 Welcome to Sheboygan County government working for you. My name is Adam Payne, County Administrator and co-host of this program with Chairman Tom Wagner. And as you know, every month we strive to focus on a different department, their roles, responsibilities. And more often than not, we have the department head here to talk about that. And today we are very pleased to have our finance director with us, Wendy Scharnen. Welcome. Wendy started with the county now a little over a year ago. She was thrown right into the fire with some challenging staff needs and the budget process. And we're just so pleased with the job that she's done. Wendy, why don't you begin by just sharing a little bit about your background? Well, I'm from Cleveland, Wisconsin, and I graduated from Sheboygan North High School. I went to LTC and my bachelor's degree is from Lakeland. When I finished with Lakeland, I went to work with the United Tribe of Indians up by Green Bay, where I worked through the ranks in the accounting finance area, making it all the way to the finance controller, which was both of the government and our gaming enterprise operations. After there, I went to Brown County. I implemented, I was their project manager implementing all their financial systems for their ERP project. And now I'm here. And here you are. Yes. So what a small world it is. My roots are from Sheboygan County. When I was in third grade, I went to the Cleveland grade school for a month or two, and then stayed at my aunt's while my parents were in transition. And so I won't say if Wendy is older or younger, but we both attended the same grade school at one point. So small world. What are the finance department's roles and responsibilities? Big picture. So your finance departments are always in charge of ensuring your financial data, making sure that your financial transactions have the integrity. We use things called internal control, and we'll set up procedures and effectiveness with all the departments around internal control. So we safeguard your assets, and we are the ones that provide the integrity to the financial information. Now, the staff now is taking on more roles in addition to your basic transactions, paying your bills. But the accountants are also partnering with the department heads, being more of an operational partner and looking at analytical things and helping them as a business perspective when they're doing their budgets especially. So your department has approximately how many staff? We have 16. 16 staff. And again, I know that you've had to fill some key vacancies, including your deputy finance director recently. Total operating budget for the department is approximately... Approximately 900. 900,000. I think it's a million. Obviously you're focusing on the big picture right now, which is the total budget of 148 million. And Wendy and her staff, as she just shared, you have assigned specific staff to different departments to help develop those department budgets. Talk a little bit about the county's budget process. Well, I've learned the budget process for Sheboyne County starts very early, January, February, working with you, assembling some of the more challenging things that we see coming in the new year. We'll build, I believe, you work with then the chairman, building the goals and the initiatives that they... Whether I like to or not, yes, I generally need to make sure the chairman's comfortable with what I do or I'm in a world of hurt. Yes. But some of the initiatives will come out early and we'll look at then the challenges such as inflation rates or some of the fixed costs we have with the county being our health insurance generally has increases all health insurance programs do lately. We have a pay for performance program and we will start early on to establish what kind of gap we have when we compare to the active revenues that we know are coming back in or possibly if we're losing any revenues. And we'll start that process very early. Through that we will then start to establish property tax targets for the departments. And these targets are communicated well through the finance committee and the executive committees and we'll lead ourselves into what's called the Leadership Forum, which I find Sheboyne County does an excellent job of... It's a collaborative effort towards the budget process and the initiatives and the goals and the challenges are all an open discussion for a complete understanding and also a complete adherence to where we want to go in direction. From that forum then is the actual budget kickoff, which is more the details because a lot of the goals are established, what we want to accomplish are established. We go to the budget kickoff is more for the department heads now to tactically get all those things performed or figured out on how we're going to meet the upcoming year's budget. We'll go through reviews with you and I. Those reviews will flush out if there's any inconsistencies or some challenges that maybe that they didn't see or may have ahead of them that we didn't know at the time we were putting gaps together. They'll take that review and they'll go to the liaison committee and that's all forwarded to the finance committee for a final recommendation to the board where the board will then adopt sometime in November. Excellent, excellent overview. So January, February we're already talking about goals and pulling together the best information we can including from the state because we have so many underfunded or unfunded mandates. A lot of collaboration with Chairman Wagner, the executive finance committee, our leadership, our annual leadership forum and then Wendy right now and I are in the midst of the department reviews and of course the county board will be taking final action in early November. If the public wants to get engaged, they hear that this process is almost an annual one. If they want to get engaged and provide input in the development of the budget, what's the best way to participate? Well, the agendas are put out on the websites for the liaison committees and the liaison committees are going to be going line by line through the budgets of the departments that they have oversight over. Also online for those agendas is an agenda packet that will have the entire budget of that department that's going to be coming up for review. So they have that opportunity to attend that meeting, ask questions during the liaison committee. They'll see that budget if they have more questions possibly when it's coming to the finance committee. They are able to come to