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HomeMy WebLinkAboutFY 2019 Budget Presentation (Department of Finance) COUNTY OF KAUA'I Department of Finance 2019 Budget Presentation April 6, 2018 Ken M. Shimonishi Director of Finance Paula M. Morikami Deputy Director 2019 Budget Presentation Department of Finance Page 2 DEPARTMENT OF FINANCE I. Mission To provide effective financial services to the people of Kaua'i and to all that we serve by establishing and maintaining a financial system that can properly account for its activities. The Department of Finance Budget Presentation for FY 19 addresses a number of initiatives, successes and achievements that are attributable to our department. The Department of Finance is comprised of nine separate divisions; Administration, Accounting, Information Technology, Treasury, Driver’s License, Motor Vehicle, Real Property Assessment, Real Property Collections, and Purchasing. These divisions continue to perform despite limited resources and financial constraints. Division reports highlight the various initiatives, challenges, successes and goals for the future. II. Successes and Achievements 1. As of the FYE June 30, 2017 the County reserves exceeded the target minimum of 30% of the prior year’s General Fund revenues as established through the adoption of the “reserve fund and reserve fund policy” via Resolution No. 2017-28 on March 22, 2017. Amounts available for reserve as of June 30, 2017 were $48.2 million or 33.3% of the prior year’s General Fund revenue vs. the minimum target of $43.5 million or 30%, an excess of $4.7 million. 2. Submitted “structurally balanced budgets” for both FY 2018 and the upcoming FY 2019, thereby continuing to adhere to the Council adopted resolutions on “Structurally Balance Budget Policy” and “Reserve Fund Policy”. 3. Successfully executed $26 million bond issuance in November 2017 for much needed capital improvement projects. As part of the bond issuance, presentations were made to the bond rating agencies of Fitch Ratings Services and Moody’s Investor Services, which resulted in reaffirmation of the County’s credit worthiness of “AA” and “Aa2”, respectively while maintaining a rating outlook of “stable”. 4. Major role in presenting arguments and impacts on passage of the G.E. Tax Surcharge, which will enable to County to address significant improvements to our roads, bridges, and transportation improvements. III. Goals & Objectives 1. Adhere to Long Term Financial Plan resolutions regarding “Structurally Balanced Budget” and “Reserve Fund and Reserve Fund Policy.” 2. Prepare a multi-year outlook of the county’s financials within the guidelines of these policies to identify resources, challenges, and recommendations to move the county forward with sustained financial stability. 3. Execute succession and training of employees through the utilization budget proviso Section 3, specifically where near future retirements are evident and specialized skills required. 2019 Budget Presentation Department of Finance Page 3 4. Continue enhancements on OPENGOV to possibly create: a. An executive overview of staffing and labor information in order to better manage staffing resources, which currently accounts for 65.0% of the county’s total operating budget, and 84.7% of the General fund’s operating budget. b. Real property tax parcel data. c. Department specific data requests, including non-financial reports. d. Other requests. IV. Budget Overview – Finance Administration The budget for Finance Administration saw a reduction of <$268,110> or <5.9%>. This was due in large part to the aggregate reduction of $300,000 in the allowance for general liability claims, inclusive of $1 funding Puhi Metals remediation work, offset by increases in insurance premiums related to property insurance lines of coverage as a result of multiple natural disaster that impacted the United States in 2017. FY 2018 FY 2019 $ + / -% + / - Salary and Wages 363,446 368,138 4,692 1.3% Benefits 176,608 171,780 -4,828 -2.7% Utilities 136,800 136,800 0 0.0% Vehicle/Equip, Lease 1 1 0 0.0% Operations 3,837,415 3,569,441 -267,974 -7.0% 4,514,270 4,246,160 -268,110 -5.9% 8% 4%3% 0% 85% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 9% 4%3% 0% 84% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 2019 Budget Presentation Department of Finance Page 4 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 Budget Overview – Finance Department Totals Overall the Finance department’s budget reflects a decrease of <$227,140> or <2.0%>. This was achieved by reducing the general liability allowance, resetting of salaries for several positions due to retirements, and overall budget line item reductions based on historical trends. FY 2018 FY 2019 $ + / -% + / - Administration 4,514,270 4,246,160 -268,110 -5.9% Accounting -1,559,944 -1,414,526 145,418 -9.3% Information Technology 3,010,007 3,163,886 153,879 5.1% Treasury 293,292 289,094 -4,198 -1.4% Drivers License 697,292 562,662 -134,630 -19.3% Motor Vehicle 802,296 721,282 -81,014 -10.1% Real Property Assessment 2,106,688 2,135,323 28,635 1.4% Real Property Collections 403,118 383,508 -19,610 -4.9% Purchasing 1,072,222 1,024,712 -47,510 -4.4% 11,339,241 11,112,101 -227,140 -2.0% 2019 Budget Presentation Department of Finance Page 5 FY 2018 FY 2019 $ + / -% + / - Salary and Wages 4,729,261 4,844,348 115,087 2.4% Benefits 2,757,353 2,627,871 -129,482 -4.7% Utilities 194,120 196,521 2,401 1.2% Vehicle/Equip, Lease 110,896 12,449 -98,447 -88.8% Operations 3,547,611 3,430,912 -116,699 -3.3% 11,339,241 11,112,101 -227,140 -2.0% 42% 24%2% 1% 31% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 43% 24% 2% 0% 31% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 2019 Budget Presentation Department of Finance Page 6 Risk Management (Provided by Atlas Insurance) Coverage Policy Limits Deductibles FY16 Premiums FY17 Premiums FY18 Premiums Forecast Change % FY19 Budget Property $25M $100K $355,912 $334,976 $357,482 7.00% $382,506 Excess Liability $20M $750K $465,257 $465,260 $438,741 3.00% $451,903 Crime $5M $25K $13,972 $14,101 $14,204 3.00% $14,630 Cyber Liability $1M $50K $22,540 $23,496 $26,116 5.00% $27,422 Excess WC/EL $25M/$2M $500K/$500K $198,293 $207,448 $214,000 10.00% $235,400 Aircraft Hull and Liability $25M/$2.2M Hull 2%/$1K $28,481 $28,481 $28,481 0.00% $28,481 incl Drone Liability $5M $0 $0 $12,500 0.00% $12,500 Liability: Subsidized Police Vehicles* See Below See Below $45,616 $49,162 $65,790 0.00% $65,790 35 vehicles 37 vehicles 45 vehicles Lifeguard Liability 7/1/17 to 7/1/18 $1M $10K $ - $ - $135,560 0.00% $135,560 Environmental / Pollution 7/1/17 to 11/1/19 $5M $50K $ - $ - $42,408 expire 11/1/19 TOTALS $1,130,071 $1,122,924 $1,335,282 $1,354,192 *Subsidized Police Vehicles: 45 vehicles as of March 2018 Bodily Injury (each person, each accident) $100,000 Property Damage (each accident) $300,000 Additional Personal Injury Protection $100,000 Uninsured Motorist-Unstacked $100,000/$300,000 Underinsured Motorist-Unstacked $100,000/$300,000 Wage Loss Benefit $1,000/$6,000 Funeral Expenses $2,000 Physical Damage Coverage Not Covered Non-Owned, Hired, Other Driver Not Covered Our projections are our best estimate for the renewal terms the County should receive when the insurance program renews at the end of the year. This forecast is based upon our recent experience renewing other client’s programs, the current and projected state of the marketplace and the assumption the County will not have a significant loss event impacting a specific line of coverage before the renewal on November 1st. 2019 Budget Presentation Department of Finance Page 7 Property: The property market for the last several years has been in a “soft market” cycle which has been advantageous to the insurance buyer and renewal terms reflected premiums decreasing over time. The last part of 2017 saw a market correction and buyers for the first time in eight years were being asked to fund the record breaking catastrophic property losses incurred in 2017 with increased rates. This trend appears to be continuing in year 2018 and the County can expect increasing pressure to accept modest rate increases for the property renewal. Excess Liability, Aviation Liability, Cyber Liability and Crime: The premium forecast for these lines of coverage and market conditions remain relatively benign for these lines of coverage. It should be noted the County significantly reduced the SIR for the Excess Liability policy from $1M to $750K per claim. The Aviation Liability policy continues to receive the no known loss premium return feature and the Cyber Liability policy received improved terms and conditions from the previous year policy. Excess Workers Compensation/Employers Liability: The forecast for this line of coverage is problematic for a number of reasons. First and foremost is the lack of competition for this particular line of coverage. The number of viable carriers willing to underwrite the County’s account is basically two, the incumbent Safety National and Midwest Employers Casualty Company. Last year we approached a third carrier, Arch to quote the account but were not successful in receiving a competitive proposal. The second significant factor driving premiums upwards in this sector are the escalation in the severity of claims and the increased cost of medical services to the injured employees. This places the carriers in the position of having to raise premium levels or exit the marketplace. We budgeted a 10% increase in this premium to reflect market conditions. Subsidized Police Automobile Liability: We have the renewal terms and pricing which we have utilized for the budget. This program has grown over the last three years since it was incepted by the County. An important f actor to consider during the budget process is the premium is auditable. This means as vehicles are added to the schedule there will be additional premium charged to the County during the course of the year. Additional vehicles added during the year would have an approximate rate of $1,462 per vehicle. Pollution Liability and Lifeguard Liability: Last year the County added two additional lines of coverage as part of the Counties comprehensive insurance program. The County secured a multi -year Pollution Liability policy covering premises pollution liability and/or indoor environmental conditions. In addition, after the State legislature allowed the immunity protections applicable to lifeguard activities to lapse the County secured a general liability policy covering liabilities arising from ocean related life guard activities. 