804) 296-5843 FAX (804) 296-5800
September 18. 1996
CharIes S. Martin
Walter F. Perkins
Sail~ H. Thomas
Mr. Dayton Haugh
Charlottesville/Albemarle Rescue Squad
PO Box 1275
Charlottesville, VA 22902
Dear Mr. Haugh~
At its meeting on September 16, 199& the Board of Supervisors adopted the
attached resoluti6n expressing ~ts appreciation to all the members of the rescue squads
who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
Ella W. Carey, ClerkZM~
/ewc
Attachment
Printed on recycled paper
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville, Virginia 22902-4696
804) 296-5843 FAX 1804, 296-5800
September 18, 1996
Charles S. Martin
Walter F. Perkins
Mr. Bill Downs
Western Albemarle Rescue Squad
PO Box 234
Crozet, VA 22932
Dear Mr. Downs:
At its meeting on September 16, 1996, the Board of Supervisors adopted the
attached resolution expressing its appreciation to all the members of the rescue squads
who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
lewc
Attachment
Printed on recycled paper
David P. Bowe rman
Charlotte ¥. Humphrls
Forrest R. Marshall, Jr
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville. Virginia 22902-4596
(804) 296-5843 FAX 804} 296-$800
September 18. 1996
CharIes S. Martin
Walter F. Perkins
Sails H. Thomas
Mr. Mike Johnson
Scottsville Rescue Squad
PO Box 33
Scottsville. VA 24590
Dear Mr. Johnson:
At its meeting on Se. ptember 16. 1996. the Board of Supervisors adopted the
attached resolution expressmg ~ts appreciation to all the members of the rescue squads
who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
Ella W. Carey, Clerk. C~WlC
/ewc
Attachment
Printed on rec.vclecl lo.per
COUNTY OF ALBEMARLE
Office of Board of Supervisors
401 Mclntire Road
Charlottesville, Virginia 22902-4596
(804~ 296-5843 FAX (804) 296-5800
September 18, 1996
Charles S. Martin
Waiter F. Perkins
Sally H. Thomas
Mr. Raymond Jones
East Rivanna Volunteer Fire Company
PO Box 8
Keswick. VA 22947
Dear Mr. Jones:
At its meeting on September 16. 1996. the Board of Supervisors adopted the
attached resolution expressing its appreciation to all t2~e members of the volunteer
fire companies who worked beyond the call of duty during and after Hurricane Fran.
Sincerely,
,ewc
Attachment
PHnted on recycled paper
COUNTY OF ALBEMARLE
MEMORANDUM
TO:
FROM:
DATE:
RE:
John Miller, C/deL Police Department
Ella W. Carey, Clerk, CMC~'~-'~
September 19, 1996
Resolution in Appreciation
At its meeting on September 16, 1996. the Board of Supervisors adopted the
attached resolution expressing its appreciation to the staff of the Police Department
who worked beyond the call of duty during and after Hurricane Fran.
/ewc
Attachment
COUNTY OF ALBEMARLE
MEMORANDUM
TO:
FROM:
DATE:
RE:
Pat Mullaney, Director, Parks and Recreation
Ella W. Carey, Clerk, CMC ~
September 19, 1996
Resolution in Appreciation
At its meeting on September 16. 1996. the Board of Supervisors adopted the
attached resolution expressing its appreciation to the staff of the Department of Parks
amd Recreation who worked beyond the call of duty during and after Hurricane Fram
ewc
Attachment
RESOLUTION
CONCERNING THE REVERSION OF
THE CITY OF CHARLOTTESVILLE
TO TOWN STATUS
WHEREAS, cXtizens of the City of Charlottesville are actively
circulating a petition to initiate the legal proceedings to cause the reversion of the
City of Charlottesville to town status; and
WHEREAS, the Charlottesville City Council can unilaterally initiate
the legal proceedings to cause the reversion of the City of Charlottesville to town
status; and
WHEREAS, the Albemarle County Board of Supervisors believes it is
timely for its position to be clearly and publicly stated; and
WHEREAS, the Board of Supervisors has determined that it would be
in the best interests of the County of Albemarle to avoid protracted and expensive
litigation and the court-imposed terms and conditions of a litigated reversion; and
WHEREAS, if reversion is initiated by citizen petition or by City
Com~cil, the Board of Supervisors wonld prefer, if possible, to adxieve a negotiated
reversion of the City to town status; and
WHEREAS, analyses by the County and City indicate that a reversion
of the City to town status is not feasible unless there is a consolidation of the City
and County schools systems; and
WHEREAS, the County and City agree that a joint study of the issues
relating to a consolidation of schools under reversion should be conducted by the
County and City school boards as the first step in determining whether a negotiated
reversion is feasible; and
WHEREAS, the Board of Supervisors has determined that a
consolidation of Cotmty and City schools, unless such consolidation is a result of the
City's reverting to town status, does not provide a long term and lasting solution to
the City's projected financial problems.
NOW, THEREFORE, BE IT RESOLVED that the Albemarle County
Board of Supervisors has determined it will not (1) negotiate any amendment to the
Annexation and Revenue Sharing Agreement which ~vould provide either additional
revenue to the City or expand the City's boundaries, (2) renegotiate the funding
formulas of existing joint service agreements to subsidize services provided to the
City, or (3) consent to a consolidation of County and City schools unless such
consolidation is a result of the City's reverting to town status.
BE IT FURTHER RESOLVED by the Board of Supervisors that if
after the joint study of school consolidation is completed, ( 1 ) the dtizens or the City
Com~cil of Charlottesville initiate the legal proceedings to cause the reversion of the
City of Charlottesville to town status and (2) it is determined by the County that a
consolidated school system resulting from the reversion is beneficial and in the best
interests of the community, then the Board is conzmitted to pursuing a negotiated
reversion of the City of Charlottesville to town status to provide for a long term
solution for the provision of governmental services to the community in lieu of court
imposed conditions of a litigated reversion. If the citizens or the City Council of
Charlottesville initiate the legal proceedings to cause the reversion of the City of
Charlottesville to To~vn status prior to timely completion of the joint study, the
County will oppose those proceedings to the extent necessary to protect the interests
of its citizens from any court-imposed conditions.
BE IT FURTHER RESOLVED that the Board of Supervisors supports
the initiation of a joint study by the Albemarle County and City of Charlottesville
school boards to determine the feasibility and benefits of the abolition of the City
school system tmder reversion and the resulting effects on the County school system
which ,vould be required to provide education to the children of both the County
and the new town. The Board agrees that the County will equally share the costs of
such study with the City of Charlottesville.
BE IT FURTHER RESOLVED that after the joint school study is
completed and if a negotiated reversion is pursued, the Board of Supervisors supports
the joint and systematic study of the services provided by the Cotmty and City to
provide information and analysis to aid the County and City in reaching a negotiated
reversion agreeInent.
BE IT FURTHER RESOLVED that the Board of Supervisors will
continue to work with the Charlottesville City Council regarding these matters and
will issue jnint status reports with the Council as these matters progress.
2
I, Ella W. Carey, do hereby certify that the foregoing writing is a true,
correct copy of a Resolution duly adopted by the Board of Supervisors of Albemarle
County byavote of four to zero on September 17, 1996.
Clerk, Board of County Su~fi},Asors
KEVERSIO.DOC 3