 Welcome to Sheboygan County Government, working for you. My name is Adam Payne, Sheboygan County Administrative Coordinator and co-host of this program with Chairman Bill Gehring. And today we're very pleased to have our Deputy Finance Director, Mary Wegman, with us as our guest. And Mary's going to be talking about the roles and responsibilities of the Finance Department as well as the very important process of our budget development. So Mary, good to have you with us. Thank you. Mary, why don't you just start by sharing a little bit about your background and how long you've been working in the Finance Department. Sure. I began with Sheboygan County in June of 1993. I was the very first staff accountant and I was promoted to my present position in August of 97 and I've been there ever since. So you were the very first staff accountant in the Finance Department. Yes, absolutely. And since then you've seen some changes in that office. How many staff do you have now? We have nine. We have nine and we've expanded. We actually have on our TO-3 staff accountants now. At this point we only have one position filled and we're looking for another one. Very good. So staff accountant since 1993 and Deputy Finance Director since 1997. Correct. And has the time flown or not so? No, it really has and it seems like every year it goes faster and faster. Well, obviously you've been in the department for a number of years and as quickly as it's gone clearly you have a lot of important roles and responsibilities. Could you please give our viewers a flavor for what the responsibilities are of the Finance Department? Sure. The Finance Department is responsible for all the financial operations of the county and that includes paying our vendors or accounts payable, monitoring receivables, internal auditing, internal controls, coordinating external auditing, debt management, budgeting of course, setting financial policies and procedures, and doing financial forecasting for the county board. And not just doing this for a department of nine or ten individuals but for 1,300 employees and 22 other departments? That's correct. We have, well, a lot of interaction with other departments. Our staff accountants are actually split up the various departments and so each of us is responsible to work more intimately, more one-on-one with each of our departments and that helps to facilitate the budgeting and you're in process auditing everything really. And that's a great transition. We talked about, you know, the difficulty or the process of putting together a budget every year and of course you're right in the middle of that and you and the Finance Director Tim Finch really help lead and coordinate that process. Could you share with our viewers a little bit about what is it that happens each year with this budget process? It's the most important policy document the county board develops. What are some of the first steps in getting that process rolling? Sure. It seems like we started earlier and earlier every year. Actually Tim Finch, the Finance Director, begins working with the Finance Committee and the Executive Committee coming up with targets for our next budget year. In June we finally have the budget kickoff meeting with all of the department heads and their support personnel where we lay out our goals and objectives for the next budget year. In July department heads go through and develop their budget. By the month of August they're presenting it to their liaison committees and late August September is when the Finance Committee reviews each and every departmental budget for the county. Finally at the October County Board meeting we'll be introducing the preliminary budget document so it's a long process. Sure is. We'll finish that in November when the county board ultimately adopts the budget and then as you said February and March of 06 we'll already begin discussions for the 07 budget. You did a nice job going through the process very succinctly there and obviously a key part of that process is the involvement of the liaison committees. There's 34 county board supervisors as you know, Mary, 10 standing committees. They all oversee one or more of the 23 departments and from your perspective and experience please share with our viewers what is the role of the liaison committee? What are they charged with doing? Sure once the department has developed their budget and we at the budget kickoff meeting as I said they're given the goals and our objectives for the 2006 then they go back with some information that we provide for them such as payroll projections, health insurance projections and looking at past financial history trends they know are coming. They develop a budget. Once they've done that they take it to their liaison committee and the liaison committee has to buy into their budget, has to approve what they're doing before it ever comes to finance. So the liaison committee as you said they need to approve that document, take ownership for it. They might challenge their department head to make an adjustment here or there and then ultimately when they adopt it it goes on to the finance committee and then from there to the full county board. That is correct. Yes. Very good. Thank you, Mary. As you know you worked for the county for some time. I've been on the county board since 1988. The whole budget process changed over the years. Way back when I first got on the county board it seemed like it would be each department or committee would try to think well what can I get by the finance committee. But when Adam came on board as the administrative coordinator he worked with the finance committee to develop a whole new budget process to attempt to kind of level out the tax rate so it wouldn't jump up and down. Currently do we have any limit on the amount that we can tax? We do. This year we have two limits