1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 KERR COUNTY COMMISSIONERS COURT Budget Workshop Monday, September 13, 2004 1:30 p.m. Commissioners' Courtroom Kerr County Courthouse Kerrville, Texas Review and Discuss FY 2004-2005 Budget PRESENT: PAT TINLEY, Kerr County Judge H A."BUSTER" BALDWIN, Commissioner Pct. 1 WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 DAVE NICHOLSON, Commissioner Pct. 4 v O M 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 On Monday, September 13, 2004, at approximately 1:30 p.m., a budget workshop meeting of the Kerr County Commissioners Court was held in the Commissioners' Courtroom, Kerr County Courthouse, Kerrville, Texas, and the following proceedings were had in open court: P R O C E E D I N G S JUDGE TINLEY: Let's come back to order, reconvene the meeting of the Commissioners Court posted for this time and date. What's the preference of the members of the Court? Would -- would you like to get into the budget workshop or finish up some items on our court agenda, or what's your pleasure? COMMISSIONER WILLIAMS: Let's finish the court agenda. COMMISSIONER BALDWIN: I'm a court agenda guy. JUDGE TINLEY: Okay. COMMISSIONER LETZ: I was a budget guy. JUDGE TINLEY: Okay. Boy, we got a race developing here. What about -- COMMISSIONER LETZ: Well, and my reasoning is, I believe there's some pretty tight timelines we have -- have to meet on budget. COMMISSIONER WILLIAMS: Yeah. COMMISSIONER LETZ: And I think this is -- I 9-13-04 wk 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 don't know how much time Ms. Rector needs to get this stuff moving and posted, and papers -- MS. RECTOR: Well, I needed to get it to the paper by noon, but -- COMMISSIONER LETZ: So, the sooner we can get to a vote on some of those things, that's pretty important. MS. RECTOR: Yes, so that I can get it printed and get it to the paper today, 'cause it's got to go in tomorrow's paper. JUDGE TINLEY: Well, with that consideration in mind, we will recess the Commissioners Court meeting, and I will call to order a workshop that was posted for this time and date at 1:30, which it's just a moment or two after that, that being a budget workshop. What else do we have to finalize here, gentlemen? COMMISSIONER WILLIAMS: Well, I -- I want to make certain that the airport number is the number that Commissioner Letz and I had indicated was where we were going with that. So, if we can take a look at that real quick -- whoever's the page guru, tell me what page we're on. JUDGE TINLEY: That's Commissioner Baldwin's game. COMMISSIONER WILLIAMS: That's Mr. Baldwin's job? 9-13-04 wk 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER BALDWIN: Remember, I haven't had my medication this morning, so -- COMMISSIONER WILLIAMS: Oh, gosh, I forgot. COMMISSIONER LETZ: It's under County-Sponsored. I know where it is. COMMISSIONER WILLIAMS: Really? COMMISSIONER LETZ: I don't know what page it is. COMMISSIONER WILLIAMS: I know where it's located, too. Also, we need to doublecheck -- COMMISSIONER NICHOLSON: 65. COMMISSIONER WILLIAMS: 65? Might want to go to 82 after that. COMMISSIONER BALDWIN: That's not -- that's County-Sponsored. I don't see airport, though. JUDGE TINLEY: Not there. COMMISSIONER WILLIAMS: That's close. Close, but no cigar. COMMISSIONER BALDWIN: Does anybody know? COMMISSIONER WILLIAMS: Where's Tommy when we need him? COMMISSIONER BALDWIN: Page 59. COMMISSIONER WILLIAMS: 59. Thank you, Commissioner. COMMISSIONER BALDWIN: I've got to do 9-13-04 wk 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 everything here. COMMISSIONER WILLIAMS: Actually, we get a refund, boys. We have 186 in there, and my reckoning indicates we need 173,541. MS. MITCHELL: Tommy's on his way. COMMISSIONER LETZ: 173,541? COMMISSIONER WILLIAMS: Yeah, and that breaks down to projects, which our share of the projects, grant matches, et cetera, is 98,309, and our administrative piece is 75,232. So, that totals 173,541. JUDGE TINLEY: Okay. COMMISSIONER LETZ: I'm not questioning your math, but didn't we just delete that one $12,000 project? COMMISSIONER WILLIAMS: It's out of here. COMMISSIONER LETZ: I don't know -- COMMISSIONER WILLIAMS: We only got 12 out of a $24,000 project. It was 24 and I took it out, so that gets us to the 173. COMMISSIONER LETZ: But if we take out the 24, we should only be taking out the 12. COMMISSIONER WILLIAMS: No, no, no, no, no. No, we -- we hadn't taken it out before. We took it out there in that discussion. COMMISSIONER LETZ: Right, okay. COMMISSIONER WILLIAMS: And our half of that 9-13-04 wk 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 24 is 12. JUDGE TINLEY: Airport has been changed. Page 59. COMMISSIONER WILLIAMS: Over on Page 82, Judge, let's take a look at the library piece real quick. COMMISSIONER BALDWIN: Got to give Tommy the number. COMMISSIONER LETZ: 173,541. COMMISSIONER WILLIAMS: Okay. What did I do with it? In light of the current contract -- what did I do with it? JUDGE TINLEY: Are you on 82? COMMISSIONER WILLIAMS: Yeah. We had talked about cutting that back, but I want to make certain that we're not creating a -- a breach situation in light of the contract. And I know I brought it here, but I can't find it -- oh, here it is. Okay. COMMISSIONER LETZ: The question -- and I had the question just as to -- to Commissioners Williams a few minutes ago, is that we have appropriated up till now in the budget an amount that we decided on, which is not the same as the City requested. And I think -- I don't have a problem with that, but we need to look at the contract to make sure that we can do that, because we're supposed -- we're responsible for -- I was told half of the operation -- 9-13-04 wk 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 well, all of a sudden, the first time since I've been a commissioner, we evidently don't agree as to what half of those operations are. COMMISSIONER WILLIAMS: Well, let me run and get you the existing contract, which we have asked to be negotiated -- renegotiated. And we have said, among other things, on or before April 15 of each year, beginning April 15 of 1991, Library Director and representative of the County Commissioners Court, who shall be designated by the Court, shall meet to review the financial statement of the library and identify budgetary needs and discuss a proposed library budget for the following year. That hasn't happened. Proposed budget for next fiscal year shall be presented to the Kerr County Commissioners Court and the Kerrville City Council on or before July 1 of each year. Seven, the City and County shall pay such sums as approved by the respective governing bodies into the library fund in 12 equal installments. That tells me that we can make whatever adjustments that we wish to make. COMMISSIONER LETZ: And they didn't meet their obligations -- their two obligations they had, they did not make, correct? They didn't make a presentation to us on a budget that I recall. COMMISSIONER WILLIAMS: No, did not. Absolutely did not do that. 9-13-04 wk 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: And they didn't have a proposed budget in April. COMMISSIONER WILLIAMS: By July 1. COMMISSIONER LETZ: Or by July 1, whatever COMMISSIONER WILLIAMS: It said we shall pay the sums approved by the respective governing bodies into the library fund in 12 equal installments on or before the 15th day of each month for the term of the contract. That's what it says. COMMISSIONER LETZ: So it appears we can -- COMMISSIONER WILLIAMS: Set the number we want to set, is the way I read it. Unless the Judge interprets it differently. COMMISSIONER LETZ: I think it goes back to another point. When we have these contracts, what happens when one of the parties doesn't follow the contract? Which they didn't provide this information that -- our end of the contract. What do you do? I mean -- I mean, I don't think any of us want to totally stop funding the library. But -- COMMISSIONER WILLIAMS: But I think this calls into question -- it certainly calls the need for a discussion to take place, just as the EMS contract calls for a need to discuss those issues. And I think when we get into doing that, reasonable minds should be able to 9-13-04 wk 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 determine that if it's -- if it's reasonable for the County to pay its proportionate share of expenses in one element in which we have joint operations, it's certainly reasonable for the County to expect to pay its proportionate share in other aspects. And I would ask sometime that -- I would suggest that we need to take a look at the statistics and use of the library to determine what the County's proportionate share is. That's -- JUDGE TINLEY: And what those expenses are, whether they're capital expenses or whether they're maintenance and operation expenses. COMMISSIONER WILLIAMS: Exactly. COMMISSIONER NICHOLSON: And whether they're reasonable expenses. Whether or not we're paying for a Rolls Royce and we only need a Chevrolet. COMMISSIONER WILLIAMS: So, we put a reduced number in the budget. Does the Court want to stick with that reduced number or go with the number of -- which I think was 416, as suggested in some correspondence directed to the County Judge? COMMISSIONER LETZ: Well, their number had a -- a budgeted number, and then they were going to give us a number back. COMMISSIONER WILLIAMS: But they also had 25 ~ asked for an increase. 9-13-04 wk 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: Right, they had a budget increase up to 416, was our part, but they're going to give us 92,000 back of unused -- is that -- unused funds from this operating year. JUDGE TINLEY: Excess fund balance, as I recall, over the 5 percent. COMMISSIONER WILLIAMS: That's excess funds, and they were asking for a $29,000 increase in the line item for the ensuing year. COMMISSIONER LETZ: Is the number that -- just so I'm on the same page, the number that we have does not include the fund balance that we're expecting back? COMMISSIONER WILLIAMS: No, 'cause we're going to get that in a check, you said. COMMISSIONER LETZ: Right. COMMISSIONER NICHOLSON: I think they're two different issues. COMMISSIONER number, in our mind? COMMISSIONER COMMISSIONER COMMISSIONER line item obligation. COMMISSIONER saying that we would receiv LETZ: So, this is not a net WILLIAMS: No. LETZ: This is our -- WILLIAMS: This is obviously a NICHOLSON: We got a letter that check in October. 9-13-04 wk 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 COMMISSIONER WILLIAMS: Right. That's COMMISSIONER LETZ: Really, I mean, it -- I guess the best word is "disturbs" me to have a lack of dialogue with the City on this and other matters. I don't know how we can get around it. We're in the eleventh hour of our budget; we have to go forward. But, you know, I'm -- I'm unclear, and I don't like the fact that we're having to -- well, I regret there's no dialogue as to what we're doing with this and other joint projects with the City. COMMISSIONER BALDWIN: Well, I think we ought to stick with the -- with 323, and hope for dialogue. COMMISSIONER WILLIAMS: I'm comfortable with that. COMMISSIONER LETZ: Okay. COMMISSIONER NICHOLSON: Yeah. JUDGE TINLEY: I think the 323 may have been arrived at by taking the 416 -- or 413, whatever it was, less the 94 that was supposed to come back. COMMISSIONER WILLIAMS: There was a 15 percent reduction off of 387. COMMISSIONER NICHOLSON: Judge, my clear recollection -- JUDGE TINLEY: 387? 