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

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19 1 Bonnie Hammersley said she was not in Orange County at that time, but there was 2 minimal use of the fund balance prior to 2013-2014. She said $5 million was put into the 3 budget in FY 2013-14 as a source of on going expenditures, and the same for 2015. 4 Bonnie Hammersley said the County and schools operating expenses are starting to eat 5 away at the fund balance. 6 Commissioner Jacobs said the BOCC set the 17% fund balance during FY 2013-14, as 7 a way to improve the County's fiscal standing. 8 Chair Dorosin said the Board discussed this, and he thought the Board voted to change 9 the 17% policy, but it looks like the Board only agreed to just dip into the balance. 10 Bonnie Hammersley said the BOCC agreed to take money out of the fund balance, but 11 the impact was unknown at the time. She said the BOCC did have a more comprehensive 12 discussion about changing the policy, but there was also discussion about the audit not yet 13 being completed at the time. 14 Commissioner Burroughs said she had a similar recollection, and she thought the 15 BOCC had agreed to go to 16% last fall. She said she would be willing to consider going to 16 16% as the County fund balance policy. 17 Chair Dorosin said he would support lowering the fund balance to 16%, and said the 18 Board should make a policy decision. He said he would like the Board to vote on it formally, 19 one way or the other. He said he would be willing to do that this evening, or wait a bit if other 20 Commissioners would like any additional information. 21 Commissioner Rich recalled the discussion being between 16.5% and 16%. 22 Chair Dorosin said it is not important to remember the previous discussion, because 23 there was no vote. He said the conversation can happen now. 24 Commissioner Jacobs suggested asking the bond counsel about this topic. 25 Bob Jessup said he would defer the question to Ted Cole, but there is not a bond risk 26 within his scope. 27 Ted Cole said if there is a near-term need for these funds, it would be preferable to use 28 the reserves for a one-time event as opposed to just lowering the policy permanently. He said 29 the bond agencies may ask at some point why the Board chose to permanently lower the fund 30 balance. 31 Ted Cole said rating agencies may or may not pick up on a permanent change, but if 32 they do, they will ask why the change occurred. He said no one ratio is going to drive a rating, 33 but picking away at areas of strength will eventually have an impact. He asked if there a specific 34 reason behind lowering the percentage to 16%. 35 Commissioner Marcoplos said he sees this money as a safeguard, and he does not see 36 it as a risk to go to 16%. He said having the money available now, and using it in current 37 dollars, is an investment that will save money. 38 Commissioner Jacobs said a 5.5-cent property tax increase is expected next year, and if 39 the reason for lowering the percentage is to give more to schools, then it will not be available to 40 offset the tax increase next year. He said he would rather plan for the inevitable 5.5-cent 41 property tax increase, and leave funds in the balance for one more year and then lower it next 42 year, to offset property tax increases in FY 2018-19. 43 Commissioner McKee said he would like to stay in a comfortable range, which is 17% 44 for him. He said he is not opposed to lowering it, but Commissioner Jacobs makes a good 45 point. He said there will be a demand for extra money, but "you can only sell the cows one 46 time," and the 1% can only be taken out once. 47 Commissioner McKee said his main concern about this discussion is not the actual 48 percentage, but rather the trend of the fund balance going down over the years. He said the 49 Board needs to be cognizant of this conversation, and it cannot continue to reduce the 50 percentage of the fund balance every year. He said this is a policy change, and asked if this