that committee also and again in that agenda it's going to tell you exactly which departments are being reviewed at what time and there's also the budget information within. And then near the end of the process there is the opportunity for a public hearing. This year that's going to be October 25th where the public can also come then to the board floor and ask questions on the proposed budget at that time. I just wanted to add I think that's an important point that you made. Sometimes people can look at our county board meetings and it seems like it's pretty structured and almost complete by the time it gets there. And sometimes the reason it is is because it's gone through what you said the liaison committee and the finance committee, a lot of heavy lifting has been done to the numerous committees well before it gets to the county board level. And I think that's really an important thing for the public because they don't see that part of it sometimes unless they would attend the meetings. You find throughout the state that every county board or common counsel is different and some of them have a real structured committee process which I think is served Sheboygan County so well. And in fact the chairperson will relay any document to not just one committee but two before the county board acts on it. So a lot of review thought input goes into that. By the time it gets to the county board not only have staff reviewed it two committees have weighed in but it's really been thoughtfully considered. So sometimes the board meetings feel as though it's almost a rubber stamp like boy how did this happen so quickly? But it's because of all that good work time and effort that went into it ahead of time. So back to the question in your point Wendy and yours as well Tom that if you want to get engaged and provide input on the development of a budget of an annual budget which is the most important public policy document the county board passes. It's all the funding for the 200 and some programs and services we provide from A to Z. The sooner you get engaged the better and attending those liaison committee meetings whether it's transportation finance planning and resources there are nine standing committees all of the agendas are posted they're all open to the public and we welcome and encourage people to get involved. It's when people come to the final county board meeting when the actions taken that sometimes it may feel like oh boy my input just didn't have as much effect or wasn't considered as much and the reason may be is because months have gone into that decision already and really it is the final moment. So the earlier get engaged the better and if you're not sure how to get engaged or you can't find it on the website or you're not real comfortable looking online contact your county board supervisor that is always the best way to have your voice heard and get direction or get guidance on where to go so you can be heard so we hope more people will get involved. A final question before I turn it over to Tom. So big picture what's your impression of the budget development process here in Sheboygan County because you've been a part of other budgets being developed in your other lines of work in the past? It's the most successful process I've been involved with and I believe the key is the collaboration and early on collaboration I believe it's your leadership form that really brings that all together. That's done in what late May early June where the supervisors and everyone already know what direction and path we want to attain. The numbers underneath it are just the details but the path is already identified and established so early on in the process that it's just a I think that leads to the success here in Sheboygan County. Excellent. Wendy thank you. Tom. Thank you Adam. Wendy years ago the Sheboygan County had their total equalized valuation was going up by around 5% recently it's been flat and sometimes down. Would you explain to the county or to the people out there what the equalized valuation actually is and how that will affect our 2017 budget which it does? Equalized value, it's actually a valuation that's done by the state of Wisconsin and the equalized value is utilized as a tool of how we distribute the levy that is needed to support the operations of the county. So when you have a flat equalized value because you'll take the support of the operations divided by that equalized value you'll see if you're increasing the support but you're not increasing your equalized value you're going to see that tax rate increase. For 2017 though we did see a small 1% increase in our equalized value. I think we just got notice on that recently. Recently the preliminary numbers are out yes. We've had for a number of years a state imposed property tax levy limits. What does that mean for our 2017 budget development? Well the imposed tax levy limits for a county there are two elements that will increase the property tax. One is in the debt service and what you're asking is in the operational part which the state has put some limits to. There is this element within the equalized value equation there's many formulas that go into the equalized value. Part of it is new construction and demolition and then net new construction. They impose a limit that you cannot increase your county levy for more than what your net new construction percentage is. This year for 2017 it did go up from last year. Last year it was at .92. It did increase to a 1.35 this year which means that we are allowed to increase the levy by about 550,000. Which again is 1.35%. And I think on average net new construction has gone up less than 1% for the last couple of few years has it not? That is correct. That is very correct. Right. Shippin County's current tax rate and property tax levy could you share what that is? And I think it's been increasing less than 1% if I recall over the last 10 years or so per year. Yes for 2016 the tax rate itself was $5.77 which was the support for $48.4 million of tax levy. Over the last 10 years you have seen increases and decreases but overall when you take the average of the entire 10 years it's been slightly less than 1%. How does the state budget every two years the state passes the budget? This was the year they didn't do it because it's next year and it's starting in January they'll get going on that. How does that impact the county budget? Well the state's shared revenue is a large piece for us to balance our budget. So when we incurred decreases in the state's shared revenues we have to find other