2019 Budget Presentation Department of Finance Page 8 Department of Finance Organizational Chart 2019 Budget Presentation Department of Finance Page 9 Finance Administration Organizational Chart 2019 Budget Presentation Department of Finance Page 10 Finance Accounting Organizational Chart 2019 Budget Presentation Department of Finance Page 11 Information Technology Organizational Chart 2019 Budget Presentation Department of Finance Page 12 Treasury Division Organizational Chart 2019 Budget Presentation Department of Finance Page 13 Real Property Tax Assessment & Real Property Collections Divisions Organizational Chart 2019 Budget Presentation Department of Finance Page 14 Purchasing Division Organizational Chart 2019 Budget Presentation Department of Finance Page 15 COUNTY OF KAUA'I Department of Finance Accounting Division 2019 Budget Presentation April 6, 2018 Ken M. Shimonishi Director of Finance Paula M. Morikami Deputy Director 2019 Budget Presentation Department of Finance Page 16 Department of Finance Accounting Division I. Mission To provide oversight and maintain the accuracy and integrity of the County’s financial system. II. Success and Achievements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the County of Kaua'i for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2016. The County has received this award for the 24th consecutive year. This award signifies that the County’s 2016 CAFR has achieved the highest standards in financial reporting in accordance with Generally Accepted Accounting Principles (GAAP) and applicable legal requirements. We remain hopeful the current CAFR will meet the Certificate of Achievement Program’s requirements. III. Challenges The Accounting Division continues to operate seamlessly despite operational challenges and risks. Our philosophy is to maintain operations by cross-training and cross- functioning to the extent possible; however, our efforts continue to be challenging due to staffing constraints and unanticipated leave of absences. On the horizon, is the potential and/or simultaneous retirements of Position 253, Accountant III and Position 105, Accounting Technician. The incumbents will have 33 years and 22 years of service, respectfully. The Accountant III is primarily tasked with capital assets, cash receipts/bank account reconciliations, and serves as the pCard Administrator for the County’s pCard Program. The Accounting Technician is primarily tasked wit h purchase order invoice/payment processing, county-wide audit and review of other commodity pCard transactions and accounts payable voucher payments, and assumes the pCard Administrator role when needed. Effective implementation of cross-training proves to represent an important risk management tool by sharing, spreading, and capitalizing of individual retained knowledge in specialized functions. However, due to unanticipated staff vacancies, such as medical leave, maternity, or other employment opportunites, the goal of cross-training and creating standardized procedures continue to be challenging. In addition, we have also experienced: 1) increases in pCard transactional volume for both travel requests and other commodities; 2) increases in leased equipment and vehicle purchases; 3) increases in capital asset purchases and construction-in-progress activity; 4) implementation of 2019 Budget Presentation Department of Finance Page 17 newly issued GASB Statements directly impacting the County, and 5) requests for technological changes that will further strain the capacity of the Accounting Division. IV. Goals and Objectives The Accounting Division’s primary objectives are to: 1) Report accurately, all financial related information in a timely manner and 2) Strive to promote transparency, streamline processes to increase efficiencies, effectiveness, and consistency throughout County-wide operations. V. Budget Overview As mentioned previously, Accounting Division’s goal of seeking improvement and successfully cross-train internally is non-realistic because we have continuously needed to cover during short staffing periods. With our current staffing level, there has been little to no success in documenting workflow or creating standard operating procedures. In the current budget cycle, Accounting Division requested a new Account Clerk (SR -11) position as part of our succession planning. Refer to Position 562. This position moved to Accounting Division from Finance-Driver’s License. With the added support, we will be in a better position to meet our goals of cross-training and cross-functioning to prepare us for future retirements and unanticipated leave of absences. Our goal is to minimize the impact on operations and continue to operate seamlessly. Budget Variances Overall salary and wages increase of $107K is primarily due to bargaining unit raises effective July 1st, newly added Account Clerk position with a base salary of $32K, and an increase of $33K in overtime, as compared to the prior year. Increase in overtime requested due to various annual year-end tasks, preparation for the upcoming audit and requested audit schedules, GASB Statement 68-Pensions (year 4 ) and GASB Statement 75-OPEB (initial implementation year), etc. FY 2018 FY 2019 $ + / -% + / - Salary and Wages 621,265 728,417 107,152 17.2% Benefits 341,002 351,149 10,147 3.0% Utilities 0 0 0 0.0% Vehicle/Equip, Lease 1 1 0 0.0% Operations -2,522,212 -2,494,093 28,119 -1.1% -1,559,944 -1,414,526 145,418 -9.3% 2019 Budget Presentation Department of Finance Page 18 Comparative Charts 18% 10% 0% 0% -72% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 20% 10% 0% 0%-70% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations -3,000,000 -2,500,000 -2,000,000 -1,500,000 -1,000,000 -500,000 0 500,000 1,000,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 The large negative budget figure shown in operations is the result of having the Accounting Division act as the clearing house for county-wide central services that are paid by the general fund and subsequently charged back to certain funds such as, Highway, Liquor, Solid Waste, Sewer, Golf, and Housing funds, in accordance with the County’s Cost Allocation Plan. 2019 Budget Presentation Department of Finance Page 19 COUNTY OF KAUA'I Department of Finance Information Technology Division 2019 Budget Presentation April 6, 2018 Ken M. Shimonishi Director of Finance Paula M. Morikami Deputy Director 2019 Budget Presentation Department of Finance Page 20 Department of Finance Information Technology I. Mission The use of technology is interwoven through virtually every process the County engages in, from collecting fees, to monitoring fuel pumps. As the County continues to grow, the demand for utilizing technology increases exponentially. Meeting this demand requires new ways of thinking and implementing new approaches to focus on the evolving needs of the County. It is the mission of IT to address these needs by creating a framework for supporting innovation, identifying goals, establishing sound principles, fostering collaboration, investing in our workforce, and charting a solid course for our future. II. Vision Our vision charts a new path for County Information and Technology Systems. Over time, it is common for departments charged with the responsibility of procuring and servicing technology systems to disengage from system users, often leaving end-users to fend for themselves. This approach serves to fragment technology environments with stakeholders going off on their own to find solutions to problems, frequently with little or no direction from IT. Our model of collaborating closely with all County departments on technology initiatives will foster a sense of partnership, allowing us to create new efficiencies not previously achievable. We will engage with stakeholders to find solutions that fully mesh with existing technology infrastructure and initiatives. The following graphic illustrates the core strategy we will apply in achieving our goals. 