BUDGET GUIDELINES 2021 BUDGET COUNTY OF MONROE MICHIGAN PREPARED FOR THE MONROE COUNTY BOARD OF COMMISSIONERS J. HENRY LIEVENS, CHAIRMAN JERRY A. OLEY, VICE-CHAIRMAN Transmitted to Board of Commissioners June 5, 2020 DOCUMENT PREPARED BY: MICHAEL BOSANAC, ADMINISTRATOR/CHIEF FINANCIAL OFFICER SUE MAIER, DIRECTOR OF FISCAL SERVICES
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BUDGET GUIDELINES
2021 BUDGET
COUNTY OF MONROE
MICHIGAN
PREPARED FOR THE
MONROE COUNTY BOARD OF COMMISSIONERS
J. HENRY LIEVENS, CHAIRMAN
JERRY A. OLEY, VICE-CHAIRMAN
Transmitted to Board of Commissioners June 5, 2020
DOCUMENT PREPARED BY:
MICHAEL BOSANAC, ADMINISTRATOR/CHIEF FINANCIAL OFFICER
SUE MAIER, DIRECTOR OF FISCAL SERVICES
TABLE OF CONTENTS
1. PURPOSES OF BUDGET GUIDELINES 1
2. OBJECT STATEMENT 2
3. ANNUAL BUDGET WITH 2ND
YEAR PROJECTION 3
4. OVERVIEW OF THE 2021 COUNTY BUDGET 4
A. Budget Outcomes/Notes on County Finances 7
B. Financial Management Measures 9
C. Budget Positives 10
D. Budget Summary 15
5. REVENUES 18
A. Equalized Valuation & Property Taxes 18
B. Sources of County Property Tax Revenue 18
C. Inmate Dormitory Revenue-Special Revenue Fund 21
D. Court Equity Fund 24
E. Court Case Filings/Trends & Data 25
F. Friend of the Court-Special Revenue Fund 26
G. Fund Balance & Budget Stabilization Fund 27
H. State Revenue Sharing 29
I. Interest Earnings/Cash Management 29
J. Delinquent Tax Revolving Fund 30
K. Other Revenues & History of General Fund Revenues/Expenditures 31
6. EXPENDITURES 32
A. Retiree Health Care 32
B. Employee Health Care 36
C. Retirement 39
D. Employee Wages 41
E. General Fund Transfers-Out 42
F. Operating Expenses 43
G. Debt Schedule 43
H. Capital Outlay 44
I. Capital Improvement Projects 44
J. Enterprise Wide Computer Capital Outlay & Network Maintenance 44
7. BUDGET GOALS 45
8. BUDGET POLICY GUIDELINES 46
9. DEPARTMENTAL GOALS & OBJECTIVES 47
10. BUDGET COMPLIANCE 48
11. BASIS OF ACCOUNTING 48
12. PRIOR YEAR BALANCES 48
13. CONTINGENCIES 48
14. PROGRAMS FUNDED BY OUTSIDE FUNDING SOURCES 48
15. INDIRECT COST CONCEPT 49
16. FEES 49
17. FINANCIAL INDICATORS-PER CAPITA DATA CHARTS 49
18. 2021 PRELIMINARY BUDGET OUTLINE 54
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1. PURPOSES OF 2021 BUDGET GUIDELINES
These guidelines are prepared to facilitate the preparation of, and to establish the parameters for revenue
and expenditure estimates for the 2021 budget. They outline the general direction for the preliminary and
recommended budgets. This document also serves to assist the County in complying with PA 2, the
Uniform Budgeting and Accounting Act by supplying requisite information on County finances to
policymakers prior to adopting the budget. It is one of several key reports presented on County financial
management.
Budgeting guidelines are defined as the Board of Commissioner’s principle budget policies to be reflected
in the annual appropriation process. In order to present these guidelines, it is necessary to review the
financial position of the organization and projections of the finances for the next budget year and beyond.
Below is an outline of financial information on the core operations selected for analysis. In summary, the
organization has remained in a state of financial stability and slightly improving from when this document
was drafted last year preparing the 2020 budget. Small incremental positive trends can be found in selected
areas of the budget and related financial position. While continued use of reserves has been required to
cover budget shortfalls over the past 10 years, these amounts have generally been trending lower and more
stable over time notwithstanding year-to-year variances. The 2020 budget projected a surplus when
adopted November 5, 2019. Since that time, one major budget amendment totaling $1.2 million of reduced
revenue has been made. As the budget is monitored throughout the current year, other measures may be
required.
As this document and the information contained herein were developed, the corona virus pandemic was
occurring throughout the county, state, nation and globe. Unprecedented actions and measures were being
taken to slow and mitigate the spread of the virus. The assumptions used in this document to develop a
preliminary 2021 budget outline will certainly stand to be modified and corrected over time as more
operational and economic impacts are known from the effects of this pandemic.
Financial review includes the following core areas of fiscal management of the County:
Current revenues and preliminary estimates of revenues for the upcoming budget year.
Economic forecast of the taxable value of real property is of primary focus and
consideration used in conjunction with the final Boards of Review and tax settlement
figures.
Evaluating past budget year operating surpluses or deficits and understanding the primary
factors that led to the financial outcome are provided. This encompasses all funds, including
major special revenue funds, the General Fund and cost centers within the General Fund.
Inflation trends and local economic conditions that impact supplies and contracted services.
Prospects for new taxes and fees, changes in current tax and fee rates along with collection
rates and best estimates for MTT adjustments. This includes what we know at this time for
the tax appeal settlement with DTE on the Monroe Power Plant and our best estimate of
results from the tax appeal of the Fermi II nuclear power plant.
Multiple categories of revenues and expenditures reviewed in trend analysis to demonstrate
the financial impact, changes over time and projections going forward.
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Major non-recurring expenditures that fall due in the current budget year.
Major non-recurring revenue that will be realized or end during the budget year including
reserve funds.
