Cook County Finance Committee Budget Review, October 27, 2011

Cook County Finance Committee Begins Review of the Proposed 2012 Budget; Concerns Raised over Some Proposed Fees and Taxes; Impact of Recent League Initiatives Seen

Department of Finance; Department of Administrative Hearings; Department of Technology; Offices under the President; and Bureau of Administration

All of the areas and departments appearing this day are under the President.  The Finance Department began by presenting an overview of the proposed Operating Budget of $2.943 billion (down from $3.055 billion in 2011).  There is also a 5-year Capital Improvement Plan for 2012 which proposes $180 million to be spent in 2012, all from funds from bonds issued in 2009 and 10; and $143 million for Capital Projects. 

Proposed Fees and Taxes

During the course of the day, Commissioners expressed concerns about several of the taxes and fees that were proposed by the President in order to balance the budget.  The proposal to have unincorporated areas either be annexed, contract for police services, or pay an additional amount for police services provided by the County Sheriff through a “special service area” tax appears to be among the most controversial.  Andrea Gibson, the Budget Director, explained that her department had worked with the Sheriff to identify that the incremental costs for the Sheriff to provide policing service for the unincorporated areas is $5 million.  Comm. Silvestri noted that areas can opt out of a “special service area” with a 51% vote of the residents.  Some of the questions asked:  Why wouldn’t the residents all vote to opt out?  Would the Sheriff really not provide service there?  The Sheriff is currently providing policing service for Ford Heights which eliminated its police force several years ago because it couldn’t afford to pay for its own.  So how will the County distinguish between Ford Heights and the unincorporated areas?

Expect much more on this topic when the Sheriff appears to discuss his proposed budget.

Several Commissioners, including Collins, Suffredin, and Schneider, expressed concern over the proposed increase in the county’s alcohol tax.  The Finance Department was asked to provide information on the current and proposed total tax on alcohol (including federal, state, and local, as well as county portions) and compare that total to the totals in other major urban areas, as well as adjoining counties.  They don’t want to vote to approve and then find out that the County would then have the highest liquor tax in the U.S., as happened several years ago when they voted to increase the sales tax by a penny.

Comm. Schneider expressed concern over the proposed new auto amusement device tax on machines that require payment to be used by the general public, such as jukeboxes and slot and video poker machines.  Comm. Schneider said that many bars will have 5 or more of these machines, and if the tax on alcohol is also raised, these small businesses will really be hurting.

Comm. Suffredin criticized the President for not mentioning that the budget contains a proposal to align Cook County and the City of Chicago’s parking tiers for charging the county’s parking tax on public garages for daily, weekly and monthly parkers, which results in an increase in the parking tax.  He said this will also affect suburban garages, which won’t necessarily be in alignment, and may hurt suburban downtown shopping districts.

Several Commissioners also wanted to know if there was any consideration given for exempting jurors, state’s attorneys, and public defenders from the proposal to institute parking fees at county parking facilities.  Comm. Gainer asked that information be provides as to whether the proposed fee was set above a threshold that would result in the County having to pay Chicago’s parking tax.

Furlough Days

This controversy was touched upon since also on this day the Interim Comptroller issued a revised and corrected report on who had not been taking these unpaid days off.  Apparently, about half the county’s employees have been deemed “essential” by their departments and thus have not taken any. While it was expected that a number of employees of the Sheriff and the Health & Hospitals System would be exempt from taking all the furlough days since some of their services are offered 24/7, there is concern that other departments are not taking the days.  The Committee will be getting further information by department, and Chairman Daley said that the Finance Committee should ask the departments about the status of furlough days when the departments appear during this budget review.  The Committee may want to amend the departments budgets for 2012 if they can’t justify not having the furlough days taken in 2011.  All employees under the President are taking the furlough days.

Note there is no proposal for furlough days in the 2012 budget.  There is a proposal to have one unpaid county-wide “shut down” day (the day after Thanksgiving in 2012).  In addition, the Administration has offered to cut the number of proposed layoffs (about 1,000) in half (to about 500) if the unions will accept 8 of the existing holidays as being unpaid.  Thus far, the unions have not agreed to this.

