1 2 3 4 5 6 7 8 KERR COUNTY COMMISSIONERS COURT 9 Budget Workshop 10 Monday, August 9, 2010 11 1:00 p.m. 12 Commissioners' Courtroom 13 Kerr County Courthouse 14 Kerrville, Texas 15 16 17 18 19 20 21 22 23 PRESENT: PAT TINLEY, Kerr County Judge H. A. "BUSTER" BALDWIN, Commissioner Pct. 1 24 WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 25 BRUCE OEHLER, Commissioner Pct. 4 2 1 I N D E X August 9, 2010 2 PAGE 3 Review and discuss Fiscal Year 2010-11 budgets and fiscal capital expenditures and personnel matters 4 related thereto, including, but not limited to, cost-of-living adjustments, salary considerations, 5 staffing levels, health benefits and insurance 3 6 --- Adjourned 65 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 On Monday, August 9, 2010, at 1:00 p.m., a budget 2 workshop of the Kerr County Commissioners Court was held in 3 the Commissioners' Courtroom, Kerr County Courthouse, 4 Kerrville, Texas, and the following proceedings were had in 5 open court: 6 P R O C E E D I N G S 7 JUDGE TINLEY: Okay. Let me call to order a budget 8 workshop of Kerr County Commissioners Court posted and 9 scheduled for Monday, August 9, 2010, at 1 p.m. It's a bit 10 past 1:00 now. The agenda item as listed on the posted 11 agenda is review and discuss fiscal year 2010-11 budgets and 12 fiscal capital expenditures and personnel matters related 13 thereto, including, but not limited to, cost-of-living 14 adjustment, salary considerations, staffing levels, health 15 benefits, and insurance. One quick item to get out of the 16 way. I'm going to let Rob Henneke lead off, the County 17 Attorney. He's got something he wants to throw into the mix 18 we may not have thought about for the coming budget year. 19 MR. HENNEKE: Thank you, Judge, Commissioners. As 20 the County is aware, we are proceeding forward with the 21 intervention into the pending administrative hearing 22 procedure in opposition to the -- or I guess in participation 23 with the L.C.R.A.'s CREZ transmission line application, and 24 currently we have retained as co-counsel a very well-known 25 and well-established firm in Austin, Lloyd Gosselink, who 8-9-10 bwk 4 1 has, you know, specific expertise in utility issues and 2 regulatory matters, and then these type of issues in 3 appearing before the administrative law judge on these P.U.C. 4 matters, which is why we've retained him, which is why we've 5 joined with the City of Kerrville and Kerrville Public 6 Utility Board to -- to assist us in proceeding forward with 7 the process. As you gentlemen are aware, currently the 8 Commissioners Court has allocated approximately $5,000 -- or 9 $5,000 in outside counsel expenses, which has been 10 anticipated to take us through the filing of the 11 intervention, which happened last week, and then also the 12 filing -- preparation and filing of the written evidence, 13 which we would have to file within 60 days of the filing of 14 the application, and locks us into the strategy and the 15 evidence -- the position that we'll have for the rest of the 16 process. 17 After that point in time, it remains to be seen, 18 and it remains to be y'all's decision as to, you know, what 19 the desire of the Commissioners Court is and what the 20 financial commitment of the Commissioners Court is to 21 continue to retain and use the attorneys that are working as 22 co-counsel in this matter from Austin. Throughout this 23 process -- and Judge Tinley and I had a conversation; I 24 wanted to bring it up here, because there is a reason why 25 we're working with Lloyd Gosselink to bring considerable 8-9-10 bwk 5 1 expertise to the table, and their advocacy is going to 2 enhance the effectiveness that Kerr County and the City of 3 Kerrville and KPUB have in being best able to represent our 4 interests and the interests of our constituents in front of 5 the administrative law judge so that the decided route of the 6 CREZ transmission line has the least negative impact possible 7 for Kerr County. 8 It's an expensive process, though, and if it was 9 one that the Commissioners decided that they wanted to have, 10 you know, the counsel participate the full route, and we 11 wanted to hire experts and we wanted to do everything that 12 they would recommend that we do to participate in this 13 process, it is, you know, very easily conceivable, you know, 14 part of it -- as we found out, there's going to be, I think, 15 a two- or three-week trial. There's going to be thousands of 16 intervenors. There's already been boxes of documents filed. 17 Right now trial is set for October 25th through November 5th, 18 and I don't really know where there's a building big enough 19 where they're going to be able to have this. We're having 20 the first meeting -- first hearing on the issue at the Palmer 21 Auditorium in Austin, which I think is being held there 22 because they needed a big enough space to fit everybody 23 that's going to be involved with this. 24 So, it is not -- it's not unreasonable to expect 25 that if this firm has continued and we want to participate 8-9-10 bwk 6 1 with this firm throughout the whole process, the grand total 2 of legal fees, which will be divided under the partners under 3 our coalition, could be $200,000 or $300,000, including 4 experts, including the other moving parts that they have. 5 And that's something that's projected forward. We have not 6 committed to anything beyond the $5,000 that you have 7 authorized, and that gets us to step one. But then if the 8 Court so chooses to, you know, continue forward, then, you 9 know, the costs are going to go up from there. It's 10 something that I felt it was important for you to consider, 11 and I just wanted to make that aware and give an opportunity 12 for it to be discussed. 13 JUDGE TINLEY: Budget issue. 14 COMMISSIONER WILLIAMS: I guess. 15 JUDGE TINLEY: Thank you. I think all of us 16 anticipated that this portion -- a good portion of today's 17 workshop would be focused on the health benefits program. 18 It's been part of the discussion already, but we've got 19 Mr. Gary Looney our insurance consultant, here. And, 20 Mr. Looney, we're all anticipating some good news, and I hope 21 you're aware of that good news. 22 MR. LOONEY: Good news. Well, last time I was -- 23 Judge, Commissioners, last time I was here, we talked about 24 that I needed to get some additional historical information, 25 more claim information, trying to -- unfortunately, claim 8-9-10 bwk 7 1 information through Wednesday, Thursday of last week, our 2 claim situation is not improved. I was hoping that we would 3 have some reduction during the summer months in some of the 4 claims, but we still have a -- a high number of very high 5 claims and a lot of frequency, a lot of utilization going on 6 during this period of time. So, our claims are what claims 7 are. That's what our plan is designed to do, is to reimburse 8 employees for those sicknesses, illnesses, accidents, things 9 that they can't project. And our plan is working very well 10 from that standpoint. So, we are paying a lot of claims. As 11 you know, we -- in the past, we've taken a lot of time and 12 effort in negotiations with hospitals, negotiations with 13 physicians' groups, physicians. We've worked on tertiary 14 providers. We've done a lot of things to try to bring down 15 the actual cost by negotiating for and on behalf of the 16 county and on behalf of the employees to get reduced fees and 17 reduced rates as best we could. 18 We've pretty much beaten those people up as much as 19 we can, so I guess we need to start flailing away in other 20 areas now. And one of those areas is just initial -- here's 21 the cost. So how are we going to try to afford it? How are 22 we going to try to fund it? And in the past, the County has 23 taken the position that every employee that worked for the 24 county would have a free insurance program, that the 25 insurance would be at no cost to the employees. We've done 8-9-10 bwk 8 1 some surveys recently, and I haven't gotten exact numbers 2 from everybody, but it appears that employees in general 3 would rather have some cost involved with their plan than to 4 destroy the benefit program overall by raising their 5 benefits -- or raising their coinsurances and deductibles and 6 other areas. They'd rather see some cost element involved as 7 opposed to completely gutting out the health insurance plan 8 itself. Is that basically what you have -- 9 COMMISSIONER WILLIAMS: You're saying they would 10 rather participate financially? 11 MR. LOONEY: In the actual premium cost -- 12 COMMISSIONER WILLIAMS: Yeah. 13 MR. LOONEY: -- of the plan, than to have all of 14 the benefits structures so -- deductibles and coinsurances 15 and all those things at such a high rate that when it did 16 impact them, they wouldn't have that amount of money to be 17 able to put toward the claim. Whereas making minor payments 18 on a monthly basis as you go along then, and still maintain 19 lower deductibles, low coinsurance and co-payments, that that 20 would be a better process than being impacted by the high 21 out-of-pocket cost in case the plan was needed or it was 22 incurred. So, as a result of that, I believe Eva has given a 23 number of -- of scenarios as to how we can eventually get to 24 the funding that's required. Right now, the fund projection 25 for next year is still at the number I've given you 8-9-10 bwk 9 1 previously, which is 2.975 million. And that -- that number, 2 then, is the -- is what we're trying to fund toward for this 3 2011 plan year. So, the 2011 plan year starts on January 1st 4 of 2011. We're in August, and we're making projections that 5 are a good five months ahead. So, in our -- I got my hat on, 6 my -- my trying to foresee the future here, and we're still 7 having laws and regulations changed on an almost weekly 8 basis. 