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HomeMy WebLinkAbout10-12-15 Agenda PacketLaurie Yoshida Chair Glen Takenouchi Vice Chair Members: Dirk Apao Jan Hashizume Joanne Nakashima Tricia Lynn Yamashita James Whitfield COUNTY OF KAUA'I COST CONTROL COMMISSION NOTICE OF MEETING AND AGENDA Monday, Octoberl2, 2015 1:30 p.m. or shortly thereafter Mo' ikeha Building, Liquor Conference Room No. 3 4444 Rice Street, Lihue, HI 96766 • Regular Open Session meeting minutes of July 13, 2015 • Regular Executive Session meeting minutes of July 13, 2015 '15 OCT -6 ' :2 BUSINESS CCC 2015 -10 Discussion and possible decision - making on a recommendation to implement an employee cost saving incentive monetary compensation program ANNOUNCEMENTS Next tentative meeting — Monday, November 9, 2015, at 1 :30 p.m. at the Mo' ikeha Building, Liquor Conference Room No. 3. NOTICE OF EXECUTIVE SESSION Pursuant to Hawai'i Revised Statutes §92 -7 (a), the Commission may, when deemed necessary, hold an Executive Session on any agenda item without written public notice if the Executive Session was not anticipated in advance. Any such Executive Session shall be held in pursuant to H.R.S. §924 and §92 -9 and shall be limited to those items described in H.R.S. §92 -5(a). Discussions held in Executive Session are closed to the public. An Equal Opportunity Employer PUBLIC COMMENTS and TESTIMONY Persons wishing to offer comments are encouraged to submit written testimony at least 24 -hours prior to the meeting indicating: 1. Your name and if applicable, your position/title and organization you are representing 2. The agenda item that you are providing comments on; and 3. Whether you will be testifying in person or submitting written comment only. 4. If you are unable to submit your testimony at least 24 hours prior to the meeting, please provide 10 copies of your written testimony at the meeting. The length of time allocated to person(s) wishing to present verbal testimony may be limited at the discretion of the chairperson or presiding member. cc: Deputy County Attorney Matthew Bracken Send written testimony Cost Control Commission Office Boards and Commissions 4444 Rice Street, Suite 150 Lihue, HI 96766 E -Mail: mromo kauai.gov Phone: (808) 241 -4920 Fax: (808) 241 -5127 SPECIAL ASSISTANCE If you need an alternate format or an auxiliary aid to participate, please contact the Boards and Commissions Support Clerk at (808) 241 -4920 at least five (5) working days prior to the 2 1 _Page Cost Control Commission Quarterly Meeting October 12, 2015 Minutes of Meeting OPEN SESSION Board/Committee: Cost Control Commission Meeting Date July 13, 2015 Location Mo'ikeha Building — Liquor Conference Meeting Room Start of Meeting: 1:39 p.m. End of Meeting: 2:49 p.m. Present Chair Laurie Yoshida; Vice -Chair Glen Takenouchi; Members: Dirk Apao, Jan Hashizume, Joanne Hashizume, Joanne Nakashima, James Whitfield Also present: Board & Commissions Office Staff: Support Clerk Mercedes Omo; Administrator Jay Furfaro; and Deputy County Attorney Matthew Bracken Excused Tricia Lynn Yamashita Absent SUBJECT DISCUSSION ACTION Call To Order Prior to the start of the meeting, Administrative Assistant to the County Clerk Chair Yoshida called the meeting to order at Eddie Topenio gave the Oath of Office to new Commissioner James 1:39 p.m. with six (6) member's present Whitfield. constituting a quorum. Chair Yoshida welcomed newly appointed Commissioner James Whitfield and new Administrator to the Office of Boards and Commissions Jay Furfaro who replaced Paula Morikami. Approval of the With no comments or corrections to the meeting minutes, Chair Yoshida Vice Chair Takenouchi moved to approve the regular Open called for a motion. meeting minutes of April 13, 2015. Session Minutes Commissioner Apao seconded the motion. of April 13, 2015 Motion carried 6:0 Business Memorandum dated April 15 2015, from Chair Laurie Yoshida, requesting the presence of Director of Finance Ken Shimonishi and Assistant CCC 2015 -09 Procurement Officer/Budget Chief Ernest Barreira, to provide an update on the Coun 's budget for fiscal year 2016, to include a discussion on the comparison of the previous 2014 and 2015 fiscal years in each department's operations including salaries and benefits. Cost Control Commission Quarterly Meeting - Open Session July 13, 2015 Page 2 SUBJECT DISCUSSION ACTION Mr. Shimonishi, Director of Finance, began by stating that modifications were made to his Powerpoint presentation (On file) to reflect the actual budget numbers as opposed to the budget that was submitted to the County Council on March 13, 2015. He continued by giving an overview of the County's General Fund revenues and use of fund balance versus expense and net transfers out that is used to support other funds that require subsidizes to the County's solid waste, golf as well as fund the County's debt service. Mr. Shimonishi goes on to talk about the overall operating budget elements by category of which 65.2 percent ($118.5 million) went towards employees' salaries and benefits. In regard to the Operating Budget by each Department majority of the budget went to public safety of which 17.9 percent went towards the Police Department and 15.6 percent to the Fire Department. In reference to Operating Budget Ordinance for FY 2014 -2016, Mr. Shimonishi stated that the information reflect the amount the County had budgeted for which includes salaries and wages, benefits, utilities etc. Mr. Shimonishi stated that in their effort to continue to budget closer to the actuals the department heads were provided with three (3) years of historical information of what