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HomeMy WebLinkAbout031212_Cost Control Commission Minutes_APPROVED AS AMENDED COUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board/Committee: COST CONTROL COMMISSION Meeting Date I March 12, 2012 Location Mo'ikeha Building—Meeting Room 2A/B Start of Meeting: 1:30 p.m. End of Meeting: 3:00 p.m. Present Chair Dirk Apao; Members: Sandi Sterker, Arryl Kaneshiro, Glen Takenouchi, and Laurie Yoshida Also First Deputy County Attorney Amy Esaki; Boards & Commissions Office Staff: Support Clerk Mercedes Youn; Administrator Paula Morikami; Administrative Aide Teresa Tamura; Director of Personnel Services Malcolm Fernandez; Personnel Management Specialist Joyce Schuierer; Deputy Finance Director Sally Motta; Real Property Review Officer Steve Hunt; Risk Management Administrator Janine Rapozo; and Human Resources Task Force Member John Isobe. Excused Absent Lawrence Chaffin Jr. SUBJECT DISCUSSION ACTION Call To Order Chair Apao called the meeting to order at 1:30 p.m. Approval of Regular Open Session Minutes of February 13, 2012. Minutes Business Chair Apao requested to take items 0) through (k) from the various Credit Unions that are listed under business item CCC 2011-8,before items CCC 2011-08 (1) and CCC 2011-03; CCC 2011-04; and CCC 2011-05. 0) Communication dated 02/28/12 from Kaua'i Community Federal Credit Union, to Kaua'i Cost Control Commission regarding estimated real property tax as a percentage of 2011 total operating expense. (k) Communication dated 02/29/12 from Kaua'i Government Employees Federal Credit Union, to Kaua'i Cost Control Commission regarding estimated real property tax as a percentage of 2011 total operating expense. (1) Communication dated 02/29/12 from Garden Island Federal Credit Union, to Kaua'i Cost Control Commission regarding estimated real property tax as a percentage of 2011 total operating expense. Cost Control Commission Regular Open Session March 12, 2012 Page 2 SUBJECT DISCUSSION ACTION (m) Communication dated 03/01/12 from Kaua'i Teachers Federal Credit Union, to Kaua'i Cost Control Commission regarding estimated real property as a percentage of 2011 total operating expense. (n) Communication dated 02/28/12 from McBryde Federal Credit Union, to Kaua'i Cost Control Commission regarding estimated real property as a percentage of 2011 total operating expense. (o) Communication dated 02/28/12 from Kekaha Federal Credit Union, to Kaua'i Cost Control Commission regarding estimated real property as a percentage of 2011 total operating expense. Chair Apao called for a motion to receive the communications 0) through(o) as submitted. Ms. Sterker moved to receive the communication as submitted. Ms. Yoshida seconded the motion. Motion carried 5:0 Chair Apao asked the Commission if they had any questions/comments for Mr. Chiba that pertained to the communications. Ms. Sterker thanked the Credit Unions for being concise by providing the necessary information that was requested by the Commission. Communications CCC 2012-03 Communication dated 02/03/12 from Council Chair Jay Furfaro, to Chair Dirk Apao requesting information relating to the Cost Ms. Sterker moved to receive. Ms. Yoshida Control Commission's 2011 Annual Report. seconded the motion. Chair Apao called for a motion to receive communication CCC 2012-03. Motion carried 5:0 Cost Control Commission Regular Open Session March 12, 2012 Page 3 SUBJECT DISCUSSION ACTION Ms. Morikami indicated that most of the questions in the communication pertain to Human Resources with the advice of the County Attorney's Office, and the Office of Information Practices,who ruled that the Human Resources Taskforce could provide an update of the taskforce's work and response to specific questions posed by Council Chair Jay Furfaro. Mr. Isobe informed the Commission that he was assigned by the Mayor to serve on the Human Resources Taskforce as a result of the Cost Control Commissions recommendation to the Administration that they do an internal review of expanding the Personnel Department to see whether or not they could incorporate Human Resources responsibilities within the existing structure of DPS (Department of Personnel Services). The Commission was provided with a copy of the report that is on file at the Office of Boards and Commissions. Ms. Sterker questioned what the acronyms ERS; EAP; TDI; FMLA; COBRA; and FLSA listed in the report under Proposed Human Resources Restructuring Functional Division stand for. Mr. Isobe indicated that the acronym's stand for: • ERS—Employee Retirement System • EAP—Employee Assistance Program • TDI—Temporary Disability Insurance • FMLA—Family Medical Leave Act • COBRA—Consolidated Omnibus Budget Reconciliation Act • FLSA—Fair Labor Standard Act Chair Apao questioned whether employees that are currently performing personnel related functions within their own department would be relocated to the Human Resources Department. Cost