that we must adhere to with the state. The newest limit is based on the net new construction. And for Sheboygan County that was 3.288 percent this year which gave us a levy increase of 1.4 million. Prior to that well and still in place I should say since 1993 is a rate limit. And that is only on taxes that are over the entire county so that drops off our special purpose taxes like bridge aid or library aid. Now this year since we have two limits municipalities are required to enact the one that is most restrictive and in our case that will be the levy limit for the net new construction. And really that new rate limit is something totally new to us this year. It's something we're dealing with for the first time and has put a fair amount of restriction on what we can tax. How have we done over the past couple of years comparison wise on our tax rate? Well since I can show you on this chart since we started a more formalized budget process with probably the 1999-2000 budget one of our goals was to even out the levy rate so there are no high or low really low increases and we've been very successful in doing that. Prior to that you can see we had some high years when we really dropped the levy rate and then we turn around the next year and increase it by an equal amount. So our goal has been to keep things very level and I think we've been fairly successful in doing that. You've been working on the preliminary budget now for a couple of months. How does it look for this next budget or current budget year? Where do you think we might come in? Right now our levy rate is at $5.95 and that represents a decrease of 33 cents. We still are reviewing budgets but I don't anticipate that there'll be much change in that. I would think we would stay very close to that rate. And it's really taken a lot of hard work by department heads, the committee finance department and county board supervisors to come in at that rate or to limit the request for dollars. Can you give our viewers some ideas about where the revenues for the county actually come from? Does it all come from the tax or where does the money come from? Sure. Actually our biggest source of revenue is the county tax levy and that accounts for 30% of all our revenues. Next are intergovernmental revenues and that makes up another 27%. And that includes all federal and state aid we receive could be state shared revenues, state transportation aids, IGT for the healthcare centers and support we receive for the clerk of courts, child support and any kind of governmental revenue. Next is the public charges for services and actually most of those are generated by our healthcare services. Those are for patient charges for staying at the centers. What about expenditures? Where does the money that we collect for the most part go? Sure. Our biggest draw on the levy if you want to call it that is our public health and human services and that accounts for 28% of all of our budget. The next closest is the general government departments and there are several departments making that up such as the treasurer, the register of deeds, finance, clerk of courts. So it's a whole grouping of departments. After that would be public safety and they make up 10% of our budget. Public works is very close behind and that's our highway department and our airport department and they also make up another 10%. The remaining 11% are all of the other departments and that's planning and land and water, the UW extension and the support we give to the UW Sheboygan campus. Okay. Really, some things just continue to go up and up and up but what have been some of the biggest challenges over the most recent years in beating the budget and putting the budget together? Well, again, we're estimating that we're going to have a double digit increase in our health insurance. We're projecting that to increase 13%. All of our employee contracts are settled and there will be an increase of 2.5% there but if you take those two together, of course, that's an increase of 15.5% to our budget. Additionally, we're projecting IGT will decrease. We're estimating a decrease of 24% from that alone and then as always, we have state mandates that are non-funded or underfunded so those are probably the things that make us pull our hair out the most. I wanted to jump in here real quickly because this is the key challenge that's really driving our budget process right now as Mary just alluded to. When you look at our wage and benefits alone, there's no fault of our employees. We have outstanding employees but a 2.5% increase in wages and health insurance going up 12-13% and we saw 20-22-26% increases even prior to that. It's starting to actually come down a little bit and it's still 13%. But those two areas alone account for about 2.5, $3 million in increase and as Chairman Gehring alluded to earlier with the budget gap that's with the state cap that's now in place, the levy constraint, really we can only bring in about one, one-and-a-half million dollars more of revenue through the tax levy. So if you take a wage and benefit increase of 2.5-3 million and new revenue of no more than a million and a half, well you can see immediately the type of challenge that the county board has and the challenge you have as a deputy finance director and all of our department heads have to continue operations in the same level of service. We're in a situation right now where organizationally with the state caps that are being imposed, the mandates that are being imposed, we don't have enough new revenue coming in to cover our wage and benefits alone and that obviously is a real challenge. Yes, it is and that's why we realize so much on our departments. They're the ones who know their area is the best and can we, is there anything we can do to run more efficiently, to bring in new revenues, anything of that nature? I think