Scotland County Board of Commissioners Budget Meeting March 26, 2025 9:00 a.m. 517 Peden Street Laurinburg, NC Commissioners in attendance: Chairman Ivey, Vice Chair Frizzell, and Commissioners McPhatter, Williams, Edge, Shelley and O'Neal. Staff in attendance: County Manager Snead, Attorney Ed Johnston and Clerk to the Board Dorothy B. Tyson. Call to Order Chairman Ivey called the Recessed Meeting to order. Approval of the Agenda Chairman Ivey called for a motion to approve the Agenda., Motion to approve the Agenda made by Comm. O'Neal and duly seconded by Comm. McPhatter. Vote to approve agenda: Unanimous. Audit Amendment Contract Approval Finance Director Hobbs stated that the reason to amend the Audit Contract is due to timeliness, not an extension. Amending the date to show that the Board has approved. Motion made by Comm. O'Neal to approve the Audit Amendment Contract and duly seconded by Commissioner McPhatter. Vote to approve: Unanimous. Fiscal Year 2024 Single County Audit Report Mr. Allen Thompson of Thompson, Scott & Adams presented the Audit Report. He stated that they are hired as an independent audit firm to issue an opinion on the financial statements as a whole, and to provide an unmodified report, quote, unquote which is a good report. There were three General Performance Indicator findings addressed 1) Timeliness of Audit Submission. The audit report was issued approx. 4 months after the required due date of October 31, 2024. Finance was short staffed which caused delays in completing the component unit audits and the County audit. 2) The Medicaid Program had two findings.. The Unit had material weaknesses, significant deficiencies, and/or statutory violations that should be addressed in the FPIC Response Letter. No Funds were involved and this issue has been addressed with a response.. A response to these findings will have to be submitted within 60 days of the Board meeting in which the financial statements were presented. He discussed the financial information for Scotland County from 2020 - 2025, noting the increase in the Fund Balance. The Fund Balance Available as % of General Fund Expenditures (21.03 %) and Unassigned Fund Balance as % ofGeneral Fund Expenditures (19.06%) are big numbers when it comes to going to the Debt Committee at the State Treasurer's Office, as well as the Tax Percentages. The positivity of Water District I and District II were addressed and stated that you must look for a positive cash flow with the Water Districts. As long as you have positive cash flow, you are not looking at. how great your net position is because you are not intending to sell it but you want to make sure that they are paying for themselves. 1 Scotland County Board of Commissioners Budget Meeting March 26, 2025 9:00 a.m. 517 Peden Street Laurinburg, NC Questions Comm. O'Neal asked what was the turn around to the positive cash flow with the Water Districts? Auditor Thompson stated that he didn't know right off the top ofhis head but could check, and call him back. Finance Director Hobbs stated that previously they had seven districts, when the City took over they were instructed by the state of NC to reconstruct them. The results in the positive cash flow was more of an internal thing, not a money making thing. Charts and diagrams of the following were discussed: Analysis of the Fund Balance, Analysis of the Fund Balance Available, Analysis ofUnassigned Fund Balance as a % of General Fund Expenditures, Analysis of Revenues Over (Under) Expenditures before Transfers, Analysis of Cash and Fund Balances, Property Tax Rates, Collection Percentages, Breakdown of General Fund Revenues and the Breakdown of General Fund Expenditures which showed that Human Services, Public Safety, and Education are the County's top three expenditures. Also discussed was a Cash Flow Indicator, this being the Water and Sewer Capital Assets Condition Ratio. The minimum threshold regarding the remaining useful life of an asset should be greater or equal to 0.50, the results for the unit was 0.46. A value less than 0.50 may signal the need to replace the assets in the near future. This will contribute to a financial performance report and will be significant to the LGC. They will want a response with a long term plan. He spoke with Kendra Boyd, Head of the LGC to see if this could be handled in a different way other than including it, and she told him no. This will be included each year as long as the depreciation has a value of less than 0.50. Discussion: Comm. McPhatter - Where are the ARPA Funds located in the budget? Auditor Thompson - The ARPA Funds are not in the General Fund, it is in a different department and is transferred to the General Fund to supplement the money which is in the General Fund. Comm. O'Neal - Where is