 Welcome to our program, Sheboygan County, working for you. My name is Bill Gearing. I'm the Sheboygan County Board Chair, and with me this afternoon is Adam Payne, our Administrative Coordinator. We thought we'd try something different for this program, and we're basically going to talk about our program prioritization process that we recently went through. Sheboygan County has 1,300 employees. We're the fourth largest employer in the county. We offer a broad range of programs, but there's a substantial cost and funding to these programs. So we came up with the prioritization and evaluation process. Adam, before we go further into the process and talking about the final report, could you please set the stage? How large is the county's entire budget and how much of the budget is property tax levy? Well, as you know, Bill, we're struggling like just about any level of government with finite resources and the ability to provide the programs and services that you mentioned. $145 million budget. Of that $145 million budget, we're looking at property tax levy of about $43 million. And each and every year, there's increasing demands on that property tax levy. How many departments do we have and how many programs are the total number of programs of the departments roughly? As you said, we have 1,300 employees and 23 departments. And those 23 departments are providing a number of programs and services, a number of functions. And in our review of all the programs and services, there were 207 program areas that were identified that you and others looked at. I've been on the county board almost 18 years now, and it seems that every year putting a budget together is a challenge. But what have been the increasing challenges in the last couple of years? Well, no question wage and benefits. Every year we have annual increases. We negotiate with about 89% of our employees. We have eight different bargaining units. And every year through that negotiation process, they get an annual wage increases. Certainly you're well aware. And generally speaking, that's been about 3% on average. The last couple of years with the cooperation of the employee bargaining units and the hard work of our human resources committee, it's been closer to 2.5%. So you take that 2.5% increase that's going to happen each year. You combine that with the high cost of health insurance that really has been opposing a challenge for us. In fact, over the last five years, it's gone up over 111%. So wage and benefits alone each year are a challenge. And for 2006, we're looking at about a $3 million increase in just the area of wage and benefits. Other areas that continue to be a real challenge for us are unfunded or underfunded state mandates. Of those 207 programs, about 90 of them are specific state mandates that we have to implement. And more often than not, the state does not provide sufficient funds to actually carry those programs out. So what happens each year is the property tax payer ends up picking up more and more of the responsibility to keep that program going. So when you combine the wage and benefit increase every year of around $3 million, when you look at underfunded state mandates, and that can range in the millions when we look at it countywide. And then just the ongoing problem that unfortunately we're challenged with here is our healthcare centers. That's one of our 23 departments, as you certainly know. And with the changing face of long-term care policies at the federal and state level, reimbursements declining from the federal and state level, I would say that without question, the three greatest challenges we have are the ongoing increases in wage and benefits, the underfunded state mandates, and the further subsidization of our healthcare centers. You've been on board now for six years, and it seems since you came on board that the budget process in working with the finance committee and the executive committee has become somewhat more streamlined and effective. Can you explain what our budget process has been for the last couple of years? I'd be glad to. When I started, and there's so many good employees that work here, as you know, we've got a very good management team, but frankly we didn't have a process in place to establish a goal and targets from the county board standpoint. Essentially each department would come in, they would say this is what we need, and then committee by committee, county board as a whole would look at that and make adjustments and how it ended, it ended. And as you know, I think the process certainly isn't rocket science, but it's very simple in the fact that the county board establishes a goal, a goal that they mean business to achieve. They then establish targets for every department to come in and hit, and that of course gives the department heads and their associated staff an objective to work toward. And so when they meet with myself as kind of the first line of review, I'm there to help position the county board for success, to help be sure that the departments are hitting the targets that the county board has established. So ultimately that goal that the county board has established is achieved. Now that doesn't mean in the end that the county board couldn't raise taxes or reduce taxes above or under that goal, but the bottom line is I think the process has been real effective because the county board establishes that goal. We give all the department heads a target to achieve and we hold them accountable to do so. Okay, really before we had targets it seemed to be kind of a hit or miss process that departments came in and the county board kind of thought, well, what can the tax payer bear this year? Well, we just had the governor sign the budget bill. He vetoed a number of things. How will what probably now is in law with the vetoes and the signing of the budget bill impact the county? Huge implications for Sheboygan County. Huge implications for every unit of government in the state. The governor as I imagine a number of people have read or heard about on the radio has established. I think you would call a compromised position that there is now a further levy constraint placed on units of government such that for Sheboygan County specifically our tax levy or property tax levy cannot go up more than what the cost of new construction will be as part of our overall equalized value. In short, last