you've alluded to it already. While our costs continue to go up, we rely upon the state for many dollar items to come in but those dollar items are going down so we're really being squeezed in the middle and fortunately we did have a bit of a surplus that we've been applying to the budget each year but we can't continue to do that. Pretty soon we'll have no surplus and we'll be in the shape of some other counties. We just got back from a county's conference and heard from many counties that are at their taxing level limit. They're laying off employees, they just don't know where to turn. We are very fortunate in that we do have a healthy, undesignated fund balance and that has been another source of revenue for us in meeting our budget but as you said we can't rely on that forever. We still need to be, I don't want to say ruthless but almost to that point where we're really really delving into how we can streamline, be more efficient and still provide the same service. Additionally, we need the state to provide support still. For instance, this year our state shared revenue has remained constant so that was a great help to us. But then on the other side, the IGT going down the 28% is a real hardship to the health care centers. They're now asking for a levy increase of 1.1 million and that is a real challenge for us to meet their needs and then continue to support everyone else. Adam? Well Mary, I think you laid that out real well from a standpoint of our budget process and some of the challenges we have and as you ended on and as the county board is now grappling with our health care centers, 1.1 million more in tax levy to support that one department and again when the state puts a cap in place that you can't raise revenue any more than a million and a half and you've got wage and benefit increases of close to 2.5-3 million, a $1 million increase for one department, again it puts tremendous pressure on the county board and people such as yourself who are working so diligently to put that budget together and position the community as a whole for success. With that said, a lot of good things continue to happen here and one of the areas that you work on and help organize is our capital improvements and monitoring that budget and could you give our viewers a few examples of some of the real impressive capital improvements that are going to be occurring in the future? Sure, for the 2006 budgeting year we have, we are continuing with the Information Technology Center at UW-Sheboygan, we're doing some hanger expansion work and runway expansion at the airport, a new project but one that's really needed is our law enforcement dispatch center is going to be upgraded in order to receive 911 calls from cell phones and we're also updating our health and human services software to provide better case management and financial information. So people listening to this might be hearing, well how can that be? How can the county be in such a financial, financial bind from a standpoint of state imposed levy constraints and losing state and federal dollars and some of the things we've talked about. How is it then that we are able to continue to make these types of capital improvements? How do we fund that? Could you touch on that? Sure, as you're aware we have a resolution in place that limits our bonding each year to four million dollars. So what we do is in May we go to departments and we say now what are big ticket items that you expect funding for, for not only the 2006 but the following four years. After we receive that information we manipulate it, prepare a schedule and then look at each of those years and see where are we over the four million, where do we have to make cuts and then with finance committee they help to manipulate that so your project might be postponed a year or maybe you only get half of the dollars you ask for this year and another half the next year. So with a big picture in place we can see where we're going to need our dollars to be. And the dollars that we bond or borrow that is not under the state imposed tax levy constraint. Is that correct? Well for the levy limit it is. The levy limit is on everything that's in our budget for the rate limit from 1993. There it is exempt. Very good. And as you said we have a five year plan in place, the finance committee goes through and determines what we can't afford to do within that four million dollar cap that the county board has put on themselves. Prior to the county taking that action how much would the county borrow from year to year? Oh well it could be anywhere from like typically five million dollars to nine point nine. The reason we wouldn't go over ten is because then our bonds lose the tax exempt status and that cuts out some of our investors so it was important for us to try and always keep that bonding below the ten million. And really that self-imposed goal if you will that the board adopted has helped our bottom line from a financial perspective. We're not borrowing as much as we did in the past yet we still have a plan in place and we're still getting improvements done. Oh absolutely because that's relieved some of the strain on our debt service which was obviously continuing to go up and go up and go up. This year we've had a very slight decline I mean it's less than one percent but it is a step in the right direction for us to be moving and now that we have that four million in place we're going to continue to see that go down not in any big chunk but it will keep inching down. The other thing that I've observed from county board supervisors and you've been here longer than I so I'd be interested to hear your point of view. It seems as though the board is challenging the community is a whole little bit more from a standpoint of leveraging resources for example UW-Shabuigan we put on this beautiful science edition