9 The last time I was here, I was telling you that 10 we're going to be obligated to include children under the age 11 of 26 in the plan. One of the statements that have come from 12 the federal government at that time was that there would be 13 no preexisting limitation on those children, age 26, and 14 there wouldn't be any date or time that they would be 15 required to either come on the plan or off the plan. Well, 16 just two weeks ago, that's changed, and we've been -- we've 17 been able to say, okay, it's up to age 19 that preexisting 18 conditions will not apply, and there will be one annual open 19 enrollment period to bring these dependents onto the plan; 20 that they won't just arbitrarily be able to come on the plan 21 and off the plan. So, from the last time I talked to you to 22 this point in time, we've had some benefit come out of this 23 process. The other thing that's come out since then is that 24 a list of benefits that will be covered under the U.S. 25 federal government outline for wellness benefits, have come 8-9-10 bwk 10 1 up with a specific list of things that will be included in 2 the wellness plans that will be moving forward for our health 3 care plans. It's a pretty substantial document, but we will 4 have to incorporate those items into the benefit plan 5 effective January. 6 That's really -- that's -- we take that into 7 consideration when we're considering the cost moving forward. 8 We're also having to take into consideration the limited 9 lifetime maximum and limited annual maximum. So, part of 10 this $2.9 million projection has to do with the trend 11 impacted by those changes. If that changes going forward, 12 and if I can -- as we get more definitive, then I may very 13 well be able to come back and say, okay, we put in one and a 14 half percent for this, and now they've taken that -- we don't 15 have that liability moving forward, so we can put that one 16 and a half percent back in and reduce that funding process. 17 But until I see those things occur, I can't legitimately say 18 it's not going to happen, 'cause right now, projected in the 19 health care law, it's going to happen. And -- (Audience 20 member sneezed.) We have medication for that. 21 MS. HYDE: Now. 22 MR. LOONEY: Now. However, in January, we're not 23 going to. 24 COMMISSIONER BALDWIN: Hey, Gary? So this is all 25 part of the Obama care we're talking about. And so, 8-9-10 bwk 11 1 obviously, this thing is coming in, like, segments, maybe. 2 And the turnkey of the program where there's mandates that 3 you shall be -- you buy something is 2014. 4 MR. LOONEY: Well, actually, there's about -- 5 there's a dozen mandates. 6 COMMISSIONER BALDWIN: And can you -- can you see 7 when these segments are coming, what the issues are? Can 8 you -- like, in 2011, you'll know what's coming down the 9 pike? 10 MR. LOONEY: 2011, we know that we're going to have 11 the changes that I've projected into the rate increases at 12 this point. They take effect on the anniversary date -- the 13 first anniversary date following September 23rd, 2010. So, 14 there's a series of mandated benefits that will have to take 15 place in January; that is, the unlimited lifetime maximum, 16 the unlimited annual maximum, the change in dependent ages up 17 to age 26, preexisting condition from 19 and under. And 18 there's -- there's some others in there that have to do with 19 wellness benefits and what the liability is for paying for 20 these listed wellness benefits in the plan. 2012, 2013, and 21 2014 are phased in periods also. 22 COMMISSIONER BALDWIN: Mm-hmm. 23 MR. LOONEY: Until 2014, where the mandate is for 24 everyone to be insured under all -- under a plan, whether it 25 be the county plan or an alternate plan that's established 8-9-10 bwk 12 1 under the -- by the state and through the federal government 2 through an exchange program. So, we're -- we're -- right now 3 the best I can do is six months ahead in 2011. 4 COMMISSIONER BALDWIN: Well, that's good, though. 5 I got one more question, then I'll leave you alone. For a 6 while. When this thing is found unconstitutional, how hard 7 is it going to be to undo everything? 8 MR. LOONEY: The -- the changes that we're making 9 right now in the plan document, as far as the unlimited 10 lifetime maximums and the limitation on the annual maximums, 11 plus this age 26, the total impact of that from a percentage 12 standpoint on the plan is between 4 and 5 percent. 13 COMMISSIONER BALDWIN: Mm-hmm. 14 MR. LOONEY: If we take and are able to go back to 15 the limitation that -- their biggest concern is the annual 16 limitation, because we now have certain benefits that do have 17 annual limitations built into the plan itself. That is 18 probably -- that plus the wellness requirements are the two 19 biggest percentage items. Those can be changed by plan 20 design and backed out in plan design. Moving from age 25 to 21 26 has minimal -- minimal -- if, in fact, it were a dependent 22 under the definition that we currently use, which is I.R.S. 23 dependents. You know, we still don't have that final 24 definition. That's the one we're going by now. But the plan 25 design itself, as long as we're able to keep that definition 8-9-10 bwk 13 1 in the plan, the impact is not as great as what we originally 2 projected. But moving back -- to answer the question, and 3 moving back, if in fact it's unconstitutional, then we can -- 4 those benefits, those will be able to be brought back into -- 5 into change, into realm. It's not going to -- it's not going 6 to prevent us or change the concept, though, that to fund 7 where we are, we may still need to have employee contribution 8 to help fund where the plan... 9 COMMISSIONER BALDWIN: Yeah. 10 MR. LOONEY: Just simply from the standpoint of 11 overall funding. 12 COMMISSIONER BALDWIN: Well, I think that's a good 13 idea anyway, but participation is healthy. 14 MR. LOONEY: So, there's been a lot of discussion 15 concerning whether or not companies should stay in what they 16 call "grandfather" status, and by staying in grandfather 17 status, that means that you're not able to change the 18 benefits outside what the federal government says you can 19 change and increase or decrease your benefits each year. And 20 the -- the negative to being grandfathered at this point -- 21 or not being grandfathered, is that if you don't stay in 22 grandfathered status, then you have to include wellness 23 benefits in your overall package. We currently have wellness 24 benefits to a degree in our overall package, so maintaining 25 grandfather status is really of no major benefit to the -- to 8-9-10 bwk 14 1 the County. So from that standpoint, we retain the right to 2 make changes, retain the right to change the funding. If we 3 stayed grandfathered, we would not be allowed to increase the 4 contribution or to ask for a contribution greater than 5 5 percent of what the employees were making previously. And I 6 haven't been able to figure out that formula yet where the 7 employees were not making a contribution previously. 8 COMMISSIONER BALDWIN: What's 5 percent of zero? 9 MR. LOONEY: Five percent of zero, I'm having 10 trouble with that formula as far as the government is 11 concerned. So, maintaining grandfather status we don't see 12 as a benefit to the -- to the County. The other question 13 I've been asked on a number of occasions is, is self-funding 14 still the appropriate funding mechanism for your 15 organization, as well as others? Right now, under the -- 16 under the legislative requirements for this new legislation, 17 there's a loss ratio that has to be maintained by fully 18 insured companies. They're required to maintain a minimum 19 loss ratio. That minimum loss ratio is tied back into their 20 underwriting. Forgive me for getting too technical, but in 21 the past we've used either a 7 or 5-to-1 ratio in 22 underwriting as far as age, sex, general location, so on. 23 So, we could have a change of numbers from one to as high as 24 7 in these elements. 25 What the federal government now says is you can 8-9-10 bwk 15 1 only change these elements on a 1-to-3 ratio. We use a 2 1-to-3 ratio to set rates, and we are required to have a 3 minimum loss ratio of either 80 or 85 percent on fully 4 insured plans. So, the concept of pooling and the concept of 5 underwriting from an experience-rated basis is going to 6 slowly disappear, and when that takes place, then whatever 7 the community rate or potential rate is, is the rate that 8 we'll be impacted. If you have an older age group, then the 9 impact because of this 1-to-3 rating structure is more 10 favorable. If you have a younger age group, then the younger 11 age group is going to be paying a lot more in premium. And 12 all of it's going to be impacted by the loss ratio. So, 13 right now, none of that impacts the self-funded programs, is 14 not projected, so that if we have a good claim year, which I 15 certainly hope -- we certainly hope we start aiming toward, 16 then we will benefit from that circumstance. Bad claim year, 17 we're still going to benefit from being self-insured from our 18 stop loss insurance. That's my story. We haven't changed 19 the -- I haven't changed that projection on the funding 20 level. 21 JUDGE TINLEY: What do you see as the most 22 effective ways to cover this gap, I'm going to call it, this 23 increased cost? 24 MR. LOONEY: We've taken a look at changing several 25 things, just to see what the impact would be, and one of the 8-9-10 bwk 16 1 things we've been paying a lot of attention to in the last 2 two years is the prescription drug program, trying to 3 determine whether or not there's some alterations we can make 4 there to help reduce the cost. When we reduce costs in the 5 plan design, what that does is, we take that $2.9 million 6 number and we apply whatever this reduction in benefit is to 7 that number. That generates down back to a lower 8 per-employee funding number. So, we looked at two or three 9 plan design issues, and one of them is, you know, an area 10 that's very expensive nowadays is the specialty drug area. 11 There's a lot more medications that are being moved off of 12 the standard formulary, put into a specialty classification, 13 and then those prices are able to be accelerated. We see 14 medications ranging anywhere from 8,000 to 15,000, $16,000 a 15 month, that are being used for special care and treatment 16 areas, which people have to qualify for to even get those 17 medications. They have to travel to locations sometimes to 18 be administered. So we've been looking at -- right now, our 19 co-payments on special medications is very large, so we've 20 been looking at a co-payment function or coinsurance function 21 on special medications. 