25 ~ COMMISSIONER NICHOLSON: That's not how we 9-13-04 wk 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 arrived at that. COMMISSIONER WILLIAMS: I think I recall doing 15 percent off of 387. What do you recall, Tommy? He's shaking his head yes. MR. TOMLINSON: That's what I recall. JUDGE TINLEY: Okay. I remember we put the -- the 15 percent discount factor in there, but I just couldn't make the number work here. COMMISSIONER NICHOLSON: Coincidentally, those two numbers are close. JUDGE TINLEY: I'm coming up with 329 as 85 percent of the 387. COMMISSIONER WILLIAMS: We'll adjust it, then. Or we could do it another way; you could take the number they're asking for and discount that by 15 percent. COMMISSIONER BALDWIN: Mm-hmm. COMMISSIONER WILLIAMS: What would that give us? 416 less 15 percent. COMMISSIONER NICHOLSON: Anything we do to add more dollars to this budget puts us in a deeper hole. JUDGE TINLEY: That's 353,6. I recall we're working off the three -- something under 400,000, and we discounted it by 15 percent. COMMISSIONER WILLIAMS: It was 387 minus the 15 percent. Okay. 9-13-04 wk 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUDGE TINLEY: Tell me which way you want to go, and I'll calculate it. COMMISSIONER NICHOLSON: Let's stay at 323, 329. JUDGE TINLEY: Makes it easier for the Auditor, doesn't it? COMMISSIONER WILLIAMS: One less number he has to crunch. I have one other quickie. On Page 47, in reviewing all of the constables' dealies, we had reduced the capital outlay in all of them that get a capital outlay line to $1,500. Somehow or other, it did not get reduced in Precinct 3, and it's still 4,300 as opposed to 15. Am I right? COMMISSIONER LETZ: That looks -- yeah, I believe that's correct. COMMISSIONER NICHOLSON: What page is this? COMMISSIONER LETZ: 47. COMMISSIONER WILLIAMS: 47. COMMISSIONER LETZ: Capital outlay for Constable 3 should be 1,500. JUDGE TINLEY: Uh-huh. COMMISSIONER WILLIAMS: That's my list for now, I think. COMMISSIONER NICHOLSON: I've got more than one question, but I'll ask them in turn. This current run 9-13-04 wk 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 we have, 7 September, do these compensation amounts include COMMISSIONER NICHOLSON: So, it's the 3 percent plus any flat rate numbers we've talked about? (Mr. Tomlinson nodded.) COMMISSIONER NICHOLSON: 3 percent plus $1,000 in some cases, plus 300 on top of that. Right. So, the only thing that's missing from compensation as of this run is whether or not there's any merit money. MR. TOMLINSON: That's -- that's correct. COMMISSIONER LETZ: Is there any number budgeted anywhere in here for a merit? MR. TOMLINSON: No. COMMISSIONER LETZ: Can you explain briefly what we have done to the Sheriff's Department, as in salary-wise? What -- we've talked about a number of different scenarios. What scenario -- MR. TOMLINSON: Well, the Sheriff's salary, as I recall, is -- is $5,000 more than the chief deputy. COMMISSIONER LETZ: I mean, but the deputy is what I'm thinking -- what did we do with all the deputies and jailers? MR. TOMLINSON: Deputies, we increased 25 ~ them -- $1, 500? $1, 500. 9-13-04 wk 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SHERIFF HIERHOLZER: $1,000 for deputies. MR. TOMLINSON: $1,000. And the jail staff, that's $1,500. SHERIFF HIERHOLZER: Correct. JUDGE TINLEY: And dispatch staff also. SHERIFF HIERHOLZER: Jailer and dispatch are the same. JUDGE TINLEY: Okay. MS. NEMEC: Plus a 3 percent. MR. TOMLINSON: Plus the COLA. SHERIFF HIERHOLZER: And then change the investigators to sergeant classification. COMMISSIONER BALDWIN: Let's get back to Number 4's question and try to finalize that. COMMISSIONER WILLIAMS: Which one was that? What question? JUDGE TINLEY: Merit. COMMISSIONER BALDWIN: The merit. Are we not -- I thought we were going to do that. COMMISSIONER WILLIAMS: Mm-hmm. COMMISSIONER BALDWIN: And I don't care how it's done. We put them in individual budgets, or we put it in one pile; it doesn't matter to me. COMMISSIONER WILLIAMS: Well, were we going to ask the Treasurer to give us a -- 9-13-09 wk 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. NEMEC: I passed that -- you have that in front of you somewhere. COMMISSIONER WILLIAMS: I don't have it. MS. NEMEC: It was passed out before y'all sat there. I'm sorry. JUDGE TINLEY: I was hanging on to all these; I figured y'all would lose them if I gave them to you too soon. (Laughter.) MS. NEMEC: Yeah. There were -- COMMISSIONER WILLIAMS: Thank you, Judge. MS. NEMEC: There were six departments -- COMMISSIONER WILLIAMS: We always speak highly of you, too. MS. NEMEC: There were six departments that requested merit increases for their employees, and the total of all those departments put together is $7,986. COMMISSIONER WILLIAMS: How much? MS. NEMEC: $7,986. COMMISSIONER WILLIAMS: Total? MS. NEMEC: Total. COMMISSIONER WILLIAMS: And that's what we got here, six departments asking for it? MS. NEMEC: Yes, that's it. And just by looking at this report, I think that this -- the way we went about handling these merit increases, I think this shows 9-13-04 wk 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that the elected officials and department heads are really responsible as to choosing who gets it and who doesn't. 'Cause I was real surprised there were some departments that did not even put in for one for their employees. And then those that did, at the most, there were three employees to a department that they were being requested for. So, I think this system seems to be working, by looking at this report. COMMISSIONER WILLIAMS: Recommendation for 12 individuals out of how many in the employee group? MS. NEMEC: Oh, boy. 300-plus. COMMISSIONER WILLIAMS: I'd say that's pretty good due diligence. COMMISSIONER NICHOLSON: What did you say MS. NEMEC: $7,986. JUDGE TINLEY: Eight grand. COMMISSIONER LETZ: I think we should include all of them that were requested. I do note that the -- I mean, there are some departments that seem to have more than others, and I think it's a little bit high for the number of employees in those departments, percentage-wise, to have that many that need a merit increase, but I'm not going to get into their business in that area. JUDGE TINLEY: The rollups, of course, the payroll taxes, retirement, and so forth have to be added. 9-13-04 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 18 But -- COMMISSIONER NICHOLSON: I think I need a little more guidance about where we're going to wind up here. If I've got the latest budget summary, does it say that we're spending half a million dollars more than we projected in taxes? MR. TOMLINSON: That's correct. COMMISSIONER NICHOLSON: We're either going to confirm that, or we're going to find ways to reduce the budget. COMMISSIONER WILLIAMS: Well, one issue we've got to talk about here pretty soon is -- I think has a major effect on that. JUDGE TINLEY: Mm-hmm. COMMISSIONER NICHOLSON: What? COMMISSIONER WILLIAMS: There is one issue we're going to get into pretty quick that has a major effect on that. COMMISSIONER LETZ: And that is? COMMISSIONER WILLIAMS: Juvenile Detention Center. JUDGE TINLEY: Juvenile Detention, yeah. COMMISSIONER LETZ: Well -- JUDGE TINLEY: You all ready for that one? COMMISSIONER LETZ: Yeah, I am. 9-13-09 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 19 MR. TOMLINSON: I have one small correction. I got a call from Truby. JUDGE TINLEY: Mm-hmm? MR. TOMLINSON: And in the Medical Expense line item, th ey had asked for -- for -- I think it was $3,200. And they had not spent anyth ing, because none of it had been done until this point. And she said that -- that they would -- they would actually spe nd $3,200 this year. JUDGE TINLEY: Looking at Page 76. COMMISSIONER BALDWIN: Mm-hmm. COMMISSIONER WILLIAMS: Page 76? JUDGE TINLEY: Line It em 220. MR. TOMLINSON: Yes. COMMISSIONER WILLIAMS: 76. COMMISSIONER BALDWIN: What was the requested number? JUDGE TINLEY: 32 was requested, and because of the historical usage, I cut it back to 1,500. And apparently that's something that comes at the end of the year, the way they have their -- their tests that are plugged in -- MR. TOMLINSON: Yes. JUDGE TINLEY: -- for the medical. COMMISSIONER WILLIAMS: Which line item are we talking about? 9-13-04 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 20 JUDGE TINLEY: 220, Employee Medicals. COMMISSIONER WILLIAMS: Oh. We talked about that before. COMMISSIONER LETZ: I don't read lips; I didn't know what you were telling me. JUDGE TINLEY: Well, everybody -- MS. UECKER: May I approach the podium? COMMISSIONER BALDWIN: I put it back to 3,200. JUDGE TINLEY: Okay. Are we going to 3,200 there? COMMISSIONER WILLIAMS: Found another one, Judge. Page 105. I thought we put 28,000 into Alternate Dispute Resolution. MR. TOMLINSON: We did. I didn't change that line item. I'll change it. COMMISSIONER WILLIAMS: So that needs to be put in there. MR. TOMLINSON: It's on the summary page. JUDGE TINLEY: Yeah, it's 28. MR. TOMLINSON: I missed that one. COMMISSIONER BALDWIN: 28,000? JUDGE TINLEY: Mm-hmm. COMMISSIONER NICHOLSON: Going the wrong direction. 9-13-04 wk 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: It's on the other list. Already here. JUDGE TINLEY: It's in the summary. The big one. The big one. Okay. COMMISSIONER WILLIAMS: Okay. JUDGE TINLEY: That's the end of your little surprise game? COMMISSIONER WILLIAMS: Well, yeah, until we get to the really, really big one. JUDGE TINLEY: Now, what do you have for us, Ms. Decker? I think we want to do that next year; not this year. MS. DECKER: Okay. JUDGE TINLEY: But you can tell us about it, just so that we'll have time to learn about it. MS. DECKER: I don't know if y'all remember. The Auditor said last week, in one of the budget workshops, that we had over $100,000 in the Law Library account that -- and I think his comment was that we can spend. So -- and I know this is not a permanent thing, but I might suggest that you reduce my salary as District Clerk to $3,000, and raise my salary as Law Librarian to 45 for a couple years. COMMISSIONER WILLIAMS: I'll -- my hearing aid went out after you -- after we got past "reduced." MS. DECKER: Well, that gives -- that saves 9-13-04 wk 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the County 45,000, or whatever it is, in this year's budget, and puts it over in -- takes it out of the Law Library fund, which is going to sit there anyway. JUDGE TINLEY: And that'll be a five-year deal? MS. UECKER: As long as there's money, I don't care. COMMISSIONER COMMISSIONER MS. UECKER: MR. TOMLINSO MS. UECKER: in the statutes that puts a Librarian. BALDWIN: That's interesting. WILLIAMS: Mm-hmm. I think it's legal. V: Don't look at me. Well, there's nothing anywhere limit on what you can pay a Law COMMISSIONER WILLIAMS: How much is in that fund now? MS. UECKER: It's a hundred some thousand dollars. MR. TOMLINSON: I think 106. JUDGE TINLEY: Yeah, 106. 105,260. COMMISSIONER LETZ: I like the intent, but I'm a little nervous about doing it, just 'cause it -- I don't know that it looks good. Is there any way that we can encourage more expenditures from other line items, like computers and things, take that out of that fund? I mean, I 9-13-04 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 23 would rather use the fund up, but leave your salary as -- kind of the way it is. I just kind of -- MS. UECKER: I don't think so, 'cause that -- you know, the -- the statute's pretty clear about what can be paid out of the Law Library account. 