the Big Money coming from? Auditor Thompson - Referenced page 63 which shows where the "big money" is coming from Medicaid, sales tax, Ad Valorem taxes, intergovermental revenues, both restricted and unrestricted. Mr. Thompson informed the Board that if other questions come up to reach out to him. Chairman Ivey thanked Mr. Thompson for the report. Scotland County School System Report Superintendent A. Baldwin thanked the Commissioners that have worked with the school system over the years and expressed thanks to the new ones. He presented the Scotland County Schools 2024-25 Local Budget Review as a slide show. He stated that the ADM as of February 2025 was 5118 (PreK students are not included), the demographics of the school System with 10 schools, the number of students in elementary, middle and high school and the racial breakdown oft the entire system. Demographics of the School System were highlighted, having 846 staff 2 Scotland County Board of Commissioners Budget Meeting March 26, 2025 9:00 a.m. 517 Peden Street Laurinburg, NC members, 73% live in Scotland County and that the School System is the second largest employer in the County and they have a 95% retention rate. They are future focused, realizing that not everyone will go to college, but they want to give the students a chance in the outside world, hence the trade programs. The post-graduation plans of seniors over the past two years have been as follows: College - 60%, Work Force 36% and Military-4%. The drop out rate for 2023-2024 was 06 which is less than the State's rate of 1.88%. The System offers courses in 26 Pathways and SCS has the highest credential attainment by credential in the State, (100% for NCCER Plumbing Level II. Over 55% of students are enrolled in either art, drama, chorus or band. He stated that the stronger the Arts program, the stronger the school. Athletics are an integral part ofsCS, with 25 teams at the middle and high school levels, and nine oft the student athletes have signed to play at the collegiate level. They are improving academics and school culture with three schools improving a letter grade, 80% of the district's schools meeting or exceeding growth expectations, and a decrease in discipline referrals by 14% at the elementary levels, down 10% at the Middle schools and down 20% at the high school level. They are focusing on instruction and are not shying away from the challenges ofbeing a low performing District, but we will come out ofit. This is his time to shine but he chose to focus on both the successes and areas needing improvement. Superintendent Baldwin recapped how the local appropriations were spent in 2024-2025: Capital Outlay: The $300,000. Was used to help offset the lease payments for South Johnson. This is a 20 year lease, which started in 2018 and the final payment is scheduled for December 2038. Current Expense (County Appropriations) 2024-2025 For the 2024-2025 school year, our current expense allocation was $10,000,000 e Pre-K - $350,000 e Exceptional Children - $845,000 e Local Supplement - $1,680,000 e Classroom Materials - $270,000 e Maintenance - $4,225,000 e Athletics - $290,000 e Board of Education - $728,000 e Superintendent's Office - $220,000 e Technology - $460,000 e Transportation - $260,000 e Public Information - $130,000 e Student Support - $140,000 e Cultural Arts - $72,000 e Non-Contributory Benefits - $110,000 e School Building Administration - $48,000 e Career and Technical Education - $72,000 e Charter Schools - $100,000 For the 2025-2026 school year, the request is $10,000,000, same as last year, and it is essential to keep what you got, could ask for more, but will not. The Capital Outlay request is $300,000. Again he mentioned the 20 year lease for South Johnson and that it will end in 2038. Chairman Ivey mentioned that they are just paying the loan that we took out, and that that decision was made before anyone other than Commissioner McPhatter was on the Board. Chair Ivey mentioned the Liaison Committee meeting scheduled for Tuesday, April 29, 2025 at 5:30 p.m. Commissioner William thanked Superintendent Baldwin and expressed appreciation for all that he is doing for the kids in Scotland County. Superintendent Baldwin reiterated that the 73% of 3 Scotland County Board of Commissioners Budget Meeting March 26, 2025 9:00 a.m. 517 Peden Street Laurinburg, NC the total school employees that live in Scotland County are diverse, certified, non-certified and administrators. Chairman Ivey asked about the $728,000. spent for the Board ofl Education Supt. Baldwin stated that it is mainly insurance costs, unemployment, and worker's compensation that is paid for by the BOE. Comm. McPhatter asked about the turnover rate and how they are maintaining the 95% retention rate? Supt. Baldwin stated that it is not always about the money. It is about relationships with the employees. They are continuing to search for clarity, providing hands n, people going in to help and provide assistance. 