22 One of the recommendations that we got from our -- 23 our ex-carrier was to move the deduction or the co-payment by 24 -- by the employee to 20 percent of whatever the medication 25 was. Well, in some cases that we looked at just this last 8-9-10 bwk 17 1 year, that co-payment on that 20 percent in some cases was as 2 high as $600. In some cases it was as high as $800 for a 3 co-payment for that medication. So, rather than take it to 4 that limit, we're probably going to recommend and will 5 recommend that we do a 20 percent, but max it out at either 6 $200 or $300 per year. So, in that case, it would still be 7 an additional co-payment number, but the volume of 8 medications that are being -- by the drug manufacturers that 9 are being moved to specialties, four years ago, five years 10 ago we may have two or three specialty meds we'd see a year. 11 Now we're seeing anywhere from five, seven, eight a year, 12 again, at this accelerated cost. So, we're looking at the 13 possibility of moving it and saving some dollars in that 14 prescription area. I think, Eva, you'd also asked for a 15 report on the -- 16 JUDGE TINLEY: What are your thoughts about those 17 higher cost meds that have a generic or therapeutic 18 equivalent, just putting those in a separate tier and say 19 these aren't covered? 20 MR. LOONEY: Well -- 21 JUDGE TINLEY: Is that an effective way to curb 22 some of the cost? 23 MR. LOONEY: Having them not covered at all? 24 JUDGE TINLEY: Mm-hmm. 25 MR. LOONEY: Well, here's -- I think this is one of 8-9-10 bwk 18 1 the reports that we got back on some of the high profile 2 medications that have alternatives. 3 MS. HYDE: If you look at the very last page, those 4 were the prescriptions -- that's one of the things y'all 5 asked me to bring back this time. Look at the scenario 6 regarding the alternative therapeutic based on the top 10's. 7 Those are the top 10's. There's only seven. The rest of 8 those in there were basically specialty drugs that were left. 9 And there's -- 'cause you can see, there's only about seven, 10 and there's only about 15 folks that are using those. 11 MR. LOONEY: There's two changes, Judge, I think we 12 need to make. The -- the co-payment on these medications, 13 there are some individuals that -- that have tried all of the 14 other generics, and they're just not beneficial for them. 15 So, these particular named medications, if there were to be a 16 higher co-payment or percentage co-payment on that where they 17 could still access those medications -- I think eliminating 18 them completely, you've got probably 25 or 30 employees in 19 the county that would be impacted by eliminating those 20 medications completely, and I think they'd rather preserve 21 the right to have made possibly a higher co-payment than a 22 standard co-payment. As you can see from the pricing of 23 these medications, one that we see probably most prevalently 24 is the Nexium. And I know that the employees that have tried 25 some of the other options, but you can see there's a 8-9-10 bwk 19 1 significant difference between the price of the Nexium and 2 the generic options. So, having a co-payment -- additional 3 co-payment for some of these medications, including them 4 possibly in that specialty medication there. The problem, I 5 guess, I'm seeing is that if we do that and we start saving 6 those dollars, that number that we're subtracting from that 7 2 million, 9 is not -- we're talking about just a few -- 8 maybe not a full percentage point. And so the impact -- 9 JUDGE TINLEY: It's on this separate tier, and I'm 10 excluding the real specialties that I just talked about. 11 MR. LOONEY: Having a specialty -- 12 JUDGE TINLEY: There's a separate tier. Your 13 thinking is to just put enough increase on the co-pay where 14 we won't get hit with vouchers and -- 15 MR. LOONEY: Exactly. And the second part of that 16 is that the HRA program or the reimbursement program 17 currently have the ability to reimburse co-pays under the 18 medications, and the HRA program really never was designed to 19 do that. That was a -- when the HRA -- to give you a little 20 history, when the HRA program first started, we were with 21 Mutual of Omaha. Mutual of Omaha outsourced the HRA 22 administration through their company to a third party. The 23 third party at that point in time was unable to identify a 24 medication -- prescription medication co-payment as a 25 non-eligible expense under the HRA, so we essentially got 8-9-10 bwk 20 1 saddled with that four years ago or five years ago. Now, 2 with the administrative capability, you can identify those 3 prescription medications and co-pays and not be applied 4 against the HRA program. 5 JUDGE TINLEY: So, restrict it to the deductible? 6 MR. LOONEY: Strictly to the deductible process 7 itself. 8 JUDGE TINLEY: What about the rollover feature? 9 MS. HYDE: That was the second thing that y'all 10 asked for. On the HRA history, so that y'all understand, 11 this spreadsheet, the very first page, you asked me what's 12 the history to this? You need to understand that the total 13 liability in cost in 2007 and 2008 was $530,000. If you look 14 at the very last box on the very first page, that liability 15 decreased in 2008-2009 to 453,000, and in 2009-2010 to 16 363,000. What that means, though, is not that our liability 17 decreased; it's that we're paying out more. We increased how 18 much we paid out by almost $200,000. So, yeah, the liability 19 that Jeannie has to show on the books has decreased, but 20 we're paying it in cash. We're paying it out. 21 COMMISSIONER LETZ: People are using their HRA 22 cards. 23 MS. HYDE: Yes, sir. 24 COMMISSIONER LETZ: That's what you're saying. 25 MS. HYDE: Right. The second question -- there 8-9-10 bwk 21 1 were several options that you wanted. If you turn the page, 2 you wanted scenarios, so the first one was employee-only HRA. 3 In order to do that, I first took employee only, which would 4 be $164,400. The problem is, I can't take out the 5 carry-over, because as you guys are well aware, if you have 6 multiples on your HRA, family members, any dependents, you 7 can utilize that money. So, pulling out a carry-over for an 8 employee only is almost impossible. So, what we said was 9 okay, we'll go to Scenario 2, and there is no carry-over. 10 Doesn't matter whether it's for the employee, dependents, 11 whatever. That's 164,4. The number doesn't change for 274 12 employees, and the potential savings is $198,000. And the 13 last one was to remove the co-pay, and as Gary just said, 14 those two are inter-related, so we cannot pull that number 15 out. Best guess estimate is about 100,000. 16 MR. LOONEY: Well, that -- the -- 17 JUDGE TINLEY: Wait. 18 COMMISSIONER OEHLER: But you wouldn't have to 19 allow it going forward. 20 MS. HYDE: That's what it shows. That is your 21 Scenario 2. 22 COMMISSIONER OEHLER: Okay. 23 JUDGE TINLEY: So your estimate if -- 24 MR. LOONEY: Allow the carry-over to go forward? 25 Is that what you're saying? 8-9-10 bwk 22 1 MS. HYDE: No, this one is with the carry-over 2 going forward. Potential savings was 80,000. Then no 3 carry-over, potential savings is 198. 4 MR. LOONEY: Okay. Now, understand that the 5 savings being demonstrated here is a liability savings. It's 6 not the actual paid claim projection; it's the liability 7 that's generated from the accumulation of the HRA program. 8 COMMISSIONER WILLIAMS: Is that first-year savings? 9 MR. LOONEY: And we're running -- we're running -- 10 the last three years, we've been running between 100,000 and 11 $125,000 a year actual paid claims out of the HRA program 12 itself. 13 COMMISSIONER OEHLER: But then you have all the 14 carry-over. That's a liability. 15 MR. LOONEY: Carry-over is a liability, but the 16 carry-over also is something that you've got total control 17 over. You know, it's not vested in any way in any employee. 18 They can't take it with them when they leave. It's strictly 19 an asset that's out there to help offset that deductible. 20 We're taking -- if we take that HRA co-payment for the 21 medications out of it, that we're estimating to be somewhere 22 in between 30,000 to $40,000 a year, as far as what those 23 co-payment charges that are being withheld are. 24 COMMISSIONER WILLIAMS: Is that a first-year 25 saving, or is that delayed action saving? On the carry-over. 8-9-10 bwk 23 1 MR. LOONEY: The carry-over? 2 COMMISSIONER WILLIAMS: Right. 3 MR. LOONEY: Again, it's a liability. 4 COMMISSIONER WILLIAMS: It's continued liability. 5 MR. LOONEY: It's a continued liability, even 6 though the liability shows that -- in this particular 7 instance, shows at 198,000, I believe. 8 COMMISSIONER WILLIAMS: Right. 9 MR. LOONEY: Then the actual paid claim portion of 10 that is what the plan is actually impacted by. And we're 11 projecting by taking out the co-pay, projecting next year 12 about 110,000 to $115,000 to be used in the HRA program. 13 COMMISSIONER WILLIAMS: Thank you. 14 MR. LOONEY: Claim. I see the eyebrows -- 15 JUDGE TINLEY: Let me see if I've zeroed in. You 16 say 30,000 to 40,000 if we restricted the HRA payment of 17 deductibles only. If we eliminate the HRA on a go-forward 18 basis to employee-only -- now, I realize there's -- and do 19 away with the carry-over, in terms of dollar cost in closing 20 this gap, what figure was that going to provide? 21 MR. LOONEY: As far as the funding processes? 22 JUDGE TINLEY: Mm-hmm. 23 MR. LOONEY: Eliminate the carry-over? 24 JUDGE TINLEY: Eliminate carry-over and -- and -- 25 MR. LOONEY: Make the HRA -- 8-9-10 bwk 24 1 JUDGE TINLEY: Going forward, it's employee only. 2 MR. LOONEY: Employee only. 3 MS. HYDE: For deductible only? 4 JUDGE TINLEY: Mm-hmm. 5 COMMISSIONER OEHLER: Mm-hmm. 6 MR. LOONEY: I'm going to have to -- have you 7 figured that one already? I'm going to have to go back and 8 look. 9 COMMISSIONER OEHLER: Okay. That's the question 10 that needs to be answered. It hasn't been answered yet. 11 MR. LOONEY: If you eliminate the HRA program for 12 dependents, when a dependent has a claim, they will be 13 subject to the full amount of the deductible under the health 14 care plan. 15 COMMISSIONER LETZ: Right. 16 COMMISSIONER OEHLER: So how much dollars does that 17 close the gap? By not providing the $600 per -- per 18 dependent? 