1. 1 Long-Range Financial & Service Forecast FY 2011-12 thru FY 2015-16

2. Overview 2 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

3. Background 3 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

4. 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

5. 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

6. 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 one- time, causing the County to draw down on Fund Balance to provide a balanced Budget. 6

7. 7 Funds Needed Funds Available 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

8. 8 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: $327,961,935 Current Estimate FY 2010-11: $322,701,688 Savings: $5,260,247

9. 9 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: CurrentPrevious (1.6%) in FY 2011-121.5% 1% in FY 2012-13 3% 2% in FY 2013-143% 3% through FY 2016.3%

10. Long Range Forecast 10 Funds Needed Funds Available

11. 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

12. 12 Baseline LRFF w $2M Before Addressing Strategic Issues

13. 13 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. Medical Plan Funding 20 County Contribution$22,570,609 Employee/Retiree Contribution$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

21. Contributions/Expenditures 21 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 (County Contribution) $14,702,443$6,880,545$6,324,399 % Employees28%26%21% % County72%74%79%

22. 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, Whats 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

23. Medical Claims Cost Pyramid 23 $10,000+ $5,000 - $9,999 $2,500 – $4,999 $1,000 - $2,499 $0 - $999 % Claimants% Costs 7.9%60.4% 9.3%16.6% 12.1%10.7% 19.2%8.0% 51.4%4.4% Claims Group (total 2010 claims)

24. Five Year Forecast 24

25. 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

26. 26 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

27. 27 Long Range Service Forecast

28. 28 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

29. 29 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

30. 30 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

31. 31 Population Trends Overall Population Bexar Countys 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

32. 32 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

33. 33 Population Trends Population in the unincorporated area now makes up a greater percentage of the total population Census YearIncorporated AreaUnincorporated Area 20001,253,56890.0%139,36310.0% 20101,465,02285.4%249,75114.6%

34. 34 Population Trends 34.3 percent of the increase in the total population occurred in the unincorporated area

35. 35 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

36. Population Trends Bexar Countys population has gotten older Census Year17 and under18 and overTotal 2000396,47328.5%996,45871.5%1,392,931 2010465,28627.1%1,249,48772.9%1,714,773 Most County services are delivered to those 18 and older 36

37. 37 Overall Population Projection Used annual growth rate in the 2000s to project the growth through 2017 using 2010 population as the baseline Decade Annual Percentage Population Increase 1960-19692.09 % 1970-19791.91 % 1980-19891.99 % 1990-19991.75 % 2000-20092.10 % 2010-20192.10%

38. 38 Overall Population Projection Bexar Countys 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

39. 39 Unincorporated Area Projection Used Balance of Bexar figures from US Census 2010 as baseline Projected growth rate of about 4.9 percent Census YearIncorporated AreaUnincorporated Area 20001,253,56890.0%139,36310.0% 20101,465,02285.4%249,75114.6% 20171,631,12682.2%352,16717.8%

40. 40 Unincorporated Area Projection Bexar Countys 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

41. 41 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

42. 42 Age Group Projections Bexar Countys population will continue to get older Census Year 17 and under18 and overTotal 2010465,28627.1%1,249,48772.9%1,714,773 2017520,00326.2%1,463,29073.8%1,983,293

43. 43 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

44. 44 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

45. 45 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

46. 46 Service Forecast Results Summary If cost-effective service delivery methods arent identified, the cost of serving our growing County population could be $19.2 million over the next five years.

47. 47 Service Forecast Results

48. 48 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

49. 49 LRFF Recommendations

50. 50 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

51. 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

52. 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

53. 53 5 Year Plan for Service Delivery 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. Direct staff to:

54. 54 5 Year Plan for Service Delivery 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 Direct staff to:

55. Adjusted Forecast 55