Demands for public and internal support services from the organization and resources
available to provide these services. This includes demands for new employee positions
above any replacements or back filled positions.
External constraints on revenue, demands on the County due to external authorities, new
obligations, regulations and compliance. Of concern always will be the pending legislation
to extend court courts and fees in the absence of a new funding model and sunset of the
existing cost and fee schedules. These concerns spring from Michigan Supreme Court’s
decision in Cameron vs. Washtenaw County. While the decision kept the status quo, that is
untenable going into the future. The sunset provision from the Cunningham case in which
courts had imposed costs for which there was no authority; that authority is only through
statute and the legislature allowed costs to continue but this authority ends in 2020 and
clarity is needed as we project revenues into the 2021 budget.
Continued state funding for implementation of the requirements of indigent defense counsel
services for standards 1-4 and funding for the additional standards to be introduced and
implemented. From what was originally enacted in PA 93 of 2013 and the state responsible
for the cost of implementing the new standards, the County has implemented fully the first
set of standards with no negative financial impact to the General Fund.
The objective of this analysis focused on the above items is to define the financial parameters for the 2021
budget. All offices and departments should expect to see the financial position of the County and our
forecast reflected in budget policy recommendations from this office to the Board of Commissioners for
action on the 2021 budget. This will ultimately be incorporated into preliminary and recommended budgets
and is consistent with past practices related to budget development.
2. OBJECT STATEMENT
These guidelines are intended to present a framework with supporting data for preparation of the budget.
The preliminary outline for the 2021 budget reflects the supporting figures and assumptions contained
throughout this document, other ongoing budget management reports and are all subject to updated
information and figures throughout the budget development phase.
All State funded programs must continually be monitored to insure that changes do not take place that can
negatively impact the County’s current year operating budget and leave the County to cover obligations
intended for the State. This is due to the State budget starting October 1 while the County budget is
calendar year. Changes at the start of the State budget can impact the County budget during the 4th
quarter.
The Board of Commissioners will rely on those department’s receiving state funding to confirm the
accuracy of projected funding for 2021 and those department managers shall be prepared to modify budgets
should funding levels change even after the County budget is adopted. As a political sub-division, county
government is subject to the annual appropriation process of the Michigan legislature and therefore, any
strategies the state uses to lower transfer-out expenditures to local units. With the COVID-19 response and
other state budget changes, the impact to the County budget has to be understood.
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Additional areas of concern relative to State funding that could affect the County’s budget and
corresponding level of services to the community include the following:
Impact from Public Acts 397 through 408 covering personal property taxes. In 2016, the
Michigan legislature provided the replacement funding intended to make local units whole from the
loss of revenue from manufacturer’s personal property tax. In the 2018 budget, we stayed with our
conservative budget assumptions for this revenue and the actual amount was much lower than in
prior years at $647,072 but still exceeded the revenue estimate. Accordingly, we have kept the
projections we had in prior budgets for this revenue source going forward. The four (4) years of
budget vs. actual for PPT:
2016 Budget $275,000 Actual $814,210
2017 Budget $275,000 Actual $1,452,564
2018 Budget $300,000 Actual $647,072
2019 Budget $450,000 Actual $1,005,007
2020 Budget $375,000 Actual TBD
Separately, funding reimbursement is provided to the Commission on Aging, Fairview Home and
the Museum’s budget. These amounts are reporting in those special revenue funds.
Changes in childcare funding, reimbursement rates, cost allocation plan amounts and associated
additional program administrative rules and requirements. We continue to measure the impact from
the new rules, requirements and interpretations of eligible costs highlighting the challenge of this
partnership with the state, courts and counties. We continue to monitor this cost sharing outcome
and impact to the County.
Solid Waste programs and changes to the fund balance in the Solid Waste fund from shrinking
revenues and continued demand for services will result in a reduction in the fund balance. Overseas
sourcing for demand of recycled products has dropped and impacted the overall costs and services
provided.
Any changes in Maintenance of Effort terms in the funding formulas that would not be
beneficial to the funding unit and allow the state to leverage County efficiencies and cost controls
with unequal benefit under the funding formulas.
Continued debate on criminal justice reforms that could impact housing of juveniles and a lack
of adequate cost sharing from the state for any new mandated services.
Possible implementation of the Michigan Joint Task Force on Jail and Pretrial Incarceration
Report Recommendations and impact to the County from the new procedures/rules.
County revenue sharing is expected to be negatively impacted. Information on the amount of
impact is not clear at this time. Our estimate for the budget is a reduction of 40% until we see the
state’s FY21 budget.
3. ANNUAL BUDGET WITH 2nd YEAR PROJECTION
The Board of Commissioners will consider financial commitments beyond the upcoming budget and weigh
longer-term impacts from any budget or policy commitment. This process will require all departments to
submit estimates of revenues and expenditures for a two-year budgeting cycle for the fiscal years ending
Unassigned Fund Balance @12/31/2019 $14,363,017* (30.22 % of 2020 GF Budget)
(Figure incorporates funds designated in 2019 as supplemental appropriations) Budget Stabilization Fund @12/31/2019 $2,430,587* (5.11% of 2020 GF Budget)
Credit Rating-Standard & Poor’s Rating Services AA Stable
Moody’s Investor Services Aa2 *Preliminary Subject to Audit
5. REVENUES
A. Equalized Valuation & Property Taxes
Property tax revenues consistently make up approximately 64% of the General Fund’s revenues.
Following adoption of the 2020 budget, we recognized lower property tax revenues from originally
budgeted. This is due to the DTE Monroe Power plant and Republic Waste agreements of taxable
value; the corresponding decrease to the General Fund is $596,000 less than budgeted. We do not yet
have a resolution for the nuclear power plant. In the prior two (2) budgets, we reserved $795,000 and
$900,000 respectively to account for expected property tax revenue losses for both plants. We will be
including additional reserves in ensuing budgets to fully absorb and recognize the loss of the DTE
Monroe Power plant revenue over the 8-year agreement and a contingency for the nuclear plant until
resolved.