each department had actually expended to give them an idea of how they could budget closer to their actual which proved to be a big improvement from previous practices. Other cost saving measures included the elimination of seven (7) positions and ten (10) dollar funded ten positions which resulted in an estimate of $1.7 million in savings which will be used to help offset some of the bargaining increases for UPW, Unit 13, HFFA (Fire Fighters), and SHOPO (Police) unions. Cost Control Commission Quarterly Meeting - Open Session July 13, 2015 Page 3 SUBJECT DISCUSSION ACTION In addition, cuts were made across the board that resulted in a $3.1 million reduction in operating expenditures including a fleet reduction of ten (10) vehicles. On the revenue side, the County created two real property classes: 1) Residential Investor Class that increased revenue by $900,000, and 2) Commercialized Home Use Class that resulted in a net reduction in taxes of $706,000. In regard to Timeshare, an assessment methodology was done which resulted in $1.75 million increase in revenue for the County. The Homestead class which represents 30.9 percent of gross real valuation of the real property only 11.3 percent is attributable from the Homestead Class because of the generous exemptions, dedication programs and a favorable tax rate. Relative to the County's CIP improvements over the past four (4) years the County has, pumped more than $59 million into the local economy. In FY 2016 the County appropriated $5 million for the Kekaha landfill to construct a gas capturing system. The CIP requests that was approved by the Legislature consist of the following: 1. Motorola 800 Mhz upgrade Phase III (Civil Defense) - $2.1 million 2. Island wide bus shelters - $1.5 million 3. Kauai Veterans Cemetery pavilion - $4 million 4. State Highways improvements for the Lima O1a project intersection $1.35 million 5. Water Department — Hanapepe /`Ele`ele waterline improvements $4.45.million 6. Moloa`a Irrigation Cooperative — Moloa`a well & post - harvest facility - $3.05 million. Cost Control Commission Quarterly Meeting - Open Session July 13, 2015 SUBJECT DISCUSSION ACTION Commissioner Nakashima asked how much money is kept in the County's reserve fund. Mr. Shimonishi replied that the reserve funds could be thought of as a savings account and that the County wants to continue to maintain a balance of $3.6 million that will be used should a natural disaster occur. Mr. Barreira clarified that the reserve funds are defined as an unassigned fund balance. Commissioner Nakashima asked for clarification if the reserve funds are being held for another project to which Mr. Barreira replied no. Vice Chair Takenouchi asked in reviewing the FY 2016 budget to FY 2015 budget it seems that several department have a lower percentage than others is it due to labor reductions or service reductions? Mr. Barreira replied it's a combination of both explaining that when they began to develop the 2016 budget the initial goal was to seek a reduction of approximately $8 million in operating expenses in order to achieve a balanced budget. But at the end of the day the reduction in operating costs and salary related expenditures only amounted $5 million savings for both. He explained that as part the new process the County has established a standing committee known as the Vacancy Review Committee whose charge is to review every position that was vacated since July 1 of last year before it can be filled. He further explained that their goal is to achieve some sort of identification in terms of re- evaluating each position if they actually need to fill it because it's essential and if there regulatory requirement involved which is one thing but at the same time look for creative ways to achieve savings in terms of finding others ways they could level resources to meet the obligations of that position without having to fill it and if there is another department or agency within the County that Cost Control Commission Quarterly Meeting - Open Session July 13, 2015 Page 5 SUBJECT DISCUSSION ACTION can better utilize that positon. He added with $8 million of likely in expenditures the County is going to have to chase in order to balance the budget for next year but having to cut $8 million over the next two (2) fiscal years makes him feel that there is no room for additional cuts. Mr. Barreira explained that part of Mr. Shimonishi's obligation as the County's new Finance Director is to work with the County's budget team to look for a long term strategic financial plan that would have identify all of the requirements; not only the County's expenses (which are well known) but other type of revenue streams that is going to be needed so they can meet their budgetary obligations. Vice Chair Takenouchi asked if any part of the County's TAT (Transient Accommodation Tax) was affected to which Mr. Shimonishi replied no, the information only relates to property taxes but as far as the TAT goes they are expecting a report is expected to be out in December from the TAT tax working group in which former Finance Director Steve Hunt and now the County's Tax Manager is a part of. Administrator Furfaro stated that it is appropriate to point out that over a (3) year period the County's share of the TAT Cap was gradually reduced from $22.1 million down to $13.5 million but over years the cap went up to $15 million where it currently stands. Chair Yoshida asked if the County's share of the TAT Cap would remain the same for the next fiscal year or was the cap lifted to which Mr. Shimonishi replied that the TAT Cap will remain the same; however, there was a