February 08, 2007 Workshop
Feb 08 2007
MINUTES OF THE MEETING OF THE BOARD OF COUNTY COMMISSIONERS
BREVARD COUNTY, FLORIDA
February 8, 2007
The Board of County Commissioners of Brevard County, Florida, met in special session on February 8, 2007, at 1:00 p.m. in the Government Center Commission Room, Building C, 2725 Judge Fran Jamieson Way, Viera, Florida. Present were: Chairperson Jackie Colon, Commissioners Truman Scarborough, Chuck Nelson, Helen Voltz, and Mary Bolin, County Manager Peggy Busacca, and Assistant County Attorney Barbara Amman.
REPORT, RE: LETTER SUPPORTING NASA FUNDING
Commissioner Voltz requested the Board send a letter to Senators and Representatives concerning supporting NASA funding; and stated it is important to make sure that NASA gets the appropriate funding because it means everything to the community.
Motion by Commissioner Voltz, seconded by Commissioner Scarborough, to send a letter of support for NASA funding to the appropriate Congressmen and Senators.
Chairperson Colon stated it would be helpful if the Brevard Delegation sent a letter on behalf of the County.
Commissioner Scarborough suggested asking Marshall Heard and Lee Solid of the EDC to help; and recommended sending the letter to the whole Florida Delegation. Commissioner Voltz stated that is fine.
Chairperson Colon stated that is good; Congressmen Feeney and Weldon are supportive; and Senator Nelson who is a huge supporter of NASA is not very happy about what is going on in Washington, D.C.
The Board reached consensus to approve the motion.
PRESENTATION, RE: HEALTHCARE
Jerry Visco, Risk Management Director, stated he will be addressing health plan issues and trends; the Board will be discussing issues that are impacting health plans in general and specific to the County; and these are the cost drivers they are having to deal with on an industry scale. He stated he will share with the Board some of the demographic information, who makes up the plans for this year, how big the County has grown and where that growth has been, and some of the proactive strategies. He stated he will talk about health management initiatives such as cost containment programs and wellness programs, contribution strategies, and Government Accounting and Standards Board (GASB) statements. He stated issues and
trends is a very broad scale issue; there are no easy answers; and the number one issue affecting health plans across the board will be the GASB-45 requirement that will require the County to begin to report future liabilities with regard to retiree healthcare expenses. Mr. Visco stated they will explain the liabilities, how they came up with the numbers, and what they can do about them. He stated hospital issues continue to plague health plans across the country; current capacity in hospitals and the cost of expansion to meet those capacity needs are issues; and network contracts continue to be an issue with regard to plan design. He stated the County has seen that issue locally with Blue Cross Blue Shield and Parrish Medical Center; there are shortages of critical professional staff; and advances in medicine, high end imaging costs, and prescription drug programs are all cost drivers. He stated those represent the majority of the cost drivers that impact medical inflation rates and trend setting; there are no easy answers; and it represents the playing field that they will have to work with. He stated the plan is now supporting over 4,700 employees and retirees and an additional 5,200 dependents; and displayed a slide showing the breakdown of the participating entities. He stated there is a plan this year to circulate updated interlocal agreements with the participating entities; they will share drafts with the County Manager and the Board; and those interlocal agreements would reestablish the working relationship between the entities and the Board. He stated this is an effort to formalize the relationship again after many years of allowing the entities to participate in the plan; there have been a lot of procedural changes over the years; and staff felt it was time to formalize some of those changes and make clear who has what responsibility between the Board as plan administrator and the participating entities as plan participants. He reiterated when they get to the point of drafting the interlocal agreements, they will share them with the County Manager and circulate them to the Commissioners before distributing them to the entities. He displayed a slide showing the trend with regard to the demographics; stated the Board will see a small decrease of 24 employees from 2006 to 2007, which is indicative of a very stable employee workforce with regard to plan participation; and the growth in the plan has come from two areas. He stated dependents had almost a 5.5% growth rate from year to year; and there has been tremendous growth in the number of retirees. He stated those numbers put a strain on the plan with regard to the cost of providing care; and those numbers are expected to continue to rise in coming years. He stated there are a number of employees who are scheduled to retire over the next five years; and the Board can expect that number to continue to grow and exert pressure on health care finances. He stated the majority of the retiree population is over 65; and another question has been the split between those who live in and out of the County.
trends is a very broad scale issue; there are no easy answers; and the number one issue affecting health plans across the board will be the GASB-45 requirement that will require the County to begin to report future liabilities with regard to retiree healthcare expenses. Mr. Visco stated they will explain the liabilities, how they came up with the numbers, and what they can do about them. He stated hospital issues continue to plague health plans across the country; current capacity in hospitals and the cost of expansion to meet those capacity needs are issues; and network contracts continue to be an issue with regard to plan design. He stated the County has seen that issue locally with Blue Cross Blue Shield and Parrish Medical Center; there are shortages of critical professional staff; and advances in medicine, high end imaging costs, and prescription drug programs are all cost drivers. He stated those represent the majority of the cost drivers that impact medical inflation rates and trend setting; there are no easy answers; and it represents the playing field that they will have to work with. He stated the plan is now supporting over 4,700 employees and retirees and an additional 5,200 dependents; and displayed a slide showing the breakdown of the participating entities. He stated there is a plan this year to circulate updated interlocal agreements with the participating entities; they will share drafts with the County Manager and the Board; and those interlocal agreements would reestablish the working relationship between the entities and the Board. He stated this is an effort to formalize the relationship again after many years of allowing the entities to participate in the plan; there have been a lot of procedural changes over the years; and staff felt it was time to formalize some of those changes and make clear who has what responsibility between the Board as plan administrator and the participating entities as plan participants. He reiterated when they get to the point of drafting the interlocal agreements, they will share them with the County Manager and circulate them to the Commissioners before distributing them to the entities. He displayed a slide showing the trend with regard to the demographics; stated the Board will see a small decrease of 24 employees from 2006 to 2007, which is indicative of a very stable employee workforce with regard to plan participation; and the growth in the plan has come from two areas. He stated dependents had almost a 5.5% growth rate from year to year; and there has been tremendous growth in the number of retirees. He stated those numbers put a strain on the plan with regard to the cost of providing care; and those numbers are expected to continue to rise in coming years. He stated there are a number of employees who are scheduled to retire over the next five years; and the Board can expect that number to continue to grow and exert pressure on health care finances. He stated the majority of the retiree population is over 65; and another question has been the split between those who live in and out of the County.
*Assistant County Attorney Barbara Amman’s absence and Deputy County Attorney Shannon Wilson’s presence were noted at this time.
Mr. Visco stated the majority of the under 65 retirees reside outside Brevard County, but only a small number of the over 65 Medicare-eligible retirees have left the County, so there is a good contingent still within the borders of the County; and displayed a slide showing the membership counts as of January 2007. He stated there is one change; the numbers have recently been updated to include the migration of a number of Blue Cross Blue Shield participants to Cigna Health Plans as a result of a special enrollment held in mid-January as a result of the Parrish Medical Center/Blue Cross Blue Shield dispute; and the numbers shown are accurate as of that special enrollment. He stated Cigna is by far the health plan of choice within the program; and displayed a slide showing the Medicare enrollment programs. He stated they are pleased with
the growth over time of participation in the Medicare programs, which are fully-insured Medicare HMO products for which the Board picks up 100% of the retiree premium; and the incentive is to remove as many of the Medicare eligible population from the self-insured health plans. Mr. Visco stated in spite of having the plan attractive from a premium perspective, they have only been successful in attracting approximately 18% of the eligible Medicare population to participate in the plans, partly because the base health plans still remain attractive to retirees and partly because of the nature of the plans. He stated it appears that retirees are reluctant to participate in an HMO product; they far and away prefer to participate in PPO products; and their focus is to find additional ways to encourage participation in the Medicare fully-insured products. He stated at this time last year, staff projected that health plan expenses for 2006 would exceed $40 million, but they came in a little bit below that number for 2006; and as a result, they were able to add to operating reserves. He stated for 2007, they projected an 11.5% increase through the end of 2007; those are the budget numbers they came forward with last year; and if that trend holds true, they would look at medical plan expenses of approximately $44 million for 2007. He displayed a bar chart; and stated there is a fair amount of movement within the Brevard County trend. He advised in 2005 there was significant increase in the County’s experience; analysis of medical utilization shows that the bumps are the result of significant increase in what would be classified as serious but not critical hospital days spent by employees; and this is a year-to-year anomaly that is difficult to predict. He stated in 2005 more employees were seeking hospital stays for more serious conditions, but they were not serious enough to reach the level of the County’s stop loss coverage, which would have provided a bit of recovery. He stated the County’s average annual increase is approximately 9.1% compared to the national average trend of approximately 10.7%; and the efforts the Board has put into place have been able to keep the County’s trend slightly below the national medical inflation trends. He stated in 2000 the Board made the decision to become a self funded program; and that has given them a lot of latitude in how the plans operate and the ability to control those costs. He commented on cost sharing with participants, the co-pay structure, health plan carve-outs, and participation in the Florida Health Care Coalition. He stated sharing health experiences with other Central Florida employers in both the public and private sectors has been very useful; and it has helped the County maintain some perspective with regard to what the industry has to deal with and what other entities are doing to meet the same demands the County is meeting. He stated the partnership with the Brevard County public school system remains the top priority; that partnership allows the county to continue to approach the marketplace with the leverage and buying power of the combined lives, which is approximately 25,000 between the School Board and County employees, retirees, and dependents; and that is a significant amount of buying power. He stated health and wellness initiatives are a recent addition to the strategies; and displayed a slide dealing with retiree contribution strategies as of January 2006. He stated the Board-approved policy allowed restructuring the retiree contributions toward health plans for future retirees so that those future benefits will be based on a years of service model as opposed to the current model where once a retiree is vested, the retiree is entitled to a full retiree subsidy or employer contribution. He advised beginning in 2006 for new hires, there is a schedule of 4% of the employer contribution to be earned for every year of service after the employee vests, so by the time a retiree has reached 25 years of service, he or she will be entitled to a full employer contribution toward health care; but anything less than 25 years of service will be docked 4% a year. He stated the federal government introduced the Medicare D Pharmacy Program; employers were encouraged to continue to offer retire pharmacy programs to their workforce to keep the retirees
from flocking to Medicare D; and the federal government provides a subsidy based on the number of Medicare-eligible retirees participating in the program. Mr. Visco stated since the inception of the Medicare D program, there have been approximately $1.2 million in pharmacy costs incurred by the County’s Medicare-eligible population; and against the cost the County has received subsidies from the federal government of $288,205 or roughly 24% of the cost. He stated one of the proactive strategies that should be emphasized this year is in regard to health and wellness activities; over the course of the last year, they have participated in two separate wellness challenges with the School Board; and the challenges have been fairly successful on a number of fronts. He stated they have gotten a good deal of participation from the membership; and as a result, the County has been a two-time recipient of the Challenge trophy. He stated over 850 employees enrolled in the separate wellness programs; the participation rates in the challenges was 14% and 17% when the target was 10% participation; and expressed pride in the level of commitment from employees. He stated over 400 employees participated in the biometric screenings; and that has paid high dividends for the County. He commented on positive feedback received from members who participated in the wellness challenge; and stated they want to continue to expand the wellness programs and encourage more employees to participate. He stated they have continued to offer health fairs; the response to the health fairs has been positive; but there was criticism that not enough employees get a chance to participate in the health fairs because they cannot get to Viera or Titusville; so last year they began an initiative to create mini-health fairs. He stated they have taken the nurse consultant and several vendors on the road; they have gone to 20 different sites; they have seen hundreds of employees; and they have brought to them the wellness message and opportunity to participate in biometric screenings. He stated that has paid off with tremendous dividends; and there has been very enthusiastic response, particularly to the biometric screenings.