2019 Budget Presentation Department of Finance Page 21 III. Fiscal Year 2018 Successes and Achievements Electronic Plan Review (EPR) – EPR was successfully implemented and fully live as of February 1st 2018. This new process allows the County to run an entirely paperless, cloud based, solution for the review and approval of plans. EPR provides an on-line repository of plans, allows citizens to submit plans electronically via the Internet, automates internal/external workflows associated with plan review/approval, and provides efficient email communications/notifications betwee n County plan reviewers and citizens. Infrastructure – Numerous upgrades or enhancements were made to the County’s technology infrastructure. Among the items completed are improved network security, greater bandwidth and redundancy to the internet, an expanded virtual server environment, additional storage systems to house county data and consolidated software licensing. Cashiering system Upgrade – The upgrade to the County’s cashiering system has been completed and is now fully on-line. The new system represents a significant change to the way cashiering operations are conducted by the County, specifically in that the new system significantly increases the amount of detailed data that is collected about each transaction. Although the project was concluded successfully, there are still additional workflow changes and further efficiencies that can be implemented. We will continue to refine the processes associated with cashiering in our effort to provide the best possible experience to our customers. IV. Fiscal Year 2018 Challenges Payroll and Personnel – Efforts were expended towards the implementation of an integrated solution involving time and attendance, scheduling and employee self-service. While components of this system are presently on-line, we have decided to take a new direction with this initiative. Rather than find a solution involving the integration of systems from multiple vendors, we will instead procure a solution from a single vendor that provides all of the desired functionality. This direction was not previously possible due to the high cost of a single vendor system. However, due to changes in the way vendors are licensing their products, specifically in using the Software as a Service (SaaS) model, a single vendor solution is now within reach. Document Imaging – The County has had a long-standing project involving scanning documents in an effort to become paperless. During the 2018 budget process, CIP funds that had previously been allocated to this project were not renewed and the initiative to image paper documents for digital storage became the responsibility of each individual department. As part of our new vision of collaborative projects led by Information and Technology, we are planning to revisit how we handle document imaging in an effort to move the County forward with achieving its goal of becoming paperless. V. Fiscal Year 2019 Goals or Objectives Internet Access – We will increase the amount of bandwidth available for internet access. This increase will support initiatives to move more services to a cloud based SaaS model. Additionally, higher bandwidth will further enhance our ability to utilize cloud based backup services in an effort to improve the redundancy and security of our system backups. 2019 Budget Presentation Department of Finance Page 22 Training – We will focus on providing better training to technology support staff in an effort to equip them with the skills needed to support the various technologies in place at the county. Among the types of training we will pursue are courses or conferences that include GIS, VoIP phone systems, server virtualization and documenting management. Enterprise Software – To further improve the level of service provided to customers of the County of Kauai, we will continue to invest in upgrading or replacing various software systems. The Kaua‘i Police Department saw great success with the new Records Management System (RMS) it implemented last year. Additionally, many departments are benefiting as the County further develops its Geographic Information System (GIS). This year, we are funding a Land Information Management System (LIMS), which will provide a comprehensive framework for the integration and sharing of data between County departments. We are also dedicating Capital Improvement Project (CIP) funds to upgrade our Human Resources Management System (HRMS), which will improve our payroll, employee self-service, timekeeping, and other HR functions. The new HRMS will provide the County with superior tools to assist in managing critical areas such as the allocation of overtime and employee scheduling. Cisco Voice paging and Intercom System – We will enhance the functionality of our existing Cisco phone system to include the capability of being able to make system-wide intercom calls. Among other things, this enhancement will allow us to quickly react to emergencies by giving us the ability to make a voice announcement to selected Cisco VoIP phones. Computer Replacements – As with previous budget cycles, we are once again targeting the replacement of computers that have reached end of life. Generally, the life of a computer is limited to four or five years, depending on its function, with a limited number of computers being used for slightly longer than five years. Through preventative maintenance and re-assignment of older computers to less demanding functions, we do our best to extend the service life of our systems to the greatest length possible. The types of systems targeted for replacement include servers, laptops, tablets and desktop computers with an average of one-hundred systems being replaced annually. Wi-Fi – We intend to extend Wi-Fi coverage to allow the addition of systems previously excluded from Wi-Fi service. This would include things such as lighting controls or other smart devices. We will also increase the number of access points to provide better coverage for Wi-Fi services. Live Event Streaming – We will continue to support streaming events live to the internet. An example of this service would be sessions of County Council. During previous years, Boards and Commissions managed the billing for this service, this year we will move management of this function to Information and Technology. This move will account for a 130k increase to the IT Budget and correspond to a like decrease in the Boards and Commissions budget. VI. Budget Overview As mentioned above, the increase in the FY 2019 budget is primarily attributable to the $130k live streaming cost now reflected in IT operations. Without this addition, the IT budget would have shown only a minimal increase of $24k, or less than 1% over FY 2018. Equipment reduction of $95k due to backup generator needs being addressed in FY 2018 and non-recurring in FY 2019. 2019 Budget Presentation Department of Finance Page 23 Department: FINANCE, Division: IT TEAM FY 2018 FY 2019 $ + / -% + / - Salary and Wages 970,688 1,052,978 82,290 8.5% Benefits 604,423 580,448 -23,975 -4.0% Utilities 56,600 59,001 2,401 4.2% Vehicle/Equip, Lease 95,001 3 -94,998 -100.0% Operations 1,283,295 1,471,456 188,161 14.7% 3,010,007 3,163,886 153,879 5.1% 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 32% 20% 2%3% 43% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 33% 18% 2%0% 47% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations Information & Technology Projects 2019 Budget Presentation Department of Finance Page 24 Software Licensing – A new approach to software licensing will assist in more easily projecting future software costs. Two examples involve Enterprise agreements with Microsoft and Adobe, allowing full access to each vendor’s suite of products for a fixed recurring expense. This type of licensing is easier to budget for and gives County users access to the latest and best software. Strategic Plan – Work continues on implementing a new strategic plan governing how the County will approach IT functions and needs. The plan incorporates key areas of immediate concern to IT such as security, quality and efficiency along with long-term goals of redundancy and deploying new enterprise class applications. Partnerships – We are developing partnerships with key County stakeholders (such as Kauai Police, Fire and Prosecuting Attorney) to facilitate expedient end-user support and customer service. This initiative will extend administrative level privileges to properly trained users at each of these respective agencies, which will result in quicker responses to requests for assistance. The services performed by users covered under this initiative will include routine tasks such as installing or updating approved software, installing printers and resetting passwords. Shifting this workload will free up time for IT Help-Desk staff to focus on larger, more complex issues. Enterprise Software – To further improve the level of service provided to customers of the County of Kauai, we will continue to invest in upgrading or replacing various software systems. The Kaua‘i Police Department saw great success with the new Records Management System (RMS) it implemented last year. Additionally, many departments are benefiting as the County further develops its Geographic Information System (GIS). This year, we are funding a Land Information Management System (LIMS), which will provide a comprehensive framework for the integration and sharing of data between County departments. We are also dedicating Capital Improvement Project (CIP) funds to upgrade our Human Resources Management System (HRMS), which will improve our payroll, employee self-service, timekeeping, and other HR functions. The new HRMS will provide the County with superior tools to assist