League Impact on Special Purpose Funds and Transparency

In September, the League provided the Commissioners its Final Report on its Study of the County’s Special Purpose Funds, along with an updated chart detailing each of the funds.  Representatives of the County League and local Leagues also met with a number of the Commissioners to discuss the concerns as to whether the Commissioners were paying sufficient attention to these funds, including whether they were still needed.  It was clear on this first day of hearings that the League has had an impact.

The Budget Director noted that one special purpose fund for the Homeland Security Department had been eliminated.  Comm. Silvestri questioned several people as to whether the county needed all 36 of the remaining funds.  The one for Animal Control was highlighted because it has a significant fund balance.  The department head explained that she hopes to utilize this fund balance at some point to build a facility to provide a number of services.

With regard to transparency, in the meetings with the Commissioners, the League noted that there appears to be more and more information being provided to Commissioners outside the public meetings.  Chairman Daley stated that, in response to the League’s concerns, for the first time the Commissioners’ questions to departments and the written responses that are provided outside of the budget hearings will be posted on the county’s web site for the public to see.

Technology

During the budget process for fiscal year 2011 (that took place in Feb.), Comm. Fritchey noted that he had offered an amendment that would require all the technology personnel under the different elected officials to work together under the direction of the County’s Technology Chief (currently Greg Wass).  This amendment did not pass because of the opposition from the other elected officials.  Comm. Fritchey stated that he intended to offer this amendment again, and asked whether Mr. Wass still supports such a consolidation.  Mr. Wass said that he supported such a move with regard to infrastructure (i.e., hardware) and enterprise functions (e.g., e-mail).  However, Mr. Wass indicated that applications for particular areas would not be ready for consolidation, noting that the Technology Collaboration Group, which was set up in lieu of the consolidation proposal, and which brings together representatives from different technology personnel throughout the county to share information about what they are doing and planning to do, may be sufficient at this time.

Overall Impression

Despite all the questions and concerns expressed by Commissioners, it was clear that the Commissioners are pleased with a number of the initiatives being taken by the Administration and all of these departments that are under the President in order to improve service, create efficiencies, and increase collaboration among different departments and between the County and City and the County and suburbs in order to reduce costs and improve services. 

-- reported by Priscilla Mims

CCHHS Board Meeting - October 27, 2011

The meeting was called to order at 7:40am by Chairman Batts. Four public speakers began the meeting. One speaker objected to the two proposed Price Waterhouse Coopers contract extensions on the agenda stating that the costs should have been included within the scope of their original contract. He stated that he runs a similar business and the costs cited would normally be included in an initial contract for such services. A Stroger physician presented the ongoing challenges of providing good patient care and the Mental Health Specialist IIs again appealed to the board to not eliminate their positions at Cermak Hospital to be replaced by MHSIII.

In approving the minutes of the Finance Committee three items were exempted from the approval as they were awaiting approval of Contract Compliance. Director Carvalho asked for guidance from the State's Attorney on whether waiting for Contract Compliance keeps the contract from moving forward. Now these contracts will have to wait another month for board approval and he asked that those submitting such contracts indicate if delay in approval will impact service delivery.

Mr. Cookinham, interim CFO, was asked to provide an update on the backlog of pending medicaide claims with the state. He stated that the rejection rate is about the same but he did not give a percentage and said the processing for 2011 has about three more weeks to go. Director Carvalho stated that he had heard that the county process was qualifying those patients who had medicare, insurance, or some source of payment and then all others were being sent to the state to sort out whether they would qualify for medicaide or not. He wanted to know what the percentage of payments that were not being sent anywhere was. Mr. Cookinham said he would check on this but he didn't think that the process was to just send them all to the state to see if they qualified.

A Shakman Compliance Monitor is to be hired and will report to Cathy Bodnar, CCHHS Chief Compliance Officer.