the growth over time of participation in the Medicare programs, which are fully-insured Medicare HMO products for which the Board picks up 100% of the retiree premium; and the incentive is to remove as many of the Medicare eligible population from the self-insured health plans. Mr. Visco stated in spite of having the plan attractive from a premium perspective, they have only been successful in attracting approximately 18% of the eligible Medicare population to participate in the plans, partly because the base health plans still remain attractive to retirees and partly because of the nature of the plans. He stated it appears that retirees are reluctant to participate in an HMO product; they far and away prefer to participate in PPO products; and their focus is to find additional ways to encourage participation in the Medicare fully-insured products. He stated at this time last year, staff projected that health plan expenses for 2006 would exceed $40 million, but they came in a little bit below that number for 2006; and as a result, they were able to add to operating reserves. He stated for 2007, they projected an 11.5% increase through the end of 2007; those are the budget numbers they came forward with last year; and if that trend holds true, they would look at medical plan expenses of approximately $44 million for 2007. He displayed a bar chart; and stated there is a fair amount of movement within the Brevard County trend. He advised in 2005 there was significant increase in the County’s experience; analysis of medical utilization shows that the bumps are the result of significant increase in what would be classified as serious but not critical hospital days spent by employees; and this is a year-to-year anomaly that is difficult to predict. He stated in 2005 more employees were seeking hospital stays for more serious conditions, but they were not serious enough to reach the level of the County’s stop loss coverage, which would have provided a bit of recovery. He stated the County’s average annual increase is approximately 9.1% compared to the national average trend of approximately 10.7%; and the efforts the Board has put into place have been able to keep the County’s trend slightly below the national medical inflation trends. He stated in 2000 the Board made the decision to become a self funded program; and that has given them a lot of latitude in how the plans operate and the ability to control those costs. He commented on cost sharing with participants, the co-pay structure, health plan carve-outs, and participation in the Florida Health Care Coalition. He stated sharing health experiences with other Central Florida employers in both the public and private sectors has been very useful; and it has helped the County maintain some perspective with regard to what the industry has to deal with and what other entities are doing to meet the same demands the County is meeting. He stated the partnership with the Brevard County public school system remains the top priority; that partnership allows the county to continue to approach the marketplace with the leverage and buying power of the combined lives, which is approximately 25,000 between the School Board and County employees, retirees, and dependents; and that is a significant amount of buying power. He stated health and wellness initiatives are a recent addition to the strategies; and displayed a slide dealing with retiree contribution strategies as of January 2006. He stated the Board-approved policy allowed restructuring the retiree contributions toward health plans for future retirees so that those future benefits will be based on a years of service model as opposed to the current model where once a retiree is vested, the retiree is entitled to a full retiree subsidy or employer contribution. He advised beginning in 2006 for new hires, there is a schedule of 4% of the employer contribution to be earned for every year of service after the employee vests, so by the time a retiree has reached 25 years of service, he or she will be entitled to a full employer contribution toward health care; but anything less than 25 years of service will be docked 4% a year. He stated the federal government introduced the Medicare D Pharmacy Program; employers were encouraged to continue to offer retire pharmacy programs to their workforce to keep the retirees
from flocking to Medicare D; and the federal government provides a subsidy based on the number of Medicare-eligible retirees participating in the program. Mr. Visco stated since the inception of the Medicare D program, there have been approximately $1.2 million in pharmacy costs incurred by the County’s Medicare-eligible population; and against the cost the County has received subsidies from the federal government of $288,205 or roughly 24% of the cost. He stated one of the proactive strategies that should be emphasized this year is in regard to health and wellness activities; over the course of the last year, they have participated in two separate wellness challenges with the School Board; and the challenges have been fairly successful on a number of fronts. He stated they have gotten a good deal of participation from the membership; and as a result, the County has been a two-time recipient of the Challenge trophy. He stated over 850 employees enrolled in the separate wellness programs; the participation rates in the challenges was 14% and 17% when the target was 10% participation; and expressed pride in the level of commitment from employees. He stated over 400 employees participated in the biometric screenings; and that has paid high dividends for the County. He commented on positive feedback received from members who participated in the wellness challenge; and stated they want to continue to expand the wellness programs and encourage more employees to participate. He stated they have continued to offer health fairs; the response to the health fairs has been positive; but there was criticism that not enough employees get a chance to participate in the health fairs because they cannot get to Viera or Titusville; so last year they began an initiative to create mini-health fairs. He stated they have taken the nurse consultant and several vendors on the road; they have gone to 20 different sites; they have seen hundreds of employees; and they have brought to them the wellness message and opportunity to participate in biometric screenings. He stated that has paid off with tremendous dividends; and there has been very enthusiastic response, particularly to the biometric screenings.
Commissioner Voltz stated when this was discussed they talked about going to do blood pressure screenings and those kinds of things; and inquired if they do blood draws or any of the necessary things for cholesterol. Mr. Visco responded they have been able to do that on a spot basis, but not consistently; it is a question of timing and when the lab resources can be made available; and it is also a question of expense. He stated when they have the opportunity, they will go out with at least free cholesterol screenings; but for the full blown lab work, such as full blood screenings, profiles, lipids, and cholesterol screenings is mostly done during the health fairs that are conducted in Viera and Titusville. Commissioner Voltz inquired how much would it cost to do some mini-health fairs; with Human Resources Director Frank Abbate responding the Health and Wellness officer is the primary employee involved in that; the Board allocated $20,000 in the past year that was used for biometric screenings; and they have made it easier for field employees to participate by using that funding and not charging the employees. Mr. Abbate stated the $20,000 is an investment of the health care premiums collected; $20,000 was allocated last year; and the Board can see the result of the limited testing that they have done. He stated they are in the process of encouraging departments, when they hold their staff meetings or any special limited events, to have the Health and Wellness officer onsite with any of the lab partners for the purpose of doing a mini-fair; and to the degree the funding is expanded for biometric screenings, they would look at expanding the tests that are available outside of just cholesterol and blood sugar tests, which are the two primary areas that have the most cost, diabetes-related conditions and cardiac. Commissioner Voltz inquired if they could utilize the funding they currently take in if the Board decides to expand the project; with Mr. Abbate responding the Board was interested in seeing them expand, which would be
advantageous; but they need to look at additional funding. Mr. Abbate stated $20,000 is dedicated now; if it went to $60,000, they would dedicate all those monies to free biometric screenings for field employees onsite; and it would be done as a pass-through cost to the labs that would provide the results directly to the employees. He stated that would provide employees who might not have the opportunity to go to a doctor for an annual physical to participate and get the results directly so they may pick up something they might otherwise not know about, such as diabetes or high blood pressure; and since those items end up costing the health plan the most, it would be a worthwhile investment.
advantageous; but they need to look at additional funding. Mr. Abbate stated $20,000 is dedicated now; if it went to $60,000, they would dedicate all those monies to free biometric screenings for field employees onsite; and it would be done as a pass-through cost to the labs that would provide the results directly to the employees. He stated that would provide employees who might not have the opportunity to go to a doctor for an annual physical to participate and get the results directly so they may pick up something they might otherwise not know about, such as diabetes or high blood pressure; and since those items end up costing the health plan the most, it would be a worthwhile investment.