in managing critical areas such as the allocation of overtime and employee scheduling. County Network and Server Systems – The majority of the County’s server and network systems have been upgraded or replaced to provide the highest level of redundancy and performance. The County’s infrastructure is 95% virtualized, which serves to reduce energy costs, streamline maintenance, and provide resiliency in responding to the County’s needs for server processing power. This infrastructure, containing over 50 miles of fiber optic cabling, multiple datacenters, and redundant storage arrays , supports more than 274 servers and over 1500 network nodes. Kapule IT Renovation – Work continues on renovations to IT office space in the basement level of the Kapule building. Once completed, the newly renovated area will house all IT personnel, curr ently IT staff are split between two locations. The co-location of IT staff will facilitate better collaboration and make team projects easier to coordinate. Creating this new work area will also provide a permanent home for GIS that is closer to the department heads responsible for GIS oversight. Digital Signatures – Methods are being adopted that will allow the County to become paperless with many of its documents that previously required a signed paper copy. These methods involve using industry standards that govern the use of digital signatures. We just completed and approved a new digital signature policy that we will begin implementing in phases over the remainder of the year. As part of this policy, we will use products from Adobe and other software companies to create paperless workflows wherever possible. 2019 Budget Presentation Department of Finance Page 25 COUNTY OF KAUA'I Department of Finance Treasury/Driver License/Motor Vehicle Registration Divisions 2019 Budget Presentation April 6, 2018 Ken M. Shimonishi Director of Finance Paula M. Morikami Deputy Director 2019 Budget Presentation Department of Finance Page 26 Department of Finance Treasury/ Driver’s License/ Motor Vehicle Registration I. Mission To provide efficient and accurate driver licensing services, motor vehicle registration, and other fee collection and revenue management services to the people of Kauai and to the departments and agencies of the County. II. Successes and Achievements 1.) Treasury oversaw the issuance on November 8, 2017 of $26 million in general obligation bonds to fund a specific set of County projects. 2.) REAL I.D. (Act of 2005) – Driver Licensing achieved full compliance on August 27, 2013 and continues today to balance the Department of Homeland Security’s (DHS) responsibility to ensure that driver’s licenses and identification cards intended to be u sed for official Federal purposes meet certain statutory and regulatory requirements. “Official Federal Purposes” as defined in the Act and the regulations includes, but are not limited to, accessing Federal facilities and boarding Federal regulated commercial aircraft. a.) Security Floor Plan. The facility Security Floor Plan (SFP) has been completed. The County of Kauai (all counties’) SFP is necessary and an integral part to help the State of Hawaii maintain “Real ID Full Compliance”. The SFP includes: security cameras, motion detectors, entry/exit devices, Fraudulent Document Recognition training (FDR) and Security Awareness Training (SAT) for all Driver Licensing staff members. The SFP intent is to prevent public access to sensitive equipment, card production materials storage locations, Sensitive Security Information (SSI) and Personal Identifiable Information (PII). The SFP will monitor the Driver License Division during hours of operation and during closing time. b.) IT Infrastructure. Upgrades of IT infrastructure or systems overhaul (including modernization of IT systems to ensure all in-State DMVs are interoperable), software upgrades to improve the ability to protect personal identity information, and ensuring the ability to use electronic immigration verification system. c.) Document Security. Document security enhancement, including the development of more tamper-resistant documents with enhanced security features, and the use of facial recognition software to detect a person with multiple identity documents or social security numbers. d.) Equipment Upgrades. The County continues to upgrade equipment required to capture and store supporting identity documents, including document scanners, high- resolution digital scanners, and high-speed printers, and e.) Outsourcing of Production. Physical production and mailing of official Real ID compliant cards have been outsourced to a more secured central issuance process, minimizing the potential for insider fraud. 2019 Budget Presentation Department of Finance Page 27 3.) LEGAL PRESENCE (Act 38, SLH 2010 and Sec. 19-122-305 HAR) – enacted by the State to comply with the REAL I.D. ACT. This requires that the county examiner of drivers to verify that a person applying for a driver’s license is legally present within the State by providing evidence of lawful status, and ties length of stay with the Hawai‘i learner's permit, driver’s license, and state identification card's expiration date. Act 310, transferred transferred State ID (SID) function to respective County’s Driver License Department, effective January 02, 2013. 4.) Hawai‘i’s LIMITED PURPOSE DRIVER’S LICENSE, PROVISIONAL DRIVER’S LICENSE AND INSTRUCTION PERMIT, effective January 2016. A Limited Purpose credential does not require documentary proof of “legal presence” and/or proof of a social security number. The term “legal presence” is defined as a person who is either a U.S. citizen or is legally authorized to be in the U.S. The Limited Purpose Driver’s license are issued as a license to operate a motor vehicle on public highways. Limited purpose credentials are not REAL ID compliant and therefore, not exclusively accepted by the TSA to board a commercial aircraft or enter federal facilities. Additional screening and/or documents may be required. In addition, these credentials are not accepted for federal official purposes and do not establish eligibility for employment, voter registration, or public benefits. 5.) The Motor Vehicle Registration division processed over 150,000 transactions in FY17. In addition to registering trucks, vehicles, and motorcycles for the public, all island car dealers and rental car companies, the MVR division also issues bus passes, collects sewer payments, issues and collects solid waste tipping fee coupons and payments, collects commercial refuse payments, and registers bicycles and trailers. MVR is also responsible for assembling the cash receipts as well as retaining the payment records. Remarkably, all of this is done with a staff of only 10 employees, which explains why there are often long customer lines at the MVR division. 6.) Driver Licensing administered the Legal Presence program during FY13, the Hawai‘i Limited Purpose Driver License in January 2016 and has been enforcing the federally mandated REAL ID Act. These new programs require a significant increase in the types of legal identification required before Driver’s Licensing can issue a state driver’s license or State ID card, the latter which became a County function in January 2013. Both customers and staff have had to adapt to these more rigorous licensing and identification requirements. While the number of licensed drivers on Kaua‘i has not significantly increased, currently estimated at 56,707 for FY18, the processing time for validating the applicant’s legal identification has been lengthened substantially to meet state and fede ral requirements. 7.) Driver Licensing safety glass was installed, October 2015, at each work station where employees interact with the public. This safety feature was implemented as a result of growing concern from the Driver License Staff about employee safety. 2019 Budget Presentation Department of Finance Page 28 III. Challenges Staffing For Motor Vehicle Registration (MVR), staff to work ratios make it difficult to provide timely customer service, while concurrently maintaining timely reporting. This is due to absenteeism, population and vehicle volume growth, unfunded State and Federal mandates, and additional responsibilities added without corresponding additional resources. In addition, the implementation of a new cashiering system has placed additional stresses on MVR’s abilities to meet its goals timely. There are peak periods, daily around lunchtime, after a weekend or a holiday and during the first and last weeks of month. MVR’s customer line for payment processing of sewer payments, tipping fee coupons, bus passes, landfill payments, commercial refuse collection and vehicle registration is typically much longer during these peak times. Trying to find a balance between providing the public with quality customer service and servicing our internal departments with timely reports continues to be a challenge. During FY18, two 89-day contracts hires were employed to assist with backlogs and improve the timeliness of customer service. For FY18, one additional MVR clerk has been reallocated from the Department of Finance to MVR going forward. For Driver’s Licensing, the increased volume of documents needed to be processed, due to a number of federal and/or state government mandates has led to additional requirements or processes for the County. During FY18, three vacancies due to retirements were filled, bringing