'Cause that's $35 per case, and I don't know what it is in County Court -- County Court at Law, but we charge $35 a case, which is the maximum that the Commissioners Court has set to put into that fund. COMMISSIONER LETZ: Right. MS. UECKER: And it can only be used to buy -- to pay for stuff out of the Law Library, including, you know, a salary for the Law Librarian. COMMISSIONER LETZ: I mean, I would be more comfortable if it wasn't quite as drastic. Maybe, you know, $10,000 to $15,000 out of the Law Library fund, I think is more reasonable. I think if you go to $3,000 -- MS. UECKER: Well, if you're going to do it, you may as well do it. COMMISSIONER NICHOLSON: Ms. Uecker, can those funds be used to pay a deputy? Your deputies? MS. UECKER: I don't think so. You know, I -- I don't think so, because I'm -- I'm designated as the Law Librarian, which is totally independent from the District Clerk's Office. And the only reason I'm still 9-13-04 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 24 doing that is because my courts have asked that I continue it, 'cause they like the way I've been handling the Law Library. Otherwise, you could have that son of a gun. COMMISSIONER LETZ: That's what we'll do. We'll make the change, then we'll take it over down here. MS. UECKER: What? Yeah, that's exactly what will happen. COMMISSIONER WILLIAMS: Interesting concept. MS. UECKER: Think about it. It's a suggestion. JUDGE TINLEY: You can always outsource it. COMMISSIONER WILLIAMS: Outsource it, yes. I was just thinking what would happen if we did take -- God forbid, this whole court went away in a year or two; Linda comes back and there's no money for a District Clerk. Then what would happen? MS. UECKER: I don't -- MS. NEMEC: You'd get it back. JUDGE TINLEY: Okay. What else we got, gentlemen? COMMISSIONER NICHOLSON: Well, I've got -- I've got a laundry list. MS. UECKER: That's $45,000. Just trying to help. COMMISSIONER NICHOLSON: I'm going to ask 9-13-04 wk 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 again, do we have to spend the -- the Capital Outlay for voting equipment? Could we do like some other counties are suggesting they're going to do; not make the change, stick with their paper ballots? That's $70,000 for machines and $16,000 for employee training. COMMISSIONER BALDWIN: I think we were just going on what was suggested to us by the State. I mean, I don't -- I really can't tell -- COMMISSIONER NICHOLSON: I can't either. COMMISSIONER BALDWIN: -- what is going to happen with this thing, and neither can anyone else on the face of the earth. But that's what they suggested to us to do, is to fund it, whether you spend it or not. I think that's kind of where -- where we came from. COMMISSIONER WILLIAMS: Well, if we don't have to -- we don't have to acquire it -- acquire the equipment until '06, it could be funded in the '05-'06 budget. COMMISSIONER BALDWIN: Could be. COMMISSIONER NICHOLSON: If we did that, that would give us an opportunity to see how it all sorts out. COMMISSIONER WILLIAMS: I think it's going to sort out differently after the next general election, when Congress gets back to doing whatever Congress does. COMMISSIONER LETZ: Jannett, do you have any 9-13-04 wk 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 input? MS. PIEPER: Y'all know the law as well as I do. COMMISSIONER LETZ: I mean, I don't -- I would be inclined to take it out of the budget, and we'll just be ready to -- if we have to do it, do it in next year's budget, and just hope Jannett can scramble real fast right at the end of next year. COMMISSIONER NICHOLSON: That's Page 3, I think -- no. COMMISSIONER WILLIAMS: Page what? COMMISSIONER BALDWIN: Let's say we did it in next year's budget, which cranks up October 1. Could you get it ordered and in place by -- in three months? MS. PIEPER: Depends on the vendor, who you went with. COMMISSIONER BALDWIN: Well, it doesn't have to be in place. We're going to -- won't have an election till March of this year. COMMISSIONER LETZ: But we could have it -- I mean, we all are aware. We could have, pretty much, discussions with Jannett in July framework, know what we have to do, and it can be ordered, as long as it doesn't come, you know, until after October 1st. COMMISSIONER WILLIAMS: You could go through 9-13-04 wk 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 all the iterations and it gets funded in October. COMMISSIONER NICHOLSON: Let's take out the 70. COMMISSIONER WILLIAMS: What page are you on, Commissioner? COMMISSIONER NICHOLSON: Page 4. JUDGE TINLEY: Page 4, yeah. COMMISSIONER NICHOLSON: How much of the 17,184, Employee Training, would -- JUDGE TINLEY: No, there was only $10,000. MS. PIEPER: $10,000. COMMISSIONER NICHOLSON: $10,000. So, cut that back. JUDGE TINLEY: To $1,800. COMMISSIONER NICHOLSON: I've got 17,184 is the recommended. Page 5. JUDGE TINLEY: Well, no. Look on Page 4. It's got a separate training area. COMMISSIONER NICHOLSON: I'm sorry. COMMISSIONER WILLIAMS: Page 4. JUDGE TINLEY: It went from 1,000 to 1,100. So, we need to cut that back to 1,000. COMMISSIONER WILLIAMS: $80,000 right there we pick up. COMMISSIONER NICHOLSON: The -- the item on 9-13-04 wk 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the next page, Page 5, Employee Training, going up from $1,500 this year to $17,000 next year is not related? JUDGE TINLEY: No, that's software training, MS. PIEPER: Yeah, it's different. COMMISSIONER NICHOLSON: Okay. I don't want to go back and redebate all these things. We could continue to do the victims rights thing the way we're doing it now and save $16,500. The way we're doing it now is hardly adequate, and for 16,5 it would be better, so that's a -- that's a judgment call. My research -- maybe this is a part of the overall juvenile issues, but my research shows that Juvenile Probation budget has gone up -- more than doubled in the last three years, from about $200,000 to $445,000. JUDGE TINLEY: It's gone up significantly in the area of two -- two main driving forces there, perhaps three. We've gotten one new probation officer, but the two main forces are alternative housing costs and the attorney's fees coming out of that budget. Those are the two main factors that have really driven that up. Mainly the alternative housing. COMMISSIONER NICHOLSON: Yeah. Looks -- again, I'm not sure how government numbers -- looks like Alternative Housing was about $17,000 in '99-'00, and it's $45,000 now. 9-13-04 wk 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUDGE TINLEY: Yeah. COMMISSIONER NICHOLSON: Is there -- do we past years, we've gotten ourselves in trouble where -- where we ran out of money. And that's even -- what you don't see are some alternative housing funds that come from the state that we have in addition to those funds that we use also. Yeah, it's gone from bad to worse. COMMISSIONER WILLIAMS: Help me out, Judge. What's alternative housing? JUDGE TINLEY: That's when you place a child in a -- in a facility, a juvenile facility or an insecure facility. COMMISSIONER BALDWIN: Like a youth ranch? JUDGE TINLEY: Boot camp, youth ranch, things of that nature, yeah. And you can chew up some -- some serious money in a hurry. Sure can. Tommy, you had a -- MR. TOMLINSON: Under T.J.P.C. rules -- financing rules, you have -- you have a base year. For Kerr County, I think it's 2000-2001. You can't -- the County has to spend equal to or more than the base year in order to get the same amount of state funds that they have in the base year. So -- so, you have -- you have to maintain your expenditures -- or the county expenditures at least equal to 9-13-04 wk 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that base year, and every year I have to file a report with the -- with T.J.P.C. attesting to the fact that the County did, in fact, spend more than the base year. JUDGE TINLEY: But, even at that, it certainly hasn't been a problem, I'll tell you, for those numbers to climb on up there like that. COMMISSIONER BALDWIN: That doesn't sound like a good place to cut. Doesn't sound like it. Fire a shot and see what happens. COMMISSIONER NICHOLSON: I don't know enough about it to fire a shot. COMMISSIONER LETZ: It's one of those items that -- I mean, it's -- a lot of the discretion of the expenditure is out of the -- it's not -- this Court doesn't have it. We can limit the amount, I guess, or try to limit the amount, but if the Judges and the -- you know, mandate that that's what they want done, well, I mean, we got to figure out a way to fund it, it seems to me. JUDGE TINLEY: Yeah. There have been -- we ran out of funds last year, didn't we, Tommy? MR. TOMLINSON: Yes, we did. JUDGE TINLEY: Yeah, in alternative housing. COMMISSIONER LETZ: Did the Judges quit sentencing people to alternative housing when we ran out of money? 9-13-04 wk 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. TOMLINSON: I don't recall that COMMISSIONER LETZ: Didn't think so. COMMISSIONER BALDWIN: Let me ask you this. Is -- is our facility considered alternate housing to someone else? JUDGE TINLEY: Absolutely. It's considered alternative housing to us. COMMISSIONER BALDWIN: So, possibly all of this money could go right here in Kerrville, Kerr County? JUDGE TINLEY: Well, to the degree that -- to the degree that we are equipped with the kind of programs -- COMMISSIONER BALDWIN: I understand. JUDGE TINLEY: -- where kids need to be, that's where we send them. COMMISSIONER WILLIAMS: What page? COMMISSIONER BALDWIN: 54. JUDGE TINLEY: Some programs we don't have, and if that's the type of program they need, we send them to where -- where the program is appropriate for the child. COMMISSIONER BALDWIN: I understand that. JUDGE TINLEY: But, to -- to the extent that we have programs available here that are appropriate for them, absolutely, we send them here. COMMISSIONER NICHOLSON: Last item on my list 9-13-04 wk 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 is salary increases for elected officials. And I'm sure that those of you that have been around a lot longer than I never a good time to vote to pay increases for elected officials. But I -- I certainly don't support the -- the salary increases on top of -- of COLA increase for elected officials. I think we ought to delete that item. COMMISSIONER LETZ: I'll make a comment. I used to be much closer to your camp, but I think it's -- you know, talking with elected officials and being an elected official, it's not right -- we've got to give people the COLA's, but COLA's historically have not kept up with inflation, and I don't think it's right to ask people to work for less than they were actually making before, which is what essentially this County has done. I don't think any of our elected officials are overpaid, and I think any salary study you look at should prove that out. I think we're paid middle to low end, and I think it -- you know, I think the Court has an obligation to all elected officials to keep them -- the salary at a reasonable rate. And I don't think we're at an unreasonable rate. COMMISSIONER WILLIAMS: I'll come at it from a different angle, too. I think we lose sight of the fact that Kerr County has grown over the last ten years 25 ~ significantly, and the -- as a result of that, the demands 9-13-04 wk 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on each department are greater than they were ten years ago, and the workload is greater. Responsibility is greater. And I -- I think we have an obligation to attempt to reward people for a good job in that regard. COMMISSIONER LETZ: I think the other comment -- point is that, I mean, it's -- it's a topic that gets a lot of media and court attention, because we're the ones that set the salaries, and -- and by doing that, we frequently set our salaries, which causes -- gives us an increase as well. But, as part of our budget, this is a -- I mean, a minuscule part of that. We're -- I mean, it's a -- you know, if we could attack -- we could save a whole lot more money by mandating all thermostats get raised two degrees in the county buildings than we would by spending a whole lot of time on elected officials' salaries. COMMISSIONER WILLIAMS: Probably right. COMMISSIONER NICHOLSON: How about that two degrees? COMMISSIONER LETZ: I'll go with you on that one, probably. COMMISSIONER WILLIAMS: I want to ask a question before we get into the really, really big topic. I want to know of Tommy, I guess, Page 112. What is that? MR. TOMLINSON: Tell me what you -- I don't have my budget. 