Audit Committee - Regular Meeting

This time, we'll call the budget committee meeting to order and ask for everyone to please register their presence.

Mary, you have four present.

Thank you. Before we continue, if there's no objection, I'm gonna ask that item e two need to be removed from the agenda. At this time, we do not have all the information needed. And without objection, if it's okay with everyone, we'll have item e two removed from the agenda. Next up, I'll ask that the emergency announcement please be played.

And I'll ask you, is there any public input on items on the agenda? Does anyone wish to speak? Yes, ma'am. Come up to the podium, please. State your name and district you live in, please.

Hi. My name is Cindy Stewart. I'm in District 5. My question is or a statement that there are a number of projects and funding initiatives that president Trump is now passing down to the state and local levels with no additional funding being provided. For instance, the ARPA has shut down funding, the it looks like the Tukalitsch, for instance, Louisville, and Knox Chapman Highway water updating projects are probably not gonna get done unless the county and or the state does it.

Also, with more pressure to provide funding at the state level, future grants may be in jeopardy. So I just wanted to make sure that you guys were thinking about that when you're going through. And I know it's kind of late in the budgeting process, but just wanna make sure y'all are thinking about that. And if you would like, I have gone through the proposed budget at the national level and have marked everything that's going down to The states. Does somebody want this?

You can give it to the officer.

We'll we'll get it. Thank you. Thank you. I was told not to expect an answer, but just to make sure y'all thinking about it.

Anyone else wish to speak to items on the agenda? Seeing none, we'll work on to item d. This is approval of the minutes. This is the approval of the April. They're in your packet. Do I have a motion to approve the minutes? Motion made by miss Hannum, seconded by commissioner Bright. Any questions or discussion on the minutes?

Seeing none, I ask you to register your vote, please. Mary, you have four yeses.

Thank you. Item e one, resolution 25 dash zero five dash zero zero one. Budget increase for the schools, $2,185,501.60. And this is the appropriate funds for the purchase of the new science textbooks for grades k through 12. I have a motion to send this on to the commission workshop from commissioner Anderson, seconded by commissioner Bryant. Is there any questions or discussion on this?

Seeing none, I ask you to register your vote, please. Mary, you have four yeses.

Thank you. Item e two has been removed. Item e three, resolution 25 dash zero five dash zero zero three, budget increase. General Services Capital, $35,808. This is to appropriate funds for the painting of the stairwells at the Blount County Justice Center. Have a motion to send this on from commissioner Bright, seconded by commissioner Anderson. Is there any questions or discussion on this?

Seeing none, I ask you to register your vote, please. Mayor, you have four yeses.

Thank you. Next up, this is discussion item f one. This is the time to discuss and set forth a recommended budget for the next fiscal year. Seems like the longer I do this, the more I realize that we've never quite finished with the budget process. It just seems to be a twelve month job.

We're continually working to improve our process and thinking outside the box and how we do business. We're always trying to find ways to serve our citizens better, and all of this is done with our citizens, our taxpayers always in mind. We we all should never forget who we work for, and that is our citizens. Our motto is simple. No new debt, no new tax increases, and then always live within your means.

That has worked well for us in Blount County government, and I hope that's how we continue to think as we prepare prepare to set forth a proposed budget. These next three resolutions set the tax rate for our citizens. It's a recommended appropriation budget and a priority list for our capital outlay plans. This level of planning takes a tremendous amount of time from each of you as budget committee members, and I and I wanna thank you. And along with our department heads and our elected officials and especially our finance director and his team, I'm deeply grateful for the dedication and commitment from each of you to our citizens and to this community and the fact that we have been able to maintain a balanced budget with no new debt for the last fifteen years.

I'm gonna ask that at this time that our finance director, Brian Baldwin, start this presentation with more details as we address the next three resolutions. First up is our fiscal year twenty five twenty six tax rate resolution.

Thank you, mayor. Thank you, committee. I I wanna echo your comments a little bit. I wanna thank the committee for the time. There are a number of employees across this county who put a tremendous amount of time into this budget, and I specifically wanna thank Carrie Barrett. We our partnership on this budget, it wouldn't have gotten done without her, and I I just really appreciate her efforts on this. I'm gonna jump into the jump into the, tax rate resolution twenty five zero six zero one. What you're, what you're looking at here is the tax rate proposal for 2026. This this tax rate resolution is presented with no property tax increase. It is still at a dollar 59, the, same as last year.

I'll call out a couple of things in here. The original value of the penny, in the letter that went out in March was 671,500. Over the course of one month's time while we were working on this budget, the value of the penny actually increased based on residential and commercial values to 675,400. So that is the new number we use. We we we get that number in in partnership with the trustee and the property assessor.

