Changing the Way Henrico Does Business

Changing the Way Henrico Does Business

VML ConferenceOctober 3, 2011

County of Henrico, Virginia

SummaryHenrico County – An IntroductionHenrico County’s Financial ManagementEconomic Downturn – Impact on the County’s

BudgetChanging the Way Henrico Does BusinessHenrico Advantage CardLooking Ahead – Future Challenges and a

Long Road to RecoverySummary

Henrico County – An Introduction

Henrico County, Virginia

Area: 244.06 square miles Population:306,935 Registered Voters: 195,108 in 2010. Median Household Income: $58,194 (2007). Approximately 25,000 businesses employ 155,209 people

in Henrico County. 4 Fortune 1000 companies headquartered here.

HENRICO

Henrico County Government Profile

Henrico’s Board of Supervisors and County Manager have governed together since 1996.

The policies and budgetary restrictions set by the Board and the County Manager have kept Henrico’s government as one of the leanest of the lean while still delivering exemplary service.

Board of Supervisors

R. Glover, Vice-Chairman

P. O'Bannon,Supervisor

D. Kaechele, Supervisor

J. Donati, Jr., Supervisor

F. ThorntonChairman

V. Hazelett, P. E.

County Manager

Education54%Public

Safety21%

Rec & Cult.4%

Miscel-laneous

2%

Gen. Govt. Adm.7%

Judicial Adm.1%

Community Devel-opment

3%Public Works

5%Health Soc.

Services3%

Henrico’s Expenditure Priorities

$743,661,366

FY2011-12 General Fund Expenditures

Henrico County Public Schools Newsweek recognized

Deep Run, Freeman, Godwin and Henrico High Schools as four of “America’s Best High Schools” in 2010.

Ten schools earned the 2011 Governor’s Award for Educational Excellence and 21 schools earned the 2011 Board of Education’s VIP Awards.

Student-Laptop Program

Just the FactsTotal Students 48,431Total Teachers 3,687Total Schools 71Scholarships $15.8 MillionGF Operating Budget (FY12) $403.8 MillionPer Pupil Expenditure $9,061

Henrico County’s Financial Management

Henrico County’s Fiscal Guidelines

When the recession started – Henrico County better prepared than most.

Conservative revenue projections and limited expense growth.

Adherence to the 5.0% Increment

2002

2002

Ops20

03

2003

Ops20

04

2004

Ops20

05

2005

Ops20

06

2006

Ops20

07

2007

Ops20

08

2008

Ops20

09

2009

Ops.2010

2010

Ops.2011

2011

Ops.-1.0%0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%

4.7% 5.0%

4.2%

5.0% 5.0%

6.0%

5.0% 5.0%

-0.7%-3.4%

Consumer Price Index Population Expenditure Growth

5.0 percent guideline for continuing operations

-3.4%

Healthy Undesignated Fund Balance

The County does not use its undesignated fund balance to subsidize current operations.

A healthy undesignated fund balance has given the County an additional financial buffer against economic shocks to the budget.

% of Fund Balance

FY98 8.95%FY99 10.67 %FY00 12.90 %FY01 15.54 %FY02 16.69 %FY03 17.79 %FY04 18.04 %FY05 18.00 %FY06 18.00 %FY07 18.00 %FY08 18.00 %FY09 18.00 %FY10 18.00 %FY11 18.00 %

Keeping Costs Down

By Locality0

5

10

15

20

25

1816.4

15.4

11.8 11.7 11.7 11.7

20.6 20.7

25.6

17.716

AlexandriaArlingtonChesapeakeChesterfield Fairfax Hanover Henrico Newport NewsNorfolkRichmondRoanokeVirginia Beach

Num

ber o

f Pos

ition

s per

1,0

00 C

itize

ns

Citizen/Position Ratios for Selected Localities

FY2011 Residential Monthly Tax Burden

Series1

$0.00 $100.00 $200.00 $300.00 $400.00 $305.29

$282.25 $219.72

$178.88 $316.89

$221.15 $162.58

$364.97 $230.76 $239.34

$363.81 $226.47

$279.70 $343.43

$200.98 Virginia BeachStaffordSpotsylvaniaRichmondPrince WilliamNorfolkNewport NewsLoudounHenricoHamptonFairfaxChesterfieldChesapeakeArlingtonAlexandria

Note: Does not include Stormwater Management Fees or Refuse Collection Fees.

Triple AAA Bond Ratings One of 34 counties in the nation to hold this

credit rating. First locality to have its triple AAA bond rating

reaffirmed after the Federal Government’s Bond Rating downgrade.

Debt Ratio GuidelinesDebt as a Percentage of General Fund Expenditures 7.75%Debt as a Percentage of Assessed Value 1.49%Debt per capita $1,650

Henrico County – Revenue Reductions

Revenue Reductions

Real Estate Tax Revenues

33%

State Revenues34%

All Other Local Revenues

31%

Federal Revenues

2%

Local government revenues hit on every front by the economic downturn.

Between FY2009 and FY2011, Henrico lost more than ten percent of its General Fund revenues.

FY2011-2012 General Fund Revenues

Source: Standard & Poor’s

Housing MarketNationally – Home prices have fallen 33% from their

peak in 2006; surpassing the 31% decline experienced during the Great Depression.

