Agenda - 06-20-2017 - 8-a - Minutes

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20 1 Bonnie Hammersley said16.2% was in the minutes of the September 8, 2016 work 2 session, and she brought forward this consensus tonight. She said it is up to the Board of 3 County Commissioners as to what number feels best. 4 Discussion ensued. 5 Bonnie Hammersley said the operating capital number does not go on the per pupil; only 6 current expense goes to per pupil. She said the increase will go on the entire package, not the 7 per pupil; only current expense goes towards the per pupil. 8 Commissioner McKee clarified that this would go on top of the per pupil. 9 Bonnie Hammersley said the recommended budget has the per pupil at $123, and it 10 would remain here. She said the amount of dollars that would go towards the schools would 11 increase, and the target would increase, which is at 48.8%. She said this money does not go 12 against the per pupil cost as it is outside of current expenses, and the State keeps track of 13 current expenses. 14 Commissioner Price said Davenport recommends 16.7%. 15 Mitch Brigulio said Davenport would recommend having the policy stay where it is, which 16 is the most beneficial in terms of speaking with the rating agencies. He said rating agencies 17 like there to be a policy, and for the County to strive to stay in line with it. He said changing the 18 policy is not necessarily an issue, but there should be a clear reason for changing it. He said if 19 the Board of County Commissioners wanted to change the policy, Davenport would recommend 20 it range between 16-17%; however, the reason behind the change is more important to 21 Davenport, and being able to convey the reason to the ratings agencies. 22 Commissioner Price asked if 16.7% is a good number because it is two months of 23 expenditures. 24 Mitch Brigulio said he does not know if this represents two months of expenditures, but 25 16.7% is a reasonable level. He said other AAA counties range from 15-20%, and 16-17% 26 makes sense. He said 17% would be the easiest to discuss with the credit rating markets 27 because it would show no change, but the greatest consideration is to have justification for any 28 changes that are made. 29 Commissioner Marcoplos asked if there have been any great fund balance tragedies in 30 North Carolina. 31 Mitch Brigulio said the 8% state statute minimum requirement is the absolute minimum 32 that a county and city would need to cash flow throughout the year. He said on top of that there 33 are some additional cushions that are helpful to be able to cash flow more on your accounts. 34 He said natural disasters, opportunities to purchase land, etc. are good examples for what the 35 fund balance could be used for. 36 Commissioner Marcoplos said he previously asked another Davenport colleague if a 37 14% fund balance would be acceptable, and that colleague said this would not be a damaging 38 fund balance, and the County would maintain a good credit rating. 39 Mitch Brigulio referred to page 10 of the Davenport presentation, and reviewed the AAA 40 rating charts across the state and nation. He said the County's current percentage is right on 41 the state median for AAA rated counties, but on a pure dollar basis Orange County has the 42 lowest dollar amount of unassigned fund balance of all AAA rated counties in NC. 43 Commissioner Burroughs said the County's policy is a percent of expenditures, and is 44 slightly more conservative than percent of revenues. 45 Mitch Brigulio said in 2016 the revenues were slightly higher than the expenditures for 46 the purposes of Moody's calculations, and the same dollar amount on a higher denominator 47 equals a lower percentage. He said a percent of revenues would be a little more conservative, 48 because it would give you the lower percentage.