revenue sources to make up that gap. They also have a very impactful way of having mandated initiatives that we were mandated to provide the service but they don't provide us funds to support or to provide that service. And in some areas they also have complete control over fees that we were able to collect to support or offset the mandated services that they put on us. And because just like us I know in the state legislature that's the one document that has to pass every two years they have to pass the state budget. So sometimes that's the opportunity for legislators and I do understand this to get something into the budget and sometimes they become mandates for us to do which are not funded though too which is something we have a problem with sometimes. What do you think are some of the most challenging issues we face in order to hold the line on tax increases, etc.? I believe the most challenging thing we have is our health care area. The increases that health care is incurring is usually more than our net new construction. Staying competitive in the job market we have implemented a pay for performance perspective for our compensation but again that is something that we need to be able to fund every year. One of our larger challenges was the transportation and needs and the maintenance but recently we did enact the half-cent sales tax which will be 100% dedicated to the transportation maintenance in the county including sharing with the municipalities. So that was one of the largest challenges that we have been able to find a revenue source to accommodate or to take care of. And down the road that will help us without we won't be borrowing as much for road construction and that will start to accumulate after a number of years you won't see that immediately but that will make the difference because as you said earlier there are caps imposed on what we can raise as far as taxes but we're way below what we're allowed to borrow so we could continue to borrow at a much higher rate than we are currently doing but there's not a lot of appetite on the board's position to do that for a number of reasons. Yes currently the board is in full support of having that service at service lowering over the next 10 to 15 years. Thank you. Thank you Tom. A little history lesson here some of you have heard us mention a couple of times these state imposed property tax levy caps and many people would say that's fantastic. Probably the most despised tax is the property tax and when you see that come around the holidays each year no one's happy about it. So the state does have these imposed caps in place but they haven't been around forever. In fact years ago the county board on their own initiative was either holding the line or reducing property taxes particularly when the recession hit our community. It was around that time or shortly thereafter that the property caps went in place which as Wendy described are tied to net new construction. So if you can imagine running an organization with about 825 employees supporting 200 programs and services including transportation, law enforcement, health and human services for the neediest of the needy and you can't raise property taxes any more than 1% or half a percent what does net new construction have to do with providing law enforcement dealing with some of the things that they're dealing with in Milwaukee County as we take this program. What does net new construction have to do with mental illness and helping people fighting mental illness or helping people get off from using heroin things of that nature. So that relationship is interesting. It's imposed on us. We have to work within those limitations but if we're going to continue to provide programs and services for the neediest of the needy or if we're going to continue to provide emergency response or law enforcement net new construction long term probably is not the answer because it certainly has no relationship to the services we need to provide the community. With that said, the board has just done a tremendous job holding the line here and one of the ways we are able to do it Wendy is streamlining or consolidating a number of departments, a number of programs and services. Could you give our viewers a little snapshot of some of the departments we've consolidated or streamlined over the last 10 years or so? Yes, when I look back into all of what you have done here very impressive. You took the register of probate and you've combined it in with the clerk accords. The comprehensive health care went and then it was consolidated with Rocky Knoll. The property listing and the land and water was consolidated into planning. Airport and highway weren't consolidated a couple of years ago becoming the transportation department or division. And most recently in last year we did a combination or consolidation of our 911 emergency dispatching which was actually taking the operations from the city and combining them into the county to streamline it and to make it more effective. And as a result of that and of course those are not easy decisions when you consolidate a department or streamline that impacts your employees that can sometimes lead to layoffs. Obviously we try to take advantage of retirements or when people leave on their own to garner those savings. But if we just talk about payroll, big picture how much has the payroll gone down for Sheboygan County over the last 10 years? Over the last 10 years this would also include consolidation and streamlining where you or where we sold the Sunny Ridge. So you saw in 2016 our payroll is about 69.8. In 2006 it was at 84 million so we've been able to bring that down about 14.6 million. Which I think is right around 38%. So when you look at the last about the last decade thereabouts I know Wendy as a finance director doesn't want to be held to the specific date. But when you look at the last decade it's been right around a 38% reduction which again shows that the county board and our management team here and all of our employees have really been part of the solution to hold the line on costs and we appreciate that and we thank everyone for their support. Another important investment that the county board needs to make is in our infrastructure. We've had a lot of discussion about our roads our bridges that we've been falling behind. It's not just Sheboygan County it's every municipality in the state it's a statewide issue it's a national issue. Could you give us a little bit of background on the transportation proposal that the county board just acted on and why