9-13-04 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 34 COMMISSIONER WILLIAMS: Page 112, general contractual obligation. Contractual obligation item of 161,225. MR. TOMLINSON: That's the -- the net on the radio equipment. COMMISSIONER WILLIAMS: Okay, thank you. JUDGE TINLEY: Okay. We ready to tackle another one? COMMISSIONER LETZ: Yeah. JUDGE TINLEY: Let's talk about Juvenile Detention. (Passed out documents.) I really didn't realize I had the whole stack of those over here a while ago. COMMISSIONER LETZ: Sure. JUDGE TINLEY: Go to Page 114, if you would. You see there Lease Payments. COMMISSIONER WILLIAMS: Mm-hmm. JUDGE TINLEY: 412,723. COMMISSIONER WILLIAMS: Got it marked. JUDGE TINLEY: Okay. That is a calculation of the cost under the lease agreement between the Facilities Corporation and Kerr County, the -- the operation of the facility having been assumed by the Juvenile Board in an operating agreement which Kerr County and the Juvenile Board made. Essentially, what that did was, it -- it has the Juvenile Board assuming the obligations of the County under 9-13-04 wk 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that lease for the operation of the facility. As I'm sure most of you recall, there was a communication from the Juvenile Board, a notice of nonappropriation. If you'll look at the budget that I gave you a copy of that was approved by the Juvenile Board, you will see in your last year's expenditures, down at the very bottom, an item entitled Lease Payments, $313,483. That was charged as an operating cost against the facility last year. Under the terms of the lease, to the extent that this Court appropriates or budgets funds for the lease payments under that lease, Kerr County becomes liable for the payment, to the extent of the amount so budgeted. COMMISSIONER NICHOLSON: I didn't hear that. JUDGE TINLEY: Under the terms of the lease agreement, to the extent that Kerr County appropriates or budgets funds for the lease payments under that lease, Kerr County becomes liable up to that amount. They have no obligation -- it has no obligation -- the County has no obligation to budget or otherwise appropriate funds for the payment of that -- of those lease payments. Now, the Juvenile Board has already given notice of nonappropriation to the County under its operating agreement, which it's obliged to do. Which is another way of saying the Juvenile Board does not have the funds to pay those lease payments. The decision is now in this Court's lap about whether or not 9-13-04 wk 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this Court appropriates the current year's -- or the ensuing year's lease payments of 412,000 and change -- 412,723, as part of their budget process. In view of the operating history of that facility, and based upon the budget which was approved by the Juvenile Board for that facility that I gave you a copy of, from a business sense, I cannot see where it is proper for the Court to budget that $412,000. Economically, it just doesn't make sense. Now, as to what the repercussions from that be looked at real favorably, this particular action. I am told -- I was told initially that if that were the case, that -- that it would be 50 or 60 basis points, which is a half to six-tenths of one percent. I was later told 80 or 90 basis points possibly, which is still less than one percent. The Auditor probably has more specific information than I do on this, but there are a number of facilities in this state that are having this same sort of difficulty that we're having. The problem, in large measure, resulted from a -- a state reimbursement amount of -- I think it was $23 per child, per day that we received up to a point, and then it got cut off. The decision was made by the regulatory agency, when they were given an opportunity to -- how to distribute their reduced budget, 9-13-04 wk 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they chose that persons other than them should have to suffer that reduction, and as a consequence, it was the -- the detention facilities. I can tell you that this coming Friday, the Juvenile Board of Kerr County is on the Texas Juvenile Probation Commission agenda at their fall meeting. Is that a quarterly meeting, Tommy? I believe that they have one once every two months? MR. TOMLINSON: I don't know if it's quarterly. JUDGE TINLEY: It's the Commission. We're on their agenda to appear. And one of the main points that we're going to want to talk to them about is the Commission's decision to remove that $23, because it's gotten not just this facility, but a number of other facilities -- similar facilities in the state in a real, real bind. I think Ms. Harris can verify that, too. MS. HARRIS: That's correct. JUDGE TINLEY: In fact, there have been some facilities that have closed. One of the other issues is that, back in 1995, the State issued some bonds. I think it was about $35 million worth, roughly, and those funds were used to build 11 different detention facilities. Those facilities, needless to say, have less operating pressure on them, because they have the State's credit that has put them where they are. But one of the issues we're going to be 9-13-04 wk 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 talking to the Commission about this coming Friday -- and, far as I know, I think the entire Board is going up, along with Ms. Harris and -- and the Auditor. That was the last plan I saw, and possibly also the County Attorney and -- but at this point, I -- I cannot -- I cannot recommend to the Court that they appropriate or budget funds for those lease payments. COMMISSIONER LETZ: Judge, if I -- make sure I understand what -- and I think I do -- what you're saying, but just to reiterate it. The recommendation of the Juvenile Board for that board, and the recommendation to this Court is to default on the lease payments. I mean, that's what it is. COMMISSIONER WILLIAMS: Not necessarily. JUDGE TINLEY: No, you're not defaulting on the lease payments; you're not appropriating funds. Government operating like it does, if we don't appropriate the funds - - I think in the securities market, they would call that a material event. Now, how you redefine that is up to you. It would not be looked at favorably, obviously. COMMI SSIONER LETZ: So, default wouldn't take place until we didn' t make the payment , and we may or may not be able to make payments, right? COMMI SSIONER WILLIAMS: If I'm understanding bonding correctly, and I've been in some of these in the 9-13-04 wk 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 past, if we don't appropriate these dollars -- if I'm wrong, Tommy, you correct me, please -- if we don't put this in our budget, which in fact is a backup to the assurance to the bondholders that Kerr -- that the Juvenile Facilities Corp. is going to make its commitment. If we fail to do that, that puts the Juvenile Facilities Corporation into, I think, technical default. Not necessarily complete default, because the trustee should be holding sufficient to make the next bond payment, which gives you a whole 'pother year to gets your ducks lined back up to get the dollars so that the Juvenile Facility Corporation can meet its obligation. So, we would be going into technical default, not clear-cut default. Now, the only thing I don't know is whether or not the bonds are issued so that the bondholders can call them if they go into technical default. I'm getting a no. So, that means that there would be a whole year. The trustee would make the next increment, and there's a -- there's another year yet before there would be a total default, given the same circumstances continuing. JUDGE TINLEY: I appreciate you pointing that out. As I mentioned, we -- we did our reserve, and that's part of the arrangement. There's a reserve built into this transaction where you've got a year's worth of obligations on the debt in reserves. And, that being the case, it gives you a year's breathing room, so to speak. But being a 9-13-04 wk 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 material event, yes, it would not be looked at favorably; I don't think there's any question about that. You do have the one year's breather, though, to try and figure out a way to resolve your problem. I'm hopeful that the Commission's going to see that they solve -- they created the problem, so they have a way to solve it, and can find the appropriate funding to do it, because I think that would be a -- a solution for the facilities all across the state. COMMISSIONER LETZ: Can -- another question. Can we appropriate the funds and not release the funds? JUDGE TINLEY: If you budget the funds, you are creating an obligation under that lease. COMMISSIONER LETZ: Obligation to make those payments? JUDGE TINLEY: Yes. Yes. COMMISSIONER WILLIAMS: So, the answer is no. COMMISSIONER LETZ: The answer is no. COMMISSIONER NICHOLSON: Might be helpful for me to know more about this facilities corporation. When was it created, and what was the strategy? Why was it created? JUDGE TINLEY: Well, we go back to about '93, '94. MR. TOMLINSON: No, it was -- JUDGE TINLEY: '90? MR. TOMLINSON: '97. 