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BUDGET, FINANCE & INVESTMENT COMMITTEE
August 9, 2001 6:15 P.M. Courthouse
MINUTES:
Members Present: Others Present: Others Present: Comm. Jerry Baxter Nancy Allen Judy Greene Comm. Joyce Ealy Comm. Grant Kelley Hulon Watson Comm. Joe Frank Jernigan Jennifer Gerhart Jeff Sandvig Comm. Paul Johnson Teena Sanders Bryan Brooks Comm. Tina Jones Truman Jones Paul Long Comm. Dwight Throneberry Phillip Martin Elaine Cawthon Comm. Jimmy Evans, Chair. John Frost
Chairman Evans presided and called the meeting to order with all members being present. APPROVE MINUTES: The minutes of the June 27, 2001 meeting were presented for approval. Comm. Jones moved, seconded by Comm. Throneberry to approve the minutes as presented. The motion passed unanimously by acclamation. INVESTMENT REPORT:
Finance Director Paul Long presented the monthly Investment Report for the use and information of the committee. The LGIP rate for the month was 3.75%. Mr. Long reviewed the investment transactions that occurred during the month. Following discussion, Comm. Baxter moved, seconded by Comm. Ealy to approve the Investment Report as presented. The motion passed unanimously by roll call vote.
FUND CONDITION REPORT: The Finance Director presented the Fund Condition Reports for the months ending June 30, 2001 and July 31, 2001 for the use and information of the committee. During the month of June, the Development Tax collections totaled $419,250 compared to $1,528,125 for June, 2000. The year to date collections were $3,102,000 compared to $4,165,125 for the prior year. The total cash balances at the end of June, 2001 were $102,530,519 with operating funds being $70,428,191, and borrowed funds being $32,102,328. Mr. Long noted the cash balance for the Employee Insurance Fund at the end of June was $948,938. The total cash balances at the end of June, 2000 were $111,672,239 with operating funds being $69,431,674 and borrowed funds being $42,240,565. Mr. Long reported the revenue estimates were achieved as expected. He advised there were no unusual conditions to report; however, he noted the General Fund reverted almost $1.6 million of the appropriations to the ending fund balance. For the month ending July, 2001, Mr. Long advised the Development Tax collections were $204,750 as compared to $137,625 for the same period last year.
Budget Minutes August 9, 2001 Page Two
The cash balances totaled $94,021,464 with $68,631,734 being operating funds, and $25,389,730 being borrowed funds. This compares to total cash balances of $107,584,082 for July, 2000, with $67,986,691 being operating funds and $39,599,390 being borrowed funds. Mr. Long noted the cash balance of the Employee Insurance Fund was $328,953. Comm. Throneberry moved, seconded by Comm. Baxter to approve the Fund Condition Reports as presented. The motion passed unanimously by roll call vote. EMPLOYEE INSURANCE FUND: Mr. Long provided a Restated Statement of Operations regarding the Employee Insurance Fund for the use and information of the Committee. Mr. Long advised in 1998-99 $331,002 was received from the re-insurance carrier with a premium payment of $572,111. In 1999-2000, the County received $1,038,385 from the re-insurance carrier and paid a premium of $648,699. He stated this is one reason the threshold is being increased from $50,000 to $100,000. Mr. Long advised this schedule indicates retained earnings of $2,625,148 in July, 1998, and three years later as of June 30, 2001 there is a $1.1 million fund deficit. The balance degenerated by $3.7 million over three years in spite of a significant increase in premium contributions last year. Mr. Long reported health insurance premium contributions did increase almost $2.3 million, but the claims cost during the last two years have used all of that plus some. Mr. Long advised the average participants are increasing by about 120 people per year. He stated using that information, he has tried to project membership over the next three years and provided the committee with a Projected Operating Statement. He reported the comparison assumes no adjustments are made to the plan and that the county remains with the same network. He advised if the contributions remained at the current rate, there would be a fund deficit of approximately $3.6 million. On the basis of the participants in the plan, this would mean an increase in premiums of approximately $250 per month. He stated this did not seem logical. Mr. Long presented an analysis regarding a possible one-time allocation to eliminate the deficit. The