staffing levels for Driver Licensing clerks back to historical norms. However, efforts to recruit for a vacant Commercial Driver’s License (CDL) Examiner did not yield any qualified candidates. Consequently, the position was downgraded in order to recruit a qualified Driver’s License Examiner, who can subsequently be trained in CDL. This recruitment is ongoing. Currently, the Chief Examiner has taken on extra duties providing CDL exams on a part-time and as-needed basis. Succession Planning Civil service requirements make succession planning extremely difficult to implement, as vacant positions must be made available for either internal or open recruitment prior to the departure of present staff. These three offices have a current position head count of 22 with two (2) positions vacant for a total of 24. One position, the Motor Vehicle Licensing and Registration Manager, has been redescribed and moved elsewhere in the Department of Finance, and the corresponding duties have been reassigned under the Treasurer. During FY18, three key employees, two in Treasury, and one in MVR retired simultaneously. While the Treasurer position was filled timely, all other positions in Treasury remain vacant. These simultaneous retirements have placed additional stresses on Treasury, which has been operating with a staff of one (1) for several months, preventing the office from meeting its internal reporting deadlines. Two employees in Driver Licensing and one employee in MVR are eligible now or will become eligible to retire in during FY18 and FY19. This does not include employees who may be searching for other employment opportunities, who may leave even sooner. 2019 Budget Presentation Department of Finance Page 29 Structural During FY18, the County created and filled a Motor Vehicle Licensing and Registratio n Manager (pos. 562, EM-3) position to oversee MVR and Driver Licensing. The creation of this new position temporarily relieved the Treasurer of oversight of these departments. The incumbent Treasurer retired in December of 2017, and the new Treasurer, formerly the Motor Vehicle Licensing and Registration Manager, continues to oversee Drivers Licensing and MVR in addition to his duties as Treasurer. As stated above, for FY19, the former Motor Vehicle Licensing and Registration Manager position has been redescribed and transferred to another office in the Department of Finance. It should be noted that none of the other Counties in the State place MVR or Driver Licensing under the oversight of their Treasurers. As volume of activity, duties, and responsibilities of MVR and Driver Licensing continue to grow, the County should reassess whether the Treasurer has the time, resources, and personnel to oversee the administration of MVR and Driver Licensing. During FY18, certain Treasury functions and one position are being moved out of MVR to Treasury to relieve back-office pressures and allow the supervisor of MVR to concentrate solely on the duties and activities of MVR. Recruitment for the reassigned position (Departmental Accounting Tech, pos. 235) is currently in process. IV. Goals and Objectives 1. Increase efficiency and decrease wait times for MVR patrons by: a. Implementing kiosks (2) for MVR transaction customer self-service, and integrating these new transactions types into MVR processes; b. Educating patrons about online, mail-in, drop-box, and kiosk methods of MVR renewals; c. Provide MVR clerks with additional training on the new cashiering system to make them faster and more accurate; and d. Encouraging rental car companies and car dealers to move to fleet registration; e. Employing bank lockbox services for processing utility payments (e.g.., sewer, solid waste, etc.). 2. Further implement paperless office processes by: a. Automating creation, tracking, and distribution of Treasury slips; b. Increasing use of on-line deposit account and investment financial reporting from the County’s banks and investment firms; c. Employing the expanded capabilities of the new cashiering system to provide more efficient, timely, and accurate financial reporting; and d. Increasing the use of document imaging (scanning) to reduce storage needs and to provide historic records that are readily retrievable at the Motor Vehicle Registration division. (This objective will require a scanning contractor for the backlog that has accumulated since the last contract. MVR will need document scanners at each work station to mitigate the ongoing accumulation of records). 2019 Budget Presentation Department of Finance Page 30 V. Budget Overview All three of these divisions have FY19 budget requests that show decreases. No new positions were added; however, (1) new position will be redescribed and transferred to MVR. Department: FINANCE, Division: TREASURY FY 2018 FY 2019 $ + / -% + / - Salary and Wages 191,672 188,917 -2,755 -1.4% Benefits 101,612 100,169 -1,443 -1.4% Utilities 0 0 0 0.0% Vehicle/Equip, Lease 1 1 0 0.0% Operations 7 7 0 0.0% 293,292 289,094 -4,198 -1.4% 0 50,000 100,000 150,000 200,000 250,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 65% 35% 0% 0%0% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 65% 35% 0%0%0% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 2019 Budget Presentation Department of Finance Page 31 V. Budget Overview (cont.) Department: FINANCE, Division: DRIVERS LICENSE FY 2018 FY 2019 $ + / -% + / - Salary and Wages 383,048 275,028 -108,020 -28.2% Benefits 214,494 193,684 -20,810 -9.7% Utilities 0 0 0 0.0% Vehicle/Equip, Lease 0 0 0 0.0% Operations 99,750 93,950 -5,800 -5.8% 697,292 562,662 -134,630 -19.3% 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 55%31% 0%0%14% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 49% 34% 0% 0%17% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 2019 Budget Presentation Department of Finance Page 32 V. Budget Overview (cont.) Department: FINANCE, Division: MOTOR VEHICLE FY 2018 FY 2019 $ + / -% + / - Salary and Wages 353,609 337,534 -16,075 -4.5% Benefits 190,284 167,344 -22,940 -12.1% Utilities 0 0 0 0.0% Vehicle/Equip, Lease 0 0 0 0.0% Operations 258,403 216,404 -41,999 -16.3% 802,296 721,282 -81,014 -10.1% 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 44% 24%0% 0% 32% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 47% 23% 0% 0% 30% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 2019 Budget Presentation Department of Finance Page 33 VI Vacant Positions: Pos. 238. Driver’s License Examiner. This position was previously “Driver’s License Examiner and Inspector (CDL).” It has been downgraded to “Driver’s License Examiner” in order to facilitate recruiting. Upon hiring, the incumbent will be required to obtain training to be a CDL examiner and the position upgraded accordingly. While recruiting for the position has commenced, the position is currently unfilled. 2019 Budget Presentation Department of Finance Page 34 COUNTY OF KAUA'I Department of Finance Real Property Assessment Division 2019 Budget Presentation April 6, 2018 2019 Budget Presentation Department of Finance Page 35 DEPARTMENT OF FINANCE Real Property Assessment Division I Mission The Real Property Assessment Division’s mission is to accurately and uniformly assess all real property within Kaua'i County annually; maintain current ownership and taxpayer address records; create and maintain up-to-date tax maps; provide public service education and information through our front desk and our website locations; and administer numerous tax relief programs in an efficient and fair manner. II Success and Achievements  The conversion to Marshall & Swift’s MVP cost tables was completed during FY18 and incorporated into the most recent assessments for 2018. Using a nationally recognized cost estimating company that spent time and effort to develop Hawai‘i-based cost factors rather than indexing regional cost multipliers gives our Hawai‘i counti es the best available tools for developing assessments using the Cost Approach to value.  RPA enhanced the Pictometry agreement, which is managed by Police, so that we could get improved countywide imagery for those sectors of this island that contain the greatest number of housing units. This new 3-inch imagery will make finding structures that are missing from our tax rolls more easily identifiable, which in turn assists this division’s future use of Assessment Analyst to remotely re-inspect residential properties from aerial images. These new images were updated in within Pictometry during FY18.  The continued refinements in “market modeling” has resulted in better median assessment-to-sales ratios, ranging from 99.2% to 100.2% in the three residential models, and from 99.9% to 101.4% for the three condominium models. The coefficient of dispersion (COD), which measures the average percentage deviation from the median ratio, also improved throughout the models. Most jurisdictions require a COD of less than 20 (20%) to validate market models are working uniformly. The three residential market models employed for the 2018 assessments produced a COD range of 6.5 to 9.7. The three condominium models returned CODs ranging from 6.1 to 7.2. These results indicate that the coefficients and variables selected to value our residential and condominium properties are seeming producing credible values based on the 749 sales utilized in these models. Properties that are less homogenous within their respective neighborhoods are generally valued on the Cost Approach as the regression analysis loses reliability when being applied to “outlier” properties.  