Commissioner Voltz stated she would like to make a motion to go forward with the increased screenings because it will save money in the long run. Chairperson Colon inquired if that is something that will be added during the budget; with Commissioner Voltz responding no. Chairperson Colon inquired when it would start, and would it be next fiscal year. Mr. Abbate stated if the Board chose, they would put that in to do it for this year; they would not be looking at General Fund dollars but dollars from the Group Health Insurance Plan; and explained how the plan works with the premium costs and the reserve amount. He stated they would start the additional screening now if the Board chooses.
Motion by Commissioner Voltz, seconded by Commissioner Scarborough, to approve funding of $60,000 from the Group Health Insurance plan dedicated to free onsite biometric screenings for field employees.
Commissioner Scarborough stated it looks like it is going to be a savings if they can prevent the heavy costs.
Chairperson Colon stated it needs to be more organized in the sense that it needs to be north, central, and south; all the employees will know when the dates are; and it can be made convenient so employees can do it on their lunch hour. Ms. Busacca advised they would go to the employees with the screenings. Mr. Abbate stated they are going to go onsite to the departments; they will include the Charter officers as well because they are part of the health plan; and with approval of the motion, they will dedicate available staff and the Health and Wellness officer to go onsite to the field for visits. Chairperson Colon reiterated it has to be organized; if they go to an office in Titusville, they are able to hit everybody in one shot; and that is really where it is. She commented on employees not having flexible schedules, ability to go for testing during lunch, informing employees of opportunities for testing, and direction during the goals and strategic planning. She stated people with high blood pressure may not know until they end up in the emergency room; and it is not just people who are overweight who have problems, as people who look healthy and are skinny could also have high blood pressure. Mr. Visco stated there are several examples of that where otherwise healthy employees have come in with high blood pressure and high cholesterol levels, and were unaware they were that ill.
Commissioner Bolin suggested the Commissioners be given blood pressure tests after a Board meeting to show their support. Mr. Visco stated they would be happy to show up during cold and flu season as well to give flu shots.
Commissioner Voltz stated if a County department is having a meeting, they can call the Health and Wellness officer to come down; and it would not be a matter of setting a time and place and
asking the employees to come up from South Brevard. Mr. Visco stated they will do it both ways; they will advertise and set up times; but they will also make themselves available for on-calls.
asking the employees to come up from South Brevard. Mr. Visco stated they will do it both ways; they will advertise and set up times; but they will also make themselves available for on-calls.
Chairperson Colon inquired how many employees are there in Brevard County; with Ms. Busacca responding approximately 2,500. Chairperson Colon stated she does not think little meetings of 50 people are going to cut it when there are 2,500 employees; and that is why it needs to be organized so they will be spending time wisely. She commented on people being upset by inconvenient office hours, making the screenings user friendly for the employees, and getting creative. Mr. Abbate stated staff will keep the Board apprised of the results, maximize opportunities, and leave a large enough window so people can get there.
Commissioner Voltz stated it would be nice to have a list of those places staff ends up going so the Board can see how much of an impact it is having and where it is having an impact. Mr. Abbate stated they will report back to the Board so it can see the results of the efforts in those areas.
Chairperson Colon called for a vote on the motion. Motion carried and ordered unanimously.
Mr. Visco stated there are actually approximately 4,500 total plan participants they have been able to see; to date they have done 857 blood pressure screenings; in the cold and flu season they distributed over 500 flu shots with a $10 co-pay; and that is significant participation on behalf of the people. He advised the number who actually got flu shots was greater than that; and he is just talking about the shots the County provided. He commented on shots given by the Health Department, Public Safety, and the Sheriff’s Office; and stated it was a very good flu season campaign across the Board. He commented on the hand washing campaign, posters in County restrooms, distribution of coupons for hand sanitizers, and posting of educational materials at the wellness website. He stated the Wellness Program is done in partnership with the School Board and the benefits consultants; the worksite biometric screenings have allowed them to identify 159 plan members who were considered at risk for potential cardiac problems, high blood pressure, and risks of stroke; and they were referred to a Healthy at Heart Program, which is done by Pfizer. He stated it is an educational program that addresses a variety of lifestyle issues, such as weight loss programs, smoking cessation campaigns, nutritional information, and stress management; 159 people have volunteered for that program and continue to participate; but there is a lot more that can be done with that program. He commented on workplace Weight Watchers, introduction of mini-health fairs, major health fair timetables, better advertising and formalizing of the programs, increasing referrals to disease management programs, departmental competitions, America on the Move walking program, and onsite wellness programs and biometric screenings. He stated it is a question of where to better spend resources; and they are going to determine whether they should continue to participate in those types of competitions versus spending more time doing the biometric screening side of things. He stated they plan to create a Retiree Wellness Committee; the retiree population has been underserved by the efforts to date and it has been difficult to communicate with that segment of the population; and they hope to find enough retiree volunteers to act as a sounding
board, so they will be able to tailor wellness programs to that population. Mr. Visco stated the nurse and the consultants, along with the partners at the School Board, are continuing to find ways to produce education programs on a variety of lifestyle issues; and personal safety was another area for the wellness program. He stated an additional initiative for 2007 is expansion of the wellness ambassador initiative; and explained the program. He stated they want to continue the onsite blood pressure screenings, cold and flu prevention programs, quarterly health management reviews with the carriers, monitoring performance of health care participants, and participation in the Wellness Steering Committee with the School Board and the consultants. He commented on emphasizing health plan initiatives in the coming year; and stated they want to continue to monitor the health plan performance activity to see how well Blue Cross Blue Shield and Cigna are performing. He stated they need to monitor the impact of the GASB-45 initiatives and what that means to the health plans and municipal employers; and they intend to have RFP’s for several products, particularly the flexible spending account program, dental programs, basic and supplemental life insurance programs, and long-term disability programs. He advised it is best practices to occasionally approach the marketplace to see what is out there and if there is any benefit in negotiating a better deal; and while they have not had any particular problems with any of the plans, it is time to check the marketplace.
board, so they will be able to tailor wellness programs to that population. Mr. Visco stated the nurse and the consultants, along with the partners at the School Board, are continuing to find ways to produce education programs on a variety of lifestyle issues; and personal safety was another area for the wellness program. He stated an additional initiative for 2007 is expansion of the wellness ambassador initiative; and explained the program. He stated they want to continue the onsite blood pressure screenings, cold and flu prevention programs, quarterly health management reviews with the carriers, monitoring performance of health care participants, and participation in the Wellness Steering Committee with the School Board and the consultants. He commented on emphasizing health plan initiatives in the coming year; and stated they want to continue to monitor the health plan performance activity to see how well Blue Cross Blue Shield and Cigna are performing. He stated they need to monitor the impact of the GASB-45 initiatives and what that means to the health plans and municipal employers; and they intend to have RFP’s for several products, particularly the flexible spending account program, dental programs, basic and supplemental life insurance programs, and long-term disability programs. He advised it is best practices to occasionally approach the marketplace to see what is out there and if there is any benefit in negotiating a better deal; and while they have not had any particular problems with any of the plans, it is time to check the marketplace.
Chairperson Colon stated they have been discussing things that are important as far as screenings and encouraging people to exercise and so forth; and inquired what kind of incentives or programs do the insurance companies bring to the table. Mr. Abbate responded Mr. Visco mentioned monitoring the plans; and one of the important things they looked at when they switched plans was what the companies were willing to put on the table in terms of coming out to the field and doing wellness activities. He stated Blue Cross Blue Shield put a lot on the table in terms of what the company was willing to do; that is what they are going to be monitoring; and as the County has a self-insured plan, it is in their best interest to make sure they do the things that were promised. He stated that is where they plan to focus this year as they go in with the additional incentives that the Board provided to do the biometric screening; the companies have made certain commitments in response to the RFP when they were brought on board; the Insurance Advisory Committee was specifically attuned to that; and they will report back to the Board on what those activities are and whether the companies are meeting their commitments. Mr. Visco stated some of the items the partners agreed to discuss are heart healthy programs, diabetes management, men or women’s health fitness programs, nutrition, stress management, smoking cessation, holiday safety, and a whole host of programs; Blue Cross Blue Shield and Cigna area ready to go; and the County just needs to access those things and put them into the field with the existing wellness programs.
Motion by Commissioner Voltz, seconded by Commissioner Bolin, to authorize going out for RFP’s for certain insurance programs, including flexible spending account, dental insurance, basic and supplemental life insurance, and long-term disability. Motion carried and ordered unanimously.
