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HomeMy WebLinkAboutFY 2024 (Department of Finance) Budget Narrative DEPARTMENT OF FINANCE FY 2024 BUDGET AND OPERATIONS SYNOPSIS Reiko Matsuyama Director 1 Department: FINANCE Fund: GENERAL FUND 1. FY 2023 to FY 2024 BUDGET COMPARISON FY 2023 FY 2024 $ + / -% + / - Salary and Wages 5,538,332 6,175,301 636,969 11.5% Benefits 3,783,712 3,980,922 197,210 5.2% Insurance 2,725,544 3,042,167 316,623 11.6% Auto/General Liability 623,455 623,455 0 0.0% Contribution & Refunds 0 5,000,000 5,000,000 100.0% Animal Control 1,092,504 1,140,170 47,666 4.4% Utilities 170,502 170,502 0 0.0% Vehicle/Equip, Lease 31,676 76,177 44,501 140.5% Operations 1,247,860 1,685,770 437,910 35.1% 15,213,585 21,894,464 6,680,879 43.9% Department: FINANCE 2 2. MAJOR CHANGES AND/OR VARIANCES IN OPERATIONS BUDGET The Department of Finance is requesting a FY24 operating budget of $21.9 million, which is an increase of $6.7 million or 44%. Salary & Wages – Requested increase of $637K or 11.5% While most of the requested increase is due to collective bargaining increases, we do also prioritize reallocations for high performing employees who are deserving of merit increases. In addition, we are requesting five (5) new positions related to our new DMV satellite operation at the Kapa‘a Armory. An additional position is being added to support our real property tax operations. • Senior Clerks (DMV): We are requesting 5 new Senior Clerk positions totaling $86K to staff the satellite office at Kapa‘a Armory. The satellite DMV will require at least 5 people to run effectively. 3 people at the window, 1 person who will do photos and cashier, and a supervisor for back-office work and to cover windows during breaks. This will ensure that we can staff the 3 windows at all times. If one or two windows need to be closed, there may not be a reason to even open to the public. We believe that State funding is an option for a portion of the positions, so for 2 of the positions we are requesting only $1 funding. While we need to bring on new staff immediately to adequately train them, we recognize the hiring challenges we face and are conservatively short-funding these positions to 9-months. • Program Support Assistant II: The staffing challenges at RPA are immense and we are requesting to add an additional position to focus on tax relief programs and customer service initiatives as we embark on new initiatives that relate to our tax code. Due to challenges in recruitment, we are proposing to short fund this position to 9-months, which is equivalent to budgetary funding of $32K. There are no requested increases to overtime accounts. Benefits – Requested increase of $197K or 5.2% Benefits include social security, health fund, employee retirement system (ERS) contributions, and other post-employment benefits (OPEB) for all divisions. Increases to these accounts are due to changes outside of our control that are tied to collective bargaining agreements. Insurance – Requested increase of $317K or 11.6% The Finance Department bears the cost of insurance premiums on behalf of the entire County. Excess liability and cyber liability are two premiums that have exponentially increased over the last couple of years. Atlas Insurance, our broker, continues to shop the market hard while carriers are becoming less inclined to insure municipal entities. With our annual renewal date of November 1, it is difficult to predict what premiums will be available and thus we are estimating a 10% increase over prior year actual numbers. While most of our coverage increases are relatively minor, the chart below shows the significant year-over-year changes. FY23 Budget FY23 Actual FY24 Budget % Increase over PY Budget Excess Liability 973,753 1,069,158 1,176,074 21% Cyber 14,488 71,217 78,338 441% 3 Auto/General Liability – flat This represents the claims accounts utilized by the County Attorney’s office to settle minor self- insurance claims. There is no anticipated change from prior year. Contributions and Refunds – Requested increase of $5M or 100% While the financial impact of Ordinance 1146 is yet to be determined, we are roughly estimating the cost at approximately $5M. We have received 335 tax class appeals in 2023 that will potentially move from the Residential Investor to Residential class. At an average value of $1.5M, that equates to a $2M credit that will need to be refunded to taxpayers. That same amount, or greater, should also be expected for the 2022 credit applications. In addition, there are those from 2023 who did not appeal but will apply for and receive the tax credit. With the expansion of the scope during the Committee hearing, the tax consequences vary greatly from those introduced at first reading. While 2023 tax rates will still be unknown, we will be able to refine this estimate for the May supplemental submittal. Animal Control – Requested increase of $48K or 4.4% The Kaua‘i Humane Society (KHS) contract is unique in that it includes a provision to reimburse the County for unspent funds. For example, the County funds a portion of approximately 34 full-time employees and the budget is stacked to reflect no vacancies at any point in the year. At year-end, an analysis is done to pay back the County for unused compensation. In FY22, the reimbursement was $83K and is expected to be approximately that amount for FY23. While the budgeted amount