The annual certification of the assessment list continues to be completed well before the March 15th deadline. This year’s 2018 assessment list was certified on February 23, 2018.  For 2018, there were 127 appeals that are contesting approximately $178 million in value, which is only 0.89% of the $20 billion in total net taxable value. These 127 2019 Budget Presentation Department of Finance Page 36 appeals represents only 0.38% of the 33,759 total parcels assessed. By comparison, there were 157 appeals in FY18; 392 in FY17; and 442 in FY16.  RPA’s tax relief measures were well utilized with 1,347 additional Home Exemption for Low-Income approved; 1,251 Long-Term Affordable Rentals receiving the Homestead tax rate; and 487 approved Very Low Income credit applicants. The number of properties that are classified as Homestead grew slightly from 11,474 in 2017 to 11,536 in 2018. A total of 187 properties received income-based tax credits that limited property taxes to 3% of gross income in-lieu of market calculated taxes. Additionally, there was a 3% assessment limit placed on properties that were classified as either Homestead or Commercialized Home Use.  The addition of the GIS Analyst II position in fiscal year 2018 allowed our division to complete the update of the County’s parcel layer as well as add a new CPR layer to our GIS maps. This is a crucial step towards moving forward on the Land Information Management System plan.  The Agricultural Working Group, which was comprised of farmers, ranchers, tree farmers, and large landowners, submit their recommendations for proposed ordinance changes to the Office of the County Attorney in April 2017. These proposed changes to the agricultural dedication program will encourage bona fide commercial agricultural activities, enhance enforcement efforts, and stagger the workload more evenly for the department’s staff. The draft is currently under review and will likely be submit to the County Council for consideration before the end of FY18. III Challenges Integrating Software This continues to be an ongoing issue for our division as well as for the IT division that supports RPA. Since our vendors periodically release new versions of their software, these updates often require reconfiguring our multiple touch points to make sure we don’t lose functionality. We recently completed a number of software integration efforts including Tyler-MVP, Tyler- Assessment Analyst, and Tyler-Pictometry. We are still working on getting our GIS map layers uploaded into Tyler’s iasWorld, and we will also be working with ESRI Canada to create a process to upload assessment and geo-reference data collected on iPads from field inspections. Many of these challenges will also be considered part of our goals for the upcoming fiscal year. Limitations on Office Space By trying to keep staffing levels flat for a number of years, we have invested heavily in technology, such as large dual monitors, large-scale scanners and printers, and other equipment that create in-office efficiencies but that also take up considerable space. Now that all of our vacant positions have been filled, we realize that additional space is needed for employees to operate effectively. To address the lack of space, we have cleaned out the storage room by disposing of broken and obsolete equipment and furniture, moved shelving and file cabinets from our work area to the downstairs storage room, and reduced the amount of desk space allocated to each employee. Yet, despite these efforts, it appears that RPA will still need additional space to accommodate daily operations. The FY18 budget included CIP monies for designing a new counter space which involved moving the front counter several feet forward. Architectural 2019 Budget Presentation Department of Finance Page 37 drawings were completed along with a full construction set ready to go to bid once CIP monies could be identified. The FY19 CIP budget includes monies to complete this project. Succession Planning With an aging workforce comes the challenges of recruiting and training replacements in several very specialized disciplines. Kaua‘i County’s Real Property Assessment division is uniquely challenged as the size and scope of our operations does not warrant carrying additional staff as trainees in waiting; yet once certain key personnel retire there won’t be any immediate successors for certain disciplines. In particular, the areas of title abstracting, tax mapping, and property technical will be the most difficult to fill as these are not positions that have a readily available workforce, and developing these positions from within takes a significant amount of time. IV Goals and Objectives ESRI Assessment Analyst + Mobile Field Tablets The appraisal staff will begin work on geo-referencing the residential structures in the Waimea district during FY19 and then the Kōloa district in FY20 using the desktop version of Assessment Analyst which will incorporate the latest Pictometry imagery. These efforts will help equalize assessments by locating missing structures that have already been completed. Additionally, RPA purchased four iPad tablets in FY18 and will install the mobile version of Assessment Analyst to geo-reference new construction rather than wait until future aerial imagery is available. Construction drawings for field inspections can be done within the Assessment Analyst application and then taken into the field to anchor geo-coordinates for new structures. This process will eliminate carrying paper files into the field and the duplicate work associated with redrawing these plans and “as builts” within the iasWorld CAMA system. RPA is finalizing a contract with ESRI Canada for this mobile application. Staff Training Training should include IAAO Standards for Mass Assessment; Land CALP development; Market Modeling; Data Collection Standards; Software utilization; and customer service. Additional training in these disciplines should translate into workflow efficiencies and better data integrity of data for our annual valuations. Ag Dedications The results of the Agricultural Working Group’s efforts were drafted into a codified version and submit to the Office of the County Attorney in April 2017. Once the legal review has been completed, we anticipate these suggested changes to the ordinance and associated administrative rules to be submit to the legislative body for consideration. These amendments, if approved, will be implemented by our Real Property Agricultural Specialist and appraisal staff on a go-forward basis. 2019 Budget Presentation Department of Finance Page 38 Land Information Management System (LIMS) This is a multi-departmental effort that involves creating a unified platform to share information countywide. Real Property seeks to provide key parcel layer and CPR layer data as a common platform from which all other departments can add their own customized ‘toolboxes’. The goal is to create greater efficiencies throughout the County by sharing access to frequently requested data. V Budget Overview Salaries & Wages are higher in FY19 due to the increased pay from collective bargaining, step movements, and staff progression. The FY19 budget is 1.4% higher than FY18, which in reality is essentially a flat budget given the increases in the uncontrollable expenses of Salaries & Wages. The controllable expenses within Operations were trimmed slightly to offset some of the employee-related increases. FY 2018 FY 2019 $ + / -% + / - Salary and Wages 1,047,060 1,098,945 51,885 5.0% Benefits 646,548 636,146 -10,402 -1.6% Utilities 720 720 0 0.0% Vehicle/Equip, Lease 7,252 3,802 -3,450 -47.6% Operations 405,108 395,710 -9,398 -2.3% 2,106,688 2,135,323 28,635 1.4% 50% 31% 0% 0% 19% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 51% 30% 0% 0%19% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 2019 Budget Presentation Department of Finance Page 39 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 2019 Budget Presentation Department of Finance Page 40 COUNTY OF KAUA'I Department of Finance Real Property Collections Division 2019 Budget Presentation April 6, 2018 Ken M. Shimonishi Director of Finance Paula M. Morikami Deputy Director DEPARTMENT OF FINANCE 2019 Budget Presentation Department of Finance Page 41 Real Property Collections Division I Mission To provide prudent financial management and customer services to the people of Kauai as well as the departments and agencies we serve. The Real Property Tax Collection function is to administer the Tax Billing & Collection system and to assist with the custodial responsibilities for all Current and Delinquent Real Property Tax, RRCA (Residential Refuse Collections Assessments) and KKUCFD (Kukui’ula Community Facilities District) Tax Records. II Successes and Achievements  Payment Agreements Since the inception of Approved Payment Agreements in 2013; there has been many successes in the payoff of delinquent Property Taxes. For example:  November 2017 o Sent out warning letters to 76 parcels o 106 actual letters (Sent to all owners on record with an associated mailing address) o 3+ years delinquent  December 2017 – Results o 55 parcels – Filed Liens o 10 parcels – Approved Payment Agreement on File which will resulted in guaranteed $5K every month being paid towards delinquent taxes. o 7 parcels – Real Property Taxes paid in full through June 30, 2018  A total of $65,968.60 collected since November 2017  Cashiering System Upgrade:  December 2017 o New web-based Cashier System upgrade. III Challenges  Staff Turnover and Reduction in Workforce: o POS #233  Civil Servant left on 10/31/2016  Out for recruitment as Tax Collection Assistant (SR15)  Unable to find qualified Candidates  Reclassified to Senior Account Clerk (SR12)  Out for recruitment for SAC  Unable to find qualified Candidates  Reclassified to Account Clerk (SR11)  Civil Servant started April 2017  Civil Servant left Nov 2017 2019 Budget Presentation Department of Finance Page 42  Out for Recruitment for Account Clerk  Unable to find qualified Candidates  Reclassified to Tax Clerk (SR12)  Out for recruitment presently o POS #275  Senior Clerk (SR10), Civil Servant left in April 2015  Vacancy Review Committee removed Civil Servant Position and converted to an 89 Day Contract Hire  KVS – 89 Day Hire  Sept 2015 to Nov 2015  Dec 2015 to Feb 2016  March 2016 to April 2016  April 2016 - Civil Servant POS #272  SVS – 89 Day Hire  July 2016 to Sept 2016  Sept 2016 to Dec 2016  Dec 2016 to March 2017  March 2017 to June 2017  Left County June 2017  NA – 89 Day Hire  July 2017 to Sept 2017  Nov 2017 to Feb 2018  Feb 2018 to present  Foreclosure Sale: o Last non-Judicial Foreclosure Sale = May 2015. o Labor intensive work; not enough staffing.  