Control Commission Regular Open Session March 12, 2012 Page 4 SUBJECT DISCUSSION ACTION Mr. Isobe informed the Commission that the people themselves and/or the staff members and/or positions would be relocated into the Department of Personnel Services. He explained that some of the positions have already been filled and some are vacant and they are either taking only the positions and/or people. Ms. Sterker questioned whether the move would be taking only the person out of the department or just their responsibilities. Mr. Isobe explained that the employees who are transitioning from their existing departments into DPS are primarily the individuals who are already performing 90 to 100 percent of personnel related functions. These are the positions that are being transferred, and not necessarily the individual positions. The employees that are staying would be utilized to help support their department by performing personnel related functions and/or other assigned duties. Mr. Isobe further explained that the Taskforce did a very methodical process in evaluating how people were being identified. First of all, the Taskforce looked at all job descriptions within the various departments which include those who had Human Resources responsibilities written in their job description. Secondly, the Taskforce conducted a written survey to find out the scope of work that was being done. Based on the results of the survey, the Taskforce found that what was written as part of their job descriptions and what the individual actually did on a daily basis did not align. The findings resulted in a series of desk audits to find out what each individual was actually doing. After completing the desk audits, the Taskforce came up with recommendations on who should be transferred and who should not. The Taskforce then followed up with additional interviews and found that there were people performing personnel related functions which were not written in Cost Control Commission Regular Open Session March 12, 2012 Page 5 SUBJECT DISCUSSION ACTION their job description. Based on the totality of the information, the Taskforce looked at what the structure of the new HR duties would be and looked at what the staffing requirements and what expertise would be needed in order to perform those functions. Ms. Sterker voiced her concern that the proposed Human Resources organizational chart show that there are seven (7) new positions being added to the new Human Resources Department. She asked how many positions would actually come from the other departments. Mr. Isobe explained that the existing Personnel Department has a total of nine (9) employees and that the expanded Human Resources Department would have a total of eighteen (18) and it is right to say that the staff would double in personnel. He further explained that the additional nine (9)positions are positions that already exist within the various departments in the County and those positions would transfer into the new HR. Chair Apao asked for clarification to the questions that was posed by Council Chair Jay Furfaro. In addition, Chair Apao asked whether there was a budget being proposed for the new Human Resources Department to operate. Mr. Isobe explained that the taskforce have made recommendations to the Administration and that the implementation of the expanded HR functions are going to be part of the new budget for fiscal year 2012-13 which is currently being work on by the Administration and the County's Finance Department which will be submitted by the Mayor to the County Council on March 15th He further explained that at this point the taskforce would not be able to provide the exact status of the budget until then. Chair Apao questioned whether a target date has been set. Mr. Isobe explained that with the approval of the budget the expansion would take place Cost Control Commission Regular Open Session March 12, 2012 Page 6 SUBJECT DISCUSSION ACTION in July 2012. The taskforce is recommending that the 1"Quarter of the new fiscal year which runs from July through September would be the transitioning period, and within the 2nd Quarter which runs from November to December, the new Human Resources Department should be up and running in its full capacity. Mr. Takenouchi asked whether the job descriptions and the salaries for the positions that are being transferred to the new Human Resources Department would remain the same. Mr. Isobe explained that in some cases the salaries and job descriptions would remain the same because the functions and responsibilities have been decentralized and are being performed by individual departments. In other cases, the job description and salaries would have to be adjusted in its totality because those positions would require additional responsibilities and duties. Mr. Takenouchi added that until that has been determined the actual operating costs for the new Human Resources Department could not be determined. Mr. Isobe