slight adjustment of $1.5million but not fully restored. Cost Control Commission Quarterly Meeting - Open Session July 13, 2015 s SUBJECT DISCUSSION ACTION Mr. Apao asked about County's self- insurance to which Mr. Shimonishi explained that each year the County tries to maintain a balance of $1 million in the self - insurance fund to cover the losses relating to real property, etc. He stated that one of the things that came out of the self - insurance fund was the cost to repair the Kamalani bridge that damaged by fire. Ms. Hashizume asked relative to the Vacancy Review Committee whose charge is to review vacant positons is there another way the committee could look into each department (rather than wait for the position to become vacant) to see if any of vacant position could be combined with another position and perhaps encourage people to retire. Mr. Barreira explained that the members of the Vacancy Review Committee are full -time employees and that magnitude of that particular task will require a little bit more leveraging of resources and would probably involve the Human Resources Department largely because the task is far beyond their scope of what they are charged to do. He added that it would it make sense to conduct that type of evaluation which he hopes the department heads are doing it on a regular basis. But with regard to the collective bargaining obligations any attempts to remove a position will require a substantial amount of due process. Chair Yoshida asked if majority of the County's specials funds are self - sufficient or have to be subsidized by the County to which Mr. Shimonishi replied that the funds that require a subsidy are the solid waste fund; occasionally the sewer fund; routinely the golf fund and the County's debt service fund. With no further questions, Chair Yoshida thanked both gentlemen for providing the Commission with an overview of the County's 2016 budget. Cost Control Commission Quarterly Meeting - Open Session July 13, 2015 SUBJECT DISCUSSION ACTION Vice Chair Takenouchi moved to receive item Being that there were no further discussion, Chair Yoshida called for a CCC 2015 -09. Commissioner Nakashima motion to receive item CCC 2015 -09. seconded the motion. Motion carried 6:0 Executive At 2:15 p.m. Deputy County Attorney Matthew Bracken cited the Hawaii Session: ES -001 Revised Statutes to bring the meeting into Executive Session. Pursuant to Hawaii Revised Statutes 02 -5 (a) (4), the purpose of this Executive Session is for the Commission to consult with its attorney the powers, duties, privileges, immunities and/or liabilities as they in relate to a legal opinion dated June 23, 2015, from DepPIy County Attorney Matthew Bracken to Chair Laurie Yoshida, regarding legal barriers for rewarding employees by monetaa coMpensation for cost saving recommendations. Vice Chair Takenouchi moved to enter into Chair Yoshida called for a motion to enter into Executive Session. Executive Session, Commissioner Hashizume seconded the motion. Motion carried 6:0 At 2:15 p.m. the Commission entered into Executive Session. Return to Open At 2:34 p.m. the Commission returned into Open Session. Session to ratify the actions taken Administrator Furfaro stated he does not feel that the Cost Control in Executive Commission is limited to cost issues when it comes to a project like this Session therefore asking for a financial forecast would not be unreasonable. Attorney Bracken noted that as long as the questions tie into cost - savings. Administrator Furfaro noted that cost savings is not just about cost savings it's about enhancing revenue. Chair Yoshida stated that for the Commission as well as the departments it's about recovering cost and not so much looking for revenue. Cost Control Commission Quarterly Meeting - Open Session July 13, 2015 SUBJECT DISCUSSION ACTION Vice Chair Takenouchi noted that another thing to consider is the County's overall general investment. Administrator Furfaro noted that an important part of the whole component is all about automation to increase revenue which would off -set the cost for new equipment and canisters. Commissioner Nakashima stated that automation is supposed to require less people. Administrator Furfaro stated that having less people is supposed to reduce overtime, but on the flip side enhancing revenue is tied to improved performance which is something the Commission should look into. Attorney Bracken stated that it's pretty clear in the Charter what the Cost Control Commission's boundaries are and that the revenue aspect is a gray area. In reference to Commissioner Nakashima's question on how much money is in the County's reserve fund, Administrator Furfaro stated that the County has a reserve fund policy of which fifty percent of the standard general accounting system is for emergency response expenses. Announcements Next quarterly meeting — Monday, October 12, 2015, at 1:30 p.m. at the Mo'ikeha Building, in the Liquor Conference Meeting Room. Adjournment There being no further business, Chair Yoshida called for a motion to Vice Chair Takenouchi moved to adjourn the adjourn the meeting. She noted that if Commissioners had any new items meeting. Commissioner Nakashima seconded they would like to discuss at the next meeting to email their suggestions to the motion. Hearing no objections from the six her. (6) Commissioners present, the meeting adjourned at 2:49 p.m, Cost Control Commission Quarterly Meeting - Open Session July 13, 2015 Submitted by: Mercedes Omo, Staff Support Clerk () Approved as circulated on () Approved as amended. See minutes of meeting. Reviewed and Approved by: Laurie Yoshida, Chair