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The tracking of Taxable value illustrates a trend of increasing values in the chart that follows. The
unknowns of future personal property losses, new construction gains, MTT appeals (DTE) and future
inflation rates still makes it difficult to project at what rate future taxable value will be in the out years.
However, with the 2021 budget we are projecting an increase of 1.57% and an increase of 1.52% in
2022 for Taxable value. These are revised downward from the prior year budgets based on updated
estimates from Equalization. We incorporate these estimates in the 2021 budget and forecast models.
B. Sources Of County Property Tax Revenue The County’s top ten (10) taxpayers and their 2019 Taxable Values are outlined below:
TAXPAYER PRODUCT/SERVICE 2019 TAXABLE VALUE
DTE Energy Power Plant/Utility $1,090,863,140
International Trans. Corp. Utility Transmission $ 65,429,373
Republic Services, Inc. Waste Treatment $ 55,318,070
Good Will Co. (Meijer) Retail/Warehouse $ 27,449,258
Consumers Power Utility $ 27,215,376
La-Z-Boy Inc. Furniture $ 23,660,269
Michigan Gas Utility $ 16,114,540
Gerdau MacSteel Steel Processing $ 16,575,290
Global Engine Asset Automotive Plant $ 14,700,848
TGC Dundee Retail $ 10,822,930
TOTAL $1,348,551,435
Total 2019 Equivalent Taxable Value $5,902,841,816
Total Top 10 Taxpayers as a % of 2019 Total Taxable Value 22.85%
Compares to 20.65% in 2018 TV
2019 Taxable Value Breakdown
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Class Taxable Value Percentage
Agricultural 330,324,189 5.23%
Commercial 673,586,087 10.67%
Industrial 1,100,050,780 17.43%
Residential 3,708,405,685 58.76%
Developmental 4,526,075 0.07%
Personal 494,264,713 7.83%
Total 6,311,157,529 100.00%
2008-2022 Actual and Estimated Property Tax Revenues
YEAR
EST/Actual Property Tax Revenue % Change $ Change
2008 $29,580,781 1.58% $461,084
2009 $28,522,671 -5.14% ($1,548,640)
2010 $27,267,793 -4.76% ($1,364,207)
2011 $26,778,208
-1.80% ($489,585)
2012 $26,304,143
-1.77% ($474,065)
2013 $26,219,236
-0.32% ($84,907)
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2014* $26,158,335
-0.23% ($60,901)
2015 $26,839,265
2.60% $680,930
2016 $26,969,035
0.48% $129,770
2017 $27,532,954
2.09% $563,919
2018 $28,383,616
3.11% $1,131,579
2019** $29,520,450
Budgeted $28,725,450 Net
4.82% $1,372,272
2020** $30,277,165
Budgeted $30,033,000 Net
1.40% $418,903
2021 $30,752,751
Budgeted $30,402,751 Net
1.57% $475,351
2022 $31,220,193
Budgeted $30,870,193 Net
1.52% $467,442
*Tax Revenues reflect payout of Consumers Energy MTT and revised receipt totals
**2019-2020 Tax revenues are estimates based on assumptions
Years 2019-2022 Reflect Budgeted amounts to reserve for DTE MTT Litigation/Adjustment/Refunds; shown as Net amount
In the 2020 budget, original tax revenue estimates were budgeted at $30,933,000 with $900,000 of this
amount reserved for the MTT and DTE appeals. The net amount of property tax revenues used to offset
planned expenditures was $30,033,000. The above table revises the tax revenue to $30,277,165 and this
now incorporates $351,000 of tax revenue loss due to DTE property in the City of Monroe and
Frenchtown Township based on the tentative settlement. It also includes the Republic Waste landfill in
Erie Township based on the parties’ stipulation order reducing tax revenues by $245,000. Both of these
property value reductions ($596,000) are carried forward into the 2021 tax revenue estimates and
beyond.
The estimated 2021 property tax estimate is $30,752,751 and of this amount, $350,000 is reserved to
cover the expected tax appeal resolution for the Fermi plant and other possible MTT settlements. The
amount is being held to make up for future tax revenue losses. This follows prior action and continued
consultation with our auditors to recognize the property tax liability and take prudent action when the
event first occurs to plan for the financial outcome. We have done that with the DTE Monroe Power
plant and additional reserves for other MTT stipulation orders and prevented expenditure of funds that
in whole or in part will require refund or revenues would not be realized.
C. Inmate Dormitory Revenue-(Immigration and Customs Enforcement Detainee Housing)
Since opening the Inmate Dormitory, reimbursement from housing federal detainees has been an
important source of revenue to help offset the total cost of operating and maintaining the facility. The
initial pro forma financial modeling to finance operation of the facility included this source of revenue.
The operations of the facility are recorded in special revenue fund. Revenues generated from inmate
housing operations and are a primary source of the fund’s revenue with fund generated revenue shown
below:
2020: 53.9%
2019: 52%
2018: 54.6%
2017: 54.4%
2016: 52%
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2019* Amounts preliminary subject to audit 2020** Amounts are budgeted
The following exhibits show the historical financial performance of the fund. The operating results are
monitored closely. Revenues generated from federal prisoner housing offset costs the County would
have to fund exclusively from the General Fund to house County inmates at the facility. Housing
counts for 2014-2019 met or exceeded budget targets. The counts are for housing U.S. Marshal’s
Service detainees in addition to ICE detainees.
2019* Amounts preliminary subject to audit 2020** Amounts are budgeted
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The historical financial summary of the operation of the Inmate Dormitory Fund is as follows:
Beginning in 2016, the County changed the sequence of employer payments into the pension trust.