19 MR. LOONEY: I have to go back and look at what the 20 actual claim flows were to be able to determine volume of 21 claims on the dependents in relationship to the deductible. 22 That would give you that number. 23 COMMISSIONER OEHLER: We know how much -- how much 24 we're giving them in the HRA card. 25 MR. LOONEY: Right. 8-9-10 bwk 25 1 COMMISSIONER OEHLER: You multiply that times the 2 number of dependents; should give you that number. 3 MR. LOONEY: It'll give us the gross liability. 4 MS. HYDE: Gives you gross liability. 5 COMMISSIONER OEHLER: That's what we're looking 6 for. 7 MR. LOONEY: It doesn't give you cash flow. 8 MS. HYDE: Here's these two, 'cause your E.R., 9 spouse and E.E., family, so your gross is that -- 10 MR. LOONEY: Gross liability for employee and 11 family. 12 MS. HYDE: That's going to be E.E. only. See what 13 I'm saying? That's going to be E.E. only, 100,000. 14 MR. LOONEY: So we're looking at 140 -- $140,000. 15 COMMISSIONER LETZ: Liability. 16 MR. LOONEY: Liability. But at the same time, when 17 you do that, you're also reducing your exposure on your 18 claims by the $600 annually for the dependent claim, so 19 it's -- so you're getting the double -- 20 COMMISSIONER OEHLER: Getting the double deal. 21 Double-dip on this one. 22 MR. LOONEY: Getting the double-dip if you do that. 23 JUDGE TINLEY: So that could amount to 24 significant -- a significant amount of funding -- what would 25 otherwise be required on a funding basis for the HRA if we 8-9-10 bwk 26 1 were to eliminate all but the employees and to eliminate the 2 rollover basis. 3 MR. LOONEY: That's correct. 4 JUDGE TINLEY: And as well as restrict it to 5 deductible only. 6 MR. LOONEY: Deductible only. 7 COMMISSIONER LETZ: Judge, it seems like the 8 rollover benefits are a liability benefit, not a cost savings 9 benefit. 10 MR. LOONEY: Well, you're reducing the -- 11 COMMISSIONER LETZ: I mean, but the -- I mean, most 12 of it's a liability reduction. 13 MR. LOONEY: Right. 14 MS. HYDE: You've lost 200,000 total in three 15 years. That is not a liability any more; that's an expense 16 that we've paid. 17 COMMISSIONER OEHLER: 70,000 a year, about. 18 MS. HYDE: It went up 15 percent from '7 to '8, and 19 then another -- I'm sorry, went up 20 percent from '7 to '8, 20 and 15 percent from last year to this year. So, that's where 21 the shortfall is. 22 MR. LOONEY: The HRA portion of the plan is one of 23 the plan designs that we changed four years ago, I believe, 24 and it's been a benefit that the employees have depended upon 25 a great deal. 8-9-10 bwk 27 1 JUDGE TINLEY: Well, it was primarily put in to -- 2 MR. LOONEY: Offset -- 3 JUDGE TINLEY: -- to take the cost of that 4 increased deductible. 5 MR. LOONEY: Correct. 6 JUDGE TINLEY: From 400 to 1,000. 7 MR. LOONEY: Right. 8 JUDGE TINLEY: Hence the $600. 9 COMMISSIONER LETZ: How much of a savings would it 10 be to reduce the amount of the HRA? Instead of doing 600, do 11 it like 300? 12 MR. LOONEY: Just -- 13 MS. HYDE: You didn't ask me that. 14 MR. LOONEY: It's just a -- 15 COMMISSIONER OEHLER: Just to half the amount. 16 COMMISSIONER LETZ: Right, the liability is half. 17 MR. LOONEY: Just half, yeah. 18 COMMISSIONER LETZ: But it means that you're 19 accomplishing the same thing on having the employee starting 20 to pick up more of their costs. I mean, yet those that are 21 relatively healthy are still getting the benefit of having an 22 HRA. 23 MR. LOONEY: Essentially, the impact is you take 24 the deductible from $1,000 to $700. 25 JUDGE TINLEY: Yeah. 8-9-10 bwk 28 1 MR. LOONEY: Instead of $1,000 to $400. 2 COMMISSIONER LETZ: Right. 3 JUDGE TINLEY: Of course, that's another place 4 that, if you increase the deductible -- 5 MR. LOONEY: That's -- we can always increase the 6 deductible. That's just -- if -- again, if you throw in 7 those changes, if you reduce the HRA, increase the 8 deductible, then the net effect is whatever -- whatever that 9 net number is. The difference -- the difference in what you 10 were talking about earlier, though, is not allowing the 11 carry-over on the HRA. 12 JUDGE TINLEY: Mm-hmm. 13 MR. LOONEY: Because that -- this is one of the 14 benefits for the employees that are not utilizing the plan in 15 a given plan year. They're allowed, then, when they really 16 need the deductible reduction, that they can accumulate that 17 over a period of time as an employee, so that that deductible 18 -- and a lot of employees will -- on many occasions will pay 19 cash for services rather than using the HRA as a -- as your 20 reduction process. 21 COMMISSIONER LETZ: That's why I'm wondering if, 22 you know, that -- cutting off that portion of it, the 23 carry-over aspect, may not really be saving that much if we 24 eliminate that carry-over, 'cause people that use -- it's 25 either use it or lose it. 8-9-10 bwk 29 1 MS. HYDE: The co-pay portion is where you're going 2 to -- 3 COMMISSIONER LETZ: Right, I agree. 4 MS. HYDE: We could see, like, nominal savings from 5 the get-go. As far as the deductibles go, keep in mind that 6 we're raising how much we're going to charge, is what y'all 7 have said pretty much, and now we're going to reduce their 8 ability on a deductible. So, their deductible at 1,000 was 9 600; right now it's 400 out of pocket. If we reduce it, of 10 course, you guys know -- I mean, 700 deductible out of 11 pocket, and if you take off spouses and dependents, that's a 12 chunk. 13 MR. LOONEY: That's a bitter pill. 14 COMMISSIONER OEHLER: Let's talk about -- you're 15 just talking about the HRA, though. 16 MS. HYDE: Just talking about the HRA at this 17 point. 18 COMMISSIONER OEHLER: I still think it's -- you 19 know, it's something to look at. We've got a big increase 20 here, and I don't think the taxpayers ought to bear it. 21 COMMISSIONER LETZ: I mean, I think the HRA should 22 be for employees only. That's a change that I think we 23 should do, because it's a benefit for the employees. That's 24 kind of a -- you know, step one in my mind. 25 COMMISSIONER OEHLER: I agree with that. 8-9-10 bwk 30 1 COMMISSIONER LETZ: And I think you should not be 2 able to use the HRA for your co-pay. That's kind of step 3 two. 4 COMMISSIONER OEHLER: I agree with that. 5 COMMISSIONER LETZ: And then when you get beyond 6 that, I'm not sure what's the best next step. 7 COMMISSIONER WILLIAMS: Why don't we go back, if we 8 can -- Gary, in your discussion earlier, you talked about 9 there being a 5 percent limitation as the rules are evolving 10 with respect to plan changes, et cetera, et cetera, et 11 cetera. Does that apply also -- or likewise to what we've 12 been talking about with regard to an employee's financial 13 commitment to the plan, an employee buy-in to the plan, or 14 can that be established at a number we choose? 15 MR. LOONEY: The way -- the way it reads now is if 16 you retain your grandfather status, if you want to retain and 17 maintain your grandfather status, you're limited to what you 18 can do as far as increasing the employee contribution, 19 increasing whether it be on the employee or dependent, the 20 changes that you can make in your coinsurance co-payments or 21 other items under your plan, plus you cannot change carriers, 22 and you cannot make other -- other changes in the plan. By 23 not being grandfathered, you can make whatever changes you 24 wish. 25 COMMISSIONER WILLIAMS: Okay. 8-9-10 bwk 31 1 COMMISSIONER OEHLER: I called -- I got the answer 2 to that from Lamar Smith's office. One of his folks gave me 3 -- we can do pretty well whatever we want to. 4 COMMISSIONER WILLIAMS: If we give up the 5 grandfather status. 6 COMMISSIONER OEHLER: Exactly. 7 COMMISSIONER WILLIAMS: Probably doesn't make much 8 difference anyway. 9 JUDGE TINLEY: No, not the way it's structured. We 10 don't gain anything by retaining grandfather status. In 11 fact, we give up a bunch. 12 COMMISSIONER WILLIAMS: Okay. Thank you for the 13 clarification. 14 COMMISSIONER OEHLER: What kind of an impact is 15 it -- I can't -- I've got all the stuff, but it's easier for 16 you to tell me. What's the impact if we -- if we charge 17 employees $60 a month, and then go up on the amount for the 18 spouse by another $60 a month, and then start going with 19 dependents at 250 a pop? 20 MR. LOONEY: We've got a series of options that 21 we've calculated. 22 MS. HYDE: Here's the options that y'all requested. 23 The second page is all the -- the last five options that 24 we've given, and the front page were the ones that we gave 25 last time. 8-9-10 bwk 32 1 (Discussion off the record.) 2 JUDGE TINLEY: Before we plow through that one, 3 what about retirees, eliminating any future additions to the 4 retirees? 5 MR. LOONEY: As far as a projection of liability, 6 you know, we just fix what our cost is now for our retirees. 7 And I can't remember what the projection -- what I put in, 8 but I just included them in the standard kind of claims 9 projection, Judge. I didn't separate anything out, but that 10 -- that's -- that is something we can do. We can eliminate 11 all future retiree benefits. Qualified retirees now qualify 12 under the -- under the state regulation for qualifying as 13 retirees, so you do have some people that are retiring under 14 age 65 that are paying full -- so we just have to make that 15 definition as to what qualifies as retiree, what doesn't, and 16 -- because you may have a situation where you have people 17 retiring under the age of 65 who don't have access to 18 insurance, other than possibly the state pool, or not 19 eligible for Medicare type. 20 JUDGE TINLEY: Right now, we've got a discounted 21 rate as to the employee, and full rate as to spouse. 22 MS. HYDE: Dependents. And full rate to spouse. 23 COMMISSIONER OEHLER: Right now we don't have a 24 tremendous number of retirees, but that number will be going 25 up. 8-9-10 bwk 33 1 JUDGE TINLEY: Well, yeah. And -- but I think you 2 also have the issue of -- that everyone seems to be concerned 3 about, and that's the GASB reporting as to your continued 4 liability for the unfunded portion. 5 MS. HARGIS: That's between 60 and 65 that we're 6 bridging. 7 MS. HYDE: That's what we're bridging. 8 JUDGE TINLEY: Yeah. Yeah. 9 MS. HYDE: Between the age of 60 and 65. 