Oakland County Executive’s

Recommended

FY 2016 – FY 2018 Triennial Budget

Presentation to the Board of Commissioners July 16, 2015

L. Brooks Patterson Oakland County Executive

The Recommended Triennial Budget for FY 2016-FY 2018 is balanced.

Balanced Budget

Reduced and Reorganized

2008 through 2011

Budgetary Focus Has Transitioned

Declining property tax revenues

Budget task allocations

Retirement incentive in 2008

300 FTE positions deleted

Departments and programs reorganized

Salary decreases in FY 2010 & FY 2011

Healthcare plan modifications

Accelerated reductions to generate savings for long-term sustainability

Reduced and Reorganized

Maintained and Stabilized

2008 through 2011

2012 through 2015

Budgetary Focus Has Transitioned

Property values stabilized

No new budget tasks

Decreased reliance on budgeted use of fund balance

Salary increases in FY 2014 & FY 2015

Fully funded pension & retiree healthcare plans

Reduced and Reorganized

Maintained and Stabilized

Reinvest for Sustainability

2008 through 2011

2012 through 2015

2016 and Beyond

Budgetary Focus Has Transitioned

Distinguished Budget Presentation Award

Since 1984

Certificate of Achievement for Excellence in Financial Reporting

Since 1991

Award for Outstanding Achievement in Popular Annual Financial Reporting

Since 1997

AAAAwardsTRIPLE

LEADERS WORKING TOGETHER

Board of Commissioners

Jessica Cooper

Prosecutor

Michael Bouchard

Sheriff

Lisa Brown Clerk

Andy Meisner Treasurer

Jim Nash Water

Resources Commissioner

L. Brooks Patterson

County Executive

Nanci Grant Circuit Court

Elizabeth Pezzetti Probate Court

Julie Nicholson District Court

Laurie Van Pelt Director, Management & Budget

Recommendation Highlights for FY 2016 – FY 2018

Reinvesting for Sustainability

Recommendation Highlights

Another property tax rate reduction in 2016

Full funding of revenue sharing

Increase for capital improvement program

Funding for building security enhancements

Use of fund balance

General salary increase for each of the next 3 years

Reinstate County match for deferred compensation

Increase contribution for retiree health savings

FY 2016 – FY 2018 Recommended Budget

The Recommended Triennial Budget is balanced for the next three fiscal years

FY 2016 FY 2017 FY 2018

General Fund/General Purpose $428,870,550 $437,176,790 $441,810,251

Special Revenue & Proprietary $396,197,060 $394,878,690 $393,656,422

Total All Funds Recommended Budget $825,067,610 $832,055,480 $835,466,673

Percentage Change From Prior Year 2.2% 0.8% 0.4%

Property Tax

Revenue Sharing

Revenue Highlights

Property Tax Revenue

Recommended property tax revenue budget adjusted for three primary factors:

Increase for change in estimated future taxable value

Reduction in County general operating millage rate

Offset (reduction) for increased capture of County tax revenue for use in tax increment financing (TIF) districts

Oakland County, Michigan

Percentage Change in Assessed and Taxable Values

4.7

9%

4.5

0%

1.0

6%

1.1

7%

-3.6

7%

-8.9

0%

-14

.90

%

-12

.50

%

-3.0

8%

1.1

6%

7.1

1%

10

.39

%

5.2

8%

5.1

4%

5.5

6%

4.1

6%

0.0

4%

-3.6

0%

-11

.75

% -7

.78

% -3

.08

%

0.0

0%

1.6

5%

3.6

9%

3.0

0%

4.0

0%

4.0

0%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017* 2018*

*estimated for 2016 - 2018

Oakland County, MI Percentage Change in Assessed and Taxable Values

Assessed Value Taxable Value

Largest increase since 1999

Taxable Value Increase

FY 2016 FY 2017 FY 2018

Current Budget Recommendation 3% 4% 4%

Previous Budget Estimate* 3% 3% 3%

Increase from Prior Year’s Estimate 0% 1% 1%

*From budget adopted on September 18, 2014

Estimated Percentage Change in County-wide Taxable Value

Millage Reductions

The 3-year budget as adopted last year on September 18, 2014, was based on a tax levy of 4.19 mills for County general operations

A reduction of .10 mills was recently approved for the July 2015 levy

The recommended budget includes an additional .05 mills reduction for the July 2016 levy

The combined total reduction of .15 mills results in a 4.04 millage rate recommended for FY 2016 – FY 2018

TIF Capture

Capture as

Fiscal Year TIF Capture Tax Levy % of Levy

2016 $5.0 $215.9 2.3%

2015 4.4 212.3 2.1%

2014 4.1 209.7 2.0%

2013 4.0 206.3 1.9%

2012 4.0 206.3 1.9%

2011 4.9 212.8 2.3%

2010 6.3 230.8 2.7%

2009 8.0 261.5 3.1%

2008 8.4 271.3 3.1%

2007 8.4 271.2 3.1%

2006 7.6 260.3 2.9%

2005 7.8 246.6 3.2%

2004 7.2 234.6 3.1%

TIF Capture History for General Fund

(in millions)

Note: FY 2015 & FY 2016 TIF capture amounts are

estimated; all other years are actual amounts. FY 2016

gross tax levy is based on recommended budget

amount.