9-13-09 wk 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUDGE TINLEY: Well, it was previously a MR. TOMLINSON: Right. MR. TOMLINSON: Yes, that's right. Yeah, JUDGE TINLEY: Okay. And, however, in '97, it was restructured. The -- the County took it over, and then the facilities corporation was -- was formed in order that you had a -- a public-type entity that qualified for certain credit instruments, the tax-free versus non-tax free, that kind of arrangement. COMMISSIONER NICHOLSON: So it wasn't any part of that strategy. That was to protect Kerr County from -- from financial responsibility or liability, those sorts of things? COMMISSIONER LETZ: Well, the original company, Recor, went bankrupt. Maybe not -- that may be a little bit too strong, but that's basically what they did. JUDGE TINLEY: Well, and to answer your question, yes, there was a strategy to have it under a separate shell in an attempt to protect, to the best extent possible, Kerr County, as opposed to having it be a facility like the Kerr County Jail, where the County's credit was 9-13-09 wk 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 placed straight out on a general obligation basis. No. COMMISSIONER LETZ: But it -- JUDGE TINLEY: Tommy? MR. TOMLINSON: Well, the major factors in the -- in the -- in establishing the corporation was that there -- the reason -- there was a mortgage on the property, and from the original owner, Recor, and the County cannot assume a mortgage, so the corporation was formed under the Public Facilities Corporation Act, which is -- which is state law. That -- that allows that corporation to assume a debt from -- from a third-party. So, essentially, the -- the corporation was formed to own the real estate, and that's really its only -- its sole purpose, was -- was to be able to assume the debt that was already ... COMMISSIONER NICHOLSON: Judge, on this 2003-'04 budget that you gave us -- JUDGE TINLEY: Mm-hmm? COMMISSIONER NICHOLSON: -- what -- under Revenues, what is "other"? MR. TOMLINSON: That is -- COMMISSIONER NICHOLSON: It drops from -- MR. TOMLINSON: We -- and for accounting purposes, we segregate the detention revenues from -- from any other. And the "other" is reimbursement for medical costs from -- from the counties that have -- that contract 9-13-04 wk 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with us. For instance, if Bandera County has a resident, and they have to go to the hospital, we pay the -- the -- we pay Peterson Hospital. Bandera, in turn, reimburses us for that. The other is that we receive -- we apply for and receive funds from the Texas -- the Department of Human Services for school -- for the school lunch program, and on the average, that's $5,000 to $6,000 a month. So, that -- COMMISSIONER NICHOLSON: That amount was cut approximately 50 percent. 254,000 to 100 -- MR. TOMLINSON: Well, last -- last year -- well, this year, in '03-'04, we received a refund from -- there was an escrow account for -- for loan payment in the original debt, or the mortgage. There was 84,000 -- about $84,000 in that escrow fund. After -- after the fact, two years later, we actually received the -- the proceeds from that instrument, so 84,000 of that 256,000 represents that escrow account. COMMISSIONER WILLIAMS: I have a question of the Auditor -- I'm sorry. Are you finished, Dave? COMMISSIONER NICHOLSON: Yes, for now. COMMISSIONER WILLIAMS: Why is there no -- why do you show no reserve for bad debts in this budget? MR. TOMLINSON: Well, I have never had a bad debt for this facility. We contract with Texas counties. I've never had one fail to pay. I mean, that's why we have 9-13-04 wk 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a County Attorney. If they don't, well, we have him go after them. COMMISSIONER WILLIAMS: Okay. COMMISSIONER LETZ: I guess the -- two questions. So, by the Juvenile Board and then the County not appropriating the funds, the impact to the County is lowering our standing credit market, which basically means just lowering our bond rate; we're going to pay more when we borrow any money. JUDGE TINLEY: Yeah. COMMISSIONER LETZ: If we were to appropriate the funds, does that bring any, I guess, other obligations with it to the operation of that facility? Or liability to the County? Or does it change anything in that relationship between -- that we currently have? 'Cause right now, I mean, this Court basically has nothing to do with that facility. JUDGE TINLEY: That's correct. COMMISSIONER LETZ: Even though it's -- well, we still have nothing to do with it from an operational standpoint, even though we are sort of responsible for the debt. So, by doing -- by appropriating funds, does it change that at all? JUDGE TINLEY: From -- from an operational control standpoint, no. From the aspect of, are you now 9-13-04 wk 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 invested in the thing? I'd have to say yes. And, psychologically, you're probably hitched to it for another year. I mean, isn't that how you'd feel if you were to lay out a year's worth of lease payments? Like you're hooked up to this thing for another year? COMMISSIONER LETZ: What -- what -- the answer to that is yes. You alluded to changes in state funding formulas or the way their payments are made to a lot of the problem. Is that -- is that the only problem, A, and is there any, you know, plan to get the facility on track financially without the State changing their funding formula? JUDGE TINLEY: The answer to both questions is yes. There -- number one, there were other problems. As I'm sure most of you heard, there was some difficulty with a group called Advocacy, Inc., which is a mental health advocacy group. They decided that -- that they were going to spend considerable time at the Kerr County Juvenile Facility. And you'll note in this budget that the -- there was considerable legal expense last year, which is not recurrent in this coming year. That's the primary reason for that high figure on legal and professional. As a result of Advocacy's activities, the census declined. And lower census rates, of course, mean lower reimbursement rates. 25 ~ What is being done in order to change that, number one, 9-13-04 wk 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we're increasing the census rates generally. And Ms. Harris is here in case you have any specific questions about that. I'm sure she'd be able to give you that. And, secondly, in order to increase the -- the program versatility, we should be approved -- maybe this week? MS. HARRIS: Hopefully. JUDGE TINLEY: For a substance abuse program that she is very confident will bring us a number of residents. Because she is highly respected throughout the state for her ability with substance abuse programs, where she's operated those programs, and has, in fact, received assurances from a number of jurisdictions that as soon as -- as soon as that program is licensed and in place, to let them know, and they want to utilize it. Is that essentially correct, Ms. Harris? MS. HARRIS: That's correct. COMMISSIONER LETZ: I guess that leads me to, I guess, my final question -- for a while, anyway, I think -- is that if there's a plan to improve the financial situation out there, which it appears there is, and if we hire new personnel out there, you know, why would the recommendation not be to ask the County to fund it, thinking that as a -- you know, a short-term solution to a problem, and hope -- and kind of grow out of it, as opposed to not appropriating the funds and hurting the entire County's 9-13-04 wk 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 credit rating? I mean, is there -- I guess, is -- you've outlined a road to improvement. Is that improvement enough JUDGE TINLEY: I'll let the Auditor answer this one. I think he's run those numbers. MR. TOMLINSON: I think the Judge prefaced his comment saying that it was not economic. If you think about the future, depending on how much -- you know, how much credit you need in the future, one -- or 90 basis points over a million dollars is really not very much in relation to $412,000. COMMISSIONER WILLIAMS: That's right. About $5,000 a year. MR. TOMLINSON: So, I think that's what -- I think that's what the Judge meant when he said from an economic sense. But that -- the loss you have, and potentially have, in a -- in a -- for a new debt would not -- would never reach the amount of the lease payment. There is one -- there is one issue I wanted to -- I want the Court to realize, is that this -- this lease payment is -- has to come from Maintenance and Operations, because -- because it is an ordinary lease. Because it -- so it's not -- it's not a debt from a -- from the County's viewpoint. So -- so, the payments are not -- would not qualify for an interest and sinking fund, so if you were to -- if you were 9-13-04 wk 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 to, you know, have a tax rate to make this payment or this lease payment, it would not be subject to the -- to the rollback calculations for -- for the rollback calculation. In other words, all interest and sinking funds, when the -- when the rollback rates are calculated, are exempt from -- from the calculations. So, I wanted you to understand that -- that this payment does not qualify for an interest and sinking fund. COMMISSIONER WILLIAMS: I want to take a crack at it from another angle, too. If we obligate Kerr County for the $412,723, we are, in effect, blessing a negative budget over which we have no say in. Zero. And I can't do that. COMMISSIONER NICHOLSON: Along those same lines, Commissioner, it's probably not appropriate for Commissioners Court to -- to question the details of the budget, except to the extent that we're impacted, because it is a -- a budget where the costs exceed the revenues. But I don't see any belt-tightening in this budget. I see personnel costs going up 17 percent in one year, for example. I don't -- I wonder if -- if the corporation or the organization is making an adequate attempt to -- to bring the budget closer to being in balance. COMMISSIONER WILLIAMS: I think they have a 25 ~ year to do that. And that's the reason I don't -- I don't 9-13-04 wk 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 particularly see -- I don't see why it's a panic situation in terms of the facility or its continued operation. If -- if the plan does entail whatever's necessary to right the situation and make it grow and get the census up to speed to cover their obligation, their operating cost -- their operating cost in addition to their obligation for debt service, then I think they have a year -- probably have a year and a half to get that done or to get it on that track, so I don't see that it's basically a panic situation in that regard right now. Or if -- if they see they can't do that, then they have sufficient time to make alternate arrangements of some type, whatever that might be. But I do see a negative impact on our budget by doing it. And once we put this in our budget, it's going to get paid. JUDGE TINLEY: I think that's probably correct. In answer to your question, there have been some measures taking place. But -- but the bottom line is, if I'm understanding what the Auditor has told me, at the current rates of reimbursement, if that facility were operating with the required staffing, as the Commission mandates; you've got to have so many -- so many staff people to perform certain functions, and for so -- for a certain number of residents. If -- if you meet those levels, and even if that facility were running at near capacity, at the current reimbursement levels, based upon what the Auditor 9-13-04 wk 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 has indicated to me, it would be, at best, a break-even proposition, which does not include adequate funds to pay the debt service. Is that correct, Mr. Tomlinson? MR. TOMLINSON: That's correct. COMMISSIONER LETZ: So, what you're saying is, unless the State kicks back their funding, that facility is doomed. JUDGE TINLEY: I'm saying that there's a good possibility, at best, all it'll be able to do is maybe break even. That and a number of like facilities around the state, except maybe