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Minutes for January 10, 2007

 

MEETING: BUDGET ADVISORY COMMITTEE

  1. WELCOME AND INTRODUCTIONS: January 10, 2007, at 8:40 a.m., in the Palm Beach County Governmental Center, West Palm Beach, Florida.

    MEMBERS AND OFFICERS PRESENT:

    Commissioner Warren H. Newell, Chairperson
    Robert C. Kneip, Economic Council Chairperson
    Ken Nielson, Former City of West Palm Beach Assistant Internal Auditor
    John A. Warner, Financial Executive
    Arthur Bernstein, Former Banker - Absent
    Steve Templeton, Templeton and Co., LLP., President
    Carolyn Williams-Smith, Young Women's Christian Association CFO
    Vivian Valentin, Deputy Clerk

    (CLERK'S NOTE: Mr. Bernstein was absent due to schedule conflict and not canvassing members for availability.)

    Commissioner Newell welcomed all the attendees and asked for introductions from all those present.

  2. SUNSHINE LAW/PUBLIC RECORDS OVERVIEW

    Assistant County Attorney Lenny Berger gave a brief overview of the Sunshine Law and made the following comments:

    • The Budget Advisory Committee (BAC) would be covered by the Sunshine Law, all the meetings were required to be open to the public, and minutes of the proceedings were to be taken.

    • The Sunshine Law not only applied to the BAC meetings, but to discussions that any of the members had among themselves regarding business that could potentially come before the board.

    • The purpose of the Sunshine Law was to make sure that all decision making occurred in public, which included all discussions that led up to an ultimate decision.

    • The Sunshine Law also extended to any message, either on a piece of paper or electronic, that was used to formalize, communicate, or perpetuate some kind of knowledge.

    • Members should not communicate to other members through staff.

    • In situations where there was a Sunshine Law violation, the punishment was severe.

    • Any work that the BAC produced could be undone if found to be rooted in violation of the Sunshine Law.

    • A knowing violation of the Sunshine Law was a second degree misdemeanor, punishable by six months in jail, $500 fine, or both.

    • If any of the BAC members had questions or concerns on the Sunshine Law, he asked that they contact him at any time.

    • He had written a booklet on the Sunshine Law, public records, and a code of ethics that each committee member would be receiving.

    Mr. Templeton stated that he noticed a critical factor in determining whether the BAC was covered by the Sunshine Law was whether it functioned as a decision-making body. He stated that as he understood it, they would not have any decision-making power and asked if it would restrict some of the inquiries and activities that the BAC might want to undergo.

    Mr. Berger stated that all advisory boards fell under the Sunshine Law. He said that the question was not whether the board was a final decision-making body but whether it was a decision-making body at all.

    Mr. Nielson asked that if he wanted to communicate with all other members by email, would that correspondence be a violation of the Sunshine Law. Mr. Berger responded that by itself a message stating that a certain topic would be brought up at the next meeting or asking for an item to be placed on the agenda was not a violation.

    Commissioner Newell directed that any correspondence regarding the BAC be sent to County Internal Auditor Joe Bergeron.

    Mr. Warner asked what the BAC members' personal liability would be. Mr. Berger stated that if they were operating in the course and scope of their duties and someone should bring an action directly to one member, the county would typically defend that member. He added that if any action was outside the scope of the BAC, for instance, violating the Sunshine Law, then that member would not be backed by the county.

  3. COMMITTEE RESPONSIBILITIES

    Commissioner Newell made the following comments:

    • The Board of County Commissioners (BCC) had only three employees: County Administrator Robert Weisman, County Internal Auditor Joe Bergeron, and County Attorney Denise Nieman.

    • In years past, the county had a Budget Oversight Committee that was set up very similar to the BAC, but that committee had ran its course and was disbanded.

    • In the last public hearing, the BCC's existing budget was criticized; and to offset that criticism, the board decided to create the BAC to look at ways to improve government.

    • He wanted to include participation of members of the community in the BAC meetings.

    • The BAC's charge was to look at ways to reduce cost, improve services to the government, recognizing that it had many facets.