Delinquent Accounts – as of February 28, 2018 o 3+ Years Delinquency  212 parcels = $2.4M o Hawaiian Home Land (DHHL)  74 parcels = $81K  Bills Sent to Lessee tend to be ignored  Include in KCC to allow to file Liens on Lessee  Include in KCC to allow to Bill/Collect from State o State Leased Land  22 parcels = $252K  DLNR (Land, Parks, Ag, Airport, Kokee and Harbors)  Bills Sent to Lessee tend to be ignored  Include in KCC to allow to file Liens on Lessee  Include in KCC to allow to Bill/Collect from State  Recording Release of Lien o Release Of Liens are not being recorded at the Bureau of Conveyances 2019 Budget Presentation Department of Finance Page 43  Some for 10+ years  Taxpayer(s) responsibility to pay fee and record o High rate of requests for “Duplicate” Release of Liens o Request to add to Kauai County Code, the ability to charge a Release Fee at the time of Filing a Lien. o COK will “Record” Release IV Goals The primary goal of the Real Property Collections Department is to effectively and efficiently Bill, Collect and Account for all Real Property Taxes and other Special Assessments, such as the Residential Refuse Collection Assessment (RRCA) and the Kukui’ula Community Facilities District Tax (KKUCFD) for the County of Kaua‘i. The Real Property Collections other major responsibility is to perform the Tax Calculation process for each New Fiscal Year. The RPC office is also responsible for accurate Account and Recordkeeping of the following:  All adjustments posted to RP Tax Accounts due to BOR and TAC decisions.  Monies transferred from the GF Account to the Real Property Trust Fund Account due to active BOR and TAC  Monies transferred back to the GF Account from the Real Property Trust Fund Account due to closed BOR and TAC  Issuance of Refunds from the Real Property Trust Fund Account due to closed BOR and TAC  All office adjustments made to Real Property Tax Accounts.  Foreclosure Monies Collected and deposited into the Treasury Trust Fund Account and not yet disbursed due to Surplus Funds.  Refunds due to overpayments of Real Property Taxes, RRCA and KKUCFD  Pre-payment(s) of Real Property Taxes.  Collection of Appeal Fees, Tax Searches and other Miscellaneous Fees. Objectives  Significantly reduce the Delinquency Rate o Decrease the amount of delinquent RP, KKCU and CFD Taxes o Increase the # of approved Payment Agreements  Pay off within 24 months (estimate years)  No Liens to file  No recommendation to Foreclosure  Filing Liens electronically o Decrease the amount time and labor to manually file a lien 2019 Budget Presentation Department of Finance Page 44 V Budget Overview The reduction in Salaries & Wages is the result of the proposed transfer of a dollar-funded position (# 275), as well as the corresponding funding for two 89-day periods, to the Office of the County Attorney for the purpose of establishing a dedicated Deputy County Attorney position for Finance. Inasmuch as RPC had been unable to conduct a tax sale auction since 2015, combined with the difficulties in buyers obtaining title insurance through the non-judicial foreclosure process, the recommended solution is to transfer the foreclosure process to the Office of the County Attorney and move towards judicial foreclosures. This will proposed change will allow RPC to concentrate on other means of collection for delinquent accounts, such as establishing payment agreements and/or filing liens. Additional expenses were trimmed in operations that resulted in achieving a 4.9% budget reduction for FY19. FY 2018 FY 2019 $ + / -% + / - Salary and Wages 209,900 201,962 -7,938 -3.8% Benefits 126,308 119,246 -7,062 -5.6% Utilities 0 0 0 0.0% Vehicle/Equip, Lease 0 0 0 0.0% Operations 66,910 62,300 -4,610 -6.9% 403,118 383,508 -19,610 -4.9% 52% 31% 0% 0%17% FY 2018 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 53% 31% 0% 0%16% FY 2019 Operating Budget Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations 2019 Budget Presentation Department of Finance Page 45 0 50,000 100,000 150,000 200,000 250,000 Salary and Wages Benefits Utilities Vehicle/Equip, Lease Operations FY 2018 and FY 2019 Comparison FY 2018 FY 2019 Finance – RPA & RPC Vacant Positions FY19 Division Pos. No. Position Description/Title SR Salary Status RPC 233 Tax Clerk (Reclassified from Account Clerk) SR12 $30,468 In Recruitment RPC 275 Real Property Tax Clerk (Unclassified) N/A $1 Transfer to OCA 2019 Budget Presentation Department of Finance Page 46 Department of Finance Purchasing Division 2019 Budget Presentation April 6, 2018 Ken M. Shimonishi Director of Finance Paula M. Morikami Deputy Director 2019 Budget Presentation Department of Finance Page 47 Department of Finance Purchasing Division I. Mission The Division of Purchasing (DOP) is tasked with the responsibility for all informal and formal procurement of Construction, Goods and Services for the County of K aua‘i. In addition, the Division is responsible for: Contract for services, small purchases involving materials, supplies and equipment; leases, rent, and the acquisition of real or personal property; maintain control of all surplus County equipment and process all inter-office and incoming/out-going mail, and postage. II. Vision The primary vision of the division is to ensure full and uncompromising adherence to the requirements of the Hawaii State Procurement Code and associated administrative rules. Of equal importance is to continue to pursue and develop an aggressive strategy and philosophy to harness all available technological resources in order to better enhance our service delivery to both our internal and external customers. III. FY 18 Successes and Achievements A. Successful Solicitation and Awarding of over 85 Formal Bids For the first time in its history, the DoP processed over 85 formal bids to date in FY 18 resulting in contracts totaling over $60 million. Prior to FY 18, the largest amount of solicitations amounted to 71. This does not include the number of other procurement responsibilities assumed by the division to include professional services, exempt, sole source, emergency, and small purchases. The substantial increase is particularly noteworthy since the DoP staffing was reduced in the c urrent fiscal year. The notable increase in workload coupled with the corresponding decrease in staffing speaks to success of the various technological initiatives that were implemented since 2011 and the commitment, character and effectiveness of this small team of professionals in the execution of their duties. B. Execution of a Paperless Budget Process Pursuant to a directive by Mayor Carvalho and consistent with his Holo Holo 2020 initiative, the FY 19 budget is the first executed by the Executive Branch following a paperless protocol. All financial components of the budget as well as budget presentations were submitted to the Council electronically. The initiative, while requiring some internal and procedural adjustments, resulted in a substantia l savings for the Executive Branch in terms of paper and related resources. For a four year period prior to the submission of the FY 19 budget, the May 8 supplemental transmission was submitted electronically. C. Digital Signatures and Electronic Records During FY 18, the DoP continued its partnership with the IT Division and the Office of the County Attorney in further developing the digital and electronic signature protocol that was discussed in the FY 17 report. In FY 18, the Policy on Electronic or Digital Signatures and Electronic Records was developed, approved and executed. This provides the pathway for full implementation of this initiative after the acquisition of the identified software which will be utilized by the County to ensure the highest level of security and effectiveness. Details of this acquisition will be addressed by the IT Division. The 2019 Budget Presentation Department of Finance Page 48 existing digital signature protocol that has been used throughout all of FY 18 has resulted in the division being able to achieve a completely paperless operation. It is intended that the