stated that the taskforce has a fairly good idea of what the costs would be,however until the budget is ultimately finalized by the County Council, it would be premature on his part to say otherwise. In addition, Mr. Isobe indicated that he would provide the Commission with additional information relative to the budget once it is finalized. Mr. Kaneshiro asked how many vacancies are there in the new structure. Mr. Isobe indicated that there are five (5)vacancies and that the taskforce is encouraging the department to begin the process of recruiting for those positions and that by July the department would have a list of qualified eligible individuals to fill those positions in anticipation of the budget being approved. Ms. Yoshida voiced her concern that some of the questions posed by Council Cost Control Commission Regular Open Session March 12, 2012 Page 7 SUBJECT DISCUSSION ACTION Chair Furfaro would be difficult for the Cost Control Commission to respond to. Ms. Sterker agreed and felt that the Council Chair is trying to get the Cost Control Commission to do something that the Council should be doing. Mr. Isobe suggested that the Commission as part of its recommendations ask the Administration upon conclusion of the work of the taskforce provide the Cost Control Commission with a detailed report of its findings and recommendations at which point that Commission would be more than happy to share those findings and recommendations with the County Council. Prior to receiving the report from the Administration it would be premature for the Cost Control Commission to provide adequate response. Chair Apao noted that question number 6 asks how the Commission might solicit responses from a broader pool of County employees in order to gather information on what training programs they feel would have the most impact on their productivity. He suggested that the Commission refer the question to the findings of a study that was conducted to determine whether County employees are being provided appropriate personnel and industrial relations related training opportunities to improve management and supervision. Mr. Isobe noted that some of the information the Commission received from the Director Department of Personnel Services may be overlapping to some of the questions posed by Council Chair Furfaro. Mr. Isobe indicated that the Taskforce in conjunction with the Department of Personnel Services is going before the County Council on April 5th to make a formal budget presentation and made a commitment to provide the Commission with an update of the presentation. In reference to the questions posed by Council Chair Furfaro, Ms. Sterker questioned how civil service and union laws would affect the consolidation of the Department of Human Resources. Ms. Yoshida suggested that the Cost Control Commission Regular Open Session March 12, 2012 Page 8 SUBJECT DISCUSSION ACTION Commission provide a general response for each of the questions. Mr. Isobe informed the Commission that the HGEA (Hawai'i Government Employees Association)union is aware of the County's plans to consolidate the Department of Human Resources and to date has not received any objections. Mr. Isobe expressed his gratitude to the members for their support and asked for continued support during the period April 5th through early May as the Human Resource Taskforce continues their quest of creating a Human Resources Department, centralizing personnel functions and services. CCC 2012-04 Communication dated 02/07/12 from Boards and Commissions Ms. Sterker moved to receive the Administrator Paula Morikami, responding to Council Chair Jay Furfaro communication. Ms. Yoshida seconded the regarding a memo to Chair Dirk Apao requesting for information regarding motion. the Cost Control Commission's 2011 Annual Report. Motion carried 5:0 CCC 2012-05 Communication dated 02/14/12 from Chair Dirk Apao, to Director of Personnel Services Malcolm Fernandez, requesting a representative be present at the Commission's March 12, 2012, meeting to answer questions relating to the updated report relating to the vacancies, new hires, reallocations, and promotions as of January 1, 2012. (a) Communication dated 03/12/12 from Director of Personnel Services Malcolm Fernandez, to Chair Dirk Apao in response to the vacancies, new hires, reallocations, and promotions as of January 1, 2012. Chair Apao called for a motion to receive the communications as submitted. Ms. Sterker moved to receive. Ms. Yoshida seconded the motion. Motion carried 5:0 Chair Apao indicated that the primary reason the Commission requested the information was budgetary reasons; he then asked Mr. Fernandez to provide a brief synopsis of the reports. Cost Control Commission Regular Open Session March 12, 2012 Page 9 SUBJECT DISCUSSION ACTION Ms. Yoshida asked what does status for exempt appointment mean. Mr. Fernandez explained that exemption appointment gives the appointing authority the power