    • There were departments that were funded only by fees and revenues, such as the Department of Airports and the Planning, Zoning, and Building Department.

    • The county currently had numerous contractual relationships with unions.

    • The BAC was open to county residents who wanted to be involved in the budget process.

    Mr. Kneip stated that the task of dissecting the budget was monumental and that the BAC's purpose would be better served if they focused more on process.

    Commissioner Newell stated that he did not have a problem inviting experts to BAC meetings to dissect an agency. He added that it was going to be a tough year for the budget because they had a declining revenue stream due to the decrease in property values and other revenue sources.

    Mr. Bergeron stated that the resolution that enabled the creation of the BAC was structured so that the committee could only examine those departments that were funded using countywide ad valorem resources. He added that the BAC could still look at the general process of other departments.

  4. COUNTY MANAGEMENT OVERVIEW

    Mr. Weisman made the following comments in regard to county management:

    • The BAC had county staff cooperation.

    • To keep the budget from increasing in the future, the county would have to reduce its expectations and not implement new projects and services.

    • It would be very difficult to reduce the existing budget with the existing processes.

    • A big factor in the county's expense budget was employment. There were many employment vacancies. Evidence suggested that the county was not competitive with other governments in hiring employees.

    • The Sheriff's Department was the single biggest factor in the county budget, over forty percent of the overall budget increase.

    • An area of the biggest cost increase was the bus service and disabled and senior transportation. There was a strong desire from the BCC to provide those services.

    • The most controversial budget items were the reserves. Palm Beach County was the only triple-A rated county in the state, and it held that status for the last six years.

    • Having the county lose its triple-A rating would be a big hit for the county practically and psychologically.

    • Economic Council had questioned if the county reserves could be reduced or not increased.

    • The county had been led to believe by the rating agencies that it needed to keep certain percentages of its budgets in reserves. The county was currently approaching $200 million in reserve funds.

    Commissioner Newell asked that Mr. Weisman provide the BAC with information on the county reserves.

    In reference to the county's reserves, Mr. Weisman said the bottom line reflected a $20 million contingency in its budget this year. He stated that the reserves included over $1 million in general funds carried forward which were to be used for emergencies if the contingency fund was inadequate.

    Mr. Kneip asked if the funds for projects that had been budgeted but not executed ended up in reserves or stayed as capital projects. Mr. Weisman stated that once a project was approved by the BCC and put in the budget, the money allocated stayed with that line item until it was spent or the board eliminated the project funds. He added that this had been a factor in many discussions on the reserves.

    Commissioner Newell stated that the county was given a certain amount of ad valorem revenue proposed by the Property Appraiser, but the number was always low compared to the final roll. Mr. Weisman replied that most of the budget was prepared before June 1st in order to have it completed for adoption by October 1st. He stated that the county did not get the Property Appraiser's valuations until June 1st, so the county prepared the budget in anticipation of what the property values were, but they always estimated conservatively.

    National Federation Republican Assemblies President John O. Parsons stated that he wanted the BAC to be aware that Palm Tran Connection was growing very rapidly which should be considered if Palm Tran's budget was reviewed in the future.

  5. CONSTITUTIONAL OFFICERS OVERVIEW
    1. CLERK AND COMPTROLLER'S OFFICE

      Clerk and Comptroller's Budget and Financial Analysis Director Donna Holm gave a brief overview of the Clerk and Comptroller's role and made the following comments:

      • The Clerk and Comptroller's Office was a separate constitutional office and had three different funding sources that made their budget complex.

      • The ad valorem portion of the Clerk and Comptroller's budget for FY 2007 was $18 million, which comprised only 27 percent of their budget.

      • As part of the Clerk and Comptroller's Office, they oversaw the operations of the court system which were state funded.

      • The official records, the third component of their budget, included recording fees, marriage licenses, and tax deeds.

      • The Clerk and Comptroller's current budget was developed several months in advance and did not reflect the impact of the decrease of fees.

      • The Clerk and Comptroller was a county fee office and was not required to obtain the approval of budgets from the BCC.

      • They went through a budget approval cycle because the Comptroller function was funded through the BCC.