analysis illustrated a one-time operating transfer of $1.8 million from all of the participating entities. He suggested the committee could decide how to divide the transfer among the entities, or that possibly the transfer could come from one source. He explained with the $1.8 million infusion, there still would need to be approximately $120 per month adjustment to the health insurance contributions, whether it be from the employee or the employer or a combination. Mr. Long advised the Insurance Committee has not been provided with this information, and he advised they would need to recommend how to split the premium increase. He advised this adjustment would not be made until January. He explained if the premiums were adjusted in January and with the $1.8 million infusion, the Employee Insurance Fund would end with approximately a $61,000 fund balance next year. In order to end with increasing fund balances for the next two years, the premium contributions would have to be increased 10% each year thereafter in January. The Finance Director advised he and the County Executive have discussed the General Fund absorbing more than it’s share of the $1.8 million infusion since the ending fund balance was significantly higher than anticipated. The Finance Director informed the committee it was necessary to make a $500,000 emergency transfer from the General Fund to the Employee Insurance Fund in order to pay the claims for Budget Minutes August 9, 2001 Page Three
the week, and he requested the committee ratify this action. He advised this would be reversed if the committee decided to approve the $1.8 million infusion. Mr. Long advised if the committee decided not to approve the $1.8 million infusion, he requested they consider a two million-dollar revenue anticipation note that could be borrowed on an as needed basis. Mr. Long advised the General Fund ended with an $11.8 million ending fund balance, and $10.4 million was projected. Chairman Evans stated he believed that county employees deserve the best healthcare the county can afford and adequately fund, but secondly he stated he was wondering if the current plan needed to be addressed to see if it needed to be revised. Mr. Long advised if the committee decided to approve the $1.8 million infusion from the various funds, the transfers would have to be appropriated from the various fund balances. He also advised if the premiums were increased in January, that would be another amendment from the fund balances that would have to be approved. Following discussion, Comm. Jernigan moved, seconded by Comm. Throneberry to ratify the $500,000 emergency transfer that was made from the General Fund to the Employee Insurance Fund. Comm. Ealy and Comm. P. Johnson noted their conflict of interest. The motion passed unanimously by roll call vote. The Finance Director requested the committee consider making a one-time allocation from some source, either from one fund or from all of the participating entities; or the other alternative would be to approve a revenue anticipation note of approximately $2.5 million until it can be considered further. Following discussion, Comm. Jernigan moved, seconded by Comm. P. Johnson to approve a Revenue Anticipation Note of $2.5 Million from the General Fund to the Employee Insurance Fund. Chairman Evans advised that each of the participating entities receive a formal notification that there is a possibility some action may be taken in January that would cause their ending fund balance to be affected significantly due to the cash flow problems in the Employee Insurance Fund. Mr. Long advised the Revenue Anticipation Note has to be re-paid by June 30, 2002. Following discussion, the motion to approve a Revenue Anticipation Note in the amount of $2.5 million from the General Fund to the Employee Insurance Fund passed unanimously by roll call vote with Comm. P. Johnson noting his conflict of interest. GENERAL FUND BUDGET AMENDMENTS
The Finance Director requested approval of the following budget amendment for the Building Codes Department to correct an error made to a salary amount during the budget process:
From: 101-39000 – Undesignated Fund Balance - $409
To: 101-54510-162 – Clerical Personnel - $351 101-54510-201 – Social Security - 22 101-54510-204 – State Retirement - 31 101-54510-212 – Employer Medicare - 5
Budget Minutes August 9, 2001 Page Four
The Finance Director also requested approval of the following budget amendment for the Ambulance Service to correct an error made to a salary amount during the budget process:
From: 101-39000 – Undesignated Fund Balance - $1,756