the ones that the state bonds are on, and maybe not even them. COMMISSIONER LETZ: Does the -- Tommy? MR. TOMLINSON: This is just a bit of information, but our financial adviser, Dain Rauscher, passed on the information to us that the Standard and Poor's, which is a national rating agency, they are in the process of reviewing any debt in the state of Texas that relates to a juvenile facility, and with potentially downgrading those credits. So, that's a good indication that -- that -- you know, a national rating agency is already aware of the problem statewide, so -- so we're not in this boat by ourselves by any stretch of the imagination. COMMISSIONER NICHOLSON: Tommy, I've got -- 25 ~ MR. TOMLINSON: That indicates that -- 9-13-04 wk 51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that -- to me, that -- that probably all juvenile facilities in the state are having problems. This is -- I mean, just three weeks ago, I received a federal income tax levy on a facility within 100 miles of Kerrville, and it's for nonpayment of -- of FICA taxes in 2001 -- I mean 2000-2001. I mean, that's a levy of -- it was a levy of close to $70,000. We haven't had a kid there -- you know, we're not paying them now; we're paying the Internal Revenue. So, that's the kind of story -- you know, that's the kind of things that are happening statewide. COMMISSIONER NICHOLSON: Tommy, I've got another question about finance. If we fail to fund these lease payments, and I think we should fail to fund them, we're going to get some demerits on our -- our credit rating, our bond rating. MR. TOMLINSON: We may anyway. COMMISSIONER NICHOLSON: Yeah. How long does it take to live that down? MR. TOMLINSON: Once the -- once the creditors are satisfied, then I -- my understanding from our bond adviser is that that's when it goes away. COMMISSIONER NICHOLSON: So, it will be out of our hands. MR. TOMLINSON: Well -- well, it would be if it goes to the trustee, because once it goes to the trustee, 9-13-09 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 52 then the trustee can do with it whatever they deem COMMISSIONER NICHOLSON: One last question. Who is it that's getting hurt because these lease payments are not made? Who do the payments go to? MR. TOMLINSON: We don't know. We don't know who the bondholders are. They're -- I think they're fairly widely dispersed. I don't think -- I don't think there's many, if any, institutional buyers. So I think -- we don't have a record of that, but I'm assuming that it's pretty wide. COMMISSIONER WILLIAMS: Tommy, let me ask a question a little differently, following up on what Commissioner 4 is asking. It's one thing if Kerr County bails out on bonds to which it has pledged the full faith and credit of the County, as opposed to not appropriating this as a backup to the Facilities Corp., having not pledged the fall faith and credit of the County; is that correct? MR. TOMLINSON: It would be, yes. COMMISSIONER WILLIAMS: Then it doesn't concern me in the least if we don't pay it, 'cause I think we can overcome that pretty quickly. JUDGE TINLEY: No, there's a very, very distinct difference between those two, Commissioner. COMMISSIONER LETZ: Does -- 9-13-04 wk 53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUDGE TINLEY: Like I say, we don't even -- we don't have an obligation to appropriate or budget funds for this, because of the way government works. But if we do, we're on the hook for it. COMMISSIONER WILLIAMS: Right. COMMISSIONER LETZ: Would it have any impact, by not paying these, on any other current or future public facility corporations we may have? I mean, will it just -- really, does it impact them one way or another? JUDGE TINLEY: I can't say it would. Separate transaction. MR. TOMLINSON: Depends. I mean, you may want to borrow money. You know, there might be an impact. COMMISSIONER WILLIAMS: But, even so, if it's downgraded from triple A to B-minus, triple B-minus, you're talking about $5,000 a year over the course of a million-dollar loan and 20 years. COMMISSIONER hear, and I'm sure the rest as well, Ms. Harris talk ab census just real briefly. COMMISSIONER COMMISSIONER BALDWIN: Judge, I would like to of the world would like to hear gut the plan to increase the WILLIAMS: I would, too. BALDWIN: I'd just like to know what the -- JUDGE TINLEY: You're on, Chief. 9-13-04 wk 54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. HARRIS: Thanks. sure and use the microphone so you can hear her properly. MS. HARRIS: I'm so meek and mild. There is a need for substance abuse treatment across the state. There are some facilities that do offer substance abuse treatment, and -- but there are several that do not offer substance abuse treatment. My experience with Roy K. Robb Post-Adjudication Facility, where I was the administrator for five years, and I started that program in San Angelo, we immediately started offering substance abuse treatment, and with tremendous response. Just as in this facility, gentlemen, Roy K. Robb Post-Adjudication, their census -- their population is down as well, and that has to do with the reimbursement and the Level 5 funding, which is something totally different. By putting a substance abuse treatment program out here, our census is going to increase, 'cause we're going to bring in kids from counties who have not been sending kids to this facility, even for behavioral management and for the corrections modality that's at the facility. Tarrant County is a really good example. Tarrant County has not sent a juvenile to this facility in approximately four and a half, five years. When we get the 9-13-04 wk 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 substance abuse treatment program in, we will receive kids from Tarrant County. I'm in the process of renegotiating to get our contract reinstated with Bexar County. Bexar County used Roy K. Robb Post-Adjudication for substance abuse touch with both placement officers in Bexar County. They're tickled to death that we're going to be putting this program in, but we have to renegotiate a contract with them, so I'm in the process of doing that. We've already gotten a juvenile from Lubbock County. Lubbock County has not sent a juvenile to this facility in a number of years as well. We now have a juvenile from Lubbock County, and we will be getting more from them. So, I foresee our future of our operation increasing, especially with the substance abuse treatment program. The -- what used to be the Texas Commission on Alcohol and Drug Abuse, it's no longer that any more. Effective September the 1st, it was fragmented. Just like M.H. and M.R. was fragmented, so was TCADA; they were fragmented. They are now under the Department of State Health Services. They are sending a monitor Wednesday to do their on-site monitoring for us to obtain our license. I sent the application in the 1st of August. That's -- that process has been completed. Did you write them a check? As soon as he writes them a check, because you have to -- you 9-13-04 wk 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have to pay a fee for however many beds you want to license, and I want to license 18 beds; 12 for boys, 6 for girls. Another benefit for this facility out here is that we do take a female population. That is another benefit. There are very few facilities across the state that take females, so that's an added benefit. And, by adding substance abuse treatment for six females, that's going to be even better. COMMISSIONER LETZ: Question. I mean, I don't know if it's to you or the Judge, but the -- obviously, there's a funding formula that we charge -- MS. HARRIS: Correct. COMMISSIONER LETZ: -- the counties that send juveniles out there. If the State isn't paying a portion of it, why don't we raise the rates? MS. HARRIS: You will not be competitive. COMMISSIONER LETZ: But they're all going MS. HARRIS: That's true, but the ones that are still hanging on, you would not be competitive. Roy K. Robb Post-Adjudication was charging $78.75 a day. Now they have raised their per diem rate for this next fiscal year to $83 a day. That happens to be the exact same thing that we're charging. There is a facility in Bowie County, which is Texarkana, and the new Juvenile Chief Probation Officer oversees the detention and the post-adjudication, and I 9-13-04 wk 57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 believe they have a boot camp as well. Their census is so low that he is trying every marketing tactic that he can think of, bless his heart; he's charging $20 a day for females and $40 a day for boys. But that's just general programming. That's just corrections; that's not any type of treatment whatsoever. And, even at that, he's still having difficulty. COMMISSIONER NICHOLSON: Do facilities like yours accept private pay? MS. HARRIS: No, sir. COMMISSIONER NICHOLSON: So, parents who either have a lot of money or have a good insurance policy are going to send their children to La Hacienda. Those that don't are going to -- MS. HARRIS: Providing that's where the Judge agrees -- court-orders them to, yes, that's correct. But, no, we -- lock-down, secure facilities that are state-funded are not allowed to access private funding. Now -- I'm sorry. COMMISSIONER LETZ: Go ahead. MS. HARRIS: Now, I have seen the cases where, in the court order -- in the juvenile's court order from the Judge, that the Judge orders the parents to pay the per diem. Now, that has occurred. COMMISSIONER LETZ: How long can this 9-13-04 wk 58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 facility operate losing money? I guess -- I mean, everything I'm hearing is that there's -- unless there's a legislative change, it's operating in the red. And, I mean -- you know, and obviously, they've come to the County and the County is saying sorry. COMMISSIONER NICHOLSON: Good question. COMMISSIONER LETZ: But I guess, you know, seriously, how long can we continue to go? I see a budget deficit from last year's operations, and a projected one for this year. MS. HARRIS: Mm-hmm. COMMISSIONER LETZ: I don't know what the COMMISSIONER WILLIAMS: Not much. COMMISSIONER LETZ: But my guess, you know, is it -- it doesn't look real promising. MS. HARRIS: And you're right. You're right. And it's not promising for anybody across the state. I do know that the West Texas Juvenile Chiefs Association and the South Texas Chiefs Association have gotten on the bandwagon, and they have met -- along with the presidents of different juvenile associations across the state, have net with Vicki Spriggs, who is the Executive Director of the Texas Juvenile Probation Commission, and they are -- they are in meetings with her to -- to voice their concern about this very issue. 