represents their estimate as of January, the contract requires further refinement of those numbers prior to payment distribution come next fiscal year. KHS will present to provide the rationale for their requested increase. Utilities – flat Thankfully, our utility charges only include telephone and internet, and thus are not subject to rising oil prices. There is no anticipated change from prior year. Vehicle/Equip Lease – Requested increase of $45K or 140.5% 001-0503-512.88-01 (Automobiles – IT) – An increase of $65K represents a replacement for the IT van, which is used daily to reach all parts of the island. The current van is more than 10 years old and not setup for IT’s specific needs. Essentially, it is a passenger van with the seats stripped out. For full functionality, IT needs a vehicle to store and transport equipment, not people. Constantly having to load and unload equipment reduces response time and increases inefficiencies and staff time. 001-0502-512.89-03 (Computers and Accessories – Accounting) – This $20K decrease was reclassified to Operations and represents the lease software we utilize for the implementation of GASB 87 and 96. Operations – Requested increase of $438K or 35.1% Major fluctuations in some of our Operations accounts represent the addition of the accounts ending in “31-01” called IT Arrangement (SBITA) needed to address the implementation of accounting pronouncement GASB 96. Most of these costs represent reclassifications from other accounts and not new requests for funding. The significant changes are noted by account below. 001-0501-512.31-00 (Dues and Subscriptions – Admin): $22K was reclassed to the new “31-01” account and represents existing costs for our financial transparency software. 4 001-0501-512.35-00 (Special Projects – Admin): We are requesting $25K for sewer credits. The ordinance to raise sewer fees also included an increase in the income threshold for low-income sewer credits making more people now eligible for the credit. 001-0502-512.31-01 (IT Arrangement – Accounting): $20K was reclassified from Vehicle/Equip Lease for our leasing software to implement the GASB 87/96 pronouncements. We further increased the amount by $5K to accounts for future GASB pronouncements and the increase in leases and software licenses that need to be tracked. 001-0502-512.61-03 (Controller Assets – Accounting): $41K decrease was a one-time cost in FY23 that will be encumbered this fiscal year and was related to new office furniture for the outdated office. 001-0503-512.31-00 (Dues and Subscriptions – IT): The following countywide software subscriptions were moved to the new 31-01 account: Microsoft Enterprise ($484K), Crowdstrike ($310K), Granicus ($155K), Adobe ($114K), Central Square ($242K), CIS Security ($16K), Esri ($61K), LaserFiche ($93K), SI Cashiering ($63K), Barracuda ($125K), E-Plan Review for Buildings ($19K). There were also a couple of small subscriptions cut due to lack of usage. 001-0503-512.31-01 (IT Arrangement – IT): For many of the licenses discussed above, a 4% contract adjustment was added to the budget lines. Microsoft Enterprise went up 12% as we added licenses as well as cyber security options that were required for insurance purposes. In addition, two new licenses were added. The annual maintenance costs for ElementsXS, also known as LIMS (Land Information Management System), was moved from CIP to operations and will be a recurring expense of $105K. Also, a software called PowerDMS is used countywide for policies and training at a cost of $30K per year. 001-0503-512.43-05 (R&M Computers – IT): $20K reduction for replacing and/or repairing other equipment was removed from FY24 budget. 001-0503-512.62-02 (Computer Peripherals/Supp – IT): $23K decrease in computer replacements to offset the increases felt in the software subscriptions above. 001-0504-512.30-00 (Other Services – Treasury): Increase of $18K is due to adding $10K for online processing fees for e-check payments collected through LIMS. We also moved the entire fee for the courier service previously split between Treasury and DMV. We combined the budget amount in Treasury who handles the contract. 001-0504-512.31-01 (IT Arrangement – Treasury): We have just issued an RFP for liquidity monitoring and treasury analysis software to complement our team in supplying data to support our cash management strategies. We estimate the cost to be approximately $40K. 001-0506-512.30-00 (Other Services – DMV): Requesting an increase of $30K for basic operations as our number of transactions has increased over the years. The contract with Marquis ID charges us $0.12 per issued drivers licenses and State ID card and the quantity processed has warranted an ask for more budget dollars. 001-0506-512.31-01 (IT Arrangement – DMV): $21K has been reclassified from R&M Computers and represents our annual software license with our customer queuing software at the DMV. 5 001-0506-512.43-05 (R&M Computers – DMV): The entire $85K request for this account is for setup of the new satellite location at the Kapa‘a Armory. We will need to set up workstations, cameras, computer equipment, and everything required to run an office. In addition, we have included one-time modifications to our existing queueing software contract to expand into a two- site operation. The prior year budget represented costs related to the integration project; those items were purchased in FY23. 