10 JUDGE TINLEY: That's the gap. Or anywhere below 11 65. Conceivably, you could be eligible below 60, far as that 12 goes. 13 MS. HYDE: Our plan is that they -- no one can get 14 health care benefits under the age of 60 unless they have a 15 medical -- 16 JUDGE TINLEY: Okay. 17 MS. HYDE: -- S.S.I. -- I mean, if there's a 18 medical disability. 19 JUDGE TINLEY: Disability? 20 MS. HYDE: And so far, we have none. 21 JUDGE TINLEY: Okay. 22 MS. HYDE: So it's just for the 60 to 65. 23 JUDGE TINLEY: What I'm suggesting is maybe killing 24 two birds with one stone, and that is, at a minimum, 25 increasing the -- the payment requirements for retirees to 8-9-10 bwk 34 1 be, in essence, full premium, in retaining the ability to 2 give them coverage, as well as full cost for any dependents. 3 MR. LOONEY: They're already there. 4 JUDGE TINLEY: Or, in the alternative, eliminate 5 future retirees. 6 MR. LOONEY: Well, you can also do both if you 7 wanted to. 8 JUDGE TINLEY: Well, yeah. 9 MR. LOONEY: So, a great many organizations do not 10 offer retiree benefits. In the corporate world, they're 11 pretty much headed that direction because of the GASB rules. 12 JUDGE TINLEY: Mm-hmm, yeah. I think that's what 13 recently started driving the train so hard. 14 MR. LOONEY: I believe so. 15 JUDGE TINLEY: Has the tendency there been to just 16 eliminate the coverage availability, or has it been to put 17 the cost at a point where it's essentially -- 18 MR. LOONEY: Essentially eliminating the coverage, 19 Judge. 20 JUDGE TINLEY: Okay. That way you don't get into 21 the contingent liability, do you? 22 MR. LOONEY: Right, no contingent liabilities, and, 23 you know, it's a much easier administrative process. 24 COMMISSIONER WILLIAMS: Eva, if you know, or Gary, 25 how many employees are on the threshold of -- in the age 8-9-10 bwk 35 1 group looking forward to retirement that it would affect? 2 MS. HYDE: You're asking how many mature 3 adolescents that we have? 4 JUDGE TINLEY: Presumably mature. 5 MS. HYDE: Between the age of 50 and 59 and a half, 6 we have 30 people. 7 MR. LOONEY: That's what I was going to say, 29 or 8 30. 9 MS. HYDE: That could -- that could retire. 10 However, comma, they can't get health care because they're 11 not 60. And I'll stress that again. 12 COMMISSIONER WILLIAMS: Well, pick it up from 60. 13 Tell me what the number is. 14 COMMISSIONER BALDWIN: Yeah, move into the geezer 15 category. 16 MS. HYDE: Into excessively mature adolescent? 17 MS. UECKER: Hey, hey, hey. (Laughter.) 18 COMMISSIONER WILLIAMS: Linda, they're talking 19 about you and me. 20 MS. UECKER: I know. 21 MS. HYDE: When we look at those, you've got seven 22 to nine. 23 COMMISSIONER WILLIAMS: 79? 24 MS. HYDE: Seven to nine. 25 COMMISSIONER WILLIAMS: Seven to nine. 8-9-10 bwk 36 1 JUDGE TINLEY: She didn't you ask your age, Bill. 2 She said seven to nine. 3 COMMISSIONER WILLIAMS: Got you. 4 COMMISSIONER BALDWIN: Can you hear us all right? 5 COMMISSIONER WILLIAMS: No, I can always hear you. 6 Some others I can't, but you, yes. 7 MS. UECKER: Sounds like, "Gee, Linda, thank you 8 for your service of 42 years. We're cutting off your health 9 insurance." 10 COMMISSIONER BALDWIN: Yeah. 11 COMMISSIONER WILLIAMS: Drop by and see us someday. 12 MS. UECKER: Yeah. 13 JUDGE TINLEY: Well, but you're going to have that 14 federal coverage available to you. 15 MS. UECKER: Oh, yeah, right. 16 COMMISSIONER WILLIAMS: Oh, yeah. 17 COMMISSIONER BALDWIN: The free insurance? 18 COMMISSIONER WILLIAMS: Yeah. 19 JUDGE TINLEY: Coming right down the pike. 20 COMMISSIONER WILLIAMS: Obama care. 21 MR. LOONEY: Are there -- Commissioner, are there 22 other scenarios that you want to be priced out? 23 (Low-voice discussion off the record.) 24 COMMISSIONER BALDWIN: Gary, try your question 25 again now. 8-9-10 bwk 37 1 MR. LOONEY: Okay. 2 COMMISSIONER OEHLER: Yeah, now that you have our 3 undivided attention. 4 MR. LOONEY: I'm not sure who's behind me. I 5 haven't turned around yet. So -- but if there's a number -- 6 a budget number that you all have decided, and you want to 7 see what plan design will fit that number, then we can work 8 that direction. Otherwise, all the numbers we're giving to 9 you are, "Okay, here's the range." And we're kind of -- kind 10 of a roller coaster. So, my -- and the number that I've 11 given to you as far as funding requirements is a little over 12 $900 per employee. Is this my budget number? 13 COMMISSIONER OEHLER: This is the plan that's been 14 formulated over the last week, but just came to print in the 15 last 30 seconds. 16 COMMISSIONER LETZ: It's a recommendation that I 17 just -- I just put down based on what we've talked about; HRA 18 for employees only, HRA not eligible for co-payment, monthly 19 contributions from our employees of $60, family 600, spouse 20 300, children 300, and reduce HRA contribution to 400. That 21 seems like that ought to get us pretty far down the line if 22 we did those things. 23 MR. LOONEY: Okay. 24 JUDGE TINLEY: We need some scrip changes there 25 too. 8-9-10 bwk 38 1 COMMISSIONER BALDWIN: Yeah. 2 COMMISSIONER OEHLER: Yeah. 3 COMMISSIONER LETZ: Yeah. 4 COMMISSIONER OEHLER: Everything that doesn't have 5 a therapeutic equivalent or generic? 6 COMMISSIONER LETZ: This ought to be easier if we 7 can work off it. 8 COMMISSIONER OEHLER: Unless it's the only drug 9 that can be taken. 10 JUDGE TINLEY: Medical necessity. 11 COMMISSIONER OEHLER: Must prove medical necessity. 12 JUDGE TINLEY: Yeah. Well, that's what they're 13 doing now, anyway. 14 COMMISSIONER OEHLER: Well, yeah. 15 JUDGE TINLEY: But I still think we need to 16 increase the co-pay, either by a percentage or by -- by a 17 dollar amount. You know, the last time we increased the 18 co-pay, they came out with this voucher coupon deal, and -- 19 COMMISSIONER OEHLER: You want to go to $100? 20 JUDGE TINLEY: Yeah. Well, I -- 21 COMMISSIONER OEHLER: That gives them 50, costs 22 them 50. 23 JUDGE TINLEY: I'd say on -- on those, you're 24 talking about a percentage of -- of, say -- 25 COMMISSIONER OEHLER: Sounds like -- 8-9-10 bwk 39 1 JUDGE TINLEY: -- 40 percent, not to exceed $100. 2 And then on the specialties, talking about 20 percent, not to 3 exceed 250, something along that line. 4 MR. LOONEY: Okay. 5 COMMISSIONER OEHLER: Sounds reasonable. 6 MR. LOONEY: We can get those numbers for you. 7 MS. HYDE: On the 40 percent, you said not to 8 exceed 100? 9 JUDGE TINLEY: Yeah. Or 50 percent; I don't know. 10 MR. LOONEY: On the HRA for employees only, 11 Commissioner Letz -- 12 COMMISSIONER WILLIAMS: Yes. 13 MR. LOONEY: Commissioner Letz, on the HRA, are you 14 talking about moving forward, grandfathering everybody as to 15 where they are today? 16 COMMISSIONER LETZ: Yeah. I think you keep the 17 amount that you have, and we've just had three years running, 18 right? Isn't it a three-year thing? So it's going to 19 start -- 20 MR. LOONEY: Right. 21 COMMISSIONER LETZ: -- going down into the future. 22 It's maxed out at 1,200 instead of 1,600. 23 MR. LOONEY: Right, and that's for employee only. 24 JUDGE TINLEY: What about the carry-over? 25 COMMISSIONER LETZ: There is a carry -- still have 8-9-10 bwk 40 1 the carry-over, but just -- our HRA amounts just -- 2 COMMISSIONER OEHLER: That's just for employees, so 3 you don't have to worry about the rest of it any more. 4 JUDGE TINLEY: And we're reducing our contribution, 5 so that's going to eliminate what you can carry over. 6 COMMISSIONER LETZ: Right. 7 JUDGE TINLEY: Okay. 8 MS. HARGIS: Reduce the contribution? 9 COMMISSIONER LETZ: 400. HRA amount is 400. 10 COMMISSIONER BALDWIN: Our good friend Dave 11 Nicholson is here. The game of, "Give them a $100 raise and 12 charge them $100 premium on their insurance," I don't think 13 it's that simple any more, is it, Dave? 14 MR. NICHOLSON: It's sure not when you consider the 15 tax implications. 16 MR. LOONEY: I thought I saw you back there. 17 MS. HYDE: Judge, you said on the 40 percent, 18 that's for everything except for specialty; is that correct? 19 COMMISSIONER OEHLER: 40 percent was a -- 20 MS. HYDE: Not to exceed $100 per scrip on all 21 except specialty, and specialty is 20 percent, not to exceed 22 250? 23 JUDGE TINLEY: Mm-hmm. Mm-hmm. 24 COMMISSIONER LETZ: Is that a -- 25 JUDGE TINLEY: Actually, I may want to say 50 8-9-10 bwk 41 1 percent, not to exceed 100. Let's look at some of those. 2 MR. LOONEY: With all due respect, Commissioner, I 3 guess my biggest concern is -- 4 JUDGE TINLEY: Yeah, 50. 5 MR. LOONEY: -- the impact on the plan design 6 itself for dependents, because they would be subject to a 7 $1,000 deductible at that point. So, we'll calculate this 8 number in there also. 9 COMMISSIONER LETZ: I mean, it's -- I just -- I 10 look at it as looking at employees first, but I also think 11 you need to spread it everywhere a little bit. I mean, I 12 just don't want it dependents only. That's why I kind of -- 13 MR. LOONEY: And also, a $1,000 deductible is not 14 out of range for a lot of plans that we see today. So -- 15 COMMISSIONER LETZ: Higher than that for a lot of 16 plans. 17 MR. LOONEY: A lot of plans. 18 COMMISSIONER LETZ: Over 2,500 and 5,000. 19 COMMISSIONER OEHLER: I'm subject to some of those. 20 COMMISSIONER LETZ: So am I. 21 COMMISSIONER OEHLER: And they don't cover much. 22 COMMISSIONER LETZ: So, I mean, it's -- 23 MS. UECKER: How much of those dependents -- of 24 those employees that have dependents are divorcées? 25 COMMISSIONER OEHLER: We don't know about 8-9-10 bwk 42 1 divorcées, but we have a number here. 2 MR. LOONEY: Single parents. 3 COMMISSIONER LETZ: Single parents. 4 MS. UECKER: Well, and the reason I'm saying that 5 is, is you have to consider in a divorce decree, most of the 6 time the spouse who's paying the child support is also 7 required to pay the medical insurance. So, I mean, that's 8 something I haven't heard mentioned, but that would help 9 them. 10 JUDGE TINLEY: There was brief mention of it. I 11 think I mentioned I didn't want to subsidize -- I didn't want 12 to continue subsidizing support-paying parents to give them 13 the benefit of the employment of their ex-spouse by Kerr 14 County. 15 MS. UECKER: Right. Well, okay. 16 JUDGE TINLEY: As, you know, there's several ways 17 they can satisfy that obligation. They can provide the 18 coverage direct. They can reimburse the ex-spouse for the 19 cost through an employer's plan that the ex-spouse has. And, 20 of course, for example, if a child is 129 bucks, that's the 21 next thing to a good free ride. 22 MS. UECKER: Mm-hmm, yeah. That's exactly what 23 I'm -- 24 MR. LOONEY: We have about 40 employees that have 25 children on that coverage under the plan. 8-9-10 bwk 43 1 MS. UECKER: Total? 