      • The Comptroller duties were to be the accountant, auditor and treasurer of all county funds.

      • Excess fees from official records and Comptroller functions were issued to the board on or before October 31st of each year. This year's excess fees were $11 million.

      • The excess fees were the result of efficient operations of the Clerk's Office, as well as county growth. They anticipated some decline in this year's excess fees because of a decrease in the real estate market.

      • For FY 2006, the actual ad valorem budget was $16.4 million, the excess fees returned to the county were $11.3 million, and the actual net ad valorem taxes were $5 million.

      • Because of the triple-A bond rating, the Clerk and Comptroller's Office managed the funds in conjunction with the county and had generated $88 million on their portfolio. Those monies were allocated to the county and were not included in the excess fees that were returned to the county.

      Mr. Warner asked if Mr. Bergeron worked for the Clerk and Comptroller's Office. Ms. Holm stated that the County Internal Auditor and Clerk and Comptroller were separate constitutional offices. She added that the Clerk and Comptroller did have an audit function because they paid the county's bills and ensured that those bills met the requirements as to public purpose.

      Mr. Weisman stated that the county's Office of Financial Management and Budget (OFMB) put together the budget, processed all the county's budget operations, and decided how money would be spent. He stated that the County Internal Auditor had the responsibility for reviewing county operations financially and operationally. He stated that the Clerk and Comptroller's Office was responsible for reviewing and writing all the county checks but could not pay them until they were approved by the BCC.

      Ms. Holm stated that the Clerk and Comptroller strictly had a financial audit function as opposed to an operational audit function.

      Mr. Weisman stated that he thought that the Clerk and Comptroller was trying to assert a higher level of involvement in general county auditing other than the financial portion, but the county had not gotten to that point yet.

      Mr. Templeton asked about the different accounting systems that were within the Clerk and Comptroller's scope. Ms. Holm stated that the Clerk and Comptroller used the Advantage system for all of their financial processes, which was also used by county offices, because departments had a purchasing function. She said that the Clerk and Comptroller had a separate system for payroll for the county, which was currently being updated.

      Mr. Bergeron stated that every constitutional office had their own accountant, budget systems and staff. He clarified that the BCC had an accountant and payroll system dedicated to board functions, but it was operated by the Clerk and Comptroller's Office because they functioned as the county's accountant. He stated that recently the Supervisor of Elections Office had taken over its own accounting.

      Mr. Warner asked if the organizational issue was within the scope of the BAC. Commissioner Newell stated that it was a big issue that had been discussed for many years, but the problem lay in the fact that there were many barriers from the constitutional offices.

      Mr. Weisman stated that if the BAC decided that they wanted to make a recommendation to the BCC to change the structure, it could be accomplished with a charter amendment.

      Mr. Warner stated that he did not want to be part of a committee that looked like it had the purview to address the issues only to find out that they were restricted. He stated that perception would be important for the effectiveness of the BAC's recommendations.

      When asked to explain what had happened when they had joined services, Mr. Weisman stated that generally the board had tried to encourage more efficient joint functions and usually that effort had either failed or been very disruptive. He added that the only area in which they had succeeded joining services had been the computer system because the judiciary ordered to make that happen. He stated the former clerks had not wanted a joint system.

      Commissioner Newell stated that when the Supervisor of Elections opted to take over their own accounting, the county had no authority to stop that change from occurring. He asked that Mr. Bergeron have someone at the next meeting to explain the charter amendment and how the process would occur.

    2. PROPERTY APPRAISER

      (CLERK'S NOTE: See item V.E. for discussion.)

    3. SHERIFF

      Sheriff's Office CFO George A. Forman made the following comments:

      • The Sheriff's Office current general fund budget was about $370 million, and the majority was funded by ad valorem taxes, utilities taxes, and franchise fees.

      • There were more than $30 million in additional revenues they had collected including contract and services with Royal Palm Beach, Wellington, Airport Securities, and others.

      • The three major statutory functions for the Sheriff's Office were law enforcement, court security, and the operation of the three jail facilities.

      Mr. Weisman stated that they were currently working on the preliminary design of a major new jail facility which would add about $20 million a year to the county budget in debt service costs in the next two years.

