Long-Range
Financial & Service Forecast
FY 2011-12 thru FY 2015-16
1
Overview
• Financial Forecast
• FY 2010-11 Estimates
• FY 2012 -16 Forecast
• Outstanding Strategic Issues
• Employee Compensation
• Employee Healthcare
• Unfunded Federal and State Mandates
• Increased demand for services
• Recommendations
2
Background
• In the Fall of 2008, first impacts of the Global
Financial Crisis began to be felt in Bexar
County
• Commissioners Court adopted Expenditure
Balancing Strategy:
– FY 2008-09: Directed mid-year 3-5 % expenditure
reductions
– FY 2009-10: Additional budget reductions of 3-5%
– FY 2010-11: Maintain FY 2009-10 department budget
levels
3
Background
• Targeted Hiring Freeze
• No salary increases (other than CBA)
• No across the board salary cuts, furloughs,
etc.
• In December 2010, one-time, non-recurring
$500 salary adjustment awarded to
employees
4
General Fund Background
• Before corrective actions were taken the
General Fund Operating Budget was
$341,076,864
• FY 2010-11 General Fund Operating
Budget is $327,961,935
• General Fund Savings is $13,114,929 from
cost savings strategies, this represents a
4% reduction in operating expenses from
FY 2008-09
5
One-time Revenues
Even with these measures, one time money
used for last two years:
• In FY 2009-10: $6 million in one-time revenue
was used to fund recurring expenditures
• In FY 2010-11 Budget identified an additional
$2 million in recurring revenues to offset the
previous year one-time revenues
• Therefore, $4 million of the revenue is still onetime, causing the County to draw down on Fund
Balance to provide a balanced Budget.
6
Fall 2010 Forecast
•
Adopted Budget projections assumed 1.5% increase
in Ad Valorem revenue for FY 2011-12
•
Also assumed a 3% increase in subsequent years
Funds Available
Funds Needed
7
Current Budget Estimates
Revenues
FY 2010-11 Budgeted Revenues:
$323,561,404
PRM Projected Revenue for FY 2010-11:
$319,626,152
Less than Budgeted:
($3,935,252)
Expenditures
FY 2010-11 Adopted Budget:
Current Estimate FY 2010-11:
Savings:
$327,961,935
$322,701,688
$5,260,247
8
Revised Forecast Assumptions
Based on preliminary tax rolls, ad valorem
revenues for FY 2011-12 are less than the Fall
Projection
Result: this forecast lowers projected property tax
revenue growth from previous forecasts:
•
•
•
•
Current
(1.6%) in FY 2011-12
1% in FY 2012-13
2% in FY 2013-14
3% through FY 2016.
Previous
1.5%
3%
3%
3%
9
Long Range Forecast
Funds Available
Funds Needed
10
Budget Needs
• Based on the current forecast adjusted
for the loss in ad valorem, the County
needs to:
– Identify an additional $2 million to maintain
a balanced baseline budget over the
forecast period
– Will NOT address Strategic Issues
(following slide)
11
Baseline LRFF w $2M
Before Addressing Strategic Issues
$400
$390
Millions
$380
$370
Baseline Funds
Needed
$360
$350
$340
$330
Current Funds
Available
$320
$310
$300
08-09
09-10
10-11
11-12
12-13
13-14
14-15
15-16
12
Strategic Issues
Cost not included in forecast
• Employee compensation programs (including
New Collective Bargaining Contract)
• Healthcare Costs
• Unfunded Federal & State Mandates/Budget
cuts
• Increasing demand for County Services due to
Population Growth
All are not included in the previous projections
13
Employee Compensation
• Over the last ten years, the County has
provided competitive wages for our
employees through various compensation
programs
– Regularly scheduled Pay table studies
– 6 month pay increase
– Hiring and promoting above minimum
– Progressive pay model
– Merit Award programs
– Cost of living increases
14
Employee Compensation
• This program has largely succeeded in
keeping Bexar County competitive with
the market
• However, given the revised lower forecast
growth rates in real estate, employee
compensation will not be able to grow as
fast as in the past
15
Employee Compensation
• 74% of County Operating Revenue is
provided by property taxes
• Employee salaries and benefits account
for 71% of County Operating Expenses
• 1% salary increase for all County
employees =$1,834,713, about equal to
one percent growth in property tax
revenue
16
Employee Compensation
• As part of Commissioners Court
Expenditure Balancing Strategy there
were no across the board salary increases
during the past three years.