Mr. Visco stated he is going to talk about some of the strategic thinking and original policy decisions that have been made by the Board over time that have put the program in the position it is in today; and the first is the partnership with the School Board. He requested the Board think about the existing policy decision and whether it wants to continue along this line; and
stated if there is a need to make any changes to provide additional direction, that is what staff is looking for at this stage. Mr. Visco stated the plans are to continue to move forward as previously directed with regard to maintaining the partnership with the Brevard County School System, which will allow to them to go to the marketplace with the gross number of lives that both entities have to offer; and they continue to see tremendous value in approaching the marketplace in that manner. He stated in terms of plan design and structure of the program, the number one issue has always been to maintain access to all the hospital systems in the County in at least one health plan option; and that brings into play the discussion with regard to Parrish Medical Center and Blue Cross Blue Shield. He noted despite the problems of both entities with the contracts, the Board policy to maintain access to all hospital systems is maintained with the Cigna plan. He stated the competitive model has paid dividends for the County this year in that they were able to continue to provide an option for access to all health plan members, including North Brevard residents who are impacted by the Parrish Medical Center and Blue Cross Blue Shield situation; and that continues to work well. He stated staff recommends continuing the relationship with Blue Cross Blue Shield through this plan year to give them an opportunity to show how well the program can perform and if it can perform as promised; and they need nine months to gather the data. He stated if in 2008 it appears the plan can no longer perform, staff will come to the Board with a recommendation to go out for RFP to replace the product; but they do not feel a need to move to replace at this point because the plan still stays true to the policy direction, and the County continues to offer the single plan with access to all hospital systems.
stated if there is a need to make any changes to provide additional direction, that is what staff is looking for at this stage. Mr. Visco stated the plans are to continue to move forward as previously directed with regard to maintaining the partnership with the Brevard County School System, which will allow to them to go to the marketplace with the gross number of lives that both entities have to offer; and they continue to see tremendous value in approaching the marketplace in that manner. He stated in terms of plan design and structure of the program, the number one issue has always been to maintain access to all the hospital systems in the County in at least one health plan option; and that brings into play the discussion with regard to Parrish Medical Center and Blue Cross Blue Shield. He noted despite the problems of both entities with the contracts, the Board policy to maintain access to all hospital systems is maintained with the Cigna plan. He stated the competitive model has paid dividends for the County this year in that they were able to continue to provide an option for access to all health plan members, including North Brevard residents who are impacted by the Parrish Medical Center and Blue Cross Blue Shield situation; and that continues to work well. He stated staff recommends continuing the relationship with Blue Cross Blue Shield through this plan year to give them an opportunity to show how well the program can perform and if it can perform as promised; and they need nine months to gather the data. He stated if in 2008 it appears the plan can no longer perform, staff will come to the Board with a recommendation to go out for RFP to replace the product; but they do not feel a need to move to replace at this point because the plan still stays true to the policy direction, and the County continues to offer the single plan with access to all hospital systems.
Commissioner Voltz stated she has Blue Cross Blue Shield HMO; it has been very positive on her part thus far; and she has used it often.
Mr. Visco inquired if the Board wants to continue with regard to employer/employee share towards the premium; and if they want to address the relationship to show they remain sensitive to the relationship between the premiums and the salary increases and position of the lowest paid employees. He stated in terms of the contribution model for retirees; the Board made efforts to address the subsidy of retiree health care; that was the change in the plan design that was effective January 1, 2006 where they moved to the years of service contribution model; and that continues to be the emphasis. He stated with regard to the premium contribution strategy, presently the contribution-to-premium makeup exists with 89% of the premium borne by employer contribution and 11% is picked up by employee contribution; and this is a change from last year’s position where they were in an 86%-14% ratio. He stated that ratio shifted based on the Board’s decision last year to absorb the full amount of the medical increase and hold employee and retiree rates stable at 2006 levels. He stated because of the lack of increase on the employee/retiree, the contribution ratio shifted from 86%-14% to 89%-11%; the retiree ratios are 62%-38%; and commented on the shifting of the numbers. He stated the five-year historic trend increases contribution on average 9.8%; the average increase in contribution is just slightly ahead of the average increase in costs; and with that slight advantage, they have been able to maintain and add to the mandated reserves they are required to bring forward as a result of State oversight of group health insured plans. He stated reserves are projected to be approximately $10.5 million this year, which is in line with where the State says the County needs to be. He advised of additional contributions from employees beyond premium contributions including out-of-pocket expenses, co-pays, and the coinsurance contribution piece; and displayed a chart showing that above the premium contribution there is an additional $4.5 or $4.8 million required from the workforce based on the current co-pay and coinsurance
structures that are in place. Mr. Visco stated they have not made too many adjustments to that over the last few years; the additional items almost double the employee premium contribution; so the total employee contribution toward medical costs is on the order of $9.9 million. He stated they project for FY 2007-2008 medical inflation should be approximately 9.5%, which is roughly on par with the County’s five-year historic average; and they are basing their assumptions on the 9.5% number. He stated funding options can take one of two courses; the Board can continue the current funding arrangement, which maintains the 89%-11% contribution strategy; or it can establish a funding target, which would alter the 89%-11% ratio to 86%-14% or whatever number the Board feels is more appropriate and adjust the premium accordingly. He stated that will affect the contribution toward overall costs; it will also have an impact on the GASB liability; and in addition to those options, there are cost-sharing alternatives that can be addressed in the future. He stated they are not prepared to go the route of the first suggestion, which would be a premium buy-up option for higher cost plans; and that means the County would establish a baseline in accordance with the lowest cost health plan’s performance, and all subsequent premiums for additional health plans would be increased to cover the additional operating expenses for those plans. He stated anyone wanting to participate in a higher cost plan would buy up to that coverage; and that would create disparities in the program that do not exist today. He stated today the County offers the same premium regardless of which HMO product one chooses; but in the future they can structure the price to reflect the cost effectiveness of each of the plans and what they bring to the table; the most cost effective plan having the lowest premium; and as a consequence it will probably drive up membership for that plan. He stated there will be an incentive then for the plans to more aggressively manage and drive costs from the program; that is one of the advantages of a buy-up program; but they cannot do that until they establish the performance baselines. He commented on Blue Cross Blue Shield being a new member, needing time to see what Blue Cross Blue Shield’s baseline will look like, and being in a position next year to address that. He stated premium increases can also be directed to components of the program; historically when the Board has addressed premium increases, it has addressed them across the board and not chosen to spotlight; but those options are available. He stated benefit design changes are another option; the Board always has the opportunity to modify the out-of-pocket expense piece by changing co-pay structures and coinsurance programs; and recommended for FY 2007-2008 an across the board employer and employee increase of 9.5%, which reflects the current average trend and would provide a good basis with regard to meeting projected expenses. He stated the Board could reduce that increase to 8.55%, but in doing so it would be necessary to seek a 17.6% increase from employees in order to generate the revenue necessary to meet projected expenses and maintain the employer/employee contribution strategy. He noted a third option would be for the Board to contribute above 9.5%; if the Board contributed 10.5%, employees could contribute less than 9.5%; but staff does not recommend that. He stated staff recommends whatever the Board contributes towards next year’s increase at least be matched in employee contribution to not increase the GASB liability that already exists because of the disparity between employer contributions and employee contributions. He stated the Board does not want to put itself in a position to make the liability any more difficult to manage than it already is; and inquired if the Board has any feeling one way or the other.
structures that are in place. Mr. Visco stated they have not made too many adjustments to that over the last few years; the additional items almost double the employee premium contribution; so the total employee contribution toward medical costs is on the order of $9.9 million. He stated they project for FY 2007-2008 medical inflation should be approximately 9.5%, which is roughly on par with the County’s five-year historic average; and they are basing their assumptions on the 9.5% number. He stated funding options can take one of two courses; the Board can continue the current funding arrangement, which maintains the 89%-11% contribution strategy; or it can establish a funding target, which would alter the 89%-11% ratio to 86%-14% or whatever number the Board feels is more appropriate and adjust the premium accordingly. He stated that will affect the contribution toward overall costs; it will also have an impact on the GASB liability; and in addition to those options, there are cost-sharing alternatives that can be addressed in the future. He stated they are not prepared to go the route of the first suggestion, which would be a premium buy-up option for higher cost plans; and that means the County would establish a baseline in accordance with the lowest cost health plan’s performance, and all subsequent premiums for additional health plans would be increased to cover the additional operating expenses for those plans. He stated anyone wanting to participate in a higher cost plan would buy up to that coverage; and that would create disparities in the program that do not exist today. He stated today the County offers the same premium regardless of which HMO product one chooses; but in the future they can structure the price to reflect the cost effectiveness of each of the plans and what they bring to the table; the most cost effective plan having the lowest premium; and as a consequence it will probably drive up membership for that plan. He stated there will be an incentive then for the plans to more aggressively manage and drive costs from the program; that is one of the advantages of a buy-up program; but they cannot do that until they establish the performance baselines. He commented on Blue Cross Blue Shield being a new member, needing time to see what Blue Cross Blue Shield’s baseline will look like, and being in a position next year to address that. He stated premium increases can also be directed to components of the program; historically when the Board has addressed premium increases, it has addressed them across the board and not chosen to spotlight; but those options are available. He stated benefit design changes are another option; the Board always has the opportunity to modify the out-of-pocket expense piece by changing co-pay structures and coinsurance programs; and recommended for FY 2007-2008 an across the board employer and employee increase of 9.5%, which reflects the current average trend and would provide a good basis with regard to meeting projected expenses. He stated the Board could reduce that increase to 8.55%, but in doing so it would be necessary to seek a 17.6% increase from employees in order to generate the revenue necessary to meet projected expenses and maintain the employer/employee contribution strategy. He noted a third option would be for the Board to contribute above 9.5%; if the Board contributed 10.5%, employees could contribute less than 9.5%; but staff does not recommend that. He stated staff recommends whatever the Board contributes towards next year’s increase at least be matched in employee contribution to not increase the GASB liability that already exists because of the disparity between employer contributions and employee contributions. He stated the Board does not want to put itself in a position to make the liability any more difficult to manage than it already is; and inquired if the Board has any feeling one way or the other.