to recruit or hire without getting a status or listing from the Department of Personnel Services. Chair Apao asked for clarification on whether the dollar funded positions are positions that are not part funded by the budget. Mr. Fernandez said yes. Ms. Yoshida asked whether the County funded positions are fully funded. Mr. Fernandez said yes. Chair Apao asked whether the State funded positions have to be funded by the State in order for it to be filled. Mr. Fernandez stated that the funding does comes from the State and usually it's a contract position. Ms. Schuierer added that the position could also be a grant funded position which means that before DPS knows about the position it has to be approved by the Council, and the State funded positions are usually grant funded positions. She further explained that there are a few positions in the Finance Department that are State funded which are the driver license examiner positions. Chair Apao asked whether the dollar funded positions are included in the County budget. Ms. Schuierer explained that the positions will show up in the budget as dollar funded positions paid by the State. Ms. Sterker asked why there are so many positions that are not recruiting. Ms. Schuierer indicated that it may be possible that the department did not submit a request. Ms. Yoshida indicated that the recruitment status for a Civil Engineer Cost Control Commission Regular Open Session March 12, 2012 Page 10 SUBJECT DISCUSSION ACTION position has been vacant for 6 years. She asked whether the Water Department is still deciding whether or not they are going to fill that position. Ms. Schuierer indicated that it may be possible that they are reviewing that position and that some of the positions are dollar funded. Chair Apao asked if a position were to be removed from the list; could the position be reinstated. Ms. Schuierer stated that in order for a position to be reinstated, the department would have to go before the County Council and request for a new position. Mr. Takenouchi asked if any of the positions have an expiration date and if it does, is it reflected in the budget. Ms. Schuierer said no. Ms. Sterker recalled a discussion a few years ago on removing positions that were not filled within a certain time period. Ms. Esaki indicated that the recommendation came from the Cost Control Commission. Ms. Yoshida questioned why the election clerk position has an effective date of 07/01/09. Ms. Schuierer stated that some of the positions are temporary and usually last for 3 months during an election year and is kept in the budget from year to year. However, if the positions are not utilized they are removed from the budget. Ms. Sterker voiced her concern that there are a lot of people in the community that are looking for work and she does not understand why these positions are not being filled. Ms. Sterker asked if someone comes in to apply for any job, what process they would have to go through. Mr. Fernandez explained that if a person is applying for regular labor work they would have to register with their labor registration to be place on the list and recruitment takes place once a year. Ms. Schuierer further explained that DPS would need to have an open Cost Control Commission Regular Open Session March 12, 2012 Page 11 SUBJECT DISCUSSION ACTION recruitment before they would accept applications and since they already have an established list with the names of the individuals, those individuals would be notified. Chair Apao asked what way does union affect the probation period for the new hires. Mr. Fernandez stated that the initial probation period is the standard 6 months for everybody, except for police. Chair Apao asked when a person moves to a new job position; is the other position eliminated. Mr. Fernandez explained that reallocation deals with the increase of duties and responsibilities for a specific position and that position is the same position and does not get eliminated, it's just upgraded. If that person qualifies for that position he/she moves with the reallocation. Mr. Kaneshiro asked when a person is promoted and the position becomes open is it place on the vacant job list. Mr. Fernandez explained that promotions are different in a sense that when a person moves into a new position, the original position becomes open. Mr. Takenouchi asked whether DPS is actively searching for only the positions that are being requested by the departments. Ms. Schuierer indicated that for the most part DPS is actively looking to fill those positions that are being requested by the departments, however, if DPS knows that there is a need to fill a position such as a senior clerk in the various departments, DPS would actively go out and try to recruit without having a request coming from the department. Mr. Fernandez added that when DPS does its recruitments it is usually inter/intra open which means anybody can apply. Chair Apao asked what triggers a