So in getting that number, we were able to increase our property tax, by as much as we could with the most recent values through March. What what you see here in the dollar 59, I'll just walk through the funds. Education fund, $1.41, 56¢. Education Capital, fund, $1.77, 10¢. Debt Service Fund, $1.51, 21¢.

General County fund $1.00 $1.69 cents, and General County Capital 3¢. Those all match the same allocation as last year. Just a I'm gonna do a real quick walk through revenue. This is more for reference later than anything else, but, I just wanted you to see our property tax, revenue. If you look, this is the trend over the last four years, and and they're scaled from the, you know, 22.

The next lineup is 23. The next lineup, 24, and then that top line is the current year. And that's year to date through, April. You can see in property tax, we're up 3.3%. So we we continue to see that natural growth without any property tax increases. The natural growth is helping us put together a balanced budget. A quick look at sales tax. It's also up year over year. As a reminder, sales tax goes to three funds, general purpose school fund, the highway fund, and the debt service fund. It's up, 4.4%.

There's some seasonality that happens with the, sales tax. We project it to end closer to 5%. The gasoline tax, it's it's up 1.7%. It's the flattest of all of these. It's a very small increase.

So if you think about the highways revenue, they're they're seeing a good size increase in sales tax, but they're seeing very, very little increase in the gas tax. And then finally, the investment revenue. One one thing I want to make you all aware of, as we look at what our investments have done, if you looked at the the top line there, the one that looks really exciting, that's last year. We're we're 13% below that right now this year, and that's in large part due to, us spending the ARPA funds. If you remember the the ARPA funds, we received all those funds upfront.

We received every penny of those federal ARPA funds, and now we are spending those. We are spending those on the Eagleton Ballpark. We are spending those on, two completed sewer or I'm sorry. It's not sewer, but waterline projects through South Blunt Utility. And we continue to, we're we're getting the other projects right up off the ground.

Those ARPA funds are there to be used. And as that money continues to be spent, the interest, the investment, return, the return on investment that we were normally getting will decrease. We'll still have the same, know, in investment in our other funds, but the returns will start to dwindle. We're also factoring in interest rates, a change in in interest rates over the next year, just being conservative. We're not keeping it at the the what it it's about four and a half, 5% now. We we've dialed that back. We could handle interest rates going as low as 3% this year depending on what happens with the with the economy. With that, mayor, that that is, the tax rate resolution.

Thank you, Brian. So we are vote we are voting on a tax rate resolution as presented at a dollar 59. I do wanna remind everybody we are still below the certified rate, which that that's something I think that this that our citizens and and this this committee and our commission should and our elected officials should be very proud of. So I ask at this time is do I have a motion to send the tax rate resolution to the commission workshop? I have a motion by commissioner Bright, seconded by commissioner Anderson. Is there any questions or discussion?

Seeing none, I ask you to register your vote, please. Mary, you have four yeses.

Thank you. Next, we have the fiscal year twenty five twenty six appropriation resolution. Once again, I'll ask Brian to continue this presentation.

Thank you, Mayor. When when you look at the year appropriation resolution, for this year, I just wanna call out a couple of things. The the total appropriation from last year to this year is gonna go down. It's gonna go to 257,000,000. There are two reasons why it's going down.

I already mentioned the ARPA funds being spent. So those are no longer loaded into the budget. They're already either spent or committed on a project, so they will not show up as a as a part of your budget, for this next year. And then the the second large driver in there is in general general purpose school fund, fund one forty one, there is no budgeted fund balance this year. So those are the two drivers to decrease the overall county budget.

In looking at, in looking at what was prioritized by the committee, for general county fund one zero one this year, we have the salary increases. We have the step of, 1.7%, which is the step from our compensation plan, and a 2% cost of living. And if you recall, we used, we used the, consumer price index, and most recent data that we have to trend this. It was at 8% this time, you know, this time last year. Now it's down to 2%.

So you can see the the cost of the CPI is is decreasing. So we budgeted that at 2% as a cost of living. So we tried to put some science behind it where we could. The other things that were, voted to be included in this year's appropriation, the sheriff's office real time operations director, salary and benefits, recovery court, job reclassification, salary and benefits, two judicial commissioner positions, and some funding for, for any overtime work needed, for for that department. On the operations side, the, sheriff's office real time operation software, the training equipment, and stipend for EMTs.

The there are five built in to the budget ongoing. This would be for an additional five that would allow them for 10 additional slots. Animal center uniform increase, property assessor data processing. This has to do with the reappraisal that they'll be undertaking this next fiscal year. Parks and rec contribution, a 4% increase to their prior allocation.

And then this is not fund one twelve, but just fund one twelve. Wanted to call it out the, jail locks over at the justice center. This is around four of seven, and that will fund them. Moving on to, other items that were supported, but not out of the operating budget. And I would say that what you're asking you the other elected officials or department heads to do with these items is to understand that they were supported, but they're supported out of a use of fund balance, and they'll need to come back to you and ask for these to, be appropriated out of fund balance.