Semi-annual payments in January and July replaced monthly payments. Then starting in 2018, a single
advance payment was made in January. The result of this change in the manner and timing of employer
pension contributions through the 2020 budget is $931,422 of aggregate lower contributions or savings.
The percentage of payroll was adjusted lower for the employer due to these advanced payments and is
reflected above in the revised rates. Starting in 2020, the County continued with single employer
payments each January but is using the actual cash credit of the early contribution to be used to pay
down the UAAL. This would increase the year over year employer costs as we eliminate the cash credit
of approximately $200,000 but provide long-term benefit of paying down the UAAL.
The above chart shows the inverse relationship between the funded ratio of the pension fund and the
requirement of increasing employer contributions as the funding level decreased. The amount of
contributions going into the pension fund has been increased as the funded ratio is the net of the total
liabilities less assets in the trust. Each year this is calculated in the annual valuation and used to
determine the funding required to fully fund the plan over the amortization period including paying
down the unfunded accrued liability. The Board continues to closely monitor the pension and RHC
trusts as both have put financial strain on the organization as pension payments are a primary
obligation. The County is legally obligated to fund 100% of the ADC and has always done so. With
pension contributions going up by $780,573 and $742,240 in 2019 and 2020 respectively, unless this
cost escalation is moderated, consideration of other action may be necessary.
D. Employee Wages
The preliminary 2021 budget has built in the known adjustments for settled CBA’s. This provision will
be subject to any changes in the collective bargaining agreements that expire going forward. We have
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also included any applicable adjustments for step increases for all effective collective bargaining
agreements and for all non-union employees.
The 2021 budget will need to be adjusted for any phase-in of the wage and compensation analysis that
is expected in June-July. The timing and recommendations of the report will determine the
implementation phase of the analysis.
Additionally, all costs for wage based fringes and increases in the baseline expenditures over 2020 have
been included based on the assumptions in the forecasting budget model. The total compensation chart
on page 8 illustrates the results of the new total compensation plans. The 2011 through 2020 amounts
more closely align with the County’s ability to fund wage and benefit programs. Year over year, 2019-
2020 there was an increase of $4,378 in total compensation on average for each employee. It will be
essential to keep total compensation escalation within the employer’s ability to pay and avoid the
consequences of any failure here.
E. General Fund Transfers-Out
Annually, the General Fund includes amounts that are transferred-out and into various special revenue
funds. The amount budgeted is the difference between the special revenue fund’s expected or budgeted
revenues and its budgeted expenses. As these special revenue funds are able to either raise additional
income/revenues and/or reduce expenditures, there is a direct correlation to the amount required from
the General Fund. There had been a long term trend of lower General Fund contributions to these
special revenue funds due to lower overall expenses and selected funds eliminating the need for any
contribution. Also, contributing to the lower trend has been the use of these fund’s fund balances as a
limited source of revenue and what we considered one-time funding sources.
A comparative view of the major special revenue funds and the budgeted transfers out for the past
thirteen (13) years is shown on the following page along with projections for 2020 based on the 2nd
year
adopted budget:
2019* is preliminary subject to audit
2020** is budgeted
2021*** is projected
Over the last couple of years, the biggest impact to transfers-out has been the effect of the July 1,
2019, 911 Surcharge. The revenue from this source reduced transfers-out to Central Dispatch to
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zero. Year over year, we expect transfers-out to be higher by $222,000. The history of the General
Fund transfers-out to these major other funds as a percentage of the total over the past 15 years are
shown below:
Since 2008, total annual budgeted expenditures for the child care fund have decreased by $844,022
representing the effort in program outcomes. However, since 2015, budgeted expenditures have
increased by $584,748, but some of these costs within this fund are at overall savings to the General
Fund by moving employees under the Child Care Fund for accounting purposes.
2019* subject to audit 2020** is budgeted
2021*** is projected
F. Operating Expenses
As in past budgets, all departments will be requested to hold all operating expenses to the prior year
amounts unless to cover targeted expenditures or if operations will be unsustainable. Line items will be
reviewed as part of the budgeting process to allocate appropriate amounts for department programs and
services. Budgeted amounts will be based upon actual expenses from the prior 3 operating years and up
to date appropriation reports. We expect overall costs and expenses to increase by $75,000.
G. Debt Schedule
The County General Fund incurred installment purchase debt related to the IT infrastructure project in
2019. Through 2023, the County debt service is $143,008 to pay off the installment purchase. It should
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be noted, the County has a debt margin of $746.3 million based on the preliminary 2019 CAFR. As
little additional debt has been issued under the County’s legal limit and existing debt is being retired,
the available margin has grown.
The Monroe County Municipal Building Authority has debt but that is the full obligation of the Mental
Health Authority, Fair and Library under a joint financing agreement for their facility projects.
Community Dental Clinic-Public Health
The County issued debt for the community dental clinic at the Public Health facility and will
service the debt from a ground lease between the dental clinic operator and the County. The
financing of the issue resulted in a debt obligation with a bond sale of $1.06 million and annual
debt service of $110,967-$120,231 for a period of 10 years through 2022. This is funded from
within the activity of Fund 221.
H. Capital Outlay
Capital expenditures need to be funded at a consistent and sufficient level as equipment investments
need to be made to keep operations reliable and avoid spending money on repairs that make those
expenditures less valuable over the long term than regular capital investments. ROI considerations and
repair vs. replacement justifications will be necessary prior to establishing capital expense amounts.
Included in the preliminary budget scenario are appropriations of $355,000 to invest in critical needs
for operations and establish baseline expenditures for this type of expense going forward. This will
cover $325,000 for the Sheriff’s fleet and related equipment, and $30,000 for a general county vehicle.
This totals $50,000 less than the prior year.
I. Capital Improvement Projects
As previously written, due to extended financial constraints, funding was limited for CIP initiatives in
years 2008-2014. Considerations for any facility or other critical emergency repairs were based
primarily on absolute necessity and were funded from multiple sources to obtain the necessary amount
of funding.