To: 101-55130-166 – Custodial Personnel - $1,506 101-55130-201 – Social Security - 94 101-55130-204 – State Retirement - 134 101-55130-212 – Employer Medicare - 22
The Finance Director requested approval of the following budget amendment for the Miscellaneous category for Liability Insurance. He advised the county had $500,000 in coverage for crime insurance, but during the bid process it was presented to the vendors as $100,000. This will cause an additional premium amount of $2,920:
From: 101-58900-599 – Other Charges - $2,920 To: 101-58900-506 – Liability Insurance - $2,920
The Finance Director requested approval of the following budget amendment to provide a $10,000 contribution to the reward in the Captain D’s slayings as recommended by the Public Safety Committee:
From: 101-39000 – Undesignated Fund Balance - $10,000 To: 101-58900-316 – Contributions - $10,000
It was noted this money would be made available, but would not be paid out until the murders are solved or an arrest is made. Comm. Baxter moved, seconded by Comm. Jones to approve the budget amendments to correct salaries in the Building Codes Department of $409 and the Ambulance Service of $1,756; the additional insurance premium for the crime insurance in the amount of $2,920; and a contribution to the reward for the Captain D’s slayings in the amount of $10,000. The motion passed unanimously by roll call vote. ADDITIONAL FUNDING FOR COURTHOUSE EXTERIOR RENOVATIONS: County Executive Allen requested approval of the following budget amendment to provide $62,000 for additional exterior maintenance work on the Courthouse. She advised, upon investigation, the low bidder did not meet some of the qualifications. The next low bidder was awarded the bid. She advised there is $300,000 encumbered from last year. The actual cost for the bid is $356,105. She explained the $62,000 additional funds will allow a small percentage over in case of any surprises that might be found such as some lead base paint that was not anticipated. The Property Management Committee approved the request from the Development Tax. The amendment appropriates the funds from the Development Tax as a transfer to the General Fund where the original purchase order was issued:
From: 120-39000 – Undesignated Fund Balance - $62,000 To: 120-99100-590 – Transfers to Other Funds - $62,000
Increase Revenue: 101-48900 – Operating Transfers - $62,000 Increase Expend.: 101-51800-707 – Building Improvements - $62,000
Comm. Jernigan moved, seconded by Comm. Baxter to approve the budget amendment for the Courthouse exterior renovations as requested. The motion passed
unanimously by roll call vote. Budget Minutes August 9, 2001 Page Five
The County Executive advised the bid, in addition to the exterior work, also includes replacing the outside doors on the south side of the Courthouse. SOLID WASTE/SANITATION FUND BUDGET AMENDMENT: The Finance Director requested approval of the following budget amendment to correct an error to an employee’s salary during the budget process:
From: 116-39000 – Undesignated Fund Balance - $100
To: 116-55754-162 – Clerical Personnel - $ 84 116-55754-201 – Social Security - 6 116-55754-204 – State Retirement - 8 116-55754-212 – Employer Medicare - 2
Comm. Ealy moved, seconded by Comm. Jernigan, to approve the budget amendment as presented. The motion passed unanimously by roll call vote.
APPROVE COPY MACHINE LEASE FOR REGISTER OF DEEDS: Mrs. Jennifer Gerhart, Register of Deeds, addressed the committee requesting a copy machine lease with the Robert J. Young Company in the amount of $563.40 for 48 months. Mrs. Gerhart advised the monthly cost includes a lease amount of $383.06 per month with supplies and maintenance being $180.00. She advised this machine is an upgrade from the machine she has now, but will only be $3 more per month. A discussion was held regarding leasing equipment versus purchasing. The Finance Director advised leasing is typically not a good idea. He stated the interest on the lease is probably 11% or 12%. He stated the departments needed to be given some direction so they will know whether to include it as a capital expenditure request in their budgets. Chairman Evans requested a comparison of lease versus purchase on the last several leases approved be provided at next month’s budget committee meeting. Following discussion, Comm. Jernigan moved, seconded by Comm. Ealy to approve the copy machine lease for the Register of Deeds as requested at a cost of $563.40 per month for 48 months. The motion passed unanimously by roll call vote.