Mr. Abbate stated they need to get into the specifics of how that impacts the employees and share the GASB information; and then they will get the Board ’s recommendation.
Mr. Visco displayed a slide showing job positions in the County, salaries associated with that pay strata, and the projected COLA and merit increases of either 3% COLA and 1% merit for a total of 4% or 50 cents per hour and 20 cents per hour COLA and merit increases. Ms. Busacca requested Mr. Abbate explain why they are using the 3% and 1%. Mr. Abbate stated FY 2007-2008 will be the third year of the LIU Collective Bargaining Agreement; and there is a 3% COLA and a 1% merit increase available or 50 cents an hour COLA and 20 cents an hour merit increase, whichever is greater. He stated the numbers assume the Board will do what it has in the past, which is to treat the rest of the career service employees in a similar manner as the bargaining unit.
Mr. Visco stated the average retiree from the County retires with 17.6 years of service and gets an annual benefit of $10,617; $919 represents the health insurance subsidy provided by Florida Retirement System, which is the equivalent of $5 a month for every year of service; and $5 times 17.6 equals $919. He stated the two together are the estimate of income for retirees not including social security or other investment incomes; the COLA increase for retirees is 3% a year; and the dollar amount shown in the remaining column represents the increase in premiums annually based on a 9.5% increase. He stated the employee would only see a $26 to $77 increase above what he or she is currently spending for either HMO or PPO coverage. Commissioner Voltz advised that is per year. Mr. Visco stated it is per year based on a 9.5% projected increase for 2008; and the point of the exercise is to see how much of a projected salary increase will be absorbed by health insurance increases based on a 9.5% target. He advised that number will slide based on the Board’s decision on how much to contribute and what the final number will be for health insurance increases in FY 2007-2008.
Mr. Visco advised GASB, Government Accounting and Standards Board’s Statements of Accounting Number 45, issued by the Board in June 2004, requires accrual accounting of other post employment benefits, known as OPEB; and it asks the County to put a dollar value on the cost of health care for current employees and retirees projected out through their lifetimes. He stated the County needs to report this number on its financial statements and disclose that to investors; the GASB standard is not a requirement to fund; it is a disclosure requirement only; and that is a huge distinction. He stated there are two major components, the implicit rate subsidy and the explicit rate subsidy; the implicit rate subsidy is something that the County has little control over; and it is the result of a Florida Statute that requires the County, as a public entity, to extend the same health care options at a premium not to exceed the premium charged to active employees. He stated he has to take the experience of the active work force and the medical experience of the retired workforce and blend them together to come up with a single premium rate; if he could charge retirees based solely on their medical experience, their rates would be significantly higher based on higher utilization of services; but because of the Florida Statute, there is an implicit rate subsidy that GASB requires the County to account for. He stated the explicit subsidy comes down to the County’s contribution strategy; the employer contributions toward active and retiree premiums create the subsidy, which the actuaries project out over the lifetimes of those individuals. He stated the current projection from the actuary on the County’s GASB liability is $123.8 million; that is the estimate of the promise to provide health care to the current core of retirees based on the premium contribution strategies that are in place. He noted that includes acknowledgement of the change in retiree contributions that the Board authorized for employees after January 1, 2006; the current annual cost accrual of $6.5 million is the actuary’s estimate of what it will cost to fund this year’s new hires through
their lifetime to the point where they become retirees; and the County will need $6.5 million in new money every year just to fund additional liabilities going forward. Mr. Visco stated $8 million is what it would cost over a 30-year period of time to fund the existing liability today, if the County incurred no additional liability going forward. He stated if they required 100% funding from retirees from this point forward, the County would still have $123 million outstanding liability and would need to put $8 million a year on the books in order to meet that liability. He stated the combined total to meet existing and projected future liabilities is $14.5 million annually, which nets out to $11.8 million in new money. He stated the County’s current employer contribution strategy allows earmarking $2.7 million toward retiree health care expenses; that money is already committed; and what GASB is saying is that the County would need to allocate an additional $11.8 million annually for the other post employment benefits projected into the future. He stated there are several options; the board can take no action and continue its current practices, which is a pay as you go basis; and that is how most municipalities will continue to do it. He stated at this stage, the actuaries and lawyers cannot tell how the investment community will respond if municipalities choose to take that course of action; and commented on options to make minimum annual contributions, to fund just future exposure and leave existing in place or vice versa, or to reduce plan expenses.
their lifetime to the point where they become retirees; and the County will need $6.5 million in new money every year just to fund additional liabilities going forward. Mr. Visco stated $8 million is what it would cost over a 30-year period of time to fund the existing liability today, if the County incurred no additional liability going forward. He stated if they required 100% funding from retirees from this point forward, the County would still have $123 million outstanding liability and would need to put $8 million a year on the books in order to meet that liability. He stated the combined total to meet existing and projected future liabilities is $14.5 million annually, which nets out to $11.8 million in new money. He stated the County’s current employer contribution strategy allows earmarking $2.7 million toward retiree health care expenses; that money is already committed; and what GASB is saying is that the County would need to allocate an additional $11.8 million annually for the other post employment benefits projected into the future. He stated there are several options; the board can take no action and continue its current practices, which is a pay as you go basis; and that is how most municipalities will continue to do it. He stated at this stage, the actuaries and lawyers cannot tell how the investment community will respond if municipalities choose to take that course of action; and commented on options to make minimum annual contributions, to fund just future exposure and leave existing in place or vice versa, or to reduce plan expenses.
Chairperson Colon inquired how long the County has been self-insured; with Mr. Visco responding since 2000. Chairperson Colon inquired if they can only track for six years; with Mr. Abbate responding whether the County is self insured or fully insured, it does not impact the liability; and the fact that the County is self-insured does not create more of a liability for GASB. Chairperson Colon stated the way the County does business is pay as you go; that is how everybody else does it, so it is not unique; and while it may look frightening, the County has been able to keep up with expenses thus far. Mr. Visco stated the County has also been able to add to reserves and operate in a positive mode for all those years. Chairperson Colon stated that is her point; it is quite scary; she is not saying it is not important; and inquired if any other municipalities or entities do it differently. Mr. Visco stated the next slide shows what the other municipalities are facing. Mr. Abbate stated that is why they asked Mr. Burdett to be present because he deals with the financial side with a variety of jurisdictions as well; and municipalities are all over the board on this. He stated some of the more cash rich jurisdictions have enough cash available that is not allocated for any particular purpose, and they are funding it or going out on bonds to fund it; and Duval County is one area that is trying to do that. He stated most jurisdictions either have not made a judgment or are planning the current practice of pay as you go because they are able to fund that every year. He stated if it does affect the bond rating, then it is easily adjusted by purchasing bond insurance to get the rating the Board wants; and commented on funding $14 million liability each year or paying the difference in the insurance. He stated if the Board put $123 million away, those are monies that can be used for no other purpose; they would just build up over time so if the County no longer existed, that money would be there to take care of paying for the retirees for the rest of their lives. He stated that is not a situation that is ever going to happen; and the requirement is that technically the County will have this in reserve and never utilize nor be able to obligate it for any other purpose. Chairperson Colon stated she does not understand; all she sees is the County and on top of that it is the Sheriff’s Department; and requested explanation. She stated she has heard of government entities that have gotten into trouble when it comes to retirement of their employees; she has heard of bankruptcy and all kinds of crazy scenarios that are quite scary; people put their heads in the sand and acted like someone else would deal with it; but when it hit, it was a tremendous impact to the budget of the government entity.
Commissioner Scarborough suggested they figure in a reoccurring dollar amount and the fixed assets of the County as being two separate things; stated he has been in favor of borrowing to build roads, courthouses, etc. because they only get more expensive; but on the other hand the reoccurring expenses seem to be a little different because of inflation. He commented on the figures not being viewed as 2050 figures, cost of houses in 1950 and 1972, fixed numbers becoming a smaller percentage of the overall County budget, and budget reflecting salaries increasing. He stated if they have to build the beltway around Palm Bay, it would be madness not to do it as quickly as possible when the market is depressed; and commented on inflation. He recommended the County use its borrowing capacity to build courthouses, roads, or things that will cost the taxpayers more.
Chairperson Colon stated there were options; but it would be a waste of time to go down that route because she does not think any Commissioner would support it. Commissioner Scarborough stated it was there that the Board had to somehow fully fund; the Board could fully fund everything if it wanted; but inquired what it would do with the money it borrowed. Chairperson Colon inquired how long has the County been existing like this; stated she does not want to put her head in the sand; if there is something happening throughout the nation that the Board is not expecting, the Board needs to know that; but she does not want to waste time discussing bonding when it is not a route the Board wants to take. She stated the Board has been doing a decent job; and commented on situations with large companies and government entities, corruption in large cities, employees and retirees losing money, and where money is invested. She stated the questions are asked to make sure that someone watching at home does not panic because there is no safety factor; as Commissioner Scarborough said, there is no need to panic; and the County has been doing okay with pay as you go.
Commissioner Voltz stated even if the Board did bond $123 million, every year it would have to come up with $6.5 million, and that is impossible. Commissioner Bolin agreed that is not an option.
Mr. Visco displayed a graphic showing contributions for the 2008 plan year and the spread around the 9.5% employer/employee increase that is recommended. He requested Board direction in regard to the recommendation. Commissioner Voltz stated option 2 is what the County is doing currently; with Mr. Visco responding option 2 is what staff is recommending.