Apr-04 Sep-05 Feb-07 Jul-08 Dec-09 Jun-11-30%

-20%

-10%

0%

10%

20%

S&P Case-Shiller 20 Home Price Index(Year-over-Year Percent Change)

20%10%

0%-10%-20%-30%

Apr-04 Sep-05 Feb-07 Jul-08 Dec-09 Jun-11

S&P Case-Shiller 20 Home Price Index(Year-over-Year Percent Change

FY2008-09 Actuals

FY2010-11 Budget Difference

Local $567,223,106 $528,774,300 ($38,448,806)

State 327,278,263 275,337,000 ($51,941,263)

Federal 11,922,329 10,860,200 ($1,062,129)

Total $906,423,698 $814,971,500 ($91,452,198)

Revenue Reductions

Changing the Way Henrico Does Business

Henrico County’s Fiscal Priorities

Henrico established three primary goals in response to the downturn which it has maintained throughout:No Reduction in Service Levels

No Tax Rate IncreaseNo Layoffs

Changing the Way We Do Business

Each Department in the County evaluated their FY2011-12 budgets – cutting costs and improving efficiency where ever possible.

As a result of these efforts the County was able to achieve considerable savings. $56,500,861 in Total Savings

One-time Savings - $5,465,532 Annual Savings - $33,305,329 Debt Service Savings - $17,730,000

Efforts in savings and efficiency are ongoing.

Hiring Freeze & Personnel Savings

Henrico County achieved $21.6 million total Personnel Savings. 278 vacant positions were either eliminated

or placed in the hold complement throughout FY2009-2010 and FY2010-2011. 122 positions from General Government

156 positions from Schools.

Volunteers Use of Volunteers & Interns

◦In FY2009-10, 1,144 volunteers were utilized per month which equated to approximately 106 full-time employees. This initiative conservatively saved the County $4,600,000 in FY2009-10.

Energy Reduction580 trillion BTU’s in energy consumption have

been saved since FY2003-04, leading to $13.5 million in savings. Utilized methane landfill gas to generate revenue

from an electric power vendor – $150,000. Central Automotive Maintenance utilizes used motor oil to heat their facility - $16,200.

Replaced most of the traffic signals incandescent bulbs with LED - $100,000. (LED in traffic signals replaced less often.)

County-wide Printing Reduction in size of newspaper ads - $37,900.Altered the day of the week Planning’s legal notices

are published in the newspaper – $11,600. Creation of an E newsletter for Libraries reduced

printing budget - $65,000.Reduced the number of toner cartridges in contract

for student printers - $450,000.Reduction in number of school publications -

$23,302.

Contracts and LeasesShifted prescribing responsibilities to

nurse practitioners and psychiatric-level staff in MHDS where appropriate - $200,000 in savings.

Renegotiated four current facility leases – $99,400 in savings.

Extended four year laptop lease in elementary schools to six years – $1,000,000 in savings.

Maintenance and Repairs

Reducing frequency of routine maintenance of grounds keeping, painting, carpet replacement, etc. in schools – $530,000 in savings.

Use of inmate labor for painting. Opening of a fire extinguisher repair

shop.

Henrico Advantage Card

Copies of Efforts Available at: www.co.henrico.va.us/finance

Looking Ahead Future Challenges and a Long Road to Recovery

Future Budgetary ChallengesHow will the State’s budgetary imbalances

impact the localities? Federal Health Care Reform Act –

increased costs in future localities’ budgets.

Has the real estate market reached bottom – when will improvement be seen?

Stubbornly high unemployment – deteriorating impact on federal, state, and local budgets.

Future Budgetary ChallengesGovernor McDonnell keeps alluding to

possible reforms to Virginia Retirement System.How will VRS “reform” impact localities?

The state has continually underfunded its actuarial liability - $18 billion in underfunded liabilities.

Possibility of a reduction in benefits or changes in localities/employees’ contributions.

Long Road to Recovery

Jan. 1981Jan. 1986Jan. 1991Jan. 1996Jan. 2001Jan. 2006Jan. 20110.0%2.0%4.0%6.0%8.0%

10.0%12.0%

National State Henrico

15 year period before unemployment fell below

5% level

Unemployment Rates Since 1981

The Fear of Recession Looms

Aug-09 Jan-10 May-10 Oct-10 Feb-11 Jul-1105

10152025Google Searches for “Double Dip Recession”

Tim

es G

reat

er th

an th

e Av

erag

e

Similar to 3Q 2010, fears of a double dip have emerged.

Note: Scale based on the average number of searches between January 2004 to present. Source: www.Google.com

SummaryHistorically, the County has adhered to prudent

fiscal policies.Economic downturn reduced County revenues

drastically.Revenue reductions absorbed internally. No

increase in taxes. In order to Change the Way Henrico Does Business,

an examination of day-to-day operations was performed by all departments.

Significant savings have been achieved due to the County’s efforts.

It will be a long road to recovery.

Video PresentationClick below to watch a two part video.

1. Changing The Way We Do Business2. Henrico Advantage Card

Thank You !

John Vithoulkas

Gene Walter

email: vit@co.henrico.va.us

email:wal35@co.henrico.va.us

Changing the Way Henrico Does Business

VML ConferenceOctober 3, 2011

County of Henrico, Virginia