Continued deferral of capital improvement or related maintenance expenditures has a high probability
of leading to the need to fund more significant repairs later or even to prematurely replace specific
assets. While deferral is a fiscal first aid technique, long-term lack of funding in some cases may
worsen the financial condition or increase the total expenditure. As the financial strain has lessened, we
recognize the backlog of important projects that need to be funded. The CIP program has moved to a
two (2) year schedule to help identify projects to coincide with the 2 year budget. Our preliminary
budget will include a provision to fund $300,000 of capital improvement projects; $50,000 less than
current year. Priority will be additional energy conservation projects, security related expenditures,
additional roofing projects, operational equipment, and facility interior finishes for carpet and exterior
concrete and asphalt resurfacing work.
J. Enterprise-Wide Computer Capital Outlay & Network Maintenance
Monroe County has made significant investments in technology infrastructure allowing a workforce to
manage increasing workloads. A complete network of over 450 workstations, 15 LANs, and a fiber
optic backbone for a private countywide voice and data network are in place to leverage enhancements
in technology. These investments have improved the efficiency and productivity throughout the
County. The organization continues to introduce new tools with goals of improving data sharing,
service responsiveness, data analysis and spatial efficiency. At the same time, there is an ongoing need
to replace legacy systems to keep them current and efficient in supporting as much automation in all
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areas of operation. In 2019, a major overhaul of the IT infrastructure took place enhancing data security
and network reliability. Data storage will continue to require additional investments to meet operational
needs going forward.
The Board’s appropriation for capital technology purchases has allowed managers who are in need of
newer equipment, to upgrade desktop computers and data management software programs. Unreliable
equipment cuts into efficiency, customer service expectations, and quality of the work product. This
leads to support staff spending more time fixing outdated or obsolete applications and equipment. A
budget goal is to continue to invest in employee tools, equipment and facility needs with a focus on
technology and automation. This investment will need to grow in dollar amounts over time and
succeeding recommended budgets will reflect this.
The concern to the County is to avoid budget choices that may stall critical technology development
and enhancements. Resource allocation decisions must consider the real value of investing in
technology projects to allow fewer employees to do the work previously completed with higher staffing
levels. A related concern is the reliability of existing systems after deferring replacement and
continuing with more expensive maintenance with less value for each dollar spent. The proposed
budget includes funding of $700,000 for continued support of the enterprise-wide network. This is
$54,000 less. Representative projects include replacing desktop computers in various offices, additional
document workflow installations and network security upgrades. Lastly, but most importantly will be
essential funding to replace the legacy financial accounting/management software following the
HR/payroll project.
7. BUDGET GOALS
With the preceding background, the Board of Commissioners are presented with the following goals
regarding the 2021 County Budget.
A. Continue current efforts, resources and strategies to improve the focus, initiatives and programs
offered for economic development activities in the Monroe community. The Monroe Link Plan is in
action phase and six (6) teams are working on the plan’s goals. Future increased funding for
implementation of the economic development strategies will be considered. An expanded economic
base with tax revenues is vital in order to provide public services. Opportunities to develop tax base
from the international bridge crossing project have begun by the Board to prepare communities and
sites for developer interest along the County’s transportation corridors and exchanges.
B. Provide County-funded services at prioritized and sustainable levels based on recurring revenues
in balance with recurring and projected expenditures. Public safety will remain a priority following
full implementation of the Sheriff Deputy staffing plan through year-end 2020.
C. Continue providing opportunities through increased investments in new technologies to provide
quality services, to improve productivity and efficiency with an expanded focus on improving
customer service skills/capabilities and leadership. Linked to this will be resources and time to train
employees in these new tools to better serve the public in delivery of services. The balance of this year
will be focused on implementing fully projects underway including RMS, JRM, CAD, HR/Payroll,
GIS. Next up will be the financial/accounting system and additional court automation projects.
D. Maintain and strengthen the overall financial position including the General Fund and Special
Revenue funds’ unreserved/undesignated fund balance at levels to maintain financial bond ratings, to
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provide a safety net against future contingencies and unknowns, to provide sufficient cash flow/cash
management and for flexibility in meeting short and long-term critical obligations. Avoid financial
strain by exercising sound policymaking and long-term financial decision-making and prudent
commitments for ongoing obligations. With future of the pandemic unknown, use of reserves will be
expected to bridge revenue shortfalls to maintain public services in the community.
E. Fund necessary capital expenditures for fixtures, equipment and related capital projects
including fleet inventory and critical building maintenance and improvement projects. These will
keep reliable tools available to employees, provide for effective use of limited funds and ensure safe,
maintained and reliable work areas for employees and visitors.
F. Balance workforce levels sustainable from available resources. Leverage past workforce
reductions to strategically reorganize staff, processes and programs to meet highest public service
needs. Recognize the largest expenditure is personnel and associated costs of personnel. Continue to
seek out opportunities to restructure functions, staffing and allocations of personnel to best meet
today’s needs for internal service and external program service models for our community.
G. Develop and implement alternative funding sources to provide public services. Continue to
explore available sources and consider implementation without creating an excessive burden on local
community resources. Include intergovernmental service consolidation and resource sharing beyond
those pursued within the organization including hotel assessments used to promote and market the
County and our communities.
H. Continue exploring opportunities to contain and control employer costs for employee and
dependent benefits through appropriate and market based cost sharing models and programs. Prepare to make changes to the cost sharing model should costs rise faster than the employer’s ability
to fund all of the new costs. Consider alternatives through pools and other cooperative risk sharing
models that would maintain the quality of the benefit program while containing costs. Included are
outlines for compensation plans that offer voluntary choices for recruiting and retention incentives
around pension and wage schedule options for employees.