Motion by Commissioner Voltz, seconded by Commissioner Scarborough, to approve Funding Target Option 2, with employer increase at 9.5% or $3.88 million, member increase at 9.5% or $0.48 million; and the employer/member split at 89%/11%. Motion carried and ordered unanimously.
DISCUSSION, RE: BUDGET
Chairperson Colon stated the Board is going to have a workshop on February 15, 2007; Mr. Burdett met with different Commissioners; and unfortunately those kinds of numbers have gone out into the community, which thinks there is millions of dollars in excess money. She inquired what was the number that Mr. Burdett originally thought they had; stated the Board will probably be meeting again before the February 15 meeting; and inquired if they have covered all the
different dollars that need to be allocated for different projects. Chairperson Colon stated the last thing that was discussed was $9 million. Finance Director Steve Burdett stated he does not know if they had a firm number or not. County Manager Peggy Busacca stated the Budget office is still working on that. Chairperson Colon stated the biggest concern was to make sure there was not all this excess money but then find out those dollars were being allocated so the number would keep growing smaller and smaller. She stated the Board was getting excited thinking there were all these dollars; and there may be a little cushion that the Board can work with. Commissioner Scarborough stated $9 million would be tremendously helpful. Chairperson Colon stated that number is not one they can count on; those discussions have gone out into the community where people are lining up asking for this and that; and it would be wonderful, but they are still trying to iron out the numbers. She stated hopefully they will have a good workshop and find out where they will be allocating some of those dollars; it is not going to be the dollars they thought they were going to have originally; and if Mr. Burdett is able to find $500,000 or even $200,000, she would be happy, although if it was more, it would be wonderful. She encouraged the Commissioners to meet with Mr. Burdett, Ms. Busacca, Mr. Rogero, and Mr. Whitten; she met with two of them; but she realized the meetings would be more productive if Mr. Whitten and Mr. Roger were there. She encouraged the Commissioners to ask questions; stated this kind of exercise needs to be encouraged; and it is almost like an education on both sides. She commented on a Council member from a municipality with a vision regarding Parks and Recreation, not knowing all the facts, and dealing with real numbers. She stated Ms. Busacca mentioned the difference in the way Mr. Burdett looks at things and the way the County’s budget is; that balance is healthy; and Mr. Burdett looks at it on a more regular monthly basis.
different dollars that need to be allocated for different projects. Chairperson Colon stated the last thing that was discussed was $9 million. Finance Director Steve Burdett stated he does not know if they had a firm number or not. County Manager Peggy Busacca stated the Budget office is still working on that. Chairperson Colon stated the biggest concern was to make sure there was not all this excess money but then find out those dollars were being allocated so the number would keep growing smaller and smaller. She stated the Board was getting excited thinking there were all these dollars; and there may be a little cushion that the Board can work with. Commissioner Scarborough stated $9 million would be tremendously helpful. Chairperson Colon stated that number is not one they can count on; those discussions have gone out into the community where people are lining up asking for this and that; and it would be wonderful, but they are still trying to iron out the numbers. She stated hopefully they will have a good workshop and find out where they will be allocating some of those dollars; it is not going to be the dollars they thought they were going to have originally; and if Mr. Burdett is able to find $500,000 or even $200,000, she would be happy, although if it was more, it would be wonderful. She encouraged the Commissioners to meet with Mr. Burdett, Ms. Busacca, Mr. Rogero, and Mr. Whitten; she met with two of them; but she realized the meetings would be more productive if Mr. Whitten and Mr. Roger were there. She encouraged the Commissioners to ask questions; stated this kind of exercise needs to be encouraged; and it is almost like an education on both sides. She commented on a Council member from a municipality with a vision regarding Parks and Recreation, not knowing all the facts, and dealing with real numbers. She stated Ms. Busacca mentioned the difference in the way Mr. Burdett looks at things and the way the County’s budget is; that balance is healthy; and Mr. Burdett looks at it on a more regular monthly basis.
Mr. Burdett stated the point he was trying to make was when managing an organization as big as Brevard County, it is necessary to keep track of the financial situation at any given point; there may be new projects or services that need to be performed; to be able to fund those, it is necessary to know the financial situation; and if departments are under-spending money or revenues in the General Fund are coming in higher, the Board would want to know that so at any given point during the year, it can make some decisions rather than waiting until the end of the year to see what kind of money may have accumulated.
Chairperson Colon stated that is a good point; and the Board wants to make sure the dollars that it is accumulating are even at the disposal of the Board. Ms. Busacca stated staff does that, especially at mid-year; her perception of this discussion is that the Board is having a discussion in February with not as much information as it would have if it waited until March; the Board is having the mid-year discussion; and one of the reasons it is doing that is because the Board wants to talk about allocating it.
Commissioner Scarborough stated the Board was told it had some more money; it could go out and borrow; it has building problems as well as road problems; and all the Commissioners received a memorandum that the Board needed to look at the fund balances. He stated he does not think Mr. Burdett ever said that money was there; the Board needs to know it is there; normally when borrowing, it is done as a whole; and to fragment the discussion would be problematic for the Board because it is trying to answer multiple needs. He inquired if Ms. Busacca is suggesting that it could be an easier discussion if the Board waited until March; with Ms. Busacca responding they do not have a reconciliation yet; and stated, to make it simplistic,
it is as though they went to the ATM and saw how much money they had in the account, but they did not know if there were checks that had been written. Commissioner Scarborough inquired if Ms. Busacca is cautioning the Board that while it needs to go ahead with the meeting on February 15, it may be wise to defer any final decisions. He stated when they go to the bond market, they do not want to fragment decisions or fragment the borrowing; and if they are 15 to 20 days off in making a good decision as opposed to a quasi-good decision, he does not see the advantage. Ms. Busacca stated when it comes to facilities, staff is not going to recommend bonding all of the money. Commissioner Scarborough stated staff is going to come to the Board with a recommendation; the Board is going to tear it apart and discuss all the recommendations; and it needs as much information as it can get when it does that.
it is as though they went to the ATM and saw how much money they had in the account, but they did not know if there were checks that had been written. Commissioner Scarborough inquired if Ms. Busacca is cautioning the Board that while it needs to go ahead with the meeting on February 15, it may be wise to defer any final decisions. He stated when they go to the bond market, they do not want to fragment decisions or fragment the borrowing; and if they are 15 to 20 days off in making a good decision as opposed to a quasi-good decision, he does not see the advantage. Ms. Busacca stated when it comes to facilities, staff is not going to recommend bonding all of the money. Commissioner Scarborough stated staff is going to come to the Board with a recommendation; the Board is going to tear it apart and discuss all the recommendations; and it needs as much information as it can get when it does that.
Ms. Busacca stated staff met yesterday with representatives of the Charter Officers; some provide information that lease space would be more advantageous to them rather than purchase space; that is not an issue that has to be discussed as part of a bond, although it has to be discussed as part of the whole; and she is estimating, based on discussions with Mr. Whitten and Mr. Rogero, that it will be closer to $4 or $5 million. She stated they estimate the jail overrun is going to be $4 million; the Board will have uses for what they ultimately come up with that will not be part of bonding; and part of the whole of the discussing is the $19.1 million cap. She stated it is clear that a project for the courts should be a separate project from a project for the jail when it comes to bonding; the Board sometimes has differences with the Clerk as to what is a project and what is not; that is how they ended up in court before; so they have identified enough money for $19 million bonds. She stated they could have the discussion in March; they will know whether it is $3 million, $4 million, or $5 million; she doubts it will be $9 million, although she hopes she is wrong; and she does not know if the Board wants to consider that recurring money to put it as part of the bond. She stated the reason she is cautioning about that is because the Board does not know what the State is going to do when it comes to property taxes.
Commissioner Scarborough stated there was discussion about the idea of having people build to lease to the County; that is another option; and the Board needs to get the information early so it can get input. He stated the Board needs to do these things; and if it does not do them right and has to come back with fragmented decisions, the Commissioners will get frustrated with each other.
Ms. Busacca stated it is going to be a challenge to have all of the information the Budget Office needs to put together; the revenue side is relatively easy; but the expense side is more challenging because they have to ask every department what it has in the pipeline, which takes more time. She stated on next Thursday, they know they can bond for roads; if the Board says to limit it to gas tax, staff will know what it can do and have that information together; it can also hear some options about whether the Board wants to look at various options; but some of the options include moving people out of their current facilities, which may be unacceptable to them.
Commissioner Scarborough stated there are multiple issues because there is concern about operational costs and functionality as they move people around; Commissioner Voltz had a great suggestion to build; it would put people close to the facility; but he does not want to do something because the Board made that decision and find out three months later that he wishes he had discussed other options. Ms. Busacca stated this is frustrating for staff as well to
not have all of the information the Board wants, but it takes time. Commissioner Scarborough suggested the Board discuss further on February 15; and if it wants to talk more two weeks later, it can do that.
not have all of the information the Board wants, but it takes time. Commissioner Scarborough suggested the Board discuss further on February 15; and if it wants to talk more two weeks later, it can do that.