Because they're one time in nature, they're not something that necessarily you'll do every single year. So elections, four year maintenance agreement, the Great Smoky Mountain Heritage Center contribution, k nines for the sheriff's office, also drones for the sheriff's office, and a uninterrupted power source over at the over at the justice center, to keep the power on when power goes out, make sure the jails stay locked, cameras stay, lights stay on, cameras, still record what's going on. So it's a safety issue there. In fund one thirty one, the same salary increases, across the county are included. Some reorganizational salary changes of 51,000 are included.

Legal expenses of 20,000 and tubes and tires are another addition there. For the general purpose school fund, I would tell you that this is a, these are not increases in their budget. They what the school board did is they reprioritized their budget, and those things are, the classified salary increases will follow the same increases of those of the rest of the county. The certified salary increases, and I'm gonna talk more about this in a minute, but a a fairly large $4,200,000 investment in certified salary increases. New teacher aid and ELA positions to to the tune of 2 and a half million.

Transportation increases of of 500,000. And then bus monitors and professional development are set up in a discretionary fund, that the school board can approve as needed throughout the year. They're not necessarily built in. The money is there, but it will require additional approval. If I could, I wanna take you back to last year where we looked at, a lot of we looked at a lot of data last year related to schools.

We pulled it from the Tennessee Department of Education. This data has all been updated for a year later. So this is the most recent data out on their website. And I'll just call your attention and compare, compare Blount County to the the rest of the state. You can see how we compare at at spending per student, 12,900. You can see how we compare with those those counties right around us. We're high or higher than all of them except for severe, much like it was last year. The statewide average is 12,600. We're at 12,900. The student teacher ratio statewide is 16.4.

We are 14.2. And last year, we ranked 17 out of the 95 counties in student per student spending. This year, we ranked 29 out of 95 counties. Following up on that, the other trend we looked at was the percent of local funding that goes in to the school system, and you can see those comparisons, pretty quick. But the local funding for the state on average is 25%.

Bowen County is at 40. The state revenue is 57%, for the state average. We are at 47. And then, federal is 18, and we are 13. So we are, contributing more on an average, and we compare similarly similarly with those around us. And severe is always in that that outlier. Last year, we ranked eight out of 95 counties. This year, we were I'm sorry. Seven. We ranked seventh.

This year, we ranked eighth. Speaking of the teacher, the teacher and certified pay increases, I will say this was created with with a tremendous amount of collaboration with the school board school board chair, and leadership at this at the, leadership at BCS. We took data and compared it with surrounding counties. We compared data with, the schools within the county, to try to get a a picture of exactly where we stood compared to everyone else around us. The, in doing that, what you can see on your screen, the the blue line is the current pay.

The green line, is the proposed pay. You'll see a few different things going on in there. First of all, you see a stair step model starting on step 16. We, borrowed that idea from the two, city schools in our county. We also looked at the the school board chair proposed taking it from 25 steps out to 30 steps, really.

And and the the logic was, a teacher can retire after thirty years. This would provide for them an increase every year all the way until they're retirement eligible. So for a bachelor's degree, and we we could pick any data point in here. You can kinda see where the bigger gaps are, but I picked year 15 for each of my examples, and the increase for average, average teacher at year 15 will be a little bit more than $5,200. The other thing I would point out that the bachelor's degrees, this accounts for twenty six percent of the teachers in our system.

Moving quickly to master's degrees. I will say that the, step increases for each of these steps, in the past, they were hard dollar amounts. They are now a percentage, and it's 1.5% between steps. When you compare that in Maryland, Alcoa City Schools do it a little bit differently. But when you compare what their steps are, their steps respectively are 1.21.6%.

So our steps fall right in the middle. When you look at the break between a bachelor's degree and a master's degree, we have a have an increase. If you get that additional degree now under this new plan, you'd have an 11% increase in pay, and that compares to the the other two systems at 10.7511% also. There are forty seven percent of our teachers that have a master's degree, and their increase at year fifteen would be just just a bit larger than $6,800. The EDS degree, their increase would be greater than $5,500, and there are twenty five percent of the teachers who have an EDS degree.

The break from a master's to an EDS is five percent in this system. The other two systems are six and six and a half percent respectively. And then finally, the EDD degree, you've got two percent of of our teachers have this degree, and the the break from an EDS to an EDD is three percent. The other two systems are six point five and two point seven, respectively. With that, Mayor, that is, fund one forty one.

Fund one fifty one, if this will click. There we go. You can see the debt payment is fifth just over 15,000,000 again this year. That is principal plus interest. We have this next fiscal year and three more years, and then you just see the cliff, coming up in '29 and '30.