year equalized value based on new construction went up 2.9%. So essentially what the governor has said is that your property taxes statewide, every local unit of government will not be able to go above that increase. So the finance committee upon learning of that directive by the governor has now changed our targets. Originally as you know, Chairman Gehring, we're looking at a 3.4% increase. Now we're looking at approximately a 2.8% increase. We don't know yet what that new equalized increase due to new construction will be. We will know by mid to the end of this month, August. But at this point we're expecting it to be somewhere between 2.5% and 3%. And that gets back to the key challenges that you just asked about. To put this in perspective, if wages and benefits are going up roughly 2.5, $3 million a year, putting everything else aside, costs for fuel, operations, all the people that we contract with to provide services in the community, if we just look at wage and benefits alone going up 2.5, $3 million a year, and then we look at what an increase in property taxes will provide somewhere 2.5, 3%. Well, a 2.8% increase will generate about $1.2 million of additional revenue. So those of you tracking this at home, if wage and benefits are going up $3 million and a tax-levy constraint will only allow us to raise revenue by $1.2 million immediately, you can appreciate the type of challenge that we're faced with. Then you add to that what we just discussed with underfunded state mandates where we essentially have to provide a service but aren't getting the dollars to fully implement it or if you look at the cost of escalating health insurance that we don't have any control over, things of that nature, it puts the county board in a very difficult position. To further add to the governor's budget and implications, now the county board could go to referendum and say we want to exceed that state target, that mandate or cap, but I think most county board supervisors at least initially are going to be reluctant to do that. They're going to want to work within those constraints and to work within those constraints. There's no question that every department is going to have to tighten their belt and that we're going to have to do a better job prioritizing the programs and looking at the level of service that we provide. Okay, now really as we experienced this morning in our meeting with the Health and Human Services Department Managers to give a first blush, look at their budget, there really are some heart-wrenching decisions there. Should a program be curtailed or cut back? But to kind of look at that even more in depth, the county board was being proactive and last January we passed legislation to bring about a program evaluation and prioritization process. Adam, give us some more background on that, would you? Well, I share the county board's pride in the process that we just went through. How many times have we heard local officials or frankly anyone who works in government talk about well, we need to establish priorities and based on those priorities, then we're going to make decisions about where to provide scarce resources. You hear people talk about establishing priorities all the time, but how many people truly take the time, expend the energy to go through a process and do so? We have 207 programs, as was mentioned earlier, to go through all of those programs and prioritize them is no small feat. To the county board's credit last year, we started talking a little bit about, well, how do we go through a process here of establishing priorities? Put our money where our mouth is and really take the time and effort to go through it. Based on your initiative and others, we had a couple of counties who had gone through this and we found out there were only two or three out of 72 counties statewide who have actually done this. They came in, presented to the county board, presented to our department heads. We got a feel for how it worked from them and we surveyed the county board and said, what do you think? Should we try something similar? The board agreed and just this January, the county board said, all right, we're going to set off and do our own prioritization process. In short, the decision of the county board with obviously your leadership was to have the chairs of all the 10 liaison committees come together. They got together and at their first meeting, they had to determine, well, how are we going to do this? What type of information are we going to ask of our department heads? What's going to be provided? How are we going to evaluate? How are we going to prioritize? And fortunately, we didn't have to start from scratch. We looked at Eau Claire County, Marathon County specifically, took the model that they had established, further improved upon it, developed a questionnaire that every department head had to complete for each and every program, developed a rating form that would be applied to each and every program. We had consistent questions that every department head had to complete in a consistent format and that was then provided to the department heads. They had time to complete that information and from there, the prior program evaluation and prior prioritization committee spent considerable time and effort going through all that information and eventually developing priorities. Okay, so the Pepsi Committee consisted of the chairs of the 10 standing committees. How did the process and the timetable proceed? How long was this committee actually working on that process? The County Board authorized going forward with us in January. I think by February, we already had our first Pepsi, again, program evaluation, prioritization committee. You'll hear us refer to that as Pepsi now and then. They got together, developed their ground rules, how they were going to operate the worksheet, the questionnaire, the rating forms, the thing we just discussed. And after they had all that information developed, they notified all the department heads, all right, for every program, for every functional area, for every service you provide, you need to complete a two-page questionnaire and respond to 14 different questions. Well, that takes some time and for all 23 departments to look at their own programs and services, break that out, develop that information, that took a month, month and a half. After all the department