• Going forward, the County will need to
identify ways to fund Cost of Living
Adjustments to keep up with future
inflation growth and maintain market
competiveness with other employers
17
Collective Bargaining
• County entered into collective bargaining
agreement with Deputy Sheriffs
Association of Bexar County in Aug 2006
• Contract expired in Sep 2009 – currently in
“evergreen” status
• Negotiations for new contract started Apr
2009 - no final agreement yet
18
Collective Bargaining
• $531,729 budgeted in FY 2010-11 for
Deputy Sheriff “step” increases required
by the collective bargaining agreement
• Bargaining unit members pay FY 2006-07
health insurance premium rates, per the
collective bargaining agreement
– For FY 2010-11, this benefit is estimated at
$882,795
19
Medical Plan Funding
County Contribution
Employee/Retiree Contribution
$22,570,609
$9,730,491
Total Contributions
$32,301,100
Total Contributions
$32,301,100
Total Expenditures
$37,668,274
Medical Plan Shortfall *
$5,367,174
* This is the amount in additional funding (or savings from plan
design) that is needed to ensure sustainability of the Medical Plan
20
Contributions/Expenditures
non-CBA
Employees
CBA
Employees
Retirees
2010-11
Contributions
$5,675,657
$2,374,720
$1,710,510
2010-11
Expenditures
$20,378,100
$9,255,265
$8,034,909
Difference
$14,702,443
$6,880,545
$6,324,399
% Employees
28%
26%
21%
% County
72%
74%
79%
(County Contribution)
21
Medical Inflation Trends
• Medical inflation trends are expected to be
10% per year over the forecast period
– Segal Company: 10.6%
source: 2011 Segal Health Plan Cost Trend Survey
– Mercer: 10%
source: Wall Street Journal, “What’s Happening to Your
Health Plan?”, 10/9/2010
– Bureau of National Affairs: 8.4% - 12.7%
source: “Surveys Predict Health Care Costs Will Rise 8.2 to
12.7% in 2011,” Managing Benefits Plans, Issue 13-2,
February 2011
22
Medical Claims Cost Pyramid
Claims Group
(total 2010 claims)
% Claimants
% Costs
$10,000+
7.9%
60.4%
$5,000 $9,999
9.3%
16.6%
$2,500 – $4,999
12.1%
10.7%
$1,000 - $2,499
19.2%
8.0%
$0 - $999
51.4%
4.4%
23
Five Year Forecast
24
Medical Plan Options
• County and employees pay more for same
coverage
• Reduce benefits to match current
contributions
• Decrease costs through healthy lifestyle,
preventive care, plan incentives
25
Unfunded Mandates
• Expect decline in State and Federal funding
• Unfunded mandates are a growing concern
• State is considering cutting mental health
beds, which will impact jail population
• Other issues such as voter identification,
immigration, and appraisal caps are
anticipated
• Medical Reform
26
Long Range Service Forecast
27
Long Range Service Forecast
 Planning tool for use in preparing for
increased service demand as a result of:
 Increases in overall Bexar County population
 Increased population in unincorporated area
 A more urban-like and developed
unincorporated area
28
Population Drives Demand for Services
 Some services are driven by the
unincorporated area population

County Roads, Fire Marshal, etc.
 Others are driven by demographic
factors, such as age

Citizens 18 and over drive the demand for
Elections, Adult Criminal Justice, etc.

Population 17 and under drives the demand for
Juvenile Services
29
Forecast Methodology
 Analyzed recent trends in the population
of Bexar County based on US Census
data
 Utilized historical information and what is
known already about the future to project
future population
 Results provide the drivers for County
services
30
Population Trends
 Overall Population
 Bexar County’s population increased by
23.1 percent from 2000 through 2010
 Increase of around 320,000 citizens
 Annual increase of 2.1 percent, higher
than the annual increase over the past
four decades
31
Population Trends
 Unincorporated Area Population –
“Balance of Bexar”
 Unincorporated area population
increased by 79 percent from 2000
through 2010
 Increase of around 110,000 citizens
 Annual increase of 6 percent
32
Population Trends
 Population in the unincorporated area now
makes up a greater percentage of the total
population
Census
Year
Incorporated Area
Unincorporated Area
2000
1,253,568
90.0%
139,363
10.0%
2010
1,465,022
85.4%
249,751
14.6%
33
Population Trends
 34.3 percent of the increase in the total
population occurred in the unincorporated
area
34
Population Trends
 82 percent increase in the number of
housing units in the unincorporated area
from 2000 to 2010
46,770 in 2000
85,452 in 2010
35
Population Trends
 Bexar County’s population has gotten older
Census
Year
17 and under
18 and over
Total
2000
396,473
28.5%
996,458
71.5%
1,392,931
2010
465,286
27.1%
1,249,487
72.9%
1,714,773
Most County services are delivered to those 18
and older
36
Overall Population Projection
 Used annual growth rate in the 2000s to
project the growth through 2017 using
2010 population as the baseline
Decade
1960-1969
1970-1979
1980-1989
1990-1999
2000-2009
2010-2019
