More adjustments and cuts were made by the Brown County Council to the 2022 budget last month as projections show less revenue coming in due to the COVID-19 pandemic.
At the start of budget request hearings in August, the council was tasked with cutting more than $1.5 million from next year’s budget.
At the Sept. 27 meeting the council continued making adjustments to submit a total budget of $7.1 million that would fit within next year’s advertised tax levy of $7,109,431. The next day, a list of six objections signed by 18 residents was filed with the county auditor.
The county is projected to bring in 7 percent less in income taxes next year due to a shortened time period for income tax collections that will be distributed next year.
“Back when the pandemic began, the governor gave everyone an extension of filing their income taxes, so 2021 income taxes include 14 months of collections and 2022 represents only 10 months of collection,” explained Caitlin Cheek, with Baker and Tilly.
“It is related to that collection change.”
The projected decrease equals about $600,000 less in the county’s budget.
Council President Dave Redding suggested the council set up a meeting with the Office of Management and Budget to request they release more of that reduction to help the county bridge their funding gap.
The county’s financial adviser is Baker Tilly, who prepared the projections for the council ahead of finalizing next year’s budget.
Cheek said that Baker Tilly anticipates tax collection schedules will return to normal in 2023.
In addition to cutting expenses to match a projected decreased revenue, the council tries with each fund to have a 15 percent cash operating balance and for 2021 the county still needs to cut $32,500 from its current general fund to achieve that goal, according to Baker Tilly.
Next year $383,000 would need to be cut from the general fund to meet that 15 percent goal and have $1,201,762 as an ending cash balance, according to projections from Baker Tilly.
During the Sept. 27 meeting, Jacque Clements, an adviser from the Association of Indiana Counties, presented an updated balance sheet for next year’s budget that also showed the county’s cumulative capital development fund and the local income tax public safety fund both still in the negative.
Commissioner Diana Biddle then cut nearly $185,000 from the cumulative capital development and LIT public safety funds.
She cut $125,000 from the cumulative capital development fund’s maintenance line with a plan to request money for that line as an additional appropriation next year from the local income tax economic development fund.
She also moved sheriff’s department equipment and vehicle leases from LIT public safety. She said she can cover those expenses with the $3 million loan the county recently took out that will be paid back over three years with property taxes.
“We will do what we can to use the loan where we can use the loan so we can free up other money within some of the funds to help Julie (Reeves, auditor) pay the things she needs to pay. We will be very creative,” Biddle said.
That includes paying off the final bill with Columbus Regional Hospital for ambulance service in the county before switching to Indiana University Health Lifeline earlier this year, which government leaders hope is another source of savings next year.
Residents have questioned if paying the ambulance service contracts count as a capital project expense, but Biddle said that the CRH bill qualified since it was a contract termination payout. The IU Health contract will be paid out of operating expenses.
The tax rate was 0.0979 in 2020, 0.0797 in 2021, and is estimated to be 0.0969 in 2022 with the loan factored in, according to Baker Tilly.
The council also plans to cut $750,000 from the health fund line in the general fund to make the 2022 budget fundable, leaving $250,000 in that line for 2022. Then other departments, like the highway department, have funds that move into the health trust fund at the beginning of the year, Reeves said.
Buy outs?
County government leaders also hope that recent changes to the county employee health insurance plan and offering a retirement incentive to qualifying county employees will help cut costs in next year’s budget.
How much will be saved from the health insurance changes will not be known until later this year once county employees enroll in the benefits plan for next year. Savings could also be seen in the cost to purchase reinsurance, but those bids will also not come in until later this year.
At the Sept. 27 meeting the council unanimously approved a motion to recommend to the commissioners to offer a buy out to certain qualifying employees.
The council recommended that they buy out one half of the base salary for employees who are 55 or older and have worked in county government consecutively for 10 years. The motion excluded sheriff’s department merit deputies, Emergency Management staff and the highway department staff except the front office secretary.
A hiring delay was also approved unanimously. Now if a vacancy happens in a county department, either on a voluntary or involuntary basis, the council recommended that the supervisor or elected official consult with the county human resources department, the commissioners and council to determine what should be done with that opening.
The county health department during an emergency declaration, the sheriff’s department and highway department were exempted from the hiring delay. The delay is expected to be in place until next year.
Biddle said the delay would at least allow the county to recover the money that will be used to buy out employees.
“Hopefully we will have a leaner government as we work through 2022 and possibly either not replace these buyouts or if someone on the team steps into that role we could look at eliminating the position they leave,” she said.
Redding reiterated that the county was not implementing a hiring “freeze,” but that all future vacancies would have to be reviewed.