2 SHERIFF HIERHOLZER: That have children. 3 MS. UECKER: Forty total? That's all? 4 SHERIFF HIERHOLZER: That have children only. 5 MS. UECKER: Only. 6 MS. HYDE: That's not children only. 7 JUDGE TINLEY: That could also mean -- 8 MS. HYDE: We got 14. 9 JUDGE TINLEY: -- the other spouse is employed by 10 someone who has -- 11 MR. LOONEY: Could be. 12 JUDGE TINLEY: -- coverage for the spouse -- for 13 the employee at no cost. So -- 14 JUDGE RAGSDALE: What I'm hearing is, like, for me, 15 my spouse, and one dependent, it's about $500 a month now. 16 COMMISSIONER LETZ: No. 17 JUDGE TINLEY: 600. 18 COMMISSIONER LETZ: 600. 19 JUDGE RAGSDALE: Oh, that's better. (Laughter.) 20 MS. HARGIS: 660. 21 JUDGE RAGSDALE: You know, to a lot of people, 22 that's like -- what I'm hearing, "Well, that's chicken feed. 23 That's chicken feed." Oh, this gentleman says, "Man, that's 24 not much." Well, $600 a month to me is a lot. 25 COMMISSIONER OEHLER: Try 900 a month sometime. 8-9-10 bwk 44 1 JUDGE RAGSDALE: Well, I'm just telling you -- 2 COMMISSIONER OEHLER: Try $5,000 deductible to go 3 with it. 4 JUDGE RAGSDALE: I'm understanding, but also I just 5 don't see a lot of humor in the fact that this is going out 6 through the roof. I appreciate what y'all are trying to do, 7 but I just -- maybe that's a nervous laugh I'm hearing, but 8 it isn't very funny. 9 COMMISSIONER LETZ: It's not a laugh. It's a 10 matter of us trying to make some tough decisions. We have a 11 $750,000 gap we've got to come up with -- well, 800,000. 12 COMMISSIONER OEHLER: Yeah. 13 COMMISSIONER LETZ: And it's going to be -- you 14 know, it's going to be tough. This isn't going to get us 15 there. I mean -- 16 MR. LOONEY: It will get somewhere. It will get us 17 down. 18 JUDGE TINLEY: Well, the unfortunate thing is, as 19 this federal thing develops, I think it's going to -- things 20 were bad before they got worse. And I think now it's bad, 21 and down the road it's going to get worse. Could be much 22 worse. 23 MR. LOONEY: Man, y'all are not alone. 24 COMMISSIONER OEHLER: This is nationwide, right? 25 MR. LOONEY: We're seeing this everywhere. We're 8-9-10 bwk 45 1 seeing this kind of trend everywhere. 2 COMMISSIONER OEHLER: Well, here's the thing. It's 3 real simple. When you get right down to it, we've had a bad 4 year on claims, number one. Number two, whenever they remove 5 the cap from any -- any claims that could be paid on any -- 6 any people that you have insured, what's it do to your stop 7 loss? It goes through the ceiling. And that's -- the 8 federal government did that to us. This Kerr County group 9 didn't do it. You didn't do it. The employees sure didn't 10 do it. The federal government did it, and we're being 11 subjected to this, and so is everybody. Everybody's going to 12 have to pay for this, whether we like it or not. And unless 13 we can change and get this thing thrown out and make it 14 somewhat more reasonable -- I mean, it's just not right for 15 that kind of a law to be passed. And they can call it 16 whatever they want to; it's just an additional cost which 17 could be considered a tax on everybody. 18 JUDGE TINLEY: Got any more questions for 19 Mr. Looney at this point? 20 MR. LOONEY: Thank you, Judge. 21 JUDGE TINLEY: Any jewels you can dream up to drop 22 in our lap before you escape? 23 MR. LOONEY: Just please don't shoot the messenger. 24 COMMISSIONER LETZ: Do you have any ideas, by 25 looking at the -- based on the numbers y'all have run, about 8-9-10 bwk 46 1 how much this will save? Do you want to venture a guess on 2 what we talked about? 3 MR. LOONEY: I meed to -- I need to look at the 4 claims, because it's a -- 5 COMMISSIONER OEHLER: Still have to be -- 6 MR. LOONEY: -- there's too many pieces that impact 7 the other pieces. 8 COMMISSIONER LETZ: Other pieces? 9 MR. LOONEY: So... 10 COMMISSIONER BALDWIN: When will we know? 11 MR. LOONEY: I'll know by the end of the week. In 12 fact, if I can get back to the office, I'll hopefully know by 13 Wednesday or Thursday. 14 JUDGE TINLEY: As always, Gary, we appreciate 15 your -- your expertise, and if there's some more thoughts 16 that come to mind, you might pass those along to Ms. Hyde. 17 MR. LOONEY: Are we meeting again next Monday? 18 COMMISSIONER BALDWIN: Not next Monday. 19 JUDGE TINLEY: I don't think that's been 20 established yet. But it's not 72 hours-plus away from the 21 next meeting, either. So, we'll do what we got to do. 22 MR. LOONEY: I'll shout. 23 JUDGE TINLEY: See if you can get those numbers. 24 If you'll feed them to her, and then we can study them and 25 see where we want to go, yeah. 8-9-10 bwk 47 1 MR. LOONEY: Thank you very much. 2 JUDGE TINLEY: Thank you. 3 COMMISSIONER WILLIAMS: Thank you, Gary. 4 COMMISSIONER BALDWIN: Thank you, sir. 5 COMMISSIONER OEHLER: Thank you. 6 JUDGE TINLEY: At this point, I'm -- well, hang on 7 just a minute. Gentlemen, do we have anything else on the -- 8 on the budget workshop that you need to -- 9 COMMISSIONER OEHLER: Well, there's several things, 10 I believe. 11 COMMISSIONER BALDWIN: Yes, sir, I've got some 12 comments. 13 JUDGE TINLEY: Okay. Well, we still have an 14 executive session item on our Commissioners Court agenda that 15 we've got to get back to. 16 COMMISSIONER WILLIAMS: Mm-hmm. 17 JUDGE TINLEY: And it'd probably be more efficient 18 to go ahead and go with the budget workshop before we throw 19 everybody out; wouldn't you agree? 20 COMMISSIONER BALDWIN: Yes, sir. 21 JUDGE TINLEY: Okay. All right, so we'll continue 22 with the budget workshop. 23 COMMISSIONER BALDWIN: Do you want me to go? 24 JUDGE TINLEY: Go for it. 25 COMMISSIONER BALDWIN: All right. Listening and 8-9-10 bwk 48 1 looking, and I hear -- I hear that there are no options other 2 than what was presented in court. In the presentation, the 3 insurance has gone out of the roof, and there's not a lot we 4 can do about it. It was presented that we should raise taxes 5 to -- right to the point of rollback level so that the public 6 can't roll us back, and then it was presented -- Plan 3 is 7 very, very large salary increases on top of that, and that 8 there's -- that there's not -- there may not be any options 9 to that. And also I heard the words, "our reserves have been 10 depleted," quote, unquote. Well, those -- those things -- 11 those are alarming things I hear. And, number one, I don't 12 go along with the no options, but the reserves being depleted 13 is alarming to me. 14 And so I have given it some thought, and if I were 15 king for a day, what I would do is I would take all the 16 things that we fund, the Kerr County budget, and I would make 17 one list of those things that are constitutional or by law 18 we're required to fund, and I would make another list of 19 those things that I consider luxury items, which is basically 20 everything else. And those things that are Constitutionally 21 or by law we're required to fund; I mean, we're required to 22 do it. We just do it and go on. I guess we could get into 23 arguments over what color of pencils an office needs, or, you 24 know, if they ordered -- if they request 10 pencils, we may 25 cut them down to nine, something like that. But basically, 8-9-10 bwk 49 1 we fund those things that the law says that we shall fund. 2 But those other things, I think that we -- we need to take -- 3 we need to go back and visit with them a little bit. 4 What are those things? I mean, how much -- how 5 important are they? Do they rise to the level that we really 6 need to raise taxes to the point of rollback? And I'm going 7 to give you some examples here of my recommendations. An 8 example of what I would do, and as a luxury item, take the 9 Human Resources office as an example. I would take one 10 full-time person out of that office, and I would move that 11 person, along with insurance and payroll, over to the 12 Treasurer's office, and delete the rest of it. The Auditor's 13 office, I'd keep one full-time employee in there with the 14 Auditor. D.P.S. secretary, delete it. That's $32,000 right 15 there. Trapper contract, Soil Conservation, Big Brothers/Big 16 Sisters, Dietert Claim, public transportation, K'Star, CASA, 17 Families and Literacy, economic development, that's $90,000 18 just in those few items right there by themselves. I would 19 call the City of Kerrville and tell them I'm no longer going 20 to fund their library. There's $300,000 right there. 21 That's just a few items that I didn't -- I didn't 22 have time to go through all of it, but you could take that -- 23 it's still a long ways; I understand that, but -- but it's 24 more than a drop in the bucket. And, of course, it takes 25 drops in a bucket to fill up a bucket. But I think that 8-9-10 bwk 50 1 there's an option here. I think it's real. And I think it's 2 come to the time, when we talk about raising taxes to the 3 point of rollback, and then turn around and ask for a huge 4 salary increase for ourselves, that does not compute. It 5 angers me, and I think that it's totally and completely 6 wrong. And so the only other option is to make cuts. It is 7 -- you turn on the television, and at any point, it is 8 foolish to raise taxes in times like that we're going through 9 today. That's all. 10 JUDGE TINLEY: You had some things, Commissioner? 11 COMMISSIONER OEHLER: Sure. Mine are similar, but 12 they're different. I think mine are maybe a little more 13 simple. Seems to me like whenever all the employees -- all 14 the elected officials and department heads submitted their 15 budgets, and we totaled all that up, it was just a few 16 thousand more than last year, before we ever started talking 17 about this five and three-quarter cent tax increase which 18 took -- would take us almost to rollback. We didn't talk 19 about, nor did any of the employees -- any of the department 20 heads or elected officials talk about raises for their 21 employees. They didn't ask for any of that. They cut their 22 budgets. They have significantly the last two years. One 23 time was to get some big pay raises for their employees. 