Cuts in budget requests from both the public schools and the college are expected Monday when County Manager Cary McSwain presents the 2008-2009 budget.

McSwain gave the Moore County Board of Commissioners a peek into the budget proposal during a work session Thursday. The manager usually keeps his budget under tight wraps until the formal presentation at a regular meeting, but he revealed a few details after Board Chairman Colin McKenzie gave him the go-ahead.

McSwain said he is recommending a $24-million-plus appropriation for the public schools, rather than the $25.5 million requested for current expense. The current expense budget for the current year is $23.6 million, which was an increase of about 8 percent over the previous year's budget. McSwain said he had discussed the budget issue with Superintendent Susan Purser.

The budget also cuts out a $75,000 appropriation requested by Sandhills Community College to purchase an activity bus.

The commissioners did not go into a detailed discussion of the budget during the work session, in which they spent most of their time reviewing recommendations on a group health plan and a draft of fiscal policy guidelines prepared by a special volunteer committee.

McSwain did not give a hint about what the proposed property tax rate will be next year. The rate will have to go up as the county begins repaying bonds issued to fund building needs for the school system and Sandhills Community College. Last November, voters approved issuing $69.5 million in bonds for the schools and college.

School Finance Director Michael Griffin was present to answer questions about the school budget request. He was sitting in for Purser, who had a conflict Thursday night and was unable to attend. The college sent no representative, but Commissioner Larry Caddell is a college trustee.

On the employee group insurance issue, the board reached consensus to add the matter to the agenda for the Monday night regular meeting. The commissioners also agreed to place the fiscal policy subject on a June meeting agenda.

In keeping with board policy, the commissioners do not take votes during work sessions but can reach agreement on issues discussed.

Maintaining Fund Balance

Jim Westbrook, who chairs the County Government Efficiency Advisory Board, reviewed the fiscal policy guidelines developed by the new panel, appointed by the commissioners to study the county's financial operations and recommend changes as needed.

The draft presented at the Thursday meeting calls for the county to establish a capital reserve program for major capital improvements in the utility systems and to maintain a fund balance of at least 15 percent of the total annual operating budget "with a targeted policy equal to 25 percent."

"What you have before you is a conservative financial policy," Westbrook said.

The proposed policy calls for the county never to reduce the fund balance below 15 percent, except in the case of an extreme fiscal emergency, such as a weather disaster or a sudden economic collapse. Any funds above the 25 percent point would be available for board appropriation as needed.

"You have to have cash on hand to handle these emergencies," Westbrook said.

The Local Government Commission, the state agency serving as a fiscal watchdog for counties and municipalities, recommends that local governments maintain a fund balance no smaller than 8 percent of the total operating budget. Counties the size of Moore usually maintain a fund balance between 14 and 17 percent. For the current year, Moore County has a fund balance of about 24 percent.

Capital Planning Needed

The advisory board also recommended that the county develop a 10-year capital improvement plan to be reviewed and updated annually. The public schools and the college would be asked to submit their respective 10-year capital improvement requests annually, along with a prioritization of these improvements.

If adopted, the guidelines would require each enterprise fund to maintain a capital reserve fund ranging from a minimum of $2 million to a maximum of $4.5 million, Under this policy, the county could finance projects costing more than $500,000, but anything below that figure would be appropriated either from retained earnings or the capital reserve fund.

The advisory board recommended that 15-year capital improvement plans be developed for all enterprise funds.

Enterprise funds are collected to operate and maintain programs separate from the county's general fund operations. An example would be funds established for water and sewer services, which are largely paid for through user fees collected by the county.

The advisory board has been devoting most of its time in recent weeks to an examination of the utility enterprise funds with emphasis on a new rate structure that encourages conservation while covering operational costs. Details about new rate recommendations were not discussed during the Thursday meeting.

"You and your group are doing a yeoman's task for us, and we really appreciate it," McKenzie said to Westbrook.

Group Insurance Change

In the other budget item discussed Thursday, McSwain recommended that the county accept FirstCarolinaCare's group insurance proposal.

His recommendation did not reflect the findings of a Group Health Committee composed of county employees, who wanted to remain with the existing provider, FISERV.

FirstCarolinaCare (FCC), which is based in Moore County, has offered a self-insurance plan that matches the current benefit package, said McSwain.

McSwain expressed respect for the work produced by the employee committee but told the commissioners that "the fiduciary responsibility to contain costs outweighs some of those concerns." He said some committee observations appeared to be subjective and "people don't like change."

Although FCC's proposal included lower administrative costs than FISERV, the committee pointed out that First Carolina lacks experience in self-insuring public sector clients. Other concerns raised by the committee include suspicion of the managed care approach as outlined by FCC. The committee said the $8,960 saved in administrative costs "is not a compelling enough amount to switch plans." The committee also noted that since 2004, claims under the existing plan have risen an average of 3.4 percent a year, while the national average increase is 12 percent.

McSwain said that the FCC proposal includes keeping the current provider network (MEDCOST) and offers additional discounts at parent facilities, amounting to a potential saving of about $170,000, based on this year's claims numbers.

McSwain presented "side-by-side cost" comparisons between the two plans as follows: FISERV $634,008 and FCC $625,048 for administrative costs; FISERV $4,999,281 and FCC $4,783,882 for estimated annual claims cost; and FISERV $6,090,600 and FCC $5,823,590 for estimated maximum claims cost.

McSwain said he was also impressed with FCC's interest in enhancing the county's employee wellness clinic and as an advocate for the county's return on investment in the clinic, known as Wellness Works.

Stay in County

Mark Browder, the county's independent insurance consultant, agreed that FCC went beyond requirements in its proposed package.

"FirstCarolina Care certainly went out of their way to accommodate the county," Browder said.

County Human Resources Director Teri Alesch reported that requests for proposals were sent to 20 vendors and 10 responses were received. Providers responding were Aetna, Blue Cross/Blue Shield of North Carolina, Coresource, First Carolina Care, FISERV, GILSBAR, Wells Fargo, NCACC/ CIGNA, Tucker Administrator and Unicare. All proposals are self-funded and match the county's current plan.

Alesch said that Aetna and Unicare were eliminated because of high administrative costs. The committee turned its attention to the remaining eight and asked each to make an individual presentation. Committee members were then asked to pick their top three preferences. FISERV came out on top, receiving eight out of nine first place votes. FCC came in second. GILSBAR was eliminated because of a much higher yearly fixed cost consideration.

However, the commissioners expressed satisfaction with the manager's recommendation. Commissioners Jimmy Melton and Larry Caddell both told of good experiences with First Carolina Care.

"Any time we can keep the money in Moore County, we ought to do so," said Commis-sioner Tim Lea.

McSwain encouraged the board to consider the matter at the Monday night meeting. He said that early action would give the county more time for the re-enrollment period.

Serving with Alesch on the employee committee were Carrie Levario, Mike Howery, Dawn Spivey, Jerrell Seawell, Tami Golden, Caroline Xiong, George Hunt, and Megan Owrey. Glenda Clendenin and Candy Davis also served.

Contact Florence Gilkeson at 947-4962 or by e-mail at florence@thepilot.com.