001-0507-512.30-00 (Other Services – RPA): Everything previously in this account has moved to the new 31-01 account as it represented software licenses costs. 001-0507-512.31-01 (IT Arrangement – RPA): In addition to existing software licenses moved to this account, we also added two new subscriptions recently procured. True Roll was contracted to identify inaccurate exemptions and property characteristics. This automated audit software of home exemptions and rental applications will work both ways to help identify those with home exemptions who are not entitled to them, and help identify those who may be eligible for a home exemption and not currently in the system. This should help us with the fair and equitable treatment of our home exemption and LTL programs. The contract is for approximately $23K annually. The Just Appraised software will assist our abstractors by offering character recognition and artificial intelligence to scan and convert recorded documents (deeds, ownership info, parcel descriptions) into importable data fields that can directly interface with our existing CAMA (Tyler) software. Our abstractors will no longer need to input data, but they will be checking the software for accuracy which will reduce errors and increase efficiency. This service will cost $29K annually. 001-0508-512.67-00 (Other Commodities – RPC): We are pursuing our first non-judicial foreclosure sale since 2015. We would like to restart this as an annual recurring process which will cost approximately $50K. An annual process should reduce the number of foreclosures we need to pursue and will create fairness for the homeowners who do pay their taxes. Additionally, there are some dilapidated properties that could become permanent housing and/or enable a family to buy a home on Kaua‘i for far below market value. 001-0509-512.31-01 (IT Arrangement – Purchasing): An increase of $25K reflects a draft RFP to replace our Public Purchase platform (which is free). The current process can and should be drastically improved for vendors looking to respond to a posting. It would include a contract automation portal which we believe is essential to county operations. 24-00 (Training – All): Requesting an approximate $16K increase in training accounts across the Department of Finance to invest in our workforce. These amounts were reduced during COVID, and we desperately need to provide adequate training for specific job duties on a more routine basis. 3. OPERATIONAL CHALLENGES Our staffing issues continue to be one of the greatest challenges we face daily. The State class specifications set the minimum qualifications very high while the pay for those positions is relatively low. It has become necessary to recruit from the lowest level and train from the bottom up, but this approach relies on retaining these new hires to reap the benefits of their training in the long-term. The State classification system has not changed in years while the employment market has evolved significantly. When we don’t change to accommodate the market, we lose any 6 competitive advantage with the private sector. The current system facilitates an environment where we are just competing with our own internal resources and have extreme difficulty recruiting from the outside. 4. TOP 3 OPERATIONAL HIGHLIGHTS FROM FY 2023 DMV Integration In anticipation of moving forward with any DMV satellite location, an integration of the Motor Vehicle & Registration Division (MVR) and the Drivers Licensing Division (DL) was imperative. While ultimately this project was the gateway to opening satellite DMV location(s), the integration will drastically improve customer service for all visiting the DMV. Wait times and appointment horizons will improve significantly once our new staff members are fully trained. For the employees, the workload will be evenly distributed leading to a better working environment, increasing team morale and creating more flexible leave schedules with a redundant workforce. In addition, more supervisory opportunities will be created generating a better career pathway for our associates. Agricultural Dedication Overhaul Thanks to the Council, we successfully revamped the agricultural dedication program, which is one of the most utilized tax relief programs we offer. The prior version of the program was cumbersome for both those who administered it, as well as the ag industry who received it. The former program was difficult for legitimate farmers and relatively easy for those inclined to abuse the system. Our Ag Specialist, who drove the heart behind the change, can now speak genuinely and confidently about the program she administers. We are currently starting to revamp the accompanying administrative rules and aim to complete them before the end of the calendar year. Process Automation All our divisions have embraced the need for process change and have developed workflows using LaserFiche for many (if not all) of their internal processes—from storing electronic documents instead of bulky filing cabinets to automatic workflows that track progress and enforce accountability. As we are the central administration of many county functions, these processes touch many users and thus have created an unimaginable amount of efficiency. The complexity of these workflows is profound, and we have found redundancies that were eliminated in the process of building each roadmap.