Fiscal Year 2005 Adopted Budget

DEPARTMENT BUDGET SUMMARY

Non-Departmental accounts include County-wide costs for insurance premiums and claims (including workers' compensation), fringe benefits for retirees (health and life insurance premiums), miscellaneous expenses, County building rent and overhead charges to certain County agencies, and contingents held for future County Board actions such as the General Fund and Affordable Housing Investment Fund.

INSURANCE COSTS: The County's risk financing program is comprised of commercially purchased insurance coverage and retained risks paid for through a program of self-insurance. The County purchases insurance primarily for its property, general liability and automobile liability exposures subject to prudent deductible or retention levels. These include real and personal property, crime, garage keepers, professional liability and constitutional office coverage. Retained exposures include general liability, automobile damage and related liability up to specific retention levels. At this time the County has a $1 million retention level for general liability. In addition, the County allocates a portion of fund balance to maintain a Self-Insurance Reserve ($3,500,000) and a General Fund Operating Reserve ($13,400,000). The General Fund Operating Reserve is funded at two percent of General Fund expenditures.

• Increases in costs (premiums and claims) are driven by catastrophes (September 11, 2001), medical cost increases, and the cost of settlement claims for workers' compensation.

RETIREE BENEFITS/HEALTH ADJUSTMENT: This account includes the employer's share of retirees' health and life insurance costs. The actual expenditures also include the year-end health care adjustment for the County's indemnity plan. Accumulated premiums collected less actual claims paid determine the health adjustment amount, either savings or additional costs determined at year-end.

• Retirees' Health and Life Insurance costs reflect anticipated expenses for FY 2005 based on current actual expenses and growth in the number of retirees.

MISCELLANEOUS EXPENSES: These County expenses include: rent, overhead charge-backs to some County agencies, the cost of the County's annual external audit and other consulting fees, national and state association memberships (NLC, NACO, VML, VACO) and other miscellaneous expenses not allocated to County departments.

• Building rent includes lease-based increases for Courthouse Plaza office and parking lot rental and leased office space for the Department of Economic Development.

• The consultant budget for FY 2005 reflects reduced contractual services for federal lobbying efforts.

• Pay enhancements reflect the funding for employer of choice benefits (Live Where You Work, Walk to Work, Wellness, etc.). The decrease reflects one-time funding ($100,550) for start-up retirement accounts for formerly temporary employees approved in FY 2004.

• Additional funding ($308,000) for County special events has been adopted for FY 2005. Special event funding in FY 2004 was approved as part of FY 2003 year-end closeout.

• Housing Projects reflect the costs of affordable housing projects funded from the Affordable Housing Investment Fund (AHIF) during FY 2003 and earlier years. The FY 2004 adopted budget did not reflect any current year allocations from the AHIF. The AHIF contingent is shown in the next section at the approved budget amount for budget comparison purposes.

• Miscellaneous expenses are for the County's Flexfund program administration, which allows for pre-tax withholding for child care and health insurance expenses. Actual expenses for FY 2003 include equipment purchased by lease financing for which lease proceeds were received.

CONTINGENTS: The non-departmental accounts also hold the County Board's contingents. These contingents are appropriated funds established to cover unforeseen expense items or new projects initiated after a fiscal year has begun (General Contingent), for a particular purpose (Affordable Housing Investment Fund), or as a set-aside for future County Board decisions. For FY 2005, the budget includes a $1,000,000 General Fund General Contingent and a $4,000,000 Affordable Housing Investment Fund (AHIF) Contingent. The AHIF Contingent is supported with federal HOME funds and local tax funds. An amount of $1,470,000 will be allocated from the AHIF local tax funds in FY 2005 to pay the annual debt service (principal and accrued interest) to Fannie Mae on the $10,000,000 credit facility used to assist Arlington Housing Corporation in the purchase of the Gates of Arlington.

In order to fund premium increases for retirement, and cost-of-living adjustments (COLA) or other compensation enhancements for County employees, a compensation contingent of $8,800,000 was proposed for FY 2005. The County Board approved a 2% COLA, an increase in the employer contribution to retirement, and a number of benefit enhancements included in the Employer of Choice recommendations. These include, among others, an additional pay step, increased Metro subsidies, increased grants for the Live Where You Work program, and an increase in the employer match for the deferred compensation plan. Most of these costs have been allocated to departments, except those included in the pay enhancements in the miscellaneous section above.

• Allocations totaling $270,000 have been approved from the General Contingent through May 2004.

• After adding in deobligations and prior year carryover funds to FY 2004 ($4,184,185), allocations totaling $6,037,963 have been approved from the AHIF Contingent through May 2004.