Annual Percentage
Population Increase
2.09 %
1.91 %
1.99 %
1.75 %
2.10 %
2.10%
37
Overall Population Projection
 Bexar County’s population projected to
increase by 13.3 percent through 2017
 Increase of 268,000 citizens
 Estimated Bexar County population in
2017 of 1.9 million citizens
38
Unincorporated Area Projection
 Used “Balance of Bexar” figures from US
Census 2010 as baseline
 Projected growth rate of about 4.9 percent
Census
Year
Incorporated Area
Unincorporated Area
2000
1,253,568
90.0%
139,363
10.0%
2010
1,465,022
85.4%
249,751
14.6%
2017
1,631,126
82.2%
352,167
17.8%
39
Unincorporated Area Projection
 Bexar County’s unincorporated area
population projected to increase by
33.9 percent through 2017
 Increase of 102,000 citizens
 Estimated unincorporated area population
in 2017 of 352,000 citizens
 Estimate 5,000 plats each year
40
Age Group Projections
 Utilized 2010 Census numbers as baseline
 Applied percentages by age group utilized
in projections prepared by the State
Demographer
 Bexar County population will continue to
get older
41
Age Group Projections
 Bexar County’s population will continue to
get older
Census
Year
17 and under
18 and over
Total
2010
465,286
27.1%
1,249,487
72.9%
1,714,773
2017
520,003
26.2%
1,463,290
73.8%
1,983,293
42
Service Forecast
 Population growth impacts the level of
demand for Bexar County services
 Given limited resources, the County needs
to plan so that it can effectively
deal with the challenge of providing more
and potentially different services
 First step is to forecast what the
demand will be – Service Forecast
43
Service Forecast Methodology
 Identified service driver (population
segment) for each core mission
 Utilized projected population segment to
forecast workload demand for each core
mission
 Allocated staff to core missions
 Separated out administrative and support staff
 Projected costs/staffing based on future
workload demand
44
Service Forecast Cost
 Six Service Areas and unadjusted 5-year
impact:
 Adult Criminal Justice Services $11.1M
 Juvenile Criminal Justice Services $2.2M
 External Government Services $2.1M
 Roads and Capital Program $3.2M
 Social Services $252K**
 Internal Government Services $502K
**Does not factor in losses of Federal or State Funding
45
Service Forecast Results
 Summary

If cost-effective service delivery methods
aren’t identified, the cost of serving our
growing County population could be $19.2
million over the next five years.
46
Service Forecast Results
Millions
$440
$420
Salary and Benefit
Adjustments
$400
Health Insurance
Transfer
Service Delivery
Plan
$380
Baseline Funds
Needed
$360
Current Funds
Available
$340
Adj Fund Balance
$320
$300
FY 2008-09
FY2009-10
FY2010-11
FY2011-12
FY2012-13
FY2013-14
FY2014-15
FY2015-16
47
Service Forecast Results
 County will need change our way of
delivering services:
 E-gov, technology, automation
 More efficient business processes
 More cost-effective staffing models
 Proactive service delivery planning program
 Focus on Core Service Delivery
 The “New Normal”
48
LRFF Recommendations
49
FY 2010-11
Commissioners Court direct PRM
to identify:
•
Additional $1 million in recurring mid-year
savings/revenue enhancements ($2 million
when annualized) for Commissioners Court
consideration to address base budget imbalance
• Target recommendations to Commissioners
Court in May 2011
50
FY 2011-12 Budget
Commissioners Court direct PRM to:
– Develop FY 2011-12 Proposed Budget to
recommend an additional $5-10 million in
savings or revenue enhancements
– 1.5 - 3% of GF $327 million Operating Budget
This will require hard choices
51
FY 2011-12 Budget
Direct staff to:
• PRM: Identify Changes to employee Medical plan
for next Plan Year (January 2012)
– Plan design changes (covered benefits, co-pays,
deductibles, out-of-pocket maximums)
– Healthy lifestyle / healthy outcome incentives
• Target is to reduce annual County cost growth to
3% ($2 million cost avoidance/savings per year)
52
5 Year Plan for Service Delivery
Direct staff to:
• PRM: Work with each office and department to
develop 5-year Service Delivery Plans.
Presentation date to Court in Summer 2012
• BCIT/PRM: Work with Offices and departments to
identify and prioritize I.T. projects that generate
highest return on investment.
Goal should be $5 million identified in annual R.O.I.
savings by FY 2012-13.
53
5 Year Plan for Service Delivery
Direct staff to:
• All Offices and Departments: Identify
improvements in current business practices
Goal of this 5 year plan is to allow the
County to deliver services to our growing
population while still being able to
compensate our employees as cost of
living and inflation increases
54
Adjusted Forecast
$410
$400
Millions
$390
Salary and
Benefit
Adjustments
$380
$370
Health
Insurance
Transfer
$360
$350
Service
Delivery Plan
$340
Baseline Funds
Needed
$330
$320
Current Funds
Available
$310
$300
08-09
09-10
10-11
11-12
12-13
13-14
14-15
15-16
55