promotion; is it the amount of hours that a person puts into his or her job. Ms. Schuierer explained that in order for a romotion to occur a position must become open and it also depends whether Cost Control Commission Regular Open Session March 12, 2012 Page 12 SUBJECT DISCUSSION ACTION or not the department needs to have that position filled right away. If that is the case, the search could be an open recruitment or intra-departmental which means within the same department or inter which means within the County. Business CCC 2011-08 Review and discussion of the County's real property tax exemptions and rate setting procedures. (On-going) (i) Information from Finance Department regarding the purpose and intent behind each property tax exemption and the date of enactment. Chair Apao indicated that the Commission previously requested information regarding the purpose and date of enactment for each of the various property tax exemptions including background information on the policy intent as to why the exemption were being provided. For example, the Commission questioned the original intent behind why the credit unions are being provided with a tax exemption. Representatives from the Department of Finance and Real Property Division provided information on the current tax exemptions. It was noted that many of the exemptions have been in place since the County assumed the responsibility for the property taxes from the State of Hawai'i and those exemptions are marked as the year of origin as being unknown. Mr. Hunt explained that the exemption amounts are in thousands and that the total exemption value is $3.67 billion as indicated in the report. Ms. Yoshida noted that most of the exemptions proposed by the State of Hawai'i and the rationale behind the exemption are unknown. She asked whether those exemptions came over with the 70's. Mr. Hunt stated that the exemptions started in 1978 when the con-con was held and the real property taxation function was passed onto the County; all of the exemptions that Cost Control Commission Regular Open Session March 12, 2012 Page 13 SUBJECT DISCUSSION ACTION were showing as unknown were exemptions that were in place at the time and since then have been transferred to the County. Mr. Hunt also explained the column which indicates last modified is when the County essentially re- evaluated the exemption amounts and/or programs and decided to either add additional programs such as the Kuleana Exemption or amend the amount of the exemption. Primarily the home use has changed from 20 to 48, where it currently stands for your basic exemption. Ms. Sterker noted that the Cost Control Commission is holding a workshop and one of the issues that they are looking into is the challenges that the real property tax division are currently facing. She asked whether the department had any recommendations that they feel would help make their work load less cumbersome and more efficient. Mr. Hunt stated that one of the issues that the real property tax division has as discussed in the past is the twenty-five dollar minimum tax on whether that amount was appropriate relative to the amount of services provided by the County. Mr. Hunt felt that in time the real property tax division would have a firmer position and right now he does not want to say that the administration wants to increase the minimum tax without having a study done. He suggested that the Cost Control Commission look into the matter. Ms. Sterker questioned whether a study has ever been done that showed the actual cost to process a request for minimum tax exemption. Mr. Hunt stated that the process begins with the mailing out of all assessment notices, followed by the billing cycle, and whether the tax exemption is being appealed. In hindsight, there is obviously a cost and what the actual costs are would be difficult to identity. Although their job is to provide the assessment he strongly stated that more consideration should be taken to allocate across the County, the level of service in terms of the police and fire that the County rovides. Cost Control Commission Regular Open Session March 12, 2012 Page 14 SUBJECT DISCUSSION ACTION Mr. Hunt indicated that the City and County of Honolulu has the highest in minimum tax exemption in the State at three-hundred dollars, Kaua'i is the lowest at twenty-five dollars, Maui comes in at one hundred-fifty dollars, and the Big Island has a range that runs from one-hundred dollars, however, in certain instances when an evaluation is below a certain level they are provided with some relief in which they pay anywhere from seventy-five dollars to fifty dollars. Ms. Motta indicated that what the administration is mainly looking for is to try to make the taxes geared towards people who can afford them. In other words, although it may be difficult, make it affordable taxing instead of having it as a flat dollar amount. For example, you could have a very wealthy property