that was so important for our community going forward? Well when we looked back over the trend of accomplishing the miles that we were able to and the miles we have and the paiser ratings from the state we were finding that we needed to at least accomplish 30 miles of road annually just to stay within the maintenance and the levels of where we wanted to keep the roads road conditions. We have not been able to do that over several years. Our average I believe was around 17-18 miles per year and in some years we're very very low. When we looked at that we knew that the transportation was at a crisis as far as leading itself to a crisis if we hadn't taken action immediately to safeguard from going into even a deeper trend of not being able to catch up on our maintenance in the county. It was important when we brought this proposal forward that we would accomplish 30 miles of road a year. It was also important that we share the proceeds of the revenues with the municipalities towards their transportation needs because the county roads are all within the county and the municipalities are within the county so we wanted to make sure that they were also being subsidized for their needs because they also have the same challenges that we were facing. We also wanted to earmark a million dollars in direct property tax relief from the revenues and we've actively been able to accomplish that this year and intend to do that in the following years. So I think we all have found the discussion interesting at the state level and also, again, municipalities across the state that one of two things happen if you don't maintain your transportation system. Either you push that off and they erode further become more dangerous and more challenging for the public to use and two, when you do get around to repairing or maintaining that road, it's more expensive. So the county board to its credit didn't want to see either continue and the half percent sales tax obviously was a bitter pill to swallow the board was not enthusiastic about it Sherman Wagner certainly was not enthusiastic about it but to the board's credit they stepped up they looked at the proposal that Wendy and Greg Schnell and some other really good staff in the county prepared very thoughtful, a lot of input from a lot of people including community leaders and at the end of the day we'll now be able to maintain do the 30 miles a year that we need to do be fiscally responsible and that we're keeping up with those costs rather than pushing the burden on to our children or grandchildren and let it be far more expensive I just, Tom, I just want to thank you for your leadership and Wendy, as finance director you did a lot of the analysis and Greg Schnell, our transportation director was so involved a lot of good people came together as I said, community leaders Sheboygan County Economic Development Corporation it was a collaborative effort to problem solve and I'm personally proud to be a part of it it's a good thing for our community it's an important investment I would just add to that the key word it was a collaborative effort and it wasn't a thought that people were enthusiastic about doing raising taxes but the alternative was borrowing a lot more money not fixing our roads and causing the next generation and even sooner than that to have to pay more money for the same mile of road because we let it deteriorate and I think the majority of the board is acceptable that would be correct because with the sales tax it's going to be replacing all of the capital pieces involved with the transportation so we will be lowering the bonding that we will be moving forward we're going to take care of our roads we're going to lower property taxes we're going to reduce our debt service we're going to share some of the revenue with our municipalities though there was at least one municipality that felt we should have shared more the first county to share any of the one-half percent sales tax revenue with another municipality so again we're leading and we're helping solve the problem so nice teamwork everyone we only have a couple of minutes left and just wanted to touch on the I guess back to your staff let's just go there you're new you've been here a year maybe that doesn't feel so new anymore but you really you're really surrounded by a wonderful team in your finance department and you've been able to start building that team with some of your own hires let's end the program there share a little bit about your staff and the good work they do and how you're feeling about your team I've been here a year coming in it was a very strong staff so that was very good feeling for me unfortunately lost several of them as soon as I came to we are just new with each other as a team I think that we collaborate well so far so good I guess we're still new though because some of my positions are only been here what, two months maybe you know that's definitely well not for that but it takes a while for a team finance team to gel and get everything working and moving forward but we also changed up the table of organization so there's new responsibilities for some of the staff that were here before and then mapping all of the new responsibilities out that's the challenge we have ahead of us and it's actually quite fun you know there's a lot of opportunities for all the staff to enjoy I would add to that and you obviously know this as a finance director the finance department is the one department in particular that touches every department within the whole county so I mean you interact with everybody at some point in time because obviously you're the finance department and that makes it a unique and a very important department we have 19 department heads working for Sheboygan County I feel so fortunate to be surrounded by so much talent dedication hard work and Wendy generally my rule of thumb is that you have to be here at least a year as a department head before I really know and they themselves may really know is this the right fit is it a good fit and I couldn't be more proud of the work you're doing the team you're building and the service you're providing this community so I thank you and I thank you for joining us speaking of another good department head Joe DiCecco is going to be retiring here in by January 2nd and he's going to be joining us next month to talk a little bit about the roles and responsibility of the district attorney's office and his legacy the good things that he helped make happen in this community very challenging work so until then thank you for joining us