9-13-04 wk 59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Because of T.J.P.C.'s negligence in appropriating the money that's brought down to them from the Legislature, their negligence in appropriating that money correctly has hurt us all, and they want to see a change, and a change has got to COMMISSIONER LETZ: Judge, you said that you and the Juvenile Board and others are going to a meeting with the State Commission. Is there any kind of a realistic chance that that's going to be resolved at that meeting, or shortly thereafter? I mean, is there any indication, through the staff at state level, that they realize there's a problem? MS. HARRIS: They realize there's a problem. Now, I doubt if this one meeting that we have with them on Friday, that that's -- that they would vote to make an immediate change. But I do believe, by hearing us, plus they've already heard several other voices across the state, they know that there's a problem that they're going to have to address for this next year. COMMISSIONER LETZ: And I guess -- I said it was my last question a long time ago, but I have one more. Is it possible to budget one or two months, and not appropriate the full amount? Which would maybe not cause a negative impact to the County, but at the same time, basically give a little bit of biding time? 9-13-04 wk 60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUDGE TINLEY: My answer to that would be, I don't believe so. COMMISSIONER WILLIAMS: I have a couple questions of Ms. Harris. With regard to the efforts to obtain a license to deal with substance abuse -- MS. HARRIS: Yes. COMMISSIONER WILLIAMS: -- children with substance abuse, juveniles, is it -- will the per diem rate be the same as it is for any other -- MS. HARRIS: Yes. Yes, sir. COMMISSIONER WILLIAMS: -- juvenile offender? MS. HARRIS: Yes. COMMISSIONER WILLIAMS: Can't go up or down? It will be the same? MS. HARRIS: It will be the same. COMMISSIONER WILLIAMS: Second question. Will it take any additional staff or special training or special tools, if you will, to do this, as opposed to how you are equipping staff now? MS. HARRIS: It will take one additional staff, and that person is called a Qualified Credentialed Counselor. That person would oversee the treatment program -- the substance abuse treatment program, but more importantly, that person would oversee two of the counselors -- two of the three counselors that we presently 9-13-04 wk 61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have. We would not have to hire any additional counselors. Two of the three counselors that I presently have have the qualifications to become counseling interns for substance abuse treatment, and the Qualified Credentialed Counselor would oversee them, and that's mandated. There is no way that we can get around that in order to have that license, so it would be one additional person that would have to be hired to oversee that. Because my credentials do not allow me to do that. COMMISSIONER WILLIAMS: Okay. My last question -- and I don't wish to put you on the spot, because all I've heard about you since your arrival in Kerr County has been nothing but good. Very, very good, as a matter of fact. MS. HARRIS: Thank you. COMMISSIONER WILLIAMS: But, inasmuch as one of the contributing elements to the facility's negative position -- I'l1 put it that way, for lack of a better term -- has to do with Advocacy, Inc., and -- and the adverse publicity generated therefrom. Would it be your sense that we are beyond that? MS. HARRIS: Beyond the publicity? COMMISSIONER WILLIAMS: Beyond that which created all the bad publicity? Have we stepped beyond that? MS. HARRIS: Oh, yes. 9-13-04 wk 62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER WILLIAMS: Are we in a new realm? MS. HARRIS: COMMISSIONER MS. HARRIS: COMMISSIONER MS. HARRIS: COMMISSIONER Yes. WILLIAMS: That's behind us? Yes. WILLIAMS: Hopefully. Hopefully. WILLIAMS: That's what I'm asking. MS. HARRIS: Yes. Now, Advocacy, Inc., still has the right to come in, which the investigator that was the initial investigator, she's still coming, and they have that option. They can come as often as they want to. They can come every day if they want to. COMMISSIONER WILLIAMS: They're a federally-chartered agency; is that correct? MS. HARRIS: Yes, they're federally funded. They are a law firm that are -- that's federally funded. COMMISSIONER NICHOLSON: Let me follow up on that. Since you weren't part of that problem, your opinion might be interesting. Besides the adverse publicity, they ran up a pretty large legal bill. MS. HARRIS: Yes. COMMISSIONER WILLIAMS: In retrospect, was it a good decision to resist Advocacy, Inc.? 9-13-04 wk 63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER BALDWIN: Go for it, Ms. Harris. COMMISSIONER NICHOLSON: You can refuse to answer. (Judge Brown entered the courtroom.) JUDGE BROWN: Excuse me. You want me to do juveniles? JUDGE TINLEY: If you don't mind. I appreciate it. JUDGE BROWN: I'l1 go do them. (Judge Brown left the courtroom.) JUDGE TINLEY: Thank you, Chief. MS. HARRIS: I'm going to give you my opinion. And this is -- this has got nothing to do with in the past. It's got nothing to do with the -- you know, this is just my humble opinion. Based on the individual investigator that continues to come to the facility, I do believe if the agenda for that particular investigator were different and more objective, I don't believe that we would -- that the adverse repercussions would have been there. Unfortunately, that was not the case. So, I do know that since I have been there, any allegations that have been made by this investigator as far as abuse and neglect cases have proved to have been invalid. And that has been investigated by Kerr County Sheriff's Department and investigated by Texas Juvenile Probation Commission. 9-13-04 wk 64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER NICHOLSON: Thank you. MS. HARRIS: You're welcome. COMMISSIONER WILLIAMS: Judge, I believe we should strike this line item from the budget for 412,723. COMMISSIONER NICHOLSON: I agree. MR. TOMLINSON: I would like -- COMMISSIONER BALDWIN: I think we have an agenda item actually -- to actually do that, do we not? JUDGE TINLEY: No. COMMISSIONER LETZ: Different item. MR. TOMLINSON: I'd like to go back to Commissioner Letz' question about partial appropriation. JUDGE TINLEY: Yeah, okay. MR. TOMLINSON: I think the term, "appropriation," I think he -- I thought maybe you were referring to the appropriation of the lease payment. JUDGE TINLEY: Mm-hmm. COMMISSIONER LETZ: Yes. MR. TOMLINSON: You know, if the Court had -- if the Court has an interest in -- in maintaining the facility for a period of time, I think you -- you could appropriate funds. Not to make a payment, but -- but to subsidize the operations, if -- if it was -- COMMISSIONER WILLIAMS: Well, that's two different things. That's apples and oranges. 9-13-04 wk 65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. TOMLINSON: That's two different things. COMMISSIONER LETZ: Two different things. But if you appropriate enough to enable the Juvenile Board or the Facilities Corporation to make the lease payments, it has a -- it could have a different effect. And my line of questioning is basically -- you know, if we need to -- you know, to say we're not going to pay it and the County's going to take the hit, okay, if that's the decision. But I want to make sure that I know all of the ins and outs. And that's why I was asking the long-term direction of the facility, because if this is a one- or two-month thing that we're going to grow out of by the end of the year, I'm not willing to let the County take any kind of a hit, 'cause I think it's -- I look at it a lot -- as a lot more serious than, "Oh, it's just .8 basis points." I think that's a pretty serious thing, for a county to allow a facilities corporation that it created to default. Or -- or, you know, to me, it's -- I mean, financially and economically, it may not be that big of a hit, but I think, psychologically, and -- and public perception, I think it's a pretty big deal, and that's why I was asking the question. If there is a short-term problem, I'm much more inclined to try to have a -- to help fix it on a 9-13-04 wk 66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 short-term basis. If it's a long-term problem, no -- I mean, no reason -- I'm not at all in favor of throwing money away. And that's the reason I was trying to find out where this facility is going. And it sounds to me that the only way this facility is going to remain solvent is for the State to start giving money, and that's something we have no control over. And I can't base a decision and a vote based on what the State may or may not do. So, I mean, I am not in favor of providing any funding at this point, but to strike this right now, but between now and our public hearing, I would like to have our financial adviser come to the Court and tell me this in person, exactly what the impact is, psychologically and directly. I think we can -- you know, and if we need to make a change at that public hearing, we could do so on this matter. We certainly -- you know, I don't think that's -- but I would like to -- COMMISSIONER BALDWIN: That's Mr. Henderson? COMMISSIONER LETZ: Mr. Henderson and/or Mr. Spurgeon. I think that if they -- you know, I received an e-mail from both of them. But this -- this is a big deal to me, and I just would be a little more comfortable if they told me this in person, as opposed to e-mail. JUDGE TINLEY: Even though I used the term 9-13-04 wk 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 "economics," you know, in terms of pure economics, it's not a difficult decision, but in terms of the effect on the stature and integrity of the County, yes, it is a big deal, and I would agree with you, Commissioner. At this point, based on the information I have, I see it as not a bump in the road, but something of a longstanding nature, unless the State does something material to come forward and -- and resolve this problem. Because, based upon the figures I indicated a little bit ago that we have to contend with, even if that thing were humming along at maximum capacity, it's at best a break-even proposition, without regard to any debt service. COMMISSIONER LETZ: Right. JUDGE TINLEY: And that -- that's what creates the problem. COMMISSIONER LETZ: But, by the same token, if the State realizes that they -- this is a big problem they've created, and, you know, the 1st of November they decide to start giving this money back, and it's -- we're going to look pretty foolish, potentially, of hurting the credit rating of the County, and the facility's up and running and making a whole bunch of money again. COMMISSIONER WILLIAMS: Not necessarily. We have a whole year to arrive at that conclusion. One year from now, we can have the same discussion, and if it's on 9-13-04 wk 68 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 its feet, doing better, gaining momentum, we could agree to fund it at that time and avoid the trustee going to total default on a bond. COMMISSIONER LETZ: So, you're saying that we don't get the credit hit until over a year. COMMISSIONER WILLIAMS: Well, I think Mr. Henderson has to answer that question. But I'm saying we have a year -- we can have the same discussion 12 months from now, and if it shows the height of improvement that we anticipate and hope for, we could determine to fund it at that time and avoid formal default. COMMISSIONER LETZ: But we still could have the credit downgrade. COMMISSIONER WILLIAMS: Henderson will have to answer that. I don't know. COMMISSIONER LETZ: That's why I would like Mr. Henderson to come to answer those questions that I'm a little unclear on still. MR. TOMLINSON: Well, the reason is that, in my mind, we're not going to be at 90 percent or 100 percent overnight. So, you know, we -- we have an operational problem until that point. My -- I see a lot of the other -- about your question in that could the Court -- I mean, if the Court deems it's necessary to keep the operation going for a period of time to know what's going to happen, is the 9-13-04 wk 69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Court -- is the Court willing to fund -- partially fund the operations of the facility, and not the appropriation of the lease payment? COMMISSIONER LETZ: That's another item on the agenda today, I believe. COMMISSIONER WILLIAMS: Yeah. COMMISSIONER LETZ: But the -- what are the census figures used to calculate the revenue side of the proposed budget? MR. TOMLINSON: That's a good question. MS. HARRIS: Do what? MR. TOMLINSON: I think the -- the administrator and her -- her staff came up with -- with numbers -- population levels based on -- on the history prior to the beginning of this fiscal year. COMMISSIONER LETZ: But that doesn't answer my question on whether the -- is this based on 75 percent occupancy? 