owner that pays twenty-five dollars and have another property owner who is barely able to pay the twenty-five dollars. The administration is interested in targeted taxing which is extremely difficult to do. Ms. Motta also indicated that Mr. Hunt's explanation is based on the mechanics and believes that this is what the Commission is asking for at this time. Mr. Kaneshiro questioned whether the gross income is based on tax returns. Mr. Hunt stated that the tax payer must submit their tax returns and that in the past the adjusted gross income line had to be below forty thousand dollars ($40,000). This year the gross amount is now fifty-six thousand four hundred dollars ($56,400) which is based off their 2010 tax returns. The additional income that was not previously included is now incorporated to primarily get rid of abuse of the system. Cost Control Commission Regular Open Session March 12, 2012 Page 15 SUBJECT DISCUSSION ACTION Chair Apao indicated that in his business they discount the net losses from the tax returns and look primarily at the present income and asked how the County handles net losses. Mr. Hunt stated that the capital losses and the business losses are not given the negative value; in fact they are excluded from that. Ms. Sterker indicated that the focus is on the minimum tax and affordable targeted tax. Mr. Hunt indicated that the Kuleana Exemption is essentially an extension of the Hawaiian homelands that are lands which are owned by the DHHL (Department of Hawaiian Home Land) and are leased out. Whereas, the Kuleana are individually held lands that are tied directly to the lineage. In the past, the Kuleana was not exempt from taxation and could be conceived under the umbrella of the Hawaiian homelands. The County eventually added the Kuleana thus, creating an exemption. Mr. Hunt voiced his concerns that there is a need for stronger separation of church and State when it comes to the Charitable Exemption. He explained that there are a lot of the exemptions coming from organizations that are religious affiliated and the County is providing relief and not all taxpayers want to support these different types of religion. However, at the same time the County does not want to be punitive to the point that the organizations are forced to go under. Mr. Hunt indicated that the City and County of Honolulu looked at providing a sliding scale of exemption based on the overall value of the property as opposed to going to the minimum tax. Another concern that the real property tax division has is with the Charitable organizations use; it's not the organization that gets the exemption, it's the Charitable use that qualifies. He stressed that there have been situations where a church or a non-profit 501 Cost Control Commission Regular Open Session March 12, 2012 Page 16 SUBJECT DISCUSSION ACTION (c) would own a particular piece of land but had no use for it and the land remains vacant. Mr. Hunt indicated that the Historical Residential is another slippery slope because of some of the homes is worth millions. Currently there are eight homes on the island all of which are located on the North shore. For example, the million dollar home in Kailua that President Obama stays at when he is on Oahu. The property tax for that Historical Resident is three hundred dollars. He further explained that the Historic properties that have owner occupants receive the minimum tax and these properties are 100 percent exempt from the building and 100 percent exempt from the land. The Historic properties that are non-owner occupant for example, the Wilcox Estate, receives 100 percent exemption on the building and 50 percent exemption on the land. Mr. Hunt indicated that the Safe Room Exemption is a flat forty thousand dollar exemption that was created after Hurricane Iniki in 1992. This exemption was an incentive for people to provide their own safe room rather than rely on the government to provide shelter during a time of extreme emergency. With no further questions, Chair Apao thanked Mr. Hunt and Ms. Motta for taking time out of their busy schedule to attend the meeting. Announcements Chair Apao announced that on Thursday, March 29, 2012, at 1:30 p.m. at the Mo'ikeha Building in Liquor Conference Room 3, the Cost Control Commission will be holding a workshop to review and discuss the County's real property tax exemptions and rate settings. Cost Control Commission Regular Open Session March 12, 2012 Page 17 SUBJECT DISCUSSION ACTION Next Meeting—April 9, 2012, at 1:30 p.m. at the Mo'ikeha Building in the Liquor Conference Room 3. Adjournment Chair Apao called for the motion to adjourn the meeting. At 3:00 p.m. Ms. Sterker moved to adjourn. Mr. Takenouchi seconded the motion. Motion carried 5:0 Submitted by: Reviewed and Approved by: Mercedes Youn, Staff Support Clerk Dirk Apao, Chair ( ) Approved as circulated(add date of meeting approval). (X)Approved as amended. See minutes of April 9th meeting.