TO:	Genesee County Legislators, Fellow Employees and Citizens
FROM:	Jay A. Gsell, County Manager/Budget Officer
DATE:	November 24, 2009
SUBJECT:	2010 Adopted Budget

The County’s 2010 all funds adopted budget, as always, has been a collaborative venture involving all our county departments, outside agencies and related service providers working in a fiscal environment; local, state and national; that is in a negative state of flux and continued pressure to do “more or the same with less.”  This hackneyed term, I believe, should finally be put to rest and the reality we are dealing with presently and for the next few years at minimum will be – to do as much as we can with the resources provided and to push for change/reform at the state and national levels to ensure our core levels of service survive the current recession and still promote the general health and well-being of our citizens/taxpayers.  None of this will be easy in the face of unchanged state and federal mandates, archaic attitudes of “doing business as usual” and parochial, inflexible attitudes toward cooperation, collaboration and, in strategic cases, privatization and/or consolidation of local government services.  As New York State struggles with a growing state deficit of $3.1 to $4 billion and a forthcoming 2010/2011 budget deficit of $6 to $13 billion, New York State counties have traditionally been not only service providers for state programs but invariably the somewhat unwilling “fiscal partners” in reductions or loss of state aid particularly for the six mandated program areas of Medicaid/Safety Net, jails, probation, public defense, mental health local government unit and Preschool Handicapped Children’s/Early Intervention.  If long term, true reform of some of these expenditure programs does not occur, starting with New York State/Albany, the 86% ($21,047,065) of our adopted $24,574,601 local property tax levy that supports our share of these direct services coupled with the rapidly escalating cost of New York State public employee pensions, Genesee County government will be faced with major dislocations of employees, non-mandated services and working to rule on mandated programs and still the prospect of crushing local property tax rates.

Requests for services, emergency dispatch call volumes, DSS and Probation caseloads, criminal justice caseloads, deteriorating road and bridge conditions and mental health client contacts are all increasing or becoming harder to “repair” in a timely manner and this in spite of most innovative/cutting edge use of technology and creativity by numerous County Department Heads and their staff.  Genesee County’s reputation for collaboration and creative problem solving have helped stave off crisis management or severe cuts in services and wholesale reductions in personnel or related service contracts with private, non-profit agencies within our community.  Genesee County will continue to explore alternative service delivery modes and even strategic disposal of assets while trying to ensure that our most needy residents/citizens/taxpayers do not fall through the cracks and the rest of our customers/clients are served in a professional, effective and efficient manner.

This 2010 Genesee County budget includes a general fund recommended appropriation of $97,567,242 within an all funds level of expenditures equal to $140,271,424 which includes our Nursing Home, Highway funds, Water fund, Risk Retention programs, Workers Compensation (countywide municipalities) pool, Job Development Bureau and Internal Service (Motor Pool) operation.  The initial requests submitted back in early September by the County departments, agencies and related service providers initially would have necessitated a general fund property tax rate of $11.98 per thousand of assessed value and a total expenditure proposal of $142,022,296.

As the Budget Officer working with the various departments and agencies approximately $1,301,000 in appropriations has been deleted from the requested General Fund budget and revenues approximating $3,650,000 have been inserted to get to the $9.82 final rate.  The 2010 budget includes the use of $2.266 million in undesignated, unappropriated audited General Fund Balance which is on par with the past 8 years’ average ($2.2 million) use of this audited, available reserve which offsets the net need for local property tax funds; this will leave approximately $7 million in the General Fund fund balance which is still within the New York State Comptroller’s and bond rating agencies’ recommended range of 7% to 10% of total general fund appropriations.  The other major revenue resource in the Genesee County budget, 4% local sales tax is projected to see no growth over our 2008/09 actual/projected receipts, and with the present and projected state of the regional and New York State economies as well as the experience of many other New York counties as well as the state, itself, with 7% to 25% declines in sales tax revenue, Genesee County has been lucky to be able to hold level; but our 50% pass-thru/sharing of these proceeds with the City, towns and villages will reflect the moribund state economy and our local economy’s reflection of same.