JUVENILE JUSTICE STATE SUPPLEMENT: Ms. Teena Sanders, Assistant Youth Services Department, requested approval of the annual Juvenile Justice State Supplement in the amount of $10,000. The Finance Director advised this has already been included in the budget. Comm. P. Johnson moved, seconded by Comm. Baxter, to approve the Juvenile Justice State Supplement in the amount of $10,000 as requested. The motion passed unanimously by roll call vote. APPROVE VIOLENT APPREHENSION UNIT GRANT: Sheriff Truman Jones and Sgt. Phillip Martin addressed the committee regarding an award of a Byrne Grant for a Violent Apprehension Unit. This is a 75%/25% grant, with the county’s match Budget Minutes August 9, 2001 Page Six
being $20,528. The grant will be used to fund two officers who will specialize in violent criminal apprehension. The deputies will combine with state and federal agents in the service of violations or fugitive orders. The unit will seek a method of safer, efficient and expedient service. The methods employed will remove individuals and groups who most endanger society. The committee was advised the grant will be a one-year grant, and at the end of the Byrne Grant funding the Sheriff’s Department plans to incorporate the individuals provided by the grant into the General Fund for the following fiscal years budgetary requests. Following discussion, Comm. P. Johnson moved, seconded by Comm. Jernigan, to approve the Byrne Grant to fund the Violent Apprehension Unit in the amount of $61,582 with the county’s share to be $20,528. The motion passed unanimously by roll call vote. The Finance Director asked if the positions were to be funded in Fund 121, Special Purpose Fund, which was created during the budget process to account for grants. The committee agreed the positions should be in Fund 121.
RECOMMENDATION REGARDING ANIMAL SHELTER: Comm. Jernigan moved, seconded by Comm. P. Johnson to forward to the County Commission a recommendation to appropriate $200,000 plus closing costs for the purchase of land for the new Animal Services building; $250,000 for the satellite office on Weakley Lane in Smyrna; and $1,250,000 for the construction of the main facility near its current location with the Public Building Authority to oversee the project. The money is to be temporarily funded from the Debt Service Fund and will be repaid at the time the county borrows money in the fall. The County Executive is to be authorized to proceed with closing only at the time both site plans are approved by the Murfreesboro Planning Commission and the Smyrna Planning Commission. If for any reason one site plan does not get approved, the project is to be referred back to the Property Management Committee for further consideration. The funding includes the $75,000 already appropriated for the Public Building Authority. The Animal Shelter project is to be a turnkey project to include furniture, fixtures and equipment. Comm. Jernigan advised the Public Building Authority has hired Huddleston Engineering. Following discussion, the motion to forward a $1.7 million bond resolution to the full Commission providing funding for the purchase of land for the new Animal Services Building, construction of a satellite facility on Weakley Lane in Smyrna, and construction of the main facility near its current location; with the project to be a turnkey project including furniture, fixtures and equipment. Additionally, the project to be constructed with the use of the Public Building Authority passed unanimously by roll call vote.
REPEATER FOR AMBULANCE SERVICE: County Executive Allen advised Item H. regarding funding for a repeater for the Ambulance Service and Animal Services could be deferred until next month. RECOMMENDATION REGARDING STUDY OF DOWNTOWN COUNTY FACILITIES: County Executive Allen advised the Property Management Committee has recommended to request a maximum of $35,000 each from the I.D.B., City of Murfreesboro and Rutherford County for a consultant’s study concerning the downtown county facilities and the relation of corrections issues, juvenile detention issues, judicial issues, record storage, and the old Health Department building. The County Executive
provided copies of letters and information regarding the old Health Department
building and the parking lot across from the building. Budget Minutes August 9, 2001 Page Seven
The County Executive provided a copy of a letter from the Industrial Development Board in support of a study concerning the congestion on the Town Square that is caused by the court system. Other letters of support from Main Street, the Historic Downtown Murfreesboro Business Association, the Rutherford/Cannon County Bar Association, and Mr. Thomas Bean, of Mid-South Sewing Center were provided for the information and review of the committee. The County Executive provided a portion of the Main Street Market Analysis and Economic Enhancement Strategy of 1999, in which it states consideration should be given to moving the court system to the southern portion of the Northside District near the new County Office Building. The County Executive stated it is important to know exactly the direction the county is moving regarding the judicial system, not only for the juvenile courts, but also for the juvenile detention facility, and how parking is addressed. She advised in order to get an objective assessment of what