I. Continue to focus efforts to strengthen or minimally maintain the financial position of the
County over the next 3-5 budget cycles by containing expenditures, target select capital investments
that provide efficiency returns or other documented savings in labor or other operational costs. Use the
County’s resources strategically to position the County’s capital investments to further overall efforts in
creating innovative solutions to local government challenges and advance the County image as a leader
that will support recruiting and retaining talent necessary to achieve a broad set of goals and objectives.
8. BUDGET POLICY GUIDELINES
To implement these goals, the Board of Commissioners adopts the following guidelines:
All departments’ overall operating expenses shall be held to minor increases over prior year
amounts that keep pace with inflationary cost increases and targeted goal attainment.
Additionally, the Administrator/Chief Financial Officer along with Finance staff shall make
detailed reviews of submitted line item amounts to verify the funding amounts are appropriate.
Staff shall be kept at the current year levels as Administrator recommendations will be provided
to the Board to not increase any staff levels.
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Departments shall continue efforts for staffing consolidation through reviews of services
and processes that develop more streamlined and optimally effective operations. The
restructuring of functional services must be continuously evaluated as a means to realize cost
control measures. This will be a focus for the balance of 2020 and also for the 2021 & 2022
budgets as the County prepares to adopt budgets reflecting adjustments in wages, benefits and
other expenditures with some uncertainty of revenue growth.
The County of Monroe Budget Calendar is incorporated into these budget guidelines and
will be followed as closely as possible in the preparation of the 2021 budget. Deviations to the
budget calendar may be possible but the intent will be to adopt the 2021 budget and projections
for 2022 within the calendar dates established or sooner if possible.
9. DEPARTMENTAL GOALS AND OBJECTIVES
Departments and offices shall review all services provided and determine if each and every service still
needs to be provided, and if so, must they continue to be provided under the existing service delivery
model. If the service needs to be maintained, the department must continue to explore alternatives to the
delivery of services. Departments and offices may be expected to provide information related to legal
mandates for the service and funding sources other than General Fund as the source. Of specific concern
will be any program, program expenditures or personnel funded in whole or in part from non-general fund
revenues and any reductions in funding. There will be no expectation to replace or supplement any loss of
funding with General Fund amounts.
In addition to the preceding, the following items will be considered and acted on as appropriate:
A. Efforts should be made to keep employees informed and updated on the fiscal issues that affect the
County Government in order to better prepare them for necessary changes. The intent of this effort is
to inform employees regardless of the nature of the information. The budget process is open to the
public and accompanying discussions focus on alternatives and possibilities. Depending on one’s
perspective of the discussion, the information may be concerning. Until the final budget is adopted,
various alternatives remain open for deliberation in public meetings and these may include staff and
program changes, reductions, restructuring and partnerships, etc. The input, ideas and collaborative
problem solving of employees should be sought and included by departments as they formulate goals,
plans and service consolidation initiatives.
B. The County Board of Commissioners should continuously evaluate the organizational structure of
the County Government and consider constructive changes such as consolidating departments, boards,
commissions and functions to improve operations. Creativity should be used, and where appropriate,
breaks with tradition in the interest of efficiency should be considered. Alternative service delivery
methods should be considered if they provide needed public services and are the most appropriate
means of delivering the public good or service. Finally, programs and services no longer valued or
necessary should be shed or shifted from the County’s program offering.
C. Full reimbursement to the County of all Administrative Costs for Grants and/or contractually
provided services including all post employment costs will be included in all program costs.
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10. BUDGET COMPLIANCE
All budgets must be prepared and submitted in accordance with the Uniform Budgeting Act, Public Act
621 of 1978, as amended and the County Budgeting Policy.
11. BASIS OF ACCOUNTING
In measuring its financial position and operating results, the County recognizes General Fund Revenues
and Expenditures on the modified accrual basis. Revenue is to be recorded in the accounting period in
which it becomes available and measurable. Expenditures are recognized in the accounting period in
which the fund liability is incurred, if measurable.
"Available" means collectible within the current period or soon enough thereafter to be used to pay
liabilities of the current period. Revenue, which usually can and should be recorded on the modified
accrual basis, includes: property taxes; regularly billed charges, or other routinely provided services; most
grants from other governments; inter-fund transfers where liability has been established and collection is
assured; or losses which can be reasonably estimated.
12. PRIOR YEAR BALANCES
Monies appropriated, but not expended within a given fiscal year are carried forward into the next fiscal
year as either obligated or surplus/(deficit) revenue.
General Fund monies are allocated each year in the County Budget to various departments, programs and
activities. However, if those monies have not been expended at the end of each fiscal year, they
automatically revert to the General Fund Unreserved Fund Balance, rather than being carried forward as a
departmental or divisional surplus. Encumbered accounts are the only exception to this rule.
Encumbrances are any unpaid expenses that are already obligated by contract or purchase order. They are
carried forward into the next fiscal year as obligated rather than surplus revenue. Special Revenue funds
containing fund balances may be used to offset transfers from General Fund in amounts determined after
additional analysis by the Finance Office.
13. CONTINGENCIES
Budgeting for contingencies in each fiscal year is the Board of Commissioner’s responsibility. This office
will not budget contingencies within any cost center except the General Fund. Departmental budget
requests shall not include contingency amounts. The preliminary budget includes $220,100 of general
purpose contingency.
14. PROGRAMS FUNDED BY OUTSIDE FUNDING SOURCES
Changes in Federal and State programs and the process of appropriating funds may impact the amounts
provided under various Federal and State grants and how the funds are administered by local units of
government.
Departments that anticipate funding for new or existing programs should define how any new program
appropriations and accompanying methods will affect their current operations and should also demonstrate
if there will be any future potential impact on departmental operations if the anticipated funding sources are
reduced or eliminated.
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15. INDIRECT COST CONCEPT
Any new funding proposals for consideration in the budget shall include provisions for recovering indirect
costs paid by the County. Departments shall continue to implement the practice of billing non-general fund
programs for their allocated share of administrative and overhead costs incurred by the General Fund. This
practice will continue with an emphasis on collecting the indirect cost amount as calculated by the
County’s annual Indirect Cost Allocation Plan.