The ongoing Medicaid Cap’s annual growth in this Cadillac of health care programs for our 5,300 enrollees, which is presently 3% over the 2009 budgeted rate, requires a $9,957,000 local share appropriation which helps leverage additional state and federal dollars into our local/regional health care community totaling $55.6 million annually.  With the current and growing New York State deficit and their 31+ optional services, the Medicaid “platinum card” coverage, this 3% growth cap measured against at least a real statewide 7% to 10% growth rate could be in jeopardy with the advent of Governor Paterson’s next 2010/2011 state budget proposal.  During 2009 and 2010, the federal American Recovery and Reinvestment Act (ARRA) stimulus program has additionally helped New York State counties with our weekly local share state payments to Albany which has also resulted in enhanced federal Medicaid reimbursements to New York State, but this “cost saving” ends January 1, 2011 and the current unfettered benefits program will continue to place an undue burden on New York State counties unparalleled in the other 49 states of the Union.  The prospect of national health care reform, again expanding New York State Medicaid eligible rolls and thus New York State counties “local share” of Medicaid expenses, will likely place a greater burden/underfunded mandate in 2010 and for years to come.

In the adopted 2010 county budget, major areas of growth include:

• New York State Retirement costs for county employees:  approximately $1.3 million increase over 2009 budget as the State Comptroller attempts to recoup the loss of 25% of the overall retirement system assets due to the national economic downturn;
• Employee health care – with gross annual cost of $9.3 million allocated, the various departments expense is net a partial offset by use of a portion of our health care reserve; we are continually trying to effectuate cost savings within components of the plan like prescription, third party administrator, plan design changes and employee cost sharing.
• GCC:  The County Legislature in June 2009 committed to a $50,000 increase in the local sponsor share which in 2010 will be $1,936,000 and when coupled with the operating chargebacks received by Genesee County due to the number of non-Genesee County students attending the flagship campus has kept our net operating support to GCC at one of the lowest levels within the entire SUNY/Community College system.
• Sheriff’s Office/Jail/Communication:  particularly within the fully consolidated (including City of Batavia and Village of LeRoy Police calls) E911 PSAP (Public Safety Answering Point) staffing, state mandated county jail staffing and previously negotiated labor agreements for all unionized full time employees there are approximately  $1.1 million in additional costs and the loss of approximately $120,000 in state aid from the jail operation for housing state ready/parole detainees (part of New York State’s deficit reduction “plan.”)
• Workers’ Compensation/self-insurance program for the county’s direct workforce and County Nursing Home both saw increased assessments; general fund = $56,000 (17% increase) and nursing home = $34,000 (10% increase), respective over 2009 costs.
• Mental Health services in the County’s Local Government Unit’s (LGU) clinic have net increased in County costs by approximately $49,000 due to burgeoning caseloads and clients with more diverse and long term mental health needs.  All related contract agency services have been capped at their 2009 funding levels which may present some problems short term but collaboration and cooperation among said agencies could help accommodate service levels even with less direct County funding.

 

The County Nursing Home will again need a General Fund subsidy of approximately $500,000 in 2010; said direct subsidy would have been approximately $1 million more had not the federal IGT (Intergovernmental Transfer) program under New York State Medicaid expenses continued to draw federal funds into the facility which the 37% local match ($839,000) is being covered by the sale proceeds to HCR of the County Health Department’s Certificate of Need for home health care services which we anticipate being approved by the State Department of Health prior to April 1, 2010.  The Nursing Home’s 240 bed long term care facility is still a prime candidate for Genesee County to explore transferring/selling the assets to a new operator while assuring the current residents of high quality medical and related needs care as well as transitioning the workforce to a new operating entity.