40% of the employees come from non-traditional backgrounds, no one is coming from Raleigh to save us, we must get them to buy in, treat them right, push them, but not push them away. Comm. Williams congratulated him on the 95% retention rate and stated that is great! Supt. Baldwin stated that it fluctuates between 95% - 98 %. Comm. O'Neal questioned the $259,000. spent for telephone services and mobile communication and that it was a huge amount for the number of schools that we have. Dr. Chapman responded that the school system is converting all landlines to a Voice Over IP System which would decrease cost by $100,000. per year. Also that they are pursuing other avenues to decrease spending on technology, that there are different pots of money but the central office and maintenance money come from local appropriations. Comm. O'Neal asked about the 9 locations for PreK. Dr. B. Adams provided clarity, as there are 9 PreK classrooms across the district and private sites. Supt. Baldwin stated that the $100,000. telephone savings is significant and can be applied to the Lease payment. Also that this endeavor has been three years in the making and is not complete yet. Comm. Shelley asked how many trades are there, as plumbing was mentioned. Supt. Baldwin replied about 10, and mentioned culinary, electrical, medical and carpentry. Chairman Ivey stated that he would not be on the School Board or be a teacher, and that ifit were easy, everybody could do it. Comm. O'Neal asked how things were going with the outsourcing of teacher substitutes? Supt. Baldwin stated that due to the change in environment and culture, teachers are present for work. He also said that the System has saved money on time management and instruction, a small cost, but worth the investment. Chairman Ivey recessed the meeting for 10 minutes. The Meeting was called back to order at 9:55 a.m. FY 26 Health Insurance Estimates Monnie English, HR Director presented an updated Health Insurance Estimates to the Board. She stated that IRS Guidelines are forcing the deductible to go up $100.00 and this increase will be paid by the employees. She reviewed the seven plans that were presented to her by the 4 Scotland County Board of Commissioners Budget Meeting March 26, 2025 9:00 a.m. 517 Peden Street Laurinburg, NC County's Insurance Broker, discussing the deductible for each, the cost for employee, employee/family. employeelspouse, employee/child and employee/children. She also presented the annual cost of each and the percentage differential for each plan. The average cost for the County per employee is $10,000., and we have roughly 350 employees. Comm. O'Neal asked if our rates could potentially change? HR Director English stated that last month we only had twelve claims, whereas this month we have eight, these are large claims, dealing with cancer. Claims for twelve people last year cost about $2.6 million dollars, but it is possible. Comm. Williams stated that cancer would definitely be a large claim. Chairman Ivey stated that no matter how you look at it, we are still looking at $10,000.00 per employee, per year. Also, that we might have to start looking at something else, not today, but in the future. Comm. O'Neal stated this cost is a good argument for an employee health clinic. County Manager Snead stated that it can save money. Comm. O'Neal stated that preventative care pays down the road. Chairman Ivey stated that a few years ago they came up with a First Health Plan and is wondering if Scotland Health Care System has something like that under Atrium. HR Director English stated that United Health Care would do the same thing. County Manager Snead reminded the Board that we shop for insurance every two years. Comm. O'Neal stated that maybe next year will be better with cost down due to healthier employees. HR Director English that she was told that, but it will not happen this year, typically takes about three years. County Manager Snead stated that BCBS wants to make the money back that they lost at a 30% differential. Comm. O'Neal asked if counties worked together as a collaborative? Chairman Ivey recommends that more be found out about Self -Funding. Comm. Williams stated that he has heard about this before. Chairman Ivey stated that this cost is not sustainable. Also, since citizens are worrying about paying their own insurance, we can't go to the citizens and ask for a 6% increase in taxes SO that we can cover our employees' insurance.Comm. Williams stated that the prices will continue to increase due to the aging workforce. Comm. O'Neal asked what were