Biddle said the employees who would qualify for a buy out work in departments where other employees could fill the opening without requiring additional training.
“The point is we don’t want to replace them,” council member Scott Rudd said.
He continued that this would be a time to look at how technology could play a role in helping to fill the vacancies, like using the county’s new websites for residents to fill out forms or applications.
“Technology enhancements. It’s about technology and opening up new working channels, if we don’t do that this gets a lot murkier in my mind,” he said.
The offer will not be made to public safety departments, the sheriff’s department or to highway department employees “because those are critical departments,” Biddle said last month.
Per the county’s personnel policy handbook, the commissioners have the right to reduce workforce for different reasons, including lack of funds or projected lack of funds.
If a new employee comes in Jan. 1 they will receive a 3.2 percent employer contribution to their PERF plan instead of the previous 11.2 percent. Also, employees will be vested after five years instead of 10, and elected officials will be vested after four years, which will hopefully help with retention of younger employees.
Money for the buy outs was not included in the Baker Tilly projections.
‘It has to happen’
The commissioners and council have been working together to cut health coverage and reinsurance expenses, as they continue to grow each year, resulting in more money being moved from the county’s rainy day fund and unappropriated funds. That fund is now well below $100,000. In July, the fund had $69,921.39 in it.
The council met in a special meeting on Sept. 7 to receive an update from the county commissioners on changes made to the county employee health insurance plan to help cut costs.
In September, a memo was sent out to county employees about changes to their health insurance plan, which included more money paid per pay period from employees’ checks, the elimination of co-pays for certain medical visits and a spousal carve out. At the Sept. 15 commissioners meeting some employees attended in person and on Zoom to ask questions and learn more. Some employees were not happy with the changes, citing concerns about being able to afford the new plan.
The commissioners approved changes to county employee preferred provider organization plan and high-deductible health plan for 2022 at their Sept. 1 meeting.
Health insurance costs continue to be an area of concern when it comes to the county’s budget this year.
A request for an additional appropriation of $250,000 from the county’s general fund to the health fund was also made at the Sept. 27 meeting. The expectation is that the county will receive $250,000 from reinsurance, or reimbursements, by the end of the year that could pay the general fund back.
But Clements suggested that the county council approve an ordinance approving an interfund transfer from the county’s highway department fund to the health trust fund.
She said additional appropriations are impacting the county’s budget and that the money could be paid back to the highway fund by the end of the year.
Next year deductibles will increase for employees, but only one member of a family will have to meet the deductible now. The county will now only contribute $1,000 to employee health savings accounts, which is a decrease from this year where the county contributed $1,500 to the HSA, matching the $1,500 deductible this year. Next year the deductible will be $4,000 for one employee under the PPO plan. Discounts to employees who are nicotine free will also be available.
Premiums also increased, which have not been raised in “quite a while,” HR coordinator Melissa Stinson said.
Co-pays were also eliminated for regular physician visits since the county offers the Brown County Health and Wellness Clinic as part of their insurance plan, which is free to employees who go. Co-pays remain for specialist visits under the PPO plan.
The commissioners voted in the fall of 2019 to provide memberships to Brown County Schools’ health clinic at Eagle Park to county employees as part of their benefits package, but more county employees need to use that clinic more to make that agreement feasible.
Spousal carve outs will also be implemented next year, which means that if an employee’s spouse is employed and they are offered health insurance then the spouse needs to be covered under their own employer’s plan and not the county’s.
The commissioners voted earlier this summer to use SIHO Insurance Services as the county’s third-party administrator for their health insurance plan for another three years.
Brown County Schools went through a similar overhaul of its health insurance plan a few years ago. In 2016, the district went with a different insurance provider and opened the health clinic at Eagle Park. Those changes took the district from a $700,000 deficit in the self-insurance fund to a $1.4 million cash balance earlier this year. Because of switching insurance companies, school employees also have not seen a health insurance premium increase in two years.
The estimated savings for the health insurance changes will not be known until after employees pick their new plans for next year. The commissioners also made changes to health insurance last year, which has resulted in a savings of $350,000 so far, Stinson said.
Changes implemented this year included increasing deductibles and maximum out-of-pocket amounts for the traditional PPO plans. Premium contributions were also increased this year.
As of July, the county had spent $1.4 million on health insurance, not including pharmaceutical reimbursements, which could bring that cost down to around $1.3 million, Stinson explained.
That amount does not include what the employees pay into the program, which will bring the cost lower.
Biddle said any employee concerned about health insurance plan changes should plan to attend the lunch and learns.
“The last thing we want is for someone to not be able to take their medicine or see their physician and end up with a catastrophic illness they have to go to hospital for,” Stinson said.