Chairperson Colon inquired would it be better to have a workshop in March when the numbers will be consolidated; with Ms. Busacca responding Finance has not finished its end of the year reconciliation yet. Chairperson Colon stated those are the numbers the Board needs. Ms. Busacca stated those are part of the numbers that are needed; she knows staff is working to finish that; and inquired when the end of year reconciliation will be ready. Mr. Burdett inquired when Ms. Busacca talks about reconciliation is she talking about cash forward numbers or about the audit. Assistant County Manager Stockton Whitten advised staff feels safer giving the Board projections and reconciliation after Mr. Burdett has closed the books; and each year they go through this mid-year process, the books are closed, they go to the departments, they reconcile the balance forward numbers, and they have a number that can be allocated to departments. He stated they are not going to be able to do that on February 15; they are still reconciling the numbers; and a more defined number will come once the books are closed and they go through the process. He stated the final information usually comes at mid-year when Mr. Burdett closes the books; the dollars do not move beyond that; and they are currently in the process of reconciling. Chairperson Colon inquired if that usually happens in March. Mr. Burdett stated the audit opinions come out in late March when they provide reports to the State; and commented on an example involving General Motors, the way Finance handles the books, and closing out every month and at the end of the year. He stated they have financial information for each period; in December they know how much is going to be accrued on all County departments; they know what the ending balance is going to be as of the end of 2006; and if there are any adjustments, they are usually not significant. He noted even if they were, he could follow up with that information; and he cannot imagine waiting every year until the books are closed to reassess the financial situation.
Chairperson Colon stated what they are talking about is possibly something that the Board might have accrued as a savings; in that savings there might be a million or two; and commented on how a household would use a savings account to buy an appliance, but not to finance a car. She stated it is a one time savings for the year; they do not know how the market will fluctuate; and once the numbers are closed in March, the Board can actually question where it is, what the cushion is that is left, and where it wants to utilize those dollars. She stated next year it might be totally different; next year they may get $2 million; another year it might be $500,000; and what Mr. Burdett is trying to get at is whatever those dollars are, the Board needs to make sure it uses them. She stated she would be uncomfortable if the numbers have not been consolidated; and she would feel safer in March when the Board will know what dollars are there. She stated it is like Ms. Busacca’s example with the ATM and not knowing what checks are still out. Mr. Burdett stated anyone wanting to know what checks are out is welcome to call his office as they have that information at any given point. Chairperson Colon inquired when Mr. Burdett would close. Mr. Burdett responded the only significance to the end of March is that is when the audit opinions are due for every local government; they close out and finish the financial reports every year so the State can have the reports to obtain whatever information the State wants; but administratively and financially in his office, the information is accurate closer to the end of January and they do not need to wait until the end of March for him to give the Board a feeling of comfort as to what kind of money is there. He stated Ms. Busacca’s staff
can go now with the money that has been carried over unused by Facilities for work on the buildings; he estimates that is approximately $1.8 million from last year; they budgeted approximately $5.7 million this year; and one of the decisions the Board has to make is whether that $1.8 million is needed to go for Facilities to do more work or is Facilities even at a point where it can use that up by the end of the year. He stated the Board could decide whether it wants to use that for recurring or nonrecurring purposes; and that would all depend on what Facilities needs to do in the future. He stated his big qualm is that he cannot imagine every government or organization waiting until their books are closed out every year to decide what they are going to do; and suggested the Board receive financial information regularly during the year so it can see what changes have occurred. He stated if departments are not spending their money, the Board needs to know why and if the money can be redirected somewhere else. Chairperson Colon stated the Board gets that at mid year, usually around March.
can go now with the money that has been carried over unused by Facilities for work on the buildings; he estimates that is approximately $1.8 million from last year; they budgeted approximately $5.7 million this year; and one of the decisions the Board has to make is whether that $1.8 million is needed to go for Facilities to do more work or is Facilities even at a point where it can use that up by the end of the year. He stated the Board could decide whether it wants to use that for recurring or nonrecurring purposes; and that would all depend on what Facilities needs to do in the future. He stated his big qualm is that he cannot imagine every government or organization waiting until their books are closed out every year to decide what they are going to do; and suggested the Board receive financial information regularly during the year so it can see what changes have occurred. He stated if departments are not spending their money, the Board needs to know why and if the money can be redirected somewhere else. Chairperson Colon stated the Board gets that at mid year, usually around March.
Mr. Whitten stated he does not disagree with Mr. Burdett; that is the process; they do quarterly supplemental budgets; and that is exactly the way other budget offices do it. He stated there is reconciliation of last year’s numbers at mid-year; and Mr. Burdett may be able to do it in the first quarter; but the process Mr. Burdett described is the same one he is describing. He described the process staff goes through to bring the numbers to the Board at mid-year; stated they go through the process each year; and last year there was approximately $4 million to $5 million there, which the Board allocates to one-time things, increasing the reserve, or some other use. He stated the issue of chasing the revenue numbers and expenditure numbers to adjust the budget on a periodic basis is more difficult because it would either be done at mid-year, quarterly, or monthly; and some revenue figures do not come in until four or five months after the end of the fiscal year and expenditures do not go in a one-twelfth pattern each year for each department. He stated it is a bit more difficult to give a monthly reconciliation; historically the best, safest, and surest way to do that has been at mid-year. He requested the Board allow staff to go through the process it always goes through; the second phase of the jail expansion, which is currently underway is under-funded; the Board will be allocating a million dollars on February 20, 2007, but will be another million dollars short; and Phase 3 of the project is $3 million to $4 million so the Board is going to need to address that. He stated the best way to do that is with the dollars that are going to be excess or from savings from mid-year. He reiterated he does not disagree with what Mr. Burdett is saying; that is exactly the process; but there are two different perspectives concerning that process.
Mr. Burdett stated if the Board wants to delay the meeting, that is fine; he can send the Board a graph with the General Fund’s ending cash balance each year since the year 2000; and it that does not generate any questions or curiosity on the part of the Board, then it can follow staff’s suggestion. He stated if there are questions, the Commissioners can call him.
Chairperson Colon inquired if that is the same graph Mr. Burdett showed her; with Mr. Burdett responding it may have been except he will be going back several years. Chairperson Colon stated other Commissioners have questions; she is glad they are having this discussion because on February 15, 2007, they would have come in thinking they had all these dollars; but they are at a different level now.
Mr. Whitten stated on February 15, he understands the Board was going to discuss the fund balance figures; he is not sure they will be close enough to give the Board a number it is going
to feel comfortable with; and as far as additional transportation projects and dollars, the Board has set aside $1.9 million with the budget and there is an additional $250,000 set aside to move Traffic Engineering off Merritt Island, so there is approximately $2.1 million the board is going to need to discuss. Mr. Whitten stated the Board can discuss facilities needs or as Mr. Burdett alluded to in his memo, swapping those to do roads. He stated fuel tax currently funds approximately $2.5 million of Road and Bridge maintenance and operations; if the Board wanted to bond out more in regard to roads, it would have to move that $2.5 million in expenditures to the General Fund; and that is his understanding of the discussion the Board was going to have on February 15th. He stated staff will bring the Board some options in regard to facilities and how it can use the $2.1 million; but staff thought the fund balance would either be a part of that discussion, if it was ready, or would occur as it normally does at mid-year.
to feel comfortable with; and as far as additional transportation projects and dollars, the Board has set aside $1.9 million with the budget and there is an additional $250,000 set aside to move Traffic Engineering off Merritt Island, so there is approximately $2.1 million the board is going to need to discuss. Mr. Whitten stated the Board can discuss facilities needs or as Mr. Burdett alluded to in his memo, swapping those to do roads. He stated fuel tax currently funds approximately $2.5 million of Road and Bridge maintenance and operations; if the Board wanted to bond out more in regard to roads, it would have to move that $2.5 million in expenditures to the General Fund; and that is his understanding of the discussion the Board was going to have on February 15th. He stated staff will bring the Board some options in regard to facilities and how it can use the $2.1 million; but staff thought the fund balance would either be a part of that discussion, if it was ready, or would occur as it normally does at mid-year.
Chairperson Colon stated so the Board can be clear, two things will be discussed; one will be in regard to roads and the second will be in regard to facilities; and unless the Board says otherwise, March would probably be the safest month when all the numbers come together so the Board can see what kind of cushion it has.
Commissioner Scarborough stated these are important questions; it was an excellent discussion listening to Mr. Burdett and Mr. Whitten go back and forth; and it helps him understand the dynamics. He commented on going ahead on February 15, understanding the questions, courthouse space needs, and inability of the Commissioners to talk outside of meetings. He stated the Board should be defining questions for Ms. Busacca who can then develop new options for the Board; they have the time to understand fully the dynamics; it is more than just money; it is the operation of the County; and commented on the human dynamics of moving departments around. He stated people are scared of the Board because the do not know what it may choose to do. He recommended going ahead on February 15, with the thought that the Board will get into the issue.
Commissioner Nelson stated he agrees with what Commissioner Scarborough is saying; there is no way they are going to come to any kind of agreement in February on where to go; it is a work in progress; and having been on the other side, Mr. Burdett and Mr. Whitten are saying the same things, but it is a level of how conservative the Board wants to be. He stated in Mr. Whitten’s shoes, he would want to be extremely conservative because he is going to be held accountable for the decisions made on how to allocate the dollars; but on Mr. Burdett’s side, he would be watching the fund balance build up and advising the Board can be more proactive and can do a better job of allocating by getting into more detail within the departments about what the circumstances are. He stated the answer is somewhere in the middle; and commented on being on the revenue driven side and holding onto money because he never knew what was going to happen. He stated that is the level of discussion that Mr. Burdett is saying the Board needs to be making; he does not disagree with that; and there is a middle ground somewhere. Chairperson Colon stated she agrees. Commissioner Nelson stated Mr. Whitten said he and Mr. Burdett are saying the same thing; and he thinks they are; but it is a question of degree of comfort level in making the decision; and ultimately that comes to the Board to make that decision.