A representative from the Procurement Office reported on changes that have been made to the CCHHS Procurement Policy so that it will be in compliance with the changes in the Cook County code that was approved by the CC Board and went into effect on October 7. The major changes include:

• Approval by the board only necessary for contracts over $150,000
• Quarterly reports to the board on purchases less than $150,000
• All purchases are to be listed on a website
• Supply Chain Managment will be able to terminate contracts in accordance with terms in contracts and can amend contracts up to $150,000
• Requests for bids will now be posted on the internet not in newspaper

Dir. Carvalho requested that the log of complaints of interference with the supply chain process also be posted on the internet. A motion was made to amend the policy accordingly. The amendment was approved as was the policy.

The board was asked to ratify the changes that were made to the CCHHS budget in the President's Executive Budget that was presented to the board on Tuesday. Dr. Raju, CEO, stated that his team had worked with the President's office to come to a compromise on the budget and he had made changes that would not reduce serves or personnel but would challenge them to be more efficient. He intended to review all contracts going forward and hoped that the budget would pass with no further amendments as he needs to focus on other matters and not spend months enmeshed in budget struggles. In further discussion it was noted that this budget reflects another quarter cent reduction in sales tax and there will be another reduction next year. In order to preserve quality services the system will need to focus on the issues of increasing revenue and keeping patients coming to CCHHS. Also it was pointed out that they will have to address the often avoided issue of productivity which has plagued the system and that encompasses management issues and infrastructure issues that are wide spread. The revised proposed budget was approved. Chairman Batts said there are two public hearings scheduled for public comment on the revised HHS budget. Transcripts of the hearings will be provided to the CC Board. The public hearings that the CC Board is holding will not address the HHS portion of the budget.

Chairman Batts also stated that he has a donor for the Foundation that the board has set up but they need to get the Foundation Board up and running so they can accept the money. They still need to find outside persons to serve on the board although they have a list of potential members.

Cathy Bodnar, Chief Compliance Officer, gave a presentation on the CCHHS Conflict of Interest Policy.

Dr. Raju, the newly hired CEO, reported that his vision for CCHHS is that they will continue to do good work and become a national model for excellent care. There will be challenges since these are difficult economic times and it will take time. He stated that the Nominating Comm. for the board met and has submitted 3 names to President Preckwinkle to fill the position on the CCHHS board left vacant by the resignation of Andrea Zopp. He also said that Provident Hospital had an excellent Joint Commission report and he commended the staff for their work.

The meeting went into closed session at 9:50am to discuss collective bargaining agreements. The observer left at that time.

October 4th Cook County Bd & Pres. Saving Money

Much of this meeting involved financial issues of the county--deficits in the budget and lower than expected revenues. A presentation by the Civic Consulting Alliance ( a pro bono civic task force which includes Commissioner Fritchey) was well received by the Board. Twenty working groups are investigating and recommending ways that city-county collaboration can save both governments money. Eleven million in savings has been identified already--combined purchasing, janitorial services, health care clinics are examples. Savings will be reflected in the upcoming budget. This group plans a 3-4 year process.

The 3rd quarter revenue report showed that the county was not meeting budget revenues, being $73 million down in revenue collection. Much of this amount is due to the Health and Hospital System not collecting from patients and from the state Medicaid program. This has been an on-going problem in the system. The Department of Revenue is pursuing businesses that aren't registered and paying appropriate taxes to the county. They will be given a pass on back penalties and interest if they now register and pay back taxes due. Cigarette tax enforcement has been stepped up with the addition of five sheriff's police going with county officials to investigate and collect the taxes. It appears that weapons and threats by some cigarette sellers were of concern to the tax inspectors.

Redeploy Illinois is a program which would promote alternatives to jail for non-violent offenders. This would involve house arrest, more community services for offenders, etc. The county is waiting for Judge Evans to complete the grant application so this program can get started to save the county money and be more effective for offenders.

Again, it was difficult for this observer and other audience members to follow all that was discussed and voted on during this meeting. The finance agenda was not available until the meeting had already begun and the last minute amendments were not available to the audience. This observer did notice that several commissioners made the effort to name and summarize agenda items that were voted on, rather than just state meaningless item numbers.

All commissioners were present at this meeting except Commissioners Silvestri and Tobolski.