“This is the new age of health care as much as none of us like it, I don’t like it either, but it has to happen.”
OBJECTION TO COUNTY BUDGET FILED
The Brown County Council held a public hearing on the 2022 budget Sept. 27. The next day, a list of six objections signed by 18 residents was filed with the county auditor.
The first objection was about how the council held public comments at the start of the Sept. 27 meeting before budget discussions began.
“How can we voice an opinion before we have heard the proposal?” the petition states.
Residents also objected to the county cutting the health insurance line in the general fund to make the budget fundable. The petition cited an additional appropriation of $250,000 from the county’s general fund in August and another $250,000 additional appropriation that was requested at the county council meeting in September.
But it was suggested that instead of doing a second additional appropriation of $250,000 that the council approve transferring that money from the highway department’s motor vehicle highway fund and then that fund would be paid back by the end of the year when reinsurance money comes in.
In the petition, residents also objected offering a buy out to county employees.
“It seems that if these employees can walk off the job without interruption of service to county citizens, perhaps a workload analysis should be conducted throughout the entire county government,” the petition states.
“Buy outs seem counterintuitive. Is Brown County government overstaffed?”
The residents also objected to using the recently approved $3 million loan to fund deficits in the operating budget lines, like ambulance contracts. The objection states that if tax money was budgeted appropriately the loan would not be needed.
Resident Kevin Fleming also questioned in county meetings if the loan violated the Indiana Code that was cited in the ordinance authorizing the issuance of the funds. The code cited states the total amount of a loan cannot exceed 5 percent of the county’s total tax levy for 2021 and that the county would have to budget next year for any deficits in this year’s budget, which would mean further cuts would have to be made to stay within the levy of $7.1 million.
At the Oct. 6 Brown County Commissioners meeting, Diana Biddle said she would have lawyers from Barnes and Thornburg, who represent the county, look over the code and the ordinance to make sure the correct code was cited.
There was also an objection in the petition to using the county’s highway department budget to help cover health insurance costs. That interfund transfer was not officially approved on Sept. 27 since it requires passing an ordinance.
The last objection was to annual property tax increases and that the county needs to control its spending.
The objection petition will be adopted with the 2022 budget. A governmental unit is not “legally required to change its proposed budgets, tax rates or tax levies in response to the objection petition,” according to the Department of Local Government Finance.
INTEREST RATES ON $3 MILLION BOND FINALIZED
The $3 million bond to pay for various county projects and road work over the next three years was finalized last month at an interest lower than projected.
Commissioner Diana Biddle shared the news with the Brown County Council on Sept. 7 and at the commissioners meeting Sept. 1.
The county will use Peoples State Bank in Nashville to issue the bond and the bank offered the county a 0.9 percent interest rate. She said based on the upfront costs of the bond and the interest for the term of the loan over three years the impact on the tax rate to do this bond is less than when the county borrowed $2 million in 2018.
“We borrowed $2 million for three years and it was 9.6 percent (tax rate). We borrowed $3 million for three years (this year) and the whole (tax) rate is 9.5. It actually came in less. We’re paying less money for more money than we got three years ago,” Biddle said.
After multiple meetings and comments, the county council approved an ordinance in August allowing the county to take out a $3 million bond to pay for various projects and road work over the next three years.
The county has been borrowing $2 million every two or three years for capital improvement projects. The last such loan they took out in 2018 was to be paid off this summer.
Plans for the money are subject to change as the county receives nearly $3 million from the American Rescue Plan Act (ARPA), split into two payments, and restrictions on how that money can be spent continue to change at the federal level. But initial plans for the money include buying the Career Resource Center of Brown County building from the school district and turning it into the prosecutor’s office, which would replace the current office that sits in the courthouse parking lot. That move is dependent on the school board and superintendent agreeing to the sale and is estimated at $500,000.
Paying off 911 system equipment which has already been purchased and installed, for $360,000, and possibly replacing about half of the 11 air conditioning units at the jail, estimated at $250,000, are also on the project list. Money also will be set aside for the highway department to do road and bridge work.
At the Oct. 6 commissioners meeting, Biddle said that the county was no longer budgeting to tear down the prosecutor’s office and was considering withdrawing their offer to purchase the Career Resource Center building from the school district, which would free up more money from that initial budget.
She said the Hawthorne Drive building is in need of some changes to accommodate the health department, who recently moved there, and that the money for the prosecutor’s office tear down would be reallocated to that.
If the offer to purchase the CRC is withdrawn then that would free up an additional $500,000 in the loan budget to fund items like the sheriff’s department vehicle leases that were removed during the budget process to help make next year’s budget fundable.