The 2021 Budget will be prepared using 100% of the most recently completed Indirect Cost Allocation
Plan based on audited 2019 financial statements. Indirect costs are defined as overhead, benefit and
administrative costs of support services used to administer a given grant, other fund or program. Indirect
costs are recognized by Federal and State funding agencies as eligible costs for providing a given service
and are eligible for reimbursement to the County. No exceptions to eligible reimbursement to the County
will be allowed.
All grant requests shall be reviewed by the Finance Department to insure that the maximum allowable
reimbursement for both direct and indirect costs is included. All departments submitting new proposals for
grants shall provide sufficient review time to fully consider allowable costs. All grant applications shall be
submitted to the Board of Commissioners prior to applying for funding to the grant source entity.
16. FEES
Every department shall annually evaluate fees charged for services provided, and establish fees equal to the
cost of providing the service. As annual costs of providing services to the residents of the County increase,
fees that are charged for the service should be adjusted accordingly. The concept of user fees for services
shall be included in the departmental recommendations for review by the Board of Commissioners. Each
department/office must review and prepare updated schedules of all fees charged as part of the annual
departmental budget submittal. The master fee schedule has been incorporated as part of the annual budget
and is found in the second to last tab
17. FINANCIAL INDICATORS-PER CAPITA DATA CHARTS
Financial indicators help an organization look inward and examine whether revenues and expenditures are
or have been in balance. Such indicators help to show weaknesses or strengths in the organization’s
revenue/expenditure future. A short description of each financial indicator is provided as a basis of
understanding each:
A. Revenues per Capita: This describes revenues relative to population. As population increases, it is
reasonable to assume a proportional increase in revenues will be necessary to continue existing levels
of equitable public services to an expanded citizenry. On the contrary, declining revenues per capita
could indicate insufficient resources to continue existing public services at the current levels and
reductions may be necessary. This was clearly a concern as there had been a 17.3% decline in this ratio
from 2008 to 2012. Beginning in 2015-2016, there has been a minor positive change to the trend and it
has continued. With the pandemic’s impact, this trend line will likely flatten.
B. Expenditures per Capita: Increasing expenditures per capita may indicate the cost of providing
public services is increasing beyond the County’s ability to pay for the same, especially if there has not
been a corresponding increase in revenue. Increasing expenditures per capita may also indicate
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declining productivity if there have not been significant additions of new programs or services. It is
particularly helpful to compare this financial indicator with revenues per capita. The trend line mirrors
and exceeds the drop as compared to the revenue line thereby providing margin and the results are
shown in operating results.
This chart illustrates the per capita revenues in 2019 still below the amount in 2008 with that year the
highest. Expenditures match the level in 2005 with 2008 being the highest per capita expense ratio. The
trend line is generally positive the last 8 years with revenue ratios higher than expense ratios.
2019* Amounts are preliminary
2020** Amounts are budgeted
C. Residents per employee: This indicator compares what is typically the County’s largest cost
category to the population of the County. It is a proxy for the County’s overall cost structure and can
be a measure of efficiently delivering services, with higher a ratio equating to less County employees
per resident and lower unit cost per service delivery unit. The table shows the County employing one
employee for every 324 county residents. As staff is added and the population holds or declines the
ratio is impacted.
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POST EMPLOYMENT BENEFIT COSTS: Per Capita Basis Data
Legacy Benefit Program Costs; per capita data: The two most challenging post employment
obligations of the County are pension and retiree health care benefits. Each of these funding obligations
is illustrated below. The costs represent the cost per County resident for the benefit liabilities described
and calculated from the most current actuarial valuations (12/31/2018). They show the per capita based
on the total calculated liabilities.
RETIREE HEALTH CARE:
The data below represents the value of the annually calculated total liability incurred for RHC. Since
the 12/31/2013 valuation, the per capita total liability has trended lower although recently is trend
negative as liabilities grow.
Data from Retiree Health Care valuations as of 12/31
Effective 2013 figures based on GASB 45 Standard @5.5% discount
The illustration below represents the trend of a growing unfunded liability generally from 2001-2013
valuations. The effect of GASB 45 standard is shown from the 12/31/2013 valuation moving the
discount rate from 7% to 5.5%. The chart shows the present day value of the assets in the RHC Trust
insufficient to cover the total liabilities of RHC benefits actuarially calculated. The 2014 valuation
significantly altered the trend line showing the actuarial change from plan designs and lower actual
claims along with projected lower RHC claims. The trends are generally positive the last five (5) years.
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RETIREMENT SYSTEM:
The following chart illustrates the trend of the value of the annually calculated total liability incurred
retirement costs for the three (3) County employee groups noted and allocated on a per capita cost
annually. The trend line is negative save for one year with the per capita cost growing each year. The
trend line has continued in spite of a closed amortization schedule for the UAAL.
Data from Monroe County Employees Retirement System valuations for years ending 12/31 for County employee groups:
General, Sheriff’s Office and Central Dispatch
The chart below illustrates the trend of growing liabilities for which the value of the assets in the
Retirement System Trust are insufficient to cover the total liabilities of retirement benefits actuarially
calculated and promised. The cost is depicted on a per capita basis for each year. Again, a consistent
negative trend line is represented over the time shown.
RETIREE HEALTH CARE & RETIREMENT SYSTEM COMBINED DATA:
The next chart combines the cumulative unfunded accrued liability of both of the County’s post-
employment benefit programs. It is displayed as a trend line over the past sixteen (16) actuarial
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valuations. The lower per capita amounts beginning in 2014 is primarily attributable to the lower
UAAL of the Retiree Health Care valuation.