heads completed that work, the Pepsi Committee established a timetable and over the course of about four, five months, they met 19 times. They would receive the information ahead of time, review the information, score the information based on the criteria that had been established. Then the department head would come in and every single program and service, every functional area, one by one, that department head, as you know, went through and briefly touched on the program, the value of the program, answered questions such as, well, how do you know what's working? How do we measure the effectiveness of the program? How many people does it serve? What does it cost? How much tax levy is going to the program versus other state and federal grants? All that information was pulled together and ultimately the committee, as we mentioned, then ranked and prioritized those different programs. So over a course of about six months from beginning to end. Okay, and basically we attempted to limit each meeting two hours, sometimes the meeting went a little bit over two hours. We reviewed maybe an average of 12 to 14 programs at each meeting and I think because of the homework, the supervisors had to take the questions and the questionnaire home and work on it at home but maybe took them two hours, two, three hours at home to put into that process. In general, how do you, as an overall, how do you think the process worked for Sheboygan County? I was very pleased. I mean, this was no small feat. Very few units of government have tried it. Again, it's one thing to talk about it. It's another to set up a process and actually take it on. And I was very pleased that the county board as a whole rallied around let's try this. I think that the individual liaison committee chairs put a lot of time and effort into it. I think in hindsight some of the questions, as we've discussed, maybe we would refined a little bit but overall it seemed as though the process worked very, very well as it was intended. We did a nice job keeping with our timetable. We kept departments on track. They had 10 minutes, essentially, to discuss each program and function, as you know, to stay within two hours every meeting. And from my standpoint, I thought it went very well. More importantly, when the county board supervisors at their recent annual leadership forum saw the final report and you asked them their feelings about it all. It seemed as though the board as a whole really appreciated the process and the final product. So all in all, I thought it went well. As you said, a final report was just prepared within the last month. In short, can you share with us some of the results of the final report? Absolutely. And I don't know if our cameraman, Steve, can zoom in on this report. This is the final report of the Program Evaluation and Prioritization Committee. And I'm going to turn it this way for a moment so you can see that it's about an inch and a half thick. This is no small document. The final results, frankly, are pretty concise. At the beginning of the report, there's a cover letter from Chairman Gehring and there's a table of contents. And then, as you might expect, from A to Z, from all 207 programs, there is a priority ranking. The top few programs, for example, number one, first and foremost, was elections. Well, clearly, if we don't have an election process, a lot of the other things wouldn't even be here. So the 207 programs, in short, are all ranked here by program title, by department name, the score is associated with it, and also we identify whether it was mandatory or discretionary. Any of our viewers, anyone in the public who's interested in looking at this information, it's all on our county website. So if someone wants to take a look at this for themselves and get a feel for what was done, I encourage you to do so. Also in the report, after you get through the first six or seven pages of the priority ranking of all the programs, then we get into a little bit more of a comprehensive layout of, well, how were these programs prioritized? And that was another interesting thing about the process. A department who may have 30, 40 programs, Health and Human Services, for example, 44 very important programs. They prioritize those from one to 44. Well, their priorities may not necessarily be the same as some of the county board supervisors. That difference shows up in here. The total expense for the program is in this report, and again, how much tax levy was part of that total expense. Also, and the key reason that this document is as large as it is, because again, if you're just looking to get at the final results, you can glean that in 10 or 15 minutes. But if you want to get into the meat of what the Pepsi Committee members were looking at, in this final report is the individual worksheet for every department's program. So if someone wants to learn more about the airport, for example, and what are some of their functions and services, right here they can go to a concise two-page summary of the programs offered in the airport department. If they're interested in learning more about the Health and Human Services Department, if they're interested in learning more about the Sheriff's Department, the County Clerk, the Clerk of Courts, the Register of Deeds, the Planning Department, all 23 departments are in here with a synopsis, a concise summary of the program that they offer and what goes into it and from their point of view how effective it's been. So from a standpoint of a document that provides a tremendous amount of information, if you're looking to learn more, as you know, Bill, about the broad scope and programs and what's offered by Sheboygan County, this is a tremendous tool. How would you envision that the County Board will use that report? Do you think that the County Board will say, okay, we're going to look at the lowest ranked 15 programs and just say they're out of the budget, they're gone? Well, this, as certainly Chairman Gehring is aware and we've discussed of late, this is the million-dollar question right now. We have this report that provides a lot of information and can be used in a lot of different ways and what I know you've communicated really clearly to County Board supervisors is first and foremost, let's take this document lead by example. Every County Board supervisor is on a liaison committee that oversees a