      Mr. Forman also stated the following:

      • Major expenditures of the Sheriff's Office included services for the jail, inmate medical services, fleet, and fuel.

      • The operations aspect of the Sheriff's Department was huge. He offered to bring in specialized individuals to discuss its different functions, such as maintenance, accounting, purchasing, and risk management.

      • The county was mandated to provide land and buildings for the Sheriff's Office.

      • The Governor, not the county commission, made the final decision on the Sheriff's Office budget because it was a constitutional office.

      Economic Council President Michael Jones stated that he was interested in learning more about the jail projects and discussing alternatives to the jail. Mr. Weisman stated that the Criminal Justice Committee (CJC) had made presentations to the BCC, comparing cost proposals and alternatives to the jail and would provide that information to Mr. Jones.

      Commissioner Newell stated that the county had a Corrections Task Force created by state statute which reviewed the constant jail population issue. He stated that the county built the jail in 1992 and accurately designed it to accommodate the jail population up to 2007-2008. He asked Mr. Bergeron to provide the BAC with a spread sheet on the jail expansion project and its cost to the county.

    4. SUPERVISOR OF ELECTIONS

      (CLERK'S NOTE: For discussion on item V.D., see below.)

    5. TAX COLLECTOR

      Mr. Bergeron made the following comments:

      • The budgets for the Property Appraiser, Supervisor of Elections, and the Tax Collector were not approved by the BCC.

      • Their budgets were submitted to the BCC for information purposes. The BCC had the ability to discuss the matter, but unless they could influence them, their budgets did not change.

      • The Property Appraiser and Tax Collector's budgets were approved by the state Department of Revenue.

      • The Property Appraiser's budget was essentially funded by calculating proportional shares of ad valorem values of all the assessed properties in the county. The funding formula was established by state statute.

      • The Tax Collector's budget was founded by fees that they generated from all of the different revenues collected by its office.

      • The county paid the Tax Collector a two percent commission on all property tax collections for the BCC and the School District.

      • The Tax Collector collected the tourist development tax for the county.

      • Each of those three constitutional offices remitted to the BCC the excess fees for the Clerk and Comptroller's Office.

      • The excess in revenues that the Tax Collector had received from all their resources was returned to the county, tax levying entities, and municipalities based on the proportion of fees that they had paid.

      • The county's budget reflected a conservative estimation of what those excess fees would be from all of the officers each year.

      Mr. Templeton stated that he got a sense from the BAC members that they would tend to recommend the elimination of duplications. He suggested that the BAC discuss the Supervisor of Election taking over their accounting function as a matter of good business practice.

      Ms. Holm stated that the Clerk and Comptroller was very open to having a discussion on combining functions.

      Mr. Kneip stated that the BAC appreciated having representatives from the Clerk and Comptroller and Sheriff's Office personally come to the meeting, and he clarified that their questions should not be taken as adversarial.

      Commissioner Newell asked for information on other county governments that had combined services or used different forums.

      Assistant County Administrator Brad Merriman said he would provide that information and also made the following comments:

      • The state constitution established all the constitutional officers, and every county was constructed in the same way.

      • The only exceptions were Duval and Miami-Dade Counties which had chosen to have their own charter.

      Mr. Kneip asked that Mr. Merriman include in his research examples of county governments outside of the state.

      Mr. Warner stated that when looking at shared or consolidated functions, there were some business models that could serve as good benchmarks.

  6. BUDGET OVERVIEW

    OFMB Budget Division Director Liz Bloeser made the following comments:

    • They were currently starting the beginning of their budget process for FY 2008.

    • They were putting together their budget instruction manual, and once it was published, she would provide it to the BAC.

    • Every constitutional office had their own budget division, but they had to go through the OFMB because it was part of the $4.4 billion budget that was in the report that she had passed out to the BAC.

    • OFMB needed to have the constitutional offices' information by June 1st of every year unless the BCC passed a resolution changing the date to May 1st.

    • The Property Appraiser did not enter into the OFMB process because they went directly to the state.

    • OFMB received figures from the Property Appraiser, and they were able to calculate their budget based on ad valorem taxes.