24 They have done their part, and they have not asked, but yet 25 it was asked that they get 5 percent by the Auditor, and as 8-9-10 bwk 51 1 well as raising taxes, when everybody else is living within 2 their means. Makes no sense to me why we shouldn't do the 3 same thing. 4 We do have increased revenues coming in. It's not 5 a lot, but we got an estimated 350,000, which isn't a lot of 6 money, not what we're used to, which runs, and has been 7 running for a long time, 750 to a million dollar increase in 8 tax valuation, in net dollars every year for a long, long 9 time. This is the lowest it's been in increase. But you 10 couple that with what was said the other day about there 11 being a $760,000 net revenue -- or net proceeds from budget 12 savings by the end of the year. That money is already built 13 into the budget tax rate that we raised the money on last 14 year, and we're not going to spend it all. Well, if we need 15 to build our reserves back, which I have a big question about 16 the reserves, because that's the only -- we'll get into that 17 in a minute. 18 But coupled with the $350,000 net increase in our 19 taxes coming in year 2010 and '11, and also a 700 -- if there 20 is really 760, or if there's 600, whatever that is, if it's 21 not been spent, needs to go into reserves. But that money's 22 still built in next year's budget at the present tax rate. 23 It's there. It wasn't like it was spent out of reserves. 24 That money was not spent out of last year's budget; 25 therefore, it can roll in. You know, like she says, if our 8-9-10 bwk 52 1 reserves have been depleted, which I'm going to have a big 2 question about that one, then we've got 750 plus 350. That's 3 a million bucks. And I believe we ought to be able to live 4 within that million bucks with no raises to anybody. The 5 only people getting increases are those that have longevity, 6 and they're due the money from longevity. Nobody else gets 7 anything, none of us. We live with what we got, and we live 8 like the people that are paying us to be public servants, 9 within our revenues. 10 COMMISSIONER WILLIAMS: If, as you say, the 760 11 unspent in the current budget year is available, it should be 12 rolled into reserves, and I agree with you there. It should. 13 And you're also saying that that amount of tax committed to 14 -- to effectively make 760 is likewise in the rate. My 15 question, then, would be in the current budget as proposed, 16 how much of the 760 has it eaten up? It probably has taken 17 all of it thus far. 18 COMMISSIONER OEHLER: Well, my answer to that is 19 that that's mostly been -- been eaten up by what's projected 20 to be the increased cost in our insurance. But if you -- if 21 we decreased that amount, then that money becomes more 22 available to do some other things with that we all know needs 23 to be done, without giving employee raises and without 24 raising taxes. We can do it. 25 COMMISSIONER WILLIAMS: The only other comment I 8-9-10 bwk 53 1 have at this point, and I'd like somebody to help us out on 2 this one question, and a little bit of enlightenment. I do 3 not disagree that we have to separate these proposed salary 4 increases from the rest of the problem that we have. They 5 have to be set aside. If there are some that require some 6 adjustment, for a variety of reasons, and that could be, then 7 we address them one-on-one, one to one to one to one. But 8 I'm not willing to fund that list the way it came across. 9 COMMISSIONER OEHLER: No. 10 COMMISSIONER LETZ: I agree with all that. The 11 only thing I would -- well, much of it. The thing I disagree 12 with is, I think if you -- and it's cost-of-living. And 13 Bruce calls it raise, which it is. I call it cost-of-living 14 adjustment. But if you don't continue to give a 15 cost-of-living adjustment, you start losing, and -- you know, 16 down the road. I know other entities do it, and that may be 17 what we have to do, but boy, that is an absolute last resort 18 from my standpoint. Because if you try and get caught up, 19 you're just -- all you're doing is pushing a tax increase off 20 into the future, 'cause at some point -- I mean, you can't 21 start -- it's a deflationary period for your employees, and 22 that's what that does. You start -- they're losing their, 23 you know, purchasing power. So, I mean, a cost-of-living 24 adjustment to me is not a raise; that's just keeping you 25 where you are. I think that we need to really look hard at 8-9-10 bwk 54 1 what that is. From my standpoint, it's about 2 to 2 and a 2 half percent. Now, I'm not sure what that total number for 3 the county is. 4 COMMISSIONER OEHLER: I'm just wondering how you 5 get cost-of-living increases given to those who have lost 6 their jobs and the ones that are having a hard time paying 7 off their homes, they've lost their jobs, and ones that would 8 love to have a job like we have here. How do they feel about 9 giving someone -- you know, public servants an increase at 10 this particular time? 11 COMMISSIONER LETZ: Yeah. And I -- I can argue 12 that way too, but to me, it's -- if you don't give a 13 cost-of-living adjustment every year, you're just causing 14 problems the next year. It's just -- I mean, you can't get 15 caught up. 16 COMMISSIONER WILLIAMS: My comments didn't go to 17 COLA. I think that's a discussion we really have to have 18 separately. 19 COMMISSIONER LETZ: But, I mean, I would like -- I 20 mean the other raises -- and I agree with what Bill said. I 21 think there are one, possibly two salaries that need to be 22 adjusted. Maintenance is one, 'cause there's some reasons 23 there. One, the salary that was brought on originally was 24 lower, because -- and we reduced it greatly from what -- and 25 his responsibilities have increased quite a bit the past few 8-9-10 bwk 55 1 years. We're increasing again this year, so I think that's 2 one. Overall, the -- all the increases, I don't -- I can't 3 go along with them. Maybe somebody else might. I think for 4 right now -- and I don't -- and your list, I think that's not 5 a bad idea, and I don't know that I'd cut them all 6 completely, but, you know, maybe do a 20 percent reduction. 7 COMMISSIONER BALDWIN: The -- I agree. I couldn't 8 agree with you more about the cost-of-living issue. That's 9 just -- you eventually get caught down the road with a large 10 amount of money. Or -- you know, and I understand that some 11 of our employees are already looking into the food stamp 12 issue again, and that's -- god, that's embarrassing for us to 13 allow that kind of thing to happen. But the cost-of-living 14 things and that kind of stuff, it has to be done -- something 15 has to be done. I mean, you can only raise the damn taxes so 16 much, you know? I mean, there is just so much you can ask 17 taxpayers to do. And the issue is, the over-65 folks, it's 18 frozen, and the young ones are a bunch of hippies that still 19 haven't figured out whether they're going to go to college or 20 not. But it's that middle class. Wham. 21 COMMISSIONER LETZ: They have to pay it all. 22 COMMISSIONER BALDWIN: I cannot do that to those 23 people. They're the ones that make everything work, and you 24 can't just keep hammering them like that. So -- so I think 25 the tax increase issue, to me, is out the window, and so it's 8-9-10 bwk 56 1 got to be done in another place. And reduction, I think my 2 colleague from western Kerr County's been preaching that for 3 a number of years, and we're there. 4 JUDGE TINLEY: Well, the over-65 tax freeze, of 5 course, has -- the cumulative effect of that has been one of 6 the major forces that have slowly brought about where we are 7 today. And that had been softened in prior years by the 8 increase in taxable value overall. 9 COMMISSIONER BALDWIN: Yeah. 10 JUDGE TINLEY: But now the taxable values are 11 softening up. You feel the effects of that more, and in 12 addition to that, as we have continued over the years to 13 shift the tax base more and more on the ad valorem taxes, 14 property taxes, the lack of economic development is coming 15 home to roost, and suddenly everyone wants to be interested 16 in economic development now. Well, that's not something that 17 takes place over a period of a year or 18 months, or even two 18 or three years in some instances. And now that everyone's 19 attention has been gathered, suddenly everybody wants to say, 20 "Well, gee, we need some economic development." And they're 21 right; we do. Our tax base, the last number I saw was 22 approximately 77 percent residentially based, which is way 23 out of whack. The gurus will tell you that a normal mix is 24 60 to 65 percent businesses as to commercial. How long is it 25 going to take to reverse that and get back to that? A long, 8-9-10 bwk 57 1 long time. So, I guess my message to you gentlemen is that 2 if this economy doesn't do something almost magical within 3 the next year or so, you ain't seen nothing yet. 4 COMMISSIONER WILLIAMS: Right. 5 JUDGE TINLEY: 'Cause the property values, instead 6 of only slightly increasing or remaining static, are going to 7 decline. We're not getting the turnover in the over-65 8 properties that were going to slowly bump up the over-65 9 values. Those properties aren't selling. None of them are 10 selling to that extent. So, if you think it's bad now, hang 11 on. The ride's fixing to get rough. 12 COMMISSIONER OEHLER: I can tell you, in 1991 it 13 was level. In '92 it was level; there was no increase in 14 valuation. And the two things you can do is raise taxes or 15 cut services, cut staff, or don't increase anything. I mean, 16 whether you like it or you don't, it doesn't get to the point 17 of what you want to do. It's what you have to do. 18 COMMISSIONER BALDWIN: Yeah. 19 COMMISSIONER OEHLER: What you should do to be -- 20 to do the right thing for, you know, everybody concerned. 21 And, yes, the employees get hurt. Everybody that -- 22 everybody gets hurt to some extent. 