Chairperson Colon stated what she heard from Mr. Burdett is that he wants to make sure the Board has those options; the Board wants to encourage that kind of discussion; Mr. Burdett
indicated it is up to the Board to decide; and she wants to make sure the information is out there. Chairperson Colon stated it is understood the Board will have that information and will have discussion in March; and on February 15th, the Board will be discussing roads plus facilities. Ms. Busacca stated the Board will have that discussion when all the information is available, if that is all right with the Board. Chairperson Colon stated Ms. Busacca will let the Board know; with Ms. Busacca responding she will. Chairperson Colon stated it is good to make sure everybody is at the table for those discussions.
indicated it is up to the Board to decide; and she wants to make sure the information is out there. Chairperson Colon stated it is understood the Board will have that information and will have discussion in March; and on February 15th, the Board will be discussing roads plus facilities. Ms. Busacca stated the Board will have that discussion when all the information is available, if that is all right with the Board. Chairperson Colon stated Ms. Busacca will let the Board know; with Ms. Busacca responding she will. Chairperson Colon stated it is good to make sure everybody is at the table for those discussions.
Commissioner Nelson stated in March, they are looking at the closeout of the books when it becomes a hard number; they still need to have the departments looking at some of the big numbers that Mr. Burdett just talked about so the Board can also have that discussion. He stated at the same time the Board is going to get the final carry forward numbers; there are also fund balances that are building up; and the departments need to be looking at that and see why it is occurring. He stated in some cases if they are not expending the funds, they need to find out what the departments are projecting to do with the dollars; and the Board can start having that level of discussion.
Chairperson Colon stated she does not want the departments to worry that the Board is going to take the funds away from them; the Board is fully aware that the projects might not be done in 2007, but may be completed in 2008 or 2009; and everyone is saying the same thing, but it is healthy to have these kinds of discussions.
Mr. Burdett stated he is confused; and inquired if he should still plan for February 15. Chairperson Colon stated it would be March so the Board will have some solid numbers; but the Board will still be meeting on February 15th. Commissioner Voltz stated the discussion will be for transportation and facilities. Chairperson Colon stated a lot of folks are coming before the Board on February 15, 2007 thinking that the Board is going to solve the problems of the world; but they need to be aware it is just one of many meetings that are going to happen because the options are tremendous. She commented on the options, maintenance, giving questions to Ms. Busacca, and different options to be brought to the Board before February 15th.
Ms. Busacca stated she heard some interesting options yesterday.
SETTLEMENT AGREEMENT AND RELEASE, RE: COLLAGE DESIGN & CONSTRUCTION
GROUP, INC.
GROUP, INC.
Motion by Commissioner Voltz, seconded by Commissioner Bolin, to approve and ratify the Settlement Agreement with Collage Design & Construction Group, Inc. that was brought to the Board’s attention on January 23, 2007 in Executive Session; and executed Settlement Agreement and Release. Motion carried and ordered unanimously.
DISCUSSION, RE: HEALTHCARE
Finance Director Steve Burdett stated Mr. Abbate and Mr. Visco are correct that the Board does not have to fund the $11.8 million, which is the amount computed by the actuary above and
beyond the current year’s requirement; however that $11.8 million will be reported on a Countywide financial report as a liability. He advised it will accumulate and build; Mr. Visco said no one is sure what the rating agencies will say about these liabilities that are going to build up on government reports; but when the County issues bonds, the rating agencies ask him what the policy of the County is and how it is going to fund the liabilities. He stated it is a policy issue on the Board’s part; it does not have to fund it all today; it does not need to issue a $121 million bond as there would be a lot of risk to that; but not funding any of it may end up portraying the County as a government that is not meeting its liabilities. He stated what the Board is going to have to decide over time is where the middle is, and what is acceptable financially as well as in terms of policy for the County.
beyond the current year’s requirement; however that $11.8 million will be reported on a Countywide financial report as a liability. He advised it will accumulate and build; Mr. Visco said no one is sure what the rating agencies will say about these liabilities that are going to build up on government reports; but when the County issues bonds, the rating agencies ask him what the policy of the County is and how it is going to fund the liabilities. He stated it is a policy issue on the Board’s part; it does not have to fund it all today; it does not need to issue a $121 million bond as there would be a lot of risk to that; but not funding any of it may end up portraying the County as a government that is not meeting its liabilities. He stated what the Board is going to have to decide over time is where the middle is, and what is acceptable financially as well as in terms of policy for the County.
Chairperson Colon inquired has there be a problem thus far. Mr. Burdett advised it has not been, but the County has not had to report that liability; and this is new generation for all governments to have to report it. Chairperson Colon inquired if every county in the State has to report it; with Mr. Burdett responding affirmatively. Chairperson Colon inquired if it is not just Brevard County going through this; with Mr. Burdett responding they will, and the rating agencies will be evaluating every county government.
Commissioner Bolin inquired about bond insurance. Mr. Burdett stated the insurance is bought by local governments that are not the top-rated governments; if a city has $100 million cash balance, it can meet its obligations no matter what; it could get a special rating from one of the firms out of New York because the government is financially in the greatest shape, so it would not have to get insurance on the bonds and will probably get the best rates. He stated he is not saying Brevard County does not have a good rating; it has an A rating; and it is nowhere near to being unrated such as a government might be that was going bankrupt. He stated Brevard County is in good shape; but in order to get to the interest rates that it would pay if it were AAA- rated, it will have to pay an insurance premium to a company that will say, based on its analysis of the County’s finances, that the County will meet its obligations on the bonds.
Commissioner Bolin inquired if a good fund balance helps the County’s rating; with Mr. Burdett responding affirmatively. She inquired if the more the County has in fund balances, the better off it might be; with Mr. Burdett responding affirmatively.
Chairperson Colon stated that was a trick question. Mr. Burdett stated it is true, but there is a cost to it.
Commissioner Scarborough stated there is the law of diminishing returns; the County can have more fund balance; there have been jumps but the movement may not have impacted the County’s rating at all. Mr. Burdett stated it is not going to impact unless the County asks the rating agencies to look at it. Commissioner Scarborough stated his point is that not everything has a direct relationship. Mr. Burdett stated when the rating agencies rate, they would be looking at more than the cash such as how the County is organized and how it responds to certain events.
Chairperson Colon stated that was an excellent question; everyone in the State will be dealing with it; and she wants to make sure that those questions are asked to the bond agencies because it is not the County’s fault that there is this policy. Mr. Burdett stated when he asks the
bond folks, they are not going to tell him what amount the County should be putting in; and the agencies make their evaluations based on the County’s policies. Chairperson Colon stated she is not discussing that, but is discussing the insurance part of it. Mr. Burdett stated that is one of the things the rating agencies will be talking about; when they ask him whether the County is funding any more beyond the pay as you go needs, and he says no, he will be asked why; and he would not want to use the excuse that is what every other government in Florida is doing. He stated the rating agencies would want to hear that the County understands its liabilities, that it understands it is based on policies for funding health benefits for retirees, and that the County needs to be funding a little more than just pay as you go. He stated the agencies will not tell the amount the County needs to fund; but at some point, the Board will probably want to do a bit more than just pay as you go. Chairperson Colon stated the bond folks do not speak just to Mr. Burdett; they speak to County staff as well, so it is not just Mr. Burdett talking directly to them. She stated the bond agencies are not mind readers; it is a matter of explaining the situation the County has been put in; and it is not because the Board is trying to be negligent. She stated they are not just lending money to the County, but to everyone else as well. Mr. Burdett stated the agencies have advised this is not unusual or just pertaining to Brevard County.
bond folks, they are not going to tell him what amount the County should be putting in; and the agencies make their evaluations based on the County’s policies. Chairperson Colon stated she is not discussing that, but is discussing the insurance part of it. Mr. Burdett stated that is one of the things the rating agencies will be talking about; when they ask him whether the County is funding any more beyond the pay as you go needs, and he says no, he will be asked why; and he would not want to use the excuse that is what every other government in Florida is doing. He stated the rating agencies would want to hear that the County understands its liabilities, that it understands it is based on policies for funding health benefits for retirees, and that the County needs to be funding a little more than just pay as you go. He stated the agencies will not tell the amount the County needs to fund; but at some point, the Board will probably want to do a bit more than just pay as you go. Chairperson Colon stated the bond folks do not speak just to Mr. Burdett; they speak to County staff as well, so it is not just Mr. Burdett talking directly to them. She stated the bond agencies are not mind readers; it is a matter of explaining the situation the County has been put in; and it is not because the Board is trying to be negligent. She stated they are not just lending money to the County, but to everyone else as well. Mr. Burdett stated the agencies have advised this is not unusual or just pertaining to Brevard County.
Commissioner Voltz inquired what is the bond rating; with Mr. Burdett responding A for the general debt. Commissioner Voltz inquired how does that relate to other counties; with Mr. Burdett responding the highest is AAA; and he cannot think of another government that has a AAA, although he is sure there is one. Commissioner Voltz inquired if most have A or AA; with Mr. Burdett responding that is the normal range; and most governments pay an insurance premium when they issue their bonds.
Upon motion and vote, the meeting was adjourned at 3:00 p.m.
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JACKIE COLON, CHAIRPERSON
BOARD OF COUNTY COMMISSIONERS
ATTEST: BREVARD COUNTY, FLORIDA
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SCOTT ELLIS, CLERK
(S E A L)