in the future we're looking to put on a technology center and at least what I've seen of late is that when the county board is going to bond dollars to put in these capital projects they're saying hey if we can get private investors or someone to make a donation to help contribute toward that obviously the taxpayers better off. Have you seen more of that or what's your perspective? I do think we have seen more of that and I think that's a great opportunity for us to partner with the outside and that way our citizens are first of all more aware of what we're doing and secondly can provide support to us to accomplish those and it makes us aware too of what they consider important. Very good. When the county board goes through the process of looking at all the capital improvement requests that department heads make or that the liaison committees to be more specific make of the finance committee how do they go about establishing priorities what's their what's their decision making process? Well I think first of all they look at obviously if a project is in process we're not going to cut off the funding so we look first to finish up items we have started. Secondly like with the airport they typically have a six-year plan in place and a lot of that is based on dollars we receive back from the federal government and 80-20% split so obviously we take that into effect and I think it's what our committees decide are the most important for us for instance the health and human services software is a large ticket item but it is so hard for them to manage their caseload and to manage financial reimbursement with you know manually because we don't have a system in place at this point so obviously that became a high priority for us to put that into place and then other things we have are for instance information systems we have a marvelous financial package people sought and it really had can do a lot for us it saved us a lot of time less and duplication of efforts and things like that but to continue with that we have to keep the hardware in place and so it's kind of you know we look at what we have now and what do we have to do to support that and then go on to other essential items. Well you've covered a lot of ground for us and hopefully have given our viewers a little better feel for the budget process and the roles and responsibilities of the finance department and one of the things you touched on just a moment ago is how important that the public is aware of what the county board is considering what the organization as a whole is doing and with the budget process really our kickoff in June and being approved the budget ultimately being approved in November the question is how how do people get more involved how can people get more information or how can they express their point of view if they're interested in doing so. Well our public hearing will be on October 25th at the county board chambers on the fifth floor of the courthouse so that's the the most important place for them to make their voice heard. We will have preliminary budgets available for them to view beginning October the 10th so they're welcome to come stop by the administration building room 208 and look at the materials and then even prior to that if it's a specific concern with the health and human services department or if they're interested in sitting in on a finance committee discussion of a particular budget they're certainly able to do so are they not? Oh certainly all of those meetings are open meetings and the agendas are posted in the lobby of the administration building so at any time they're welcome to sit in and listen. Well in the few minutes that we have remaining is there anything else that you wanted to touch on or that we wanted to share before we conclude? I don't really think so I just you know I hope viewers are aware that they are a very important part of this process and make their their views known if they feel they can't do it at the public hearing they're always welcome to stop by our office or give us a call and we'll be happy to answer their questions. Oh wonderful Mary we certainly appreciate your time today and Mary Wegman again has been with the finance department since 1993 very knowledgeable has tremendous insight on how the county operates and if you have questions of her or suggestions of her or her staff certainly don't hesitate to contact Mary and probably the best way to get a hold of a resource in the county is to contact our county clerk's office Julie Glancy is the county clerk she does an excellent job her staff are very friendly and if you contact that office depending on the area that you're interested in or want to weigh in or provide some input or get more information she can refer you to the correct person. So in summary a hundred and forty five million dollar budget about forty three forty four million dollars of tax levy resources coming in from the federal and state government a private pay or reimbursement for medical care such as our nursing home or something along those lines and when you talk about a hundred and forty five million budget twenty three departments two hundred and seven programs and nearly thirteen hundred employees a tremendous amount of responsibility and importance that the finance department provides so I can't tell you how pleased I am that deputy finance director Mary Wegman could be here today and I really appreciate her work and the work of her staff next month we'll be talking to Carl busy our corporation council we have a rather unique relationship in Sheboygan county where we contract with our corporation council and Carl busy will be here to talk a little bit about corporation council's roles and responsibilities why that's been a good fit for Sheboygan county and some of the important work that he does so until next month thank you for joining us