90 percent? 50 percent? The revenue number under Detention is 1,566,000. I'm just wondering what level of occupancy was used to generate that revenue. MS. HARRIS: My understanding, it was based on billable days. It was an average, and I -- and I couldn't tell you at what percentage capacity, if I'm understanding your question correctly. COMMISSIONER LETZ: Right. 9-13-04 wk ~o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. HARRIS: At 50 percent capacity versus 90 percent capacity. It was based on billable days, the number of days that they billed out last year. COMMISSIONER LETZ: Last year? MS. HARRIS: Yes, sir. COMMISSIONER LETZ: I think that's an important number -- or important -- important to know what went into calculating that number. Is that a conservative number, or is that a worst-case number or a best -- I mean, just exactly where are we on the revenue side? Because if that number changed there, it's going to have a pretty significant change on the bottom line. And if that's an optimistic number, the bottom line will look really bad. If it's a pessimistic number, the bottom line looks pretty good. So -- okay. COMMISSIONER WILLIAMS: Somewhere in between. COMMISSIONER LETZ: That's right. JUDGE TINLEY: I think they were trying to make a realistic number, recognizing that it was going to be a climb-out situation. Because the numbers are fairly low right now. MS. HARRIS: Mm-hmm. COMMISSIONER LETZ: What's our occupancy currently? MS. HARRIS: Today we have 30 kids. And 9-13-04 wk 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that's pre and post put together; 20 post and 10 pres. COMMISSIONER LETZ: And what's the occupancy -- total occupancy? MS. HARRIS: For post, it would be 36 beds, and for pre it would be 24. COMMISSIONER LETZ: So, 60? MS. HARRIS: Mm-hmm. COMMISSIONER LETZ: We're at -- MS. HARRIS: 30. COMMISSIONER WILLIAMS: Does that include the new facility? MS. HARRIS: Yes, sir. COMMISSIONER LETZ: So, we're about half occupancy. MS. HARRIS: That's correct. COMMISSIONER LETZ: So, we're deleting the 412,000, correct? JUDGE TINLEY: At least for -- for consideration purposes. COMMISSIONER LETZ: Okay. JUDGE TINLEY: Obviously, until the final budget gets passed and approved, it's not an appropriation or nonappropriation, if I understand it, so we still have our options open. COMMISSIONER LETZ: Tommy has to change all 9-13-04 wk 72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those numbers again. Don't you? JUDGE TINLEY: Do we have anything else on the budget that we need to consider right quick? MR. JOHNSTON: I have a question. Can I present it now? COMMISSIONER LETZ: Sure. MR. JOHNSTON: One question. COMMISSIONER BALDWIN: What page? MR. JOHNSTON: Pardon? COMMISSIONER LETZ: What page? COMMISSIONER BALDWIN: What page? MR. JOHNSTON: It would be in the Road and Bridge budget. I'm not sure what page it's on; I don't have a copy of it. JUDGE TINLEY: Okay. Which part of the Road and Bridge? MR. JOHNSTON: Well, my question is -- COMMISSIONER LETZ: 74. MR. JOHNSTON: -- according to the A.G. opinion, DM-368, which interprets Texas Transportation Code, and David Motley's opinion to this Court on August 31st of this year, which a copy was provided to me, I'm asking the Court to provide a reason that reflects actual conditions under which the County is truly unable to employ a County Engineer. 9-13-04 wk 73 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUDGE TINLEY: I think the record is replete with various discussions about the -- MR. JOHNSTON: It's never been espoused when I was in court. JUDGE TINLEY: Pardon? MR. JOHNSTON: I said it was never answered when I was in court. May have been some other time. JUDGE TINLEY: I think the record is replete with those discussions, and I think to -- to ask that we go back and rehash all those discussions -- MR. JOHNSTON: I don't think that's what I'm asking. I think, just -- what is the reason? I think both -- JUDGE TINLEY: There's a number of reasons that were discussed, and I would refer you to the record of those discussions. I don't choose to have you, in pre-litigation mode, come say, "You give me the reason, and I'm going to hold you to it." MR. JOHNSTON: Not pre-litigation mode. I just thought I deserved some kind of an ex -- you know. JUDGE TINLEY: You've not had an attorney contact the Court on your behalf? MR. JOHNSTON: Well, they are trying to figure out the same answer that I'm asking you. JUDGE TINLEY: Okay. I think the record's 9-13-04 wk 74 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 fairly complete, Mr. Johnston, and I'd refer you to that. There are verbatim transcripts made. MR. JOHNSTON: So you don't have one reason? You just have all the discussion, ad infinitum? JUDGE TINLEY: There are a number of reasons, in those discussions, enumerated. MR. JOHNSTON: Okay, I appreciate it. JUDGE TINLEY: Is that it for the budget, gentlemen? COMMISSIONER BALDWIN: God, I hope so. JUDGE TINLEY: Okay. Why don't we take a recess for about 15 minutes? We'll come back, and if we got any more, we'll work on those. (Recess taken from 3:27 p.m. to 3:45 p.m.) JUDGE TINLEY: Okay, let's come back to order, to our budget workshop that we recessed out of. Any more budget items, gentlemen? COMMISSIONER BALDWIN: No. JUDGE TINLEY: Okay. COMMISSIONER LETZ: Well, I guess the question to Tommy -- 'cause we're getting ready to do some other items when we get back to our agenda. I presume we've changed the bottom line, so our estimated fund balance at the end of September '05 is going to be roughly $6 million 9-13-04 wk 75 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 now. COMMISSIONER BALDWIN: Yes. COMMISSIONER LETZ: And the 412,000, plus a few other changes, I think, were a net positive to the County. COMMISSIONER NICHOLSON: Did Tommy say yes? MR. TOMLINSON: That's right, yeah. I was having to find the page. COMMISSIONER WILLIAMS: Do we have a clue as to what those numbers are? COMMISSIONER LETZ: Well, my next question is, we have another handout that gives the schedule of tax rates that I think that Paula needs to publish. How long is it going to take to get a new page like this? MR. TOMLINSON: That page you have in your hand agrees with what -- what the summary -- COMMISSIONER LETZ: It agrees with $6 million -- it agrees with -- with the fund balance there? Actually, the rates don't change; just changes the fund balance. MR. TOMLINSON: Yes. COMMISSIONER WILLIAMS: Well -- MR. TOMLINSON: The -- the numbers in -- in the estimated tax revenue column -- COMMISSIONER LETZ: Right. 9-13-04 wk 76 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. TOMLINSON: -- are the rates that I show on that schedule. COMMISSIONER LETZ: Okay. MR. TOMLINSON: Times the -- the tax. COMMISSIONER LETZ: Okay. COMMISSIONER WILLIAMS: Are you looking at something I don't see? COMMISSIONER BALDWIN: This. MR. TOMLINSON: I left a tax rate schedule this morning. COMMISSIONER BALDWIN: Got it. COMMISSIONER LETZ: Right, I understand. COMMISSIONER NICHOLSON: Okay. If the estimated fund balance wound up being about $6 million, which is a -- an unbalanced budget of about $650,000 -- are you listening to me, Tommy? MR. TOMLINSON: No, I'm listening to some conversation here. COMMISSIONER NICHOLSON: I'll quit preaching and say, how much of the tax increase would it cost to fund the $650,000 deficit budget? MR. TOMLINSON: Well, as far as you -- you can go as far as the three -- you can go as far as you want to, but ... (Laughter.) I'll take that back. MS. RECTOR: Don't say that. 9-13-04 wk 77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER WILLIAMS: A little over two, MR. TOMLINSON: But you can go up to the roll -- safely go up to a rollback, which is .3508, I believe is the number. Yeah, .3508 is the rollback rate, and then -- for '04-'05. So, the difference between the .3508 and the .3721 is an extra amount you can raise the rate without going over the roll rate, which is -- COMMISSIONER LETZ: But -- go ahead. MR. TOMLINSON: Which is, like, close to 80 basis points. COMMISSIONER LETZ: But what I was going to say was that I'm sure -- I don't know if you were advocating going in that direction, but I certainly am not in favor of that direction, because the way we budget, we budget for 100 percent employment throughout the year, and we know that's not going to be the case. And we know that we -- and history tells us that, for the past several years, we've had a deficit budget, but we, at the end of the year, had a surplus budget. COMMISSIONER NICHOLSON: No, Commissioner, I'd like to find any way we can to avoid tax -- a tax increase. JUDGE TINLEY: Tommy, let me ask you, if I might. Total county rate at the present time is .3721. 9-13-04 wk 78 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Rollback rate is specified as .3508. Looks like we're already over. MR. TOMLINSON: No, that's -- I think that's a misprint. JUDGE TINLEY: Shouldn't that be .3805? MR. TOMLINSON: Yeah, I had a little dyslexia there. COMMISSIONER BALDWIN: Let's find out for sure. COMMISSIONER WILLIAMS: Yeah, 'cause the previous year it was .380. Previous year was .387. JUDGE TINLEY: You want to verify that for us before we get too far into this drill? MR. TOMLINSON: I have it right here in front of me. (Discussion off the record.) MS. RECTOR: COMMISSIONER MS. RECTOR: COMMISSIONER COMMISSIONER MS. RECTOR: COMMISSIONER JUDGE TINLEY budget, gentlemen? .3827. WILLIAMS: Say it again? .3827. WILLIAMS: .3827. Thank you. LETZ: That's the rollback rate? That's the rollback. WILLIAMS: Okay. Okay. Anything else on 9-13-04 wk 79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER WILLIAMS: Are we in regular Commissioners Court session? JUDGE TINLEY: No, we're still on the budget workshop. Anything else? I'm going to recess the budget workshop, in case there's things we need to come back to, and I will reconvene the Commissioners Court meeting for this date, and recessed earlier today at approximately 1:30. (Budget workshop recessed at 3:32 p.m., and later adjourned at 5:07 p.m.) STATE OF TEXAS COUNTY OF KERR The above and foregoing is a true and complete transcription of my stenotype notes taken in my capacity as County Clerk of the Commissioners Court of Kerr County, Texas, at the time and place heretofore set forth. DATED at Kerrville, Texas, this 21st day of September, 2004. JANNETT PIEPER, Kerr County Clerk BY: ___ ________ ________ Kathy anik, Deputy County Clerk Certified Shorthand Reporter 9-13-04 wk