Peak

Peak

The recently approved policy limits total TIF capture to no more than 5% of the annual tax levy, which is approximately $10.8 million based on the current taxable value and millage rate

Net Change in Property Tax Budget

FY 2016 FY 2017 FY 2018

Prior year’s property tax revenue estimate, from budget adopted in September 2014 $217.4 $224.1 $231.0

Adjustments:

Increase in taxable value 1.4 3.6 6.0

Reduction in millage rate (.15 mills) (7.8) (8.0) (8.2)

Reduction for TIF captures (0.6) (0.6) (0.6)

Net adjustments ($7.0) ($5.0) ($2.8)

Revised recommended property tax revenue estimate $210.4 $219.1 $228.2

(in millions)

Summary of Property Tax Revenue Changes

Revenue Sharing

State revenue sharing payments to counties were temporarily eliminated with passage of Michigan Public Act 357 in 2004

Revenue sharing was restored to Oakland County beginning with partial year funding in FY 2015 with full restoration to begin in FY 2016

The County’s 3-year budget as adopted in September 2014 included a 1/3 reduction based on State appropriation for revenue sharing in prior years

The State began fully funding County revenue sharing in FY 2015 and the legislature recently approved continuation of full funding for FY 2016

Based on the revenue sharing estimate as published on the State Treasury website for FY 2016, the recommended budget includes an increase of $10.1 million annually over the next three years for revenue sharing

Capital Improvement Program

Building Security Enhancements

Use of Fund Balance

Expenditure Highlights

Capital Improvement Program

The recommended budget includes an increase of $4 million annually for the transfer from the General Fund to the Building Improvement Fund for a total appropriation of $5.5 million annually

An ongoing appropriation of this amount annually would provide sufficient funding for projected standard capital improvement needs of existing facilities over the next 10 years through FY 2025

Capital Improvement Program

Building Security Enhancements

A major building security enhancement project, above and beyond the standard building maintenance projects, is also included in the recommended Capital Improvement Program

Project Total FY 2016 FY 2017 FY 2018 FY 2019

Estimated Costs 15,042,500$ 4,074,000$ 5,468,500$ 4,615,000$ 885,000$

Funding Sources:

Budgeted Security Reserve Line Item 7,600,000$ 1,900,000$ 1,900,000$ 1,900,000$ 1,900,000$

Assigned General Fund Balance - Security Cameras/Consoles 2,042,986 2,042,986 - - -

Assigned General Fund Balance - Homeland Security Enhancements 6,414,514 131,014 3,568,500 2,715,000 -

Return to Fund Balance (1,015,000) - - - (1,015,000)

Total Funding from All Sources 15,042,500$ 4,074,000$ 5,468,500$ 4,615,000$ 885,000$

Funding for Building Security Enhancements

Use of Fund Balance

Five-year Forecast

General Fund Balance

ATTENTION TO FUND BALANCE

A healthy fund balance is an essential ingredient for long-term budget flexibility and sustainability = adequate cash flow

Significant increases in fund balance over the past decade is a result of planned, early budget reductions

Budgeted Use of Fund Balance

2nd quarter forecast

Declining use of fund balance over next 5 years

2 years ago, the adopted budget included $47 million in use of fund balance for FY 2016

Long-term Forecast of General Fund Balance (in thousands)

Improvement from last year’s estimate of $99.4 million for FY 2019

Jordie Kramer Director, Human Resources

Deferred Compensation Match

Retiree Health Savings Contribution

General Salary Increase

Recruitment & Retention

Employee Compensation

Deferred Compensation 457(b)

Plan Enhancement - Fidelity

Voluntary Deferred Compensation Plan available to full-time eligible employees

Effective with the FY 2010 budget, the County eliminated the $300 (maximum) “employer match” resulting in a significant savings

FY 2016 recommended budget includes the reinstatement of the annual $300 County match for employees in the Deferred Compensation Plan, effective January 1, 2016

Retiree Health Savings plan (RHS):

January 1, 2006, the County eliminated retiree health coverage for new employees

New employees are offered a Retiree Health Savings Plan which can be used for eligible medical expenses upon retirement or separation from County employment

Currently the County contributes $50 bi-weekly to RHS accounts .

FY2016 recommended Budget includes a $25 bi-weekly increase effective with the first pay period of FY2016 $75

General Salary Increases

General salary decreases during tough economic times 2.5% reduction FY 2010 1.5% reduction FY 2011

No general salary increases FY 2012 and 2013 October 2012 - one-time payment of $500

Restoring general salary increases

2% FY 2014 3% FY 2015 Proposed 3% FY 2016

Employee Recruitment and Retention

Recruitment and Retention efforts a top priority for the County

One third of the County’s workforce is expected to turn-over within the next 3 to 5 years

Retirements

Voluntary turnover

Succession Planning

Identifying needs within departments

Develop strategies

Highlighting the benefits of working for Oakland County

Tuition reimbursement

Health care benefits – low employee contribution

Employee Recruitment and Retention

Promote diversity in the workforce

“NEOGOV” - New applicant system

More user friendly

Compatible with mobile devices

Efforts to promote Oakland County as an employer of choice

Social media

HR website re-design

Sourcing candidates

Establishing strong relationships with colleges and universities

L. Brooks Patterson Oakland County Executive

In Closing

The recommended budget is balanced through FY 2018

The longer term five-year forecast projects a balanced position through FY 2020

Includes continued but diminishing use of General Fund Balance through FY 2020

Oakland County retains its AAA rating, which would not be possible without the continued support from the Board of Commissioners, the elected officials, and the County’s workforce

Postscript: A detailed overview of the Recommended Budget will be presented by Fiscal Services at the July 23rd Finance Committee meeting.

Thank you