    • The budget preparation calendar was based on the truth in millage (TRIM) statute, which set the deadlines when certain processes needed to occur.

    • OFMB started their budget process in February or March, and through the County Administrator, they would estimate the constitutional offices' figures for the following year's budget.

    • If OFMB had estimated too highly of a figure, then they had to close the gap.

    Mr. Weisman stated that the county tried to keep the yearly increases at a five percent level, but as of recently, they had been getting up to the higher single digits.

    Mr. Forman stated that a couple of years ago there was a change in law that allowed deputies to unionize, and this now affected the majority of the Sheriff's budget.

    When asked if there was a uniform policy regarding salary increases for county and constitutional offices' employees, Mr. Weisman replied that there was a multiplicity of contracts and circumstances that did not allow for that.

    Commissioner Newell stated that union contracts could not be changed by the BCC. Mr. Weisman stated that to attempt to change the contracts, the matter needed to be addressed on a broad basis over a number of years.

    Mr. Parsons asked how the Sheriff's Office handled hiring more law enforcement for cities in their budget.

    Mr. Forman replied that the Sheriff's Office would come to the board with any new contract, and the board would run it through their process and increase the appropriations.

    Mr. Jones offered the BAC a Housing Leadership Council study done by the Florida International University (FIU), which had done an analysis of the county's workforce and the essential or public workforce. He stated that the results showed that the essential worker tended to be on the high side of the pay scale in contrast to workers that were driving the local economy.

  7. TAX WATCH ISSUES

    OFMB Director Richard Roberts stated that Florida TaxWatch had completed an analysis on the Economic Councils' behalf that resulted in the following three findings:

    • The county had a very high rate of growth in their taxes.

    • The county had too much money in their reserves, particularly capital projects.

    • There was a need for review of capital reserves in operations and ranking of priorities.

    Mr. Roberts added that Florida TaxWatch had also provided the county with seven recommendations on various issues, one of which considered merging independent administrative and support units of separate constitutional offices. He said that he would supply the BAC with the report and the county's response.

    Mr. Kneip stated that the BAC should discuss the Florida TaxWatch county budget study's results and the county's response in detail at the next meeting.

  8. MEETING FREQUENCY AND DURATION

    Mr. Warner stated that the BAC members should agree with their deliverables within the scope of their charge and how their schedule fit into the county's budgeting schedule.

    Discussion ensued and the following comments were made:

    • The Government Finance Officers Association (GFOA) website had budget practice recommendations that could be helpful in future BAC discussions.

    • Mr. Roberts was asked to compare the GFOA budget practices with the county's process and bring it back to the BAC at there next meeting.

    • It was asked that the BAC members be supplied with an agenda of their next meeting in advance and a calendar or work plan for future meetings to outline potential topics to be discussed.

    • Mr. Bergeron was asked to research budget practices of other public and private agencies.

    • Discussions for the next meeting would also include discretionary funds.

    • The BCC wanted significant recommendations that made significant changes.

    • Mr. Roberts was asked to provide a list of countywide programs that were funded using ad valorem taxes, as well as the amount that each received.

    • Any discussions and recommendations on the reserve issue would have an effect on the FY 2008 budget.

    • The BCC was looking at the reserve issue as one of the major areas needing improvement.

    • Past BCC discussions had been on the potential financial impacts, if any, on the county if the reserves were decreased and there was a drop in the bond rating.

    • Mr. Roberts was asked to provide a list of all county departments' projects, their funding source, and current status.

    • At the next meeting they should discuss projects that had not been executed and whether eliminating them would provide any relief to taxpayers or create efficiency.

    • The BAC had the option of going back to the BCC and asking them to clarify what their scope encompassed.

    • The next BAC meeting would be on Thursday, February 1, 2007, at 8:00 a.m. in the McEaddy Conference Room in the Governmental Center.

    • They anticipated the meeting should last approximately an hour and one-half.

    • The BAC members would decide the following meeting date at the February 1st meeting.

  9. MEMBER COMMENTS - None

  10. ADJOURNMENT

The chair declared the meeting adjourned at 10:36 a.m.