2021 PRELIMINARY BUDGET
Significant Assumptions: 2020 Budget was balanced by deferring $2.05 million of contributions to Retiree Health
Care by intentionally underfunding the actuarial determined contribution (ADC) by this amount or funding 79% of
the ADC. The remaining budget shortfall covered by use of $80,000 from Property Tax Foreclosure Fund. No funds
were appropriated from Fund Balance. Technically, the County is operating a current year budget that is out of
balance from current revenues = current expenditures by $2.13 million. This is an improvement in budget strength
over the prior year’s amount of $2.49 million or a gain of $358,525 over 2019.
1. 2021 Property tax revenues are budgeted with a net increase of $369,751 over the 2020 adopted budget;
$180,249 lower in real property taxes and $550,000 lower in the amount reserved for prior year tax adjustments;
no change in the personal property tax reimbursement amount.
2. At this time, we do not forecast a need to appropriate any amount from General Fund reserves to balance the
budget.
3. State revenue sharing reflects a 40% decrease over the 2020 budgeted amount – a reduction of $1,058,869. All
other revenue line item’s cumulative total is estimated as level or flat to same amount as the 2020 budget.
Includes state revenue sharing payments equal to 2019 amount until state budget adopted.
4. Budget outline based on patterned CBA models and like provisions in CBA’s. Fringe rates are assumed at flat to
CPI increases except for rate increases as follows: 1) Retirement-Employer Contribution +5%; 2) Retiree Health
Care +5%, and; 3) Health Care-Employer Cost +6%.
5. No changes in staffing levels; no additional staff, no reductions in staff. Budget includes only Board approved
positions.
6. Contingency has been reduced to $350,000 which is a reduction of $436,925. No program reductions.
7. Capital Outlay funding is included in the amount of $414,000 for vehicles; a decrease of $49,000 over 2020.
$280,000 Equipment project completed in 2020 makes net decrease in Capital Outlay $335,500. Use of the tax
foreclosure fund to transfer $80,000 for funding for current year capital outlay expenditures. The transfer amount
is the same amount as the 2020 budget.
8. Computer Capital Outlay funding is included at the amount of $700,000; $54,000 less than the 2020 level.
9. Capital Improvement Program funding is included at $300,000 for facility capital needs; $50,000 decrease.
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10. Funding in the unrestricted contingency account of $290,000; an increase of $69,900.
11. There will be a net increase in the General Fund transfer out amounts, due in part to an expected transfer to the
MANTIS drug enforcement unit.
Budget projections illustrated as differences between 2020 adopted budget and updated with settled collective
bargaining agreements, used as a baseline for comparative purposes to project a budget outline.
18. 2021 PRELIMINARY BUDGET OUTLINE
General Fund Budget Property Tax Revenue: Positive Negative
2020 Projected Property Tax $30,933,000
Reserved Amount (MTT) ($900,000)
Net $30,033,000
2021 Projected Property Tax $30,752,751
Reserved Amount (MTT) ($350,000)
Net $30,402,751
Revenue Increase Over 2020 $369,751 $369,751
State PPT Replacement $ 375,000 $0
Total Tax Revenues $30,777,751
State Revenue Sharing:
$1,588,304 ($1,058,869)
Retirement-Employer Contribution:
Assumed 5% increase in contribution rates
($7,428,890 vs. $7,999,880=$570,990)
General Fund portion=$354,308 ($354,308)
Employee contribution=$715,289
Retiree Health Care:
Assumed 5% increase in contribution rates
($7,233,735 vs. $7,648,306=$414,571)
General Fund portion=$259,997 ($259,997)
Employee contribution=$350,411
Health Care-Employer Cost:
2020 budgeted at $3,884,448. Assume increase of
6.0% in Health care employer rates=increase
of $225,867. General Fund portion=$139,294 ($139,294)
Charges for Service Revenue Reductions
Charges for service ($604,000)
Interest earnings ($70,000)
Convention facilities tax $23,868 ($650,132)
Tax Foreclosure Transfer:
Level amount of $80,000 $0
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Contingency ($436,925)
Capital Outlay Funding ($335,500)
Computer Capital Outlay Funding ($ 54,000)
Capital Improvement Funding ($ 50,000)
Wage & wage based fringe expenses ($318,775)
Budgeted Expenditures
Operating Expenses ($113,618)
Election Expenses ($245,000)
Transfers-Out:
Special Revenue Funds net: ($368,676)
(Dorm, MANTIS, Child Care Fund)
Use of Fund Balance; not yet Budgeted ($0)
Summary:
Revenues and/or estimated savings over baseline 2020 Budget $1,491,176
Additional expenditures and/or lower revenue over 2020 Budget ($3,263,669)
Total Projected Preliminary 2021 Budget Deficit ($1,772,493)
Other 2021 Budget Considerations:
1. The impact from the pandemic has severely impacted State of Michigan revenues. Revenue sharing as an annual
appropriation under the statute will likely be impacted. We have used a 40% reduction of revenue sharing in our forecast.
2. Cautious review of all State Grant Funding line items in General Fund and Special Revenue Fund revenue sources.
Revenue shortfalls will be covered by expenditure reductions or General Fund transfers-in.
3. As the 2020 preliminary financials are finalized, we will compare significant budgeted revenue line items against
2019 actual and incorporate into final 2021 budget. The objective is to incorporate actual figures to establish a new
baseline for the various sources of significant revenue. There likely will be revenue adjustments due to changing
operations.
4. The County will need to consider the impact of legislation on forfeiture practices that have been used to fund
MANTIS and efforts against illegal drugs. Funding is expected to rapidly be depleted and if the programs and staffing
are to continue, the General Fund will need to appropriate money to continue.
Disclaimer: Projected Preliminary Surplus/Shortfall is based upon many dynamic factors and other assumptions. The figures are based on rudimentary calculations
and are subject to significant change. Significant additional analysis is necessary prior to increasing the confidence of the above figures. The purpose is to present an early projection of the 2021 Budget based on estimates and support the governing Board in its policymaking.