23 COMMISSIONER BALDWIN: I'll give you an example of 24 that, is that the Tax Assessor/Collector's office, it seems 25 like there's a lot of people in there. And I don't know if 8-9-10 bwk 58 1 there -- if there's a more professional, good group of 2 employees anywhere in the courthouse. They're just -- 3 they're wonderful. They care about the taxpayers. They care 4 about the county. They care about us. I mean, they're neat, 5 they're efficient, they're smart, the whole thing. They're 6 great. And you never see a line going out of that -- very 7 rarely do you see a line when it's tax time or license plate 8 time or that; you very rarely see a line of people waiting, 9 because they're so efficient. I'm going to tell you what, I 10 don't mind if there's people waiting in line or not. I don't 11 care any more. If we -- you know, if we had to reduce staff 12 in there, and the -- and the crowd goes out the line out on 13 the lawn, I don't care. They can wait. That's just the way 14 things are. That's what I'm saying. 15 COMMISSIONER OEHLER: You know, I don't -- I mean, 16 there's nothing worse than reducing staff and people losing 17 their job. There's nothing worse, and I would hate to do 18 that to anybody. I think it's better to try to hold -- hold 19 what we have and -- and live within our means, and keep 20 everybody employed that we possibly can. If it comes to 21 cuts, we'll make some, but I wouldn't want to. But, you 22 know, a lot of employers didn't want to let employees go 23 either. There's a whole bunch of them that don't have jobs 24 in Kerr County right now that are looking. There's several 25 big contractors that have turned loose a large portion of 8-9-10 bwk 59 1 their employees. 2 COMMISSIONER WILLIAMS: About 6 and a half percent 3 of them. 4 COMMISSIONER OEHLER: So, you know, to me, it just 5 seems unfair and unjust to do something here as public 6 servants that the private sector can't do for themselves. 7 COMMISSIONER LETZ: One of the things you may want 8 to look at also is put a hiring freeze on -- not a reduction 9 in staff, but no replacement of employees if they leave for 10 whatever reason. 11 COMMISSIONER OEHLER: Yeah. I think we're there. 12 COMMISSIONER WILLIAMS: Go back to the point you 13 made earlier. Working from the handout that was given to us 14 by the Auditor's office, if the current budget was underspent 15 by 760, I guess the question is, is the proposed budget 16 starting from a minus 760 in each of those categories 17 totally? 18 JUDGE TINLEY: Well, we've always depended upon 19 what we call our fund balances carrying over. 20 COMMISSIONER WILLIAMS: Right. 21 JUDGE TINLEY: As being part of our funding source 22 as we go forward. Now, granted, depending on what's 23 estimated in the way of revenues and expenditures, that's 24 going to cause the reserve percentage to go up or down. But 25 if we -- if we take the fund balances to cover increased 8-9-10 bwk 60 1 costs, it's six of one, half a dozen of the other. We got to 2 make up what we don't have in beginning fund balances. 3 COMMISSIONER WILLIAMS: Well -- 4 JUDGE TINLEY: From the County's standpoint. 5 COMMISSIONER OEHLER: That's not the way I 6 understand it. 7 COMMISSIONER WILLIAMS: Let me see if I understand. 8 The reality is, you can't have that 760 two ways. 9 JUDGE TINLEY: That's right. 10 COMMISSIONER WILLIAMS: If you commit it to 11 reserves 'cause you underspent your budget, it went to 12 reserves, and starting from that 760 is not a factor when you 13 start budgeting for the next year. If you commit it to 14 rolling over into the next budget year, then obviously it's 15 not going to go into -- 16 COMMISSIONER OEHLER: That's deficit spending. 17 JUDGE TINLEY: We essentially do that, because 18 everything goes back to baseline at the beginning of the new 19 budget year, but those fund balances are utilized in 20 determining what we have available to spend, because -- 21 COMMISSIONER WILLIAMS: Right. 22 JUDGE TINLEY: -- that's money we have. 23 COMMISSIONER WILLIAMS: Right. 24 JUDGE TINLEY: And if you allocate it for a 25 specific purpose, why, then you take that out of the 8-9-10 bwk 61 1 equation. You got to make it up somewhere. 2 COMMISSIONER OEHLER: Well, but the thing is, 3 Judge -- and, you know, correct me if I'm wrong. I'm missing 4 the interpretation here somewhere. That money that -- that 5 760 that was not spent, that was raised by our tax rate from 6 the previous year, and it would continue to be raised in this 7 budget year. Doesn't matter what happens to the leftover 8 money. We're starting out fresh, and the increase -- there's 9 not that big of an increase in anything except insurance and 10 all these wonderful things that Ms. Hargis has proposed. 11 We're starting out very similar to where we started out last 12 year, needing the same amount of revenues, and that 760 is 13 already built into the tax rate. It's -- what was not spent 14 was saved out of last year's revenues. 15 JUDGE TINLEY: But your fund balances are carried 16 over for consideration into your pool of funds that you have 17 available for your ensuing year. 18 COMMISSIONER OEHLER: There aren't any reserves -- 19 the way I look at it, anything left over goes to reserves. 20 JUDGE TINLEY: Essentially, it goes into the 21 general fund in one big pool. 22 COMMISSIONER OEHLER: If you budget that, then 23 you're deficit spending for the next year. 24 JUDGE TINLEY: You -- you take what's already 25 there, plus what you are going to generate in the way of 8-9-10 bwk 62 1 taxes, fees, and fines, other revenue sources, and from that 2 you -- you charge your expenditures for the year. The 3 balance is what you use to calculate your reserves. 4 COMMISSIONER OEHLER: Okay. Well, you still start 5 out -- you still start out the year -- whatever cost savings 6 you got left from any budget, you budgeted -- you set a tax 7 rate to raise a certain amount of money to fund that budget. 8 It's a set amount of money that tax rate will generate, and 9 that same amount of money will be raised next year too on 10 that same tax rate. Even -- but you used to apply that to 11 whatever your increased values are. 12 COMMISSIONER WILLIAMS: Well, simplistically, 13 whatever that tax rate is that was required to fund the 14 current budget is your point; it's still in place. 15 COMMISSIONER OEHLER: It's still in place. 16 COMMISSIONER WILLIAMS: It should continue to fund 17 the equivalent to this year's budget without any increase. 18 So that gets you down to, what is your increases of this year 19 over last year? 20 COMMISSIONER OEHLER: Yeah, our increase from -- 21 COMMISSIONER WILLIAMS: And the biggest deficit we 22 have is the health care moving forward. 23 COMMISSIONER OEHLER: Yeah. But that 760 wasn't 24 spent, and it wasn't requested in this coming -- upcoming 25 year's budget. 8-9-10 bwk 63 1 JUDGE TINLEY: Commissioner, I suppose you could 2 say, okay, we got three-quarters of a million in fund balance 3 to begin the year. 4 COMMISSIONER OEHLER: That's right. 5 JUDGE TINLEY: Going to allocate that -- that pot 6 of money to the increase in health care costs, so that takes 7 it out of the equation. 8 COMMISSIONER OEHLER: Go ahead. I'll -- 9 JUDGE TINLEY: You eliminate that pocket -- that 10 pool of money, so now you're at zero. You start the year 11 with zero reserves, in essence. You've got no cash flow to 12 start with if you got that allocated. What you generate with 13 the same tax rate is enough to cover exactly what you've 14 covered the previous year, plus whatever the valuation 15 increases are. 16 COMMISSIONER OEHLER: Mm-hmm. 17 JUDGE TINLEY: But once you do that, you zero out 18 every year. Now, that's not -- we've been carrying forward 19 fund balances -- not carrying them forward, 'cause you can't 20 legally, but that gives you a fund balance at the beginning 21 of the next year, and ad infinitum. Once you chop it off, 22 you're -- 23 COMMISSIONER OEHLER: I'm not chopping it off. 24 JUDGE TINLEY: -- you're committed. 25 COMMISSIONER OEHLER: I'm not chopping it off. Not 8-9-10 bwk 64 1 chopping it off, because I'm not -- you know, I'm saying that 2 this -- if we got a million dollar increase over what we 3 spent last year coming up, that 760 is still built into that 4 upcoming year's tax rate, and there's going to be 350 on top 5 of it more. That's a million bucks, to cover the $750,000 6 they can go to on the insurance, but that's not -- we're 7 going to whittle it down; it's not going to be that much. 8 Plus you got 350. 9 COMMISSIONER LETZ: I think we're probably 10 talking -- 11 COMMISSIONER OEHLER: You're looking at this a 12 different way than what I was taught so many years ago of 13 what reserves are. Reserves are, you know, basically what 14 moneys are unspent that are left, and should be left, unless 15 spent in a specific way ordered by Commissioners Court. 16 COMMISSIONER LETZ: I think what we need is the 17 sheet that we've gotten every year -- I presume at some point 18 we'll get it -- that have all of the funds and all of the -- 19 COMMISSIONER OEHLER: I've been looking at them, 20 and all these wonderful audit reports we get. 21 COMMISSIONER LETZ: But the -- I mean, I think 22 until we get the -- you know, a new health care number, -- 23 COMMISSIONER OEHLER: Yeah. 24 COMMISSIONER LETZ: -- and then we look at kind of 25 a proposed -- pretty close to -- I think everyone was pretty 8-9-10 bwk 65 1 clear; we're not going with a whole bunch of raises across 2 the board. There may or may not be a cost-of-living. 3 COMMISSIONER OEHLER: Yeah. 4 COMMISSIONER LETZ: And see where we are. 5 COMMISSIONER OEHLER: I don't disagree. 6 COMMISSIONER WILLIAMS: I agree. 7 COMMISSIONER LETZ: And then I think I'm inclined 8 to go down Commissioner Baldwin's list and start making 9 discretionary cuts. But I'd also probably be in favor of a 10 hiring freeze, maybe for at least -- 11 COMMISSIONER OEHLER: All those things are factored 12 into what we have to do to balance the budget. 13 JUDGE TINLEY: Okay. Anything else, gentlemen, on 14 the workshop? Okay. We will adjourn the workshop. 15 (Budget workshop adjourned at 2:43 p.m.) 16 - - - - - - - - - - 17 18 19 20 21 22 23 24 25 8-9-10 bwk 66 1 STATE OF TEXAS | 2 COUNTY OF KERR | 3 The above and foregoing is a true and complete 4 transcription of my stenotype notes taken in my capacity as 5 official reporter for the Commissioners Court of Kerr County, 6 Texas, at the time and place heretofore set forth. 7 DATED at Kerrville, Texas, this 13th day of August, 8 2010. 9 10 JANNETT PIEPER, Kerr County Clerk 11 BY: _________________________________ Kathy Banik, Deputy County Clerk 12 Certified Shorthand Reporter 13 14 15 16 17 18 19 20 21 22 23 24 25 8-9-10 bwk