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

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

2. 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

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 Background

4. 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 Background

5. 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 General Fund Background

6. 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. One-time Revenues

7. 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

8. Current Budget Estimates

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 2011-12 1.5% 1% in FY 2012-13 3% 2% in FY 2013-14 3% 3% through FY 2016. 3% 9

10. Long Range Forecast Funds Available Funds Needed

11. 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) Budget Needs

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

13. 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 Strategic IssuesCost not included in forecast

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

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

20. Medical Plan Funding * 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

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, “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

23. Medical Claims Cost Pyramid Claims Group (total 2010 claims)

24. Five Year Forecast

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

26. 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 Unfunded Mandates

27. Long Range Service Forecast

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. 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. 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. 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

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. Population Trends • Population in the unincorporated area now • makes up a greater percentage of the total • population

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

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 County’s population has gotten older Most County services are delivered to those 18 and older

37. Overall Population Projection • Used annual growth rate in the 2000s to • project the growth through 2017 using • 2010 population as the baseline

38. 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

39. Unincorporated Area Projection • Used “Balance of Bexar” figures from US • Census 2010 as baseline • Projected growth rate of about 4.9 percent

40. 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

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. Age Group Projections • Bexar County’s population will continue to • get older

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. 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. 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. 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.

47. Service Forecast Results 47

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” 48

49. LRFF Recommendations

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