the expenditures this Year? County Manager Snead responded $2.8 and next year would be $10,000.00 times 350 employees. Comm. O'Neal states that he would like to understand how Richmond County is doing the selfinsured. County Manager tasked with checking on Richmond County and their selfi insurance and talking with our Insurance Broker for more options. Comm. O'Neal asked that she would find out their direction, are they happy, are they staying with this plan or going some place else? Chairman Ivey stated to look at employee participation rate also. He also talked about the differences in the cost for an individual, employee with family, employee with one child and employee with spouse. The HR Director informed the Board that there are only about thirty employees that have family coverage. Vice Chair Frizzell asked if employees receive treatment at the Health department? County Manager Snead stated that it has been talked about for years, and we need to get it off the ground. Comm. Williams asked if there were other counties with Employee Health Clinics? The County Manager stated that Richmond County loves it, they can go to the Clinic, receive care, get medicine all while still working. Comm. O'Neal stated that we need to look into every area, look at what we have, is it working and/or can it be better. Chairman Ivey tasked the County Manager and HR Director to check into new options, check with Scotland Health Care System regarding an Atrium plan, check on the Richmond County Health Clinic and maybe try another Broker. Comm. O'Neal asked when can 5 Scotland County Board of Commissioners Budget Meeting March 26, 2025 9:00 a.m. 517 Peden Street Laurinburg, NC we discuss this again? County Manager Snead replied, the April 7th meeting. Comm. O'Neal stated that they must get to stepping since time is short. Vice Chair Frizzell stated that a Health Clinic would be a good incentive for employees and it saves money. County Manager Snead stated that with billing insurance for the Health Clinic, we would be paying ourselves back. FY 2026 Initial Budget Projections Finance Director Hobbs presented the Initial Budget Projections for FY 2026 stating that the Ad Valorem taxes and Sales taxes can change over the next two months, also that the Unrestricted Revenues can either go up or down as these are DSS revenues. She stated that the other sources is the Fund Balance and that the Miscellaneous Revenues is mostly the school lease income, about $2 million. There is still money remaining for the John Blue House, Reentry is asking for $8,000.00 which includes a $3,000.00 increase. Chairman Ivey pointed out that the Ad Valorem taxes were offt by $1 million, and the following Budgets were decreased: Sheriff's Office, the Jail and transportation. Chairman Ivey stated that Industrial Incentive Grants account for $300,000., and we do not have any new ones. The Finance Director stated that she is not sure how they are calculated and that she is not involved in that process. She discussed Debt Service, Lottery Funds being unknown, School Funding of$10 million, Capital Outlay of $300,000. Chairman Ivey stated that the offer to the Liaison Committee is $975,000., which includes Capital Outlay, with an ADM of5118 which is lower than stated that the Liaison Meeting and could possibly be 5000. Commissioner Williams said to not forget PreK. County Manager Snead stated that the School System receives funds from the State for this, PreK. Chairman Ivey stated that we are not cutting funds and that no matter where we go it will be and increase per pupil. He also told them that ifthey have not read the Senate Bill sponsored by Senator Bill, it states for 2025-2026 the School System is to accept whatever we give them and there is to be no mediation or suing for either party. He also stated that he is not sure why he put that in the Bill. Sandy Callan of WLNC stated that this is a House Bill written by two others. Vice Chair Frizzell cautioned them to be mindful of the children and grandchildren. County Manager Snead stated that this Budget includes a 2% COLA, Progression Steps, 401K and Health Insurance, the employees are not losing anything. Chairman Ivey stated that he wanted to see those items stay and that there is more work to do. The County Manager stated that they can conservatively reduce the budget because we will not be 100% staffed and will need to get through this year with the insurance being paid. Commissioner Williams asked ifthe 30% increase is included in this Budget? Chairman Ivey informed the Board that personnel and capital are not included in this budget and there is no need to go over. County Manager stated that personnel requests are changing. Commissioner O'Neal questioned the Humane Society's budget of $110,000. Commissioner