same paperless utility will be possible among other departments as a result of this new resource. The ability for the County to advance this initiative is a result of the support of the Office of the County Attorney relating to Act 177, SLH 2005. Two separate legal opinions executed by DCA Nick Courson and approved by CA Mauna Kea Trask provided the legal and procedural pathways for this initiative. The division also extends its thanks to the County Council for its unanimous support of the Council Resolution 2016-21 which enabled the County to advance these various electronic initiatives. D. Succession Planning The division’s succession plan is in its fifth year of implementation. During FY 18, two of the d ivision’s three senior managers retired after more than 60 years of collective procurement experience. The succession plan that was developed and expanded over the years focused upon effectively addressing these retirements and resulted in the successful recruitment and selection of a new procurement supervisor in December 2017. This selection provides the framework for immediate mid-management oversight of the division as well as the eventual replacement of the Division Chief who is also retirement eligi ble. Active recruitment for an entry level procurement specialist position is underway. The filling of this position will retain the level of manpower that existed prior to the promotion of position 150. The continuing development of procurement expertise is a critical component of the succession plan in terms of creating a cadre of workers who possess the knowledge, skills, and ability to ensure organizational and performance continuity. Equally important are the continued efforts to build and de velop supervisory capacities among the senior specialists so as to create a pool of qualified professionals who will meet the requirements for eventual promotion to leadership positions in the division. This type of leadership continuity too is critical to the future success of the division. IV. Challenges A. Electronic Purchase Orders One of goals listed for fiscal year 18 involved the implementation of electronic purchase orders for the County. Numerous challenges have been encountered from both technical and procedural perspectives. As such, this initiative has not yet achieved success. The IT Division has engaged our contract service provider (Superion) to assist in the transition. While the system is capable of executing electronic purchase orders and support document transmission, numerous tests have resulted in mixed results. Continued efforts will be made to deal with the numerous challenges involved in this project in order to move it forward successfully. V. Goals & Objectives Fiscal Year 2018-2019 The Goals and Objectives section for Fiscal Year 2018 -2019 for the DoP summarizes the Division’s key requirements that are deemed essential to better achieve our mission and service delivery to both internal and external customers. 2019 Budget Presentation Department of Finance Page 49 Summary of Fiscal Year 2018-2019 Goals and Objectives 1. Complete Implementation and Execution of a Digital and Electronic Signature Protocol for the County Pursuant to the legal opinions executed by the OCA with regard to the adaptation and implementation of digital signatures, the County has now developed a county-wide digital and electronic signature policy. The next critical phase is working in close partnership with the IT Division to utilize recently procured licenses, schedule county-wide training and updating internal policies and procedures to facilitate effective transition and implementation to all County departments, divisions, and agencies. Summary of Fiscal Year 2018-2019 Goals and Objectives 2. Implementation of County-wide Random pCard Transaction Audits Pursuant to a number of repeat financial audit recommendations, the Director of Finance has directed that the DoP develop a random audit system of pCard transactions throughout the County. The DoP supervisor has developed a fully automated audit system and implementation will be critical in FY 19. The results of this audit will address two issues: 1) strengthening procurement practices and determining further training needs, and 2) ensuring full compliance with pCard, policies, processes and requirements. The audit process has already begun. 2019 Budget Presentation Department of Finance Page 50 Summary of Fiscal Year 2018-2019 Goals and Objectives 3. Succession Planning The DoP’s comprehensive and detailed succession plan has been presented to the Council in five consecutive budget presentations. The initiative will continue to move forward in FY 19. In fact, the sequential execution of the succession plan in FY 19 is actually the culmination of the various work that has been committed in this area for the past five years. This is highlighted by the departure of our two senior managers. Both highly skilled and qualified managers take with them more than 60 years of collective government and procurement experiences. Remaining objectives of the plan include: 1. Continued cross training, job-rotation, and job sharing among all procurement specialists and technicians involving the full scope of procurement duties and responsibilities focused on further developing and honing the knowledge and skills of our senior procurement specialists and technicians. 2. Responsible and effective training and guidance for the newly selected working level supervisor to work in collaboration with the ACPO to provide daily management oversight for the division. 3. Reallocation of the Procurement and Specifications Specialist V to a Procurement and Specifications Specialist VI when minimum qualifications and performance are achieved so as to ensure managerial continuity in the division. 4. Effective recruitment of the entry-level Procurement and Specifications Specialist I and corresponding training. This will create the fourth procurement specialist position and return the division to the full cadre of specialists that was impacted with the promotion of the supervisor. Cross training, job rotation, and peer training will continue to be active components of the training regimen based on past successes. 5. The new training initiative begun in FY 18 involving mandatory attendance for all procurement specialists and technicians at the National Institute of Government Procurement (NIGP) Conferences on an annual basis will continue. Two specialists attended in FY 18. The NIGP is the nationally renowned support resource for all government procurement entities. The annual conference has provided our professional staff the opportunity for exposure to on-task seminars, trainings, discussions panels, and other activities designated to further develop competence within the field of procurement. The conference also advances the most modern resources and initiatives which will lend assistance to the DoP in keeping abreast of new and emerging trends in procurement so as to remain on the cutting edge of this important governmental process. The advancement of the various technological initiatives of the DoP were a result of resources gathered via involvement with this annual conference. While funds are expended for this resource, the DoP’s operating budget remains significantly lower that what it was in 2010 as a result of operational changes that have reduced mailing, paper, and manpower resources. 2019 Budget Presentation Department of Finance Page 51 VI. Budget Overview 2019 Budget Presentation Department of Finance Page 52 VII. Vacant Positions The DoP currently has one vacant position – Pos. No 150 - - Procurement and Specifications Specialist I. This vacant position resulted from the promotion of the incumbent as the DoP Supervisor. Pos. No. 150 had been priced as a senior level Procurement and Specifications IV (SR 22) but was downgraded to a PSS I (SR 16) to accommodate recruitment at the entry level. This resulted in significant salary and fringe benefit savings. The end result of these personnel changes was a formal reorganization of the DoP which achieves structural realignment of the management and operations of the division. In the current fiscal year, approval was granted from the HR Department to downgrade one of the retiring PSS VI positions to an entry level PSS I position (SR 16). This position (No. 232) was $1 funded in FY 18 since the division was not yet ready to actively recruit due to the need to successfull y fill the division supervisor position. While it was initially the intent to seek funding of this position in the FY 19 budget at the SR 16 entry level, the position has been removed from the DoP budget in the current fiscal year to accommodate manpower support needs in the Motor Vehicles Division. The significant operational and technological changes that have been pursued by the DoP since 2011 have allowed for a reduction in supervisory manpower without adversely impacting divisional productivity. While there is some concern about the recent record-level surge in formal procurement assignments, the new $26 million bond float resulting in a total of over $40 million of funds available in the CIP budget, and the corresponding removal of the entry-level specialist position, the division will do its best to maintain its current level of productivity. VIII. Grants The DoP does not rely upon any grant funds as part of the operating budget. The operation is fully funded by the general fund.