particular department and before you start suggesting, for example, if you're on the highway department, before highway or transportation committee, before you suggest, well, let's eliminate that program over there in health and human services or extension, look first at the department that you oversee and because of the priorities that have been established here, it's a useful tool for them to use as part of the budget process. Beyond that, we've discussed, well, where do we go from here? And at this point, again, based on what you've communicated to the County Board, it sounds as though the same group of liaison committee chairs or at least a similar makeup will continue to get together, maybe every other month, look at the information that's in this report and delegate to staff some areas to further look at. From what's been discussed thus far, for example, the bottom 10, 20% for example, those that are in the lowest quartile of all the programs, that would be a place to start and questions such as, well, what tools, what performance standards do we have in place to really know if this program is working effectively or not? One of the things we identified right away here, and this is the case for just about all levels of government, we do a great job developing and administering programs. We do a very poor job, for the most part, evaluating their effectiveness, having tools in place, benchmarks in place to know whether or not this program really is doing what it was created for. So I think that'll be an area of focus starting with the lower quartile of programs. Another key question that I would expect the county board supervisors to ask of staff is, well, this is a mandated program, but how much more or less are we providing to pay for that program? If we're over matching, well, is that a concern? Again, how effective has it been? And if it's a discretionary program, and most of the programs the county provides are discretionary, well, clearly it's fully within the county board's prerogative to eliminate or reduce that program. And if it's in the lower end of the priorities, those are gonna be the ones that are looked at first and the closest early on. Just to follow up then also upon the usage of the report, I've encouraged the chairs of the committees and also the committee members of the leadership forum, at least for this budget go around, if they are having trouble meeting their target, take a look at how their programs were ranked. Possibly the lowest ranking program might be the one that needs to be curtailed or cut back just a little bit. In hindsight, is there anything that you think we maybe should have done differently in this whole process if we could do it all over again? Any time you go through a process like this, or frankly, I think anything we do, there's always room for improvement. And I know that a few of the county board supervisors who participated in hindsight, some of the questions that we asked of departments to answer, maybe some of those questions could have been a little clearer, could have been a little less open to interpretation. Same for some of the scoring, we had specific means of ranking and scoring the programs based on how the questions were answered. And in a couple of instances, I think some supervisors and I would agree would have liked to tighten those up a little bit. As I mentioned earlier, I think we improved upon what Marathon or Clare County did, but I'm certain that the next county that comes along or local unit of government that comes along and looks at what we did, I'm sure they'll find opportunity to further improve as well. But really beyond that, as we talked about earlier, I think it went very well. As you mentioned already, the final report, at least the rankings are on our websites. So if the citizens wish to take a look at that, they can. We do have just a minute or so left, and I think it might be kind of interesting just to mention the top one or two programs in the lowest ranking program, if you can, Adam. Sure. And again, if you have access to a computer or if you want to go to the public library, you certainly can get access there. Get on the county website. If you haven't checked it out before, I encourage you to do so. A lot of information there that you can learn about different departments and certainly take a look at the report. And as Bill mentioned, the top, I'll read the top five elections. There was a total of 775 points that you could receive. Elections had 691. That was the highest score and was the top program from a standpoint of a priority. County board support and activities, the work of the county board, that was number two, tax collections and related activities. Well, clearly if we don't have revenue coming in, we're not going to be able to provide any of the programs or services we do. That was number three, a real estate recording at the Register of Deeds office. Very important function. As folks know, when you buy or sell land, obviously you need a place to track that and record that information. Labor relations was right up at top. We have, as Bill mentioned earlier, about 1,300 employees and 89% of them are in a bargaining unit and we have to have good labor relations and that was deemed a very important priority. On the other end of the table, homespun post. That was the least valuable program from a standpoint of priorities. Doesn't mean that people don't appreciate our homespun post and the work that ensues there. If you're not familiar with it, that's where people can go to take crafts and generate a little extra income. But when you look at the broad spectrum and scope of services that we provide, that was not determined to be a high priority. County employee health, we have some internal health programs for employees and again, when you look at the broad range of programs and services that we provide, that was not deemed to be a very high ranked program. Bach Farm. Yes, the county actually owns a Bach Farm, some property and at some point the county might be interested in selling that property for other purposes. So a little bit of a flavor of some of the programs. Okay. Well, on behalf of Adam Payne and myself, we thank you for joining us today. On the program next month, our person to be interviewed will be our finance director, Kim Finch, and we'll find out really how the budget process is going on. Thank you.