the needs are and to develop a master facilities plan, the recommendation was to fund a study with the City of Murfreesboro, Rutherford County, and the Industrial Development Board participating. She stated that is what is being proposed, and the Property Management Committee voted unanimously to support the study. The County Executive stated if the County Commission goes on record stating they will support a $35,000 contribution for the study, she would go back to the City of Murfreesboro and the I.D.B. and ask them to participate in a similar fashion. She advised in developing a Request for Proposal, she does not know what the exact cost will be. She stated she has samples from other counties, and the cost has ranged from $80,000 to $100,000. She advised it would depend on the scope of the study, which would also need to include an analysis of the old Health Department building. She stated the study would also need to include what offices need to be in close proximity together, as well as a study of the Correctional Work Center. Comm. Jones stated it is logical to hire a professional consultant to provide a master plan for space needs, and she stated she supported that 100%. She stated in terms of the dollar amount, it might be more appropriate to send out Request for Proposals with the vendor informing the County what the cost will be opposed to the County letting the vendor know how much is available. The County Executive reported the RFP will not include a dollar amount. She advised when the RFP’s are returned, all of the firms will be interviewed and ultimately negotiate what the cost will be. Comm. Jones stated she would be more comfortable with a resolution that endorses the concept of the study without placing a price tag on it. The County Executive advised she is developing the RFP based upon the one that was done with the Heery study in 1995. She stated she has also requested assistance from CTAS, and she has assured Main Street, the Bar Association, and others that they can review the RFP before it is issued Following discussion, Comm. Jones moved, seconded by Comm. Throneberry, to forward a resolution to the County Commission that the County Commission will go on record in strong support of hiring a consultant to conduct a study of the downtown county facilities, including the old Health Department, the judicial system, juvenile detention, record storage, and the Correctional Work Center facility with the county to participate on a one-third basis with the City of Murfreesboro and the Industrial Development Board; and the cost will be determined following a Request for Proposal. The motion passed
unanimously by roll call vote. Budget Minutes August 9, 2001 Page Eight
LOCAL PURPOSE TAX FUND BUDGET AMENDMENT (DEVELOPMENT TAX): The Finance Director requested approval of the following budget amendment to appropriate a transfer of one-half of the Development Tax collections to the General Debt Service Fund. When the Development Tax was doubled, the commission voted that the amount of the increase would be transferred to the Debt Service Fund, and this was inadvertently omitted during the budget process:
From: 120-39000 – Undesignated Fund Balance - $1,450,000 To: 120-99100-590 – Transfers to Other Funds - $1,450,000
Comm. Jernigan moved, seconded by Comm. Jones to approve the budget amendment as requested. The motion passed unanimously by roll call vote.
SCHOOL BUILDING PROGRAM BUDGET AMENDMENT: Mr. Hulon Watson, Superintendent, and Mr. Jeff Sandvig, Assistant Superintendent, requested approval of a School Building Program budget amendment in the amount of $105,925 from the Blackman High School construction budget to the Siegel Property Infrastructure budget:
From: Blackman Furniture & Fixtures - $56,450 Blackman Technology - 49,489
To: Blackman Equipment - 14 Siegel Infrastructure (Site Development) $105,925
Mr. Sandvig advised this completes the funding for electrical lines that had to be moved on the Siegel property. Comm. Baxter moved, seconded by Comm. Ealy to approve the School building amendment in the amount of $105,925 as requested. The motion passed unanimously by roll call vote.
APPROVE TRI-PARTY AGREEMENT FOR BLACKMAN HIGH SCHOOL:
Mr. Watson advised he was requesting approval of a Tri-Party Agreement between the Public Building Authority, Rutherford County Board of Education and Rutherford County due to the fact the PBA desires to close out its contract with American Constructors, Inc. as it relates to the Blackman High School. There are two items related to the completion of the school itself that have not been completed, namely, reseeding of the lawn of the Blackman High School and erosion repairs along and in the ditchline within the boundaries of the Blackman High School site. Mr. Watson advised it is in the best interest of all involved that the Board of Education take responsibility for completion of the work and that $55,000 will be retained in the project for such purposes. Comm. Throneberry moved, seconded by Comm. Baxter, to approve the Tri-Party Agreement between the Public Building Authority, Rutherford County Board of Education and Rutherford County as it relates to the reseeding of the lawn of the Blackman High School and erosion repairs along and in the ditchline within the boundaries of the Blackman High School. The motion passed unanimously by roll call vote.