O'Neal also asked if the Humane Society was meeting our needs? The County Manager responded yes, and that she has not heard of any problems this year from the Health Department. Also, that problems in the past of not accepting animals led to pro rating the $90,000.00. She mentioned that the Health Department prepares a report each month regarding the number of animals dropped off monthly by both the City and County. Vice Chair Frizzell said that he would like to see that report each month. The County Manager stated that she would make it available. Commissioner Shelley asked if we are paying the Medical Examiner? Vice Chair Frizzell 6 Scotland County Board of Commissioners Budget Meeting March 26, 2025 9:00 a.m. 517 Peden Street Laurinburg, NC mentioned the decrease in the transportation budget. County Manager Snead mentioned that the decrease is due to no new buses purchased and that she will be meeting with them next week. The increase in Emergency Management was questioned. Finance Direct Hobbs explained that the increase is due to the addition of a Fire Marshal. County Manager Snead reminded the Board oft the reclassification of the Building Code Inspector to a Fire Marshall. Chairman Ivey stated that we will have to wait until we have the figures to go over Agenda Items # 6 (Master Capital Plan), #7 (Departmental Capital Requests) and # 8 (Departmental Personnel Requests). He also stated that the next Budget Meeting will have to be either April 7th or move to the end of the month which would be close to the May meeting. County Manager Snead stated that would be cutting it close (April 7th) when she has to meet with the other departments next week. Chairman Ivey asked about April 29th and stated that it is close to the next meeting (May 5, 2025) and may eliminate the need for another. He then mentioned April 30th as the date and that the Liaison Committee meeting is scheduled for April 29th. After the discussion, a date was agreed upon. Chairman Ivey stated that the next Budget Meeting would be held on Wednesday, April 30, 2025 at 9:00 a.m. at 517 Peden Street. Commissioner Budgeting Priorities and Direction Commissioner O'Neal's suggested direction is to keep COLA and Progression, but you must sharpen your pencils to do that. County Manager Snead said that they would have to ask themselves can we go without this position to help our employees? Chairman Ivey asked the Tax Adm. Butler if the revaluation would be for this budget year? She answered that it would be for next year. Chairman Ivey responded that budget discussions for next year would be better. Commissioner McPhatter asked about relief for the citizens? Chairman Ivey said that we would love to keep it revenue negative. Tax Admin. Butler informed the Board that the last ten (10) qualified sales were up 69 - 70%. The dollar amount will be a shock for the citizens. Chairman Ivey mentioned that tax relief is being sought for the elderly, disabled and veterans, and that NCACC is lobbying for revenue replacement from the state to replace the revenues lost. Tax Admin. Butler informed the Board that the veterans property tax exemption can be up to $25,000.00 or 50%, whichever is greater. Comm. O'Neal mentioned the decreasing the revaluation period from eight (8) years, which contributed to the 69% increase. County Manager Snead stated that Mrs. Butler and her tax department are in a position to be ready to do that. Comm. O'Neal mentioned that we have to do the 1/4 cent sales tax, and not depend on property taxes, as it is a consumption tax and will be shared by all. Comm. Shelley replied that we pushed it, we need the income and if we showed them that we have decreased property tax then they will vote for the consumption tax. Comm. O'Neal mentioned that a better job has to be done with the lead up. Comm. Shelley stated that the citizens want a consistent decrease in property taxes. Vice Chair Frizzell commented that it was not advertised enough. Comm. Shelley replied that it may not have mattered and Vice Chair Frizzell said that we need to get the information out there. Comm. O'Neal mentioned that the School System is giving a 3% COLA, period. Chairman Ivey stated, "for the record, Tim did not promise anything in the tax cut." 7 Scotland County Board of Commissioners Budget Meeting March 26, 2025 9:00 a.m. 517 Peden Street Laurinburg, NC Chairman Ivey informed the audience that the next meeting will be a Regular Meeting on Monday, April 7, 2025 at 6:00 p.m., at the EOC Building. He read the reasons for a Closed Session and the relevant General Statutes as listed on the Agenda. Motion made to go into Closed Session by Vice Chair Frizzell and motion duly seconded by Commissioner McPhatter. A BL Tim Ivey Dorothy B. Jyson Chairman Clerk to the Board o (Seal) 6 AR a 8