Major expenditure areas that are not in need for more County support from 2009 to 2010 include the aforementioned County Nursing Home due to the federal IGT revenue maximization program, County Highway/Road Machinery funds which at $4.6 million in County General Fund support is barely a “maintenance of effort” profile and, hopefully, if the County is able to fund any capital improvement project requests with our 1% sales tax proceeds coupled with State CHIPS funding, the County Highway Department will put the less than adequate funding to maximum use.

The County Health Department with the almost complete elimination of the Certified Home Health Agency/Long Term Home Health Care programs (after April 2010) saw a reduction of approximately 12 FTE’s and the continued scrutinizing of the Early Intervention/Preschool Handicapped Children’s programs also saw net County cost proposals versus the 2009 budgeted expenses decrease.

The County Clerk/Auto Bureau divisions will require no net increase County funds in the 2010 budget even as the County Clerk looks to provide greater technology/information access to documents on file in County Building #1 and the Auto Bureau continues to attract out of county business due to its efficiency and effectiveness which provides more retained fees for Genesee County.

The six major federal/state mandated service programs included in this County budget – Medicaid, Early Intervention/Preschool Handicapped Children’s, Mental Health LGU, Probation, County Jail and Public Defender/Assigned Counsel – consume 86% of the 2010 property tax levy.  While state/federal initiatives like the Medicaid 3% Cap/ARRA Federal Medical Assistance Percentages (FMAP) reductions and local alternatives to incarceration programs within the criminal justice system continue to provide some modest local cost containment – the mandates are basically unfettered entitlements and enriched levels of benefits that both in terms of new clients/caseloads and cost increases are major factors in New York State and the counties being in deficit fiscal mode.  Real reform and less or no cost shifting by New York State to the counties must be part of future State budget and long term planning initiatives if government is ever to get out of its own way.

In this budget proposal there are no new County full time positions, negligible changes in hours or reclassification unless fully paid for by state/federal grants and for 2010 I will be working with the County Legislature and County Departments to implement a strategic/selective hiring freeze as we start planning for the catastrophe that will likely be the County/New York State 2011 budget.

There are no management salary increases in this budget which affects approximately 120 County employees and the two largest employee unions are or will be in negotiations with the County in late 2009/early 2010; the other three unions have collective bargaining agreements in place through 2010.  With a present -1.4 to -1.9% CPI and 7.3% to 9.7% official unemployment rate in Genesee County, future labor agreements and employer cost sharing on health care and other benefits will be severely constrained by New York State retirement mandated cost increases and ballooning employee health care/prescription costs; the number of high cost claims in excess of $50,000 in one year has again reached 12+ in calendar year 2009.

In 2010 the Department of Social Services will again “contract” for youth and adult protection/prevention services with the Office for the Aging, Veterans Services, Probation and Juvenile Officers in the Sheriff’s Office which results in the County receiving approximately 63% state aid for these services thus reducing the net County cost as well as espousing our collaborative efforts interdepartmentally and helping to reduce crisis incidents in the lives of citizens/clients.

The Countywide Water Fund is projected to need $931,000 in General Fund support from the County’s 1% sales tax as part of the fund’s debt service payments to the Monroe County Water Authority (MCWA) for our $27 million Phase I/Phase IIA system-wide improvements.  While progress is being made on extending potable, municipal water in select, rural areas of the County; major ($5 to $7 million) improvements in cooperation with MCWA on the east side of Genesee County/western Monroe County are still in need of significant state/federal aid in order for MCWA and Genesee County to truly begin Phase II transmission extensions.

In this adopted 2010 General Fund budget the appropriations of $97.6 million and related payments will require a local county property tax levy of $24,574,601 and $9.82 tax rate/$1,000 aided by the aforementioned use of audited, end of 2008 fund balance of $2.20 million.  This 2010 budget is at best a hedge against continued fiscal pressures delivered at Genesee County’s doorstep with regard to increasing human services clients, criminal justice activity, poor economic indicator performance in the regional and state economies and the current mandated service delivery programs that harkens back to the 1970’s origins with the unrealistic New York State spin of hooking county governments into not only delivering and administering what are typically state and federal partnerships in the rest of the US but also having counties directly funding actual benefits – the so called “local shares.”  With the federal stimulus/ARRA program expiring as of January 1, 2011 the County’s local share of Medicaid will again continue rising at least by the State mandated 3% level which will put significant pressure on our local property tax levy.