Budget Minutes August 9, 2001 Page Nine RESOLUTION TO PROVIDE FUNDING FOR SCHOOL’S TECHNOLOGY:
Mr. Sandvig provided an analysis of available funds for the School’s technology request. The ending fund balance at June 30, 2001 was $8,743,397. Five percent of the fund balance is $6,721,658. This would leave $2,021,740 available above the five percent. Mr. Sandvig suggested using $1,956,539 of the ending fund balance for capital projects, with $1,285,000 for the David Youree and Roy Waldron HVAC repairs and $671,539 amended into the General Purpose School Fund for K-6 items in technology plan. Mr. Sandvig suggested of the bond money previously approved for the HVAC Systems in the amount of $3,045,519, that $1,658,519 be used for 7th through 12th grade technology. The Board also requested $1,000,000 from the Development Tax for the technology program. All of the sources would provide $3,330,058 for the technology program. A discussion was had regarding the health insurance dilemma and how that would affect the School’s ending fund balance. Chairman Evans asked if the decision was made for each department to share their proportionate share of the $1.8 million needed for the health insurance plan, if they would be willing to do that? Mr. Watson reported he would recommend it to the Board. Mr. Watson proposed to reduce the request down to $2,658,000, and leave out the $671,539 for a potential insurance infusion. Mr. Sandvig advised the Board would probably concentrate on 7th & 8th grade first and growth classrooms. The Finance Director reported in the Development Tax, the year ended with approximately $3.6 million fund balance. He advised before action tonight, $1.4 million was appropriated. Another $1,450,000 was appropriated tonight for the transfer to the Debt Service Fund. This leaves approximately $700,000 available without getting into this year’s revenue. Comm. Jernigan moved, seconded by Comm. Throneberry to appropriate $700,000 from the Development Tax, $300,000 from the General Purpose School ending fund balance, and borrowed funds of $1,658,519 for the school’s technology. The Finance Director stated his preference would be not to get into the school’s ending fund balance at this time. He said if the committee wants to fund $2.5 to $3 million for technology, he would suggest it all be borrowed, or whatever portion is not appropriated from the Development Tax. He explained with the magnitude of the problem in the Employee Health Insurance Fund, and if a contribution is allocated on the basis of participation the School Board’s portion is going to be approximately $1.9 million. Mr. Long stated his fear would be the fund balance would be drawn down too low, and in July when very little revenue is received, the School Board would be faced with having to borrow money to meet operations. Comm. Baxter suggested using $700,000 from the Development Tax and fund the remainder of the technology with a bond issue. The Finance Director stated he was comfortable with that. Mr. Watson stated they were not expecting to request any funding from the ending fund balance, but reminded the committee it is there for unforeseen emergency situations also.
Budget Minutes August 9, 2001 Page Ten
Mr. Long provided amended $28,910,000 General Obligation School Bond Resolutions for the use and information of the committee. He explained the amended bond resolutions would allow the School Board to use a portion of the bond proceeds for technology. He reported if $1,285,000 is used for the HVAC repairs, then the $28,910,000 bond resolution could be reallocated so that $1,658,519 can be used for technology with $700,000 to be appropriated from the Development Tax. Following discussion, Comm. Jernigan changed his motion, seconded by Comm. Throneberry to appropriate $1,285,000 from the General Purpose School Fund ending fund balance for the HVAC repairs, $700,000 from the Development Tax and $1,658,519 from the bond issue for a total of $2,358,519 for technology and to forward the amended $28,910,000 General Obligation Bond Resolutions to the full commission for approval. The motion passed unanimously by roll call vote.
ADJOURNMENT: There being no further business to be presented at this time, Chairman Evans declared the meeting adjourned at 8:30 P.M.
___________________________________________ Elaine Cawthon, Secretary |
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