So that's something we're we are already working on, and planning for. But you can see for at least the next four years, we have a pretty consistent, pretty consistent, payable there. And looking at our total debt, you, today, we we're gonna make a payment this year, and our debt is 108,000,000 and change. In this next fiscal year, when we make the payment after you appropriate the money and we make the payment, our debt will be down to 98,000,000. So in this next fiscal year, you'll get under a $100,000,000 in debt.

Quick summary of our of our major funds here. You can see we have some increases and some decreases. I I've already talked about the fund one forty one decrease. Fund one fifty one decrease, is simply what what is owed, on our on our debt. We were able to back that off a little bit. But with this, resolution, we're asking you to move forward a, budget for this county total 256,600,000.0.

Thank you, Brian. And I I do wanna say thank you to the elected officials and our department heads and that that have worked very, very hard to be very, very conservative on putting together this budget, which is is, as you've mentioned, less than last year. And the fact that we've been able to do that speaks volume for our elected officials and and and what they're able to do and and what what's important to them. But I really wanna say this. I I I just wanna say how much I appreciate our our the our school board chair, Chris Pass, and the school the majority of the school board members who have really taken it on, on task to work with with you and and Carrie and Tyler and and the work that you all have put in because I I'm there.

I watch the hours days days and hours that you all have worked together, to do what, should have been done a long time ago, that's, give our teachers the money that they they deserve. And the fact that we've been able to do that on the existing budget just speaks volume for for the hard work that you all have put in. And I just wanna say to that to the school board and to your staff, thank you all very much for setting down and actually working with us for for what's best for our kids, truly what's best for our kids and what's best for our citizens. And I and I if if I appreciate this, and I'll and I'll say this on behalf. I think every one of us up here appreciates the heck out of of this and and what this has meant for our community and our school system.

And I and from what I hear from the people that I talk to in this community, they do too. And I hear and I and I do hear a lot of it from the teachers and administration that they do appreciate what's being done and what and and the fact that that that that, finally, I think that that that they are a priority, and they are appreciated. So thank you all very much for that. Anyone else have any other comments on this before we go on? If not, fiscal year yeah.

So coming up is fiscal year twenty five twenty six appropriation resolution. Do I have a motion to send this on? Motion made by commissioner Anderson, seconded by miss Hannam. Any other discussion? Seeing none, I ask you to raise your vote, please.

Mary, you have four yeses.

Thank you. Next, we have fiscal year twenty five twenty six resolution to establish our capital outlay priorities. Once again, Brian.

Thank you, Mary. This one this one, I'll I'll make much quicker. I promise. You have, in your packet the new, capital plan with everything that has been asked for. It's been reprioritized.

The we we intend to treat, this exactly like we've treated it the last several years. You have the categories there for each of the items. And each of these items out of fund one seventy six, fund one seventy seven, and fund one eighty nine, in order to be appropriated, have to come back before you. So the only monies that were appropriated in these funds were trustee commissions or any ongoing, for for example, in fund one eighty nine, there's a, server capital line that we have to it's recurring every year. Those are the only things we lay in, and everything else will come back to this committee, with the justification that you require.

At this time, fiscal year twenty five twenty six, resolution to establish capital outlay priorities. I ask, do I have a motion? Send this on. I have a motion from miss Hannem, seconded by commissioner Brock. Any questions or discussion on this? Seeing none, I ask you to register your vote.

Mary, you have four yeses.

Thank you. At this time, all three of these resolutions move on to the commission workshop and the main meeting for information only to give the commissioners and the public the next several weeks to review. Our public hearing on the budget process is scheduled for Thursday, June 12 at 6PM, immediately followed by the regular June budget committee meeting. And at that time, the meeting at that meeting, we will vote to send this final budget recommendation onto the commission for their consideration at the June meeting. Again, I just want to say thank you to each of you budget committee members.

I know this has been a long tedious process. It started at the first of the year in January, and I appreciate each and every one of your dedication. I also, again, wanna thank you, Brian, and Carrie, and Taylor, and your all of your staff for for all the work. I look forward to the next few weeks and look forward to working with all of our county departments and our school departments to make this budget happen. We're committed to partnering with the school board again this year to align priorities and funding and really look forward to that.

We're we've recommended a balanced budget tonight, but that has no new debt that has no new debt and no new tax increase. We're using the resources we have and showing good stewardship for to our taxpayers and to our citizens every day. And I wanna say thank you to everyone. Once again, elected officials, county commission, our our employees, and, department heads, thank each and every one of you because all of us work together to make this happen, and I really appreciate this. It has to be it has to feel good when your government is actually working within the the boundaries of what your government should be working in.

I think that's where we're at. Seeing nothing else on the agenda, do I hear a motion to adjourn? Move to adjourn.