Looking ahead to 2011 and beyond there are major concerns with regard to our elected representatives in Albany not truly dealing with New York State deficits and ignoring the options most counties and other local governments in New York State have instituted which is consolidation/cooperative services, reductions of personnel, true privatization of critical/core services and no new revenue fees/“fixes” for deficit financing which would only put a further strain on our county taxpayers.  This Genesee County all funds 2010 appropriation of $140,271,424 which is an decrease of 0.18 over the 2009 adopted all funds appropriation of $140,517,653 includes a General Fund (where the property tax levy comes into play) appropriation of $97,567,242 versus the 2009 General Fund adopted budget of $98,807,468 and property tax levy of $24,574,601 versus the 2009 adopted $24,123,276 tax levy.

All this is tempered by the uncertainty of the New York State budget deficit reduction proposals just released by Governor Paterson which as of today do not decimate state aid to "mandated" county services but will reduce some specific grants to Office for the Aging, County Health and related agencies’ state aid.  As these reductions roll into state fiscal year 2010/2011 the Governor’s next budget proposal will very likely more significantly affect New York State counties and this county’s response will be to fulfill our mandated dictates to the letter of the law, practice “strategic civil disobedience” if necessary where state aid or personnel is being reduced/cut and attempt to provide quality, efficient services and return an investment to our community to the best of our ability, but not let New York State off the hook as to their role in longer pre-sentence investigations, longer waits for benefits, compliance checks and the prospect of waiting lists/delays in receiving/qualifying for Mental Health benefits.

Once again the County budget is a testament to the creative and collaborative nature/efforts of the elected and appointed employees of Genesee County government, our partners in the public and private non-profit service delivery sector and our contracted entities who provide valued and necessary goods and services to support the county workforce in their daily service to citizens/taxpayers.  Over the next 12 months our departments, agencies and contracted service providers will scrutinize service levels, costs, opportunities to further efficiencies and savings so we can be prepared for the 2011 budget cycle which will likely be more dire than any we have faced since the early 2000’s.

As mentioned previously the County will pursue key priorities within our Countywide Comprehensive Plan and 10 focus groups which are part and parcel of our annual operating budgets and programs of service goals and objectives.  Strategic use of our 1% sales tax to continue to pay down debt service, limited capital expenditures and pared down “asset acquisitions;” i.e. replacement of critical information technology equipment and five 100,000+ mileage Sheriff patrol vehicles; all part of 5 to 6 year “capital” planning and strategic thinking are critical pieces of our overall plan and help make Genesee County an example of good governance, strategic thinking, quality and efficient services and being more proactive than reactive to issues/changes as they are often dropped in our laps by other local governments or the state and federal governments.  With regard to “asset acquisitions” the State and federal governments under HAVA/voter access at the polls mandate continue to demand purchase of voter accessibility/tamper proof voter equipment paid for mostly by federal funds passed through New York State.  This outside funding source is rapidly drying up/declining and New York State counties will be on their own with future technology “upgrades” and replacements for their legacy green voting machines.

The teamwork, networking, communication that is endemic in Genesee County government is replete throughout this 2010 budget.  The trusted and extremely capable County Manager’s staff of Frank Ciaccia, Laurie Itjen and Sue Chatley aligned closely with the County Treasurer’s staff, Human Resources and County Legislature continue to make this budget process very open, transparent and fiscally prudent in terms of reality and our ability, though sometimes limited, to be masters of our fate in terms of the key barometer of our fiscal health – the property tax rate.

Genesee County is committed to being the best local government individually and collectively that we can be in a state that has a reputation of anything but “good government.”  We are a service business and we strive to be the best and constantly look for ways to maintain and/or improve our performance and the results which that performance engenders within out 60,000 person community.

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