BUDGET MESSAGE

May 15, 2023

Honorable Chairman and members of the Cabarrus County Board of Commissioners:

It is my honor and privilege to submit the Fiscal Year 2023-2024 (FY24) Recommended Budget and FY24 Community Investment Fund (CIF) capital investments for Cabarrus County.

Consistent with direction given by the Board of Commissioners (BOC) at the annual budget retreat in February, this budget funds critical investments while maintaining a property tax rate of 74 cents per $100 of assessed valuation for a fourth consecutive year. That brings the proposed General Fund budget to just under $340 million – a 6.7% increase from last year. Across all funds, including those supported by user fees, the FY24 budget totals just over $450 million.

The budget also supports capital investments through the CIF. Funding sources for these projects are noted in the Cabarrus County Capital Project Ordinance scheduled for adoption by commissioners in June 2023, in addition to the General Budget Ordinance. Capital projects planned for beyond FY24 are included in the budget document for informational purposes and will require a staff recommendation and formal adoption by the Board before proceeding.

Staff worked diligently over the past few months to prepare a budget informed by economic conditions, Board priorities and strengths and opportunities for improvement identified by the Community and Workplace surveys.

Our local economy remains strong and resilient. The population continues to climb, with the North Carolina State Demographer’s Office projecting population growth of 40% by 2042, to well over 300,000 residents. The unemployment rate of 3% in December 2022 outpaced the State of North Carolina (3.8%) and the United States (3.5%).

Strong revenues, led by unprecedented sales tax, point to the benefits of a diverse local economy and the burden it can take off local property owners. The budget includes total sales tax revenues of nearly $75 million – an increase of 13% from last year and 58% from five years ago. The property tax rate remains unchanged and tax values remain at 2020 levels. Still, new growth and development have lifted projected property tax revenues (excluding fire districts) to $236 million – an increase of 4.4% from last year and 44% from five years ago.

In addition to a strong economy, Cabarrus recently ranked well in benchmark comparisons against North Carolina’s other 99 counties. Cabarrus is North Carolina’s 11th healthiest county. Nearly 90% of our residents have health insurance, food security and are not living in poverty, putting us in the top five of North Carolina counties. More than half of our residents have a postsecondary degree or credential, which is the 11th best in the state.

In January 2023, the Board and staff began the development of a new five-year strategic plan for the County’s business operations, to be grounded in impactful vision, mission and value statements. The process was informed by two recently completed surveys—our Community and Workplace surveys.

In November 2022, the ETC Institute distributed the Community Survey to a random sample of 2,000 households and received 465 responses. More than two-thirds of Cabarrus residents maintain a positive opinion of the County, with quality-of-life satisfaction scores rating higher than the national average across several categories. According to the survey, 79% of respondents were either ‘very satisfied’ or ‘satisfied’ with Cabarrus County as a place to raise children, while 78% said the same for the County as a place to live. Seventy-three percent responded similarly about the overall quality of life.

The most impressive results were related to the exceptional customer service provided by County staff. Ratings were significantly above the national average, including:

• 83% ‘very satisfied’ or ‘satisfied’ with the respect and professionalism of employees
• 78% ‘very satisfied’ or ‘satisfied’ with the accuracy of information and assistance given by employees
• 75% ‘very satisfied’ or ‘satisfied’ with how quickly staff responded
• 73% ‘very satisfied’ or ‘satisfied’ with how well an issue was handled by employees
• 72% ‘very satisfied’ or ‘satisfied’ with the ease of contact

Understanding resident perceptions is an essential first step, but it’s also important to understand the opinions of our workforce.

To achieve this, a Workplace Survey was conducted by the Local Government Workplaces Initiative of the UNC Chapel Hill School of Government. The County first participated in the survey in 2020 to gain a general understanding of our work climate and to establish benchmarks.

With 84% of our workforce participating in the 2022 survey, feedback shows several areas where we can improve, including:

• 47% of employees are dissatisfied with their health insurance
• 50% of employees are dissatisfied with their pay
• More than 60% of employees interact with disrespectful, rude or yelling community members at least every few months
• Around 60% of employees feel burned out, emotionally drained, fatigued or used up by their work on a regular basis

While we focus on areas where improvement is possible, we cannot lose sight of ways we excel, including:

• 70% of employees feel valued by the organization
• More than 80% of employees feel the County fosters an inclusive workplace
• More than 80% of employees feel they have the resources and training needed to be successful in their job
• More than 90% of employees feel the County has clear, logical and written policies, practices and procedures

As the County works to address areas for improvement through the strategic planning process, we must continue to build on our strengths and prioritize the well-being of our workforce to meet resident expectations.

Using information from the 2020 Workplace Survey, the FY23 budget addressed several employee needs, which resulted in improvements expressed in the 2022 Workplace Survey. Workplace improvements last fiscal year included:

• Development of new pathways to public service with three paramedic trainee positions, two management fellows and increased internships. Using these positions, Emergency Medical Services recruited their first class of paramedic trainees that will move into full-time positions by the middle of 2023; Information Technology bolstered cybersecurity; Budget enhanced its capabilities through the Management Fellow program; and several interns have been hired across Human Services, Finance, Procurement and Human Resources.
• Use of market data to help increase salaries for positions within Emergency Medical Services, Human Resources, Information Technology Services, the Sheriff’s Office and others
• Addition of 39 new positions across several County departments to address employee burnout and improve service delivery
• Choice to cover the shortfall for at least two fiscal years rather than financially impacting employees with dental premium increases

Thus far in FY23, the Board allocated new State funding to increase public safety and health. The Sheriff’s Office added two detective positions to investigate human trafficking and child exploitation cases through a $1 million State grant. North Carolina is ranked 9th in the United States for the volume of human trafficking cases. Unfortunately, Cabarrus is not immune to the problem.

State-directed funding of $2 million was also provided through the County to the SUN Project, a collaborative system of care for pregnant mothers with substance use disorders.

The County continued to make strategic investments in our educational partners: Cabarrus County Schools (CCS), Kannapolis City Schools (KCS) and Rowan-Cabarrus Community College (RCCC). Each saw an increase of at least 3% in FY23 with additional funding for local supplements, operations and charter school pass-through funding. Although not part of the original adopted budget, the Board demonstrated a commitment to youth public safety through the mid-year approval of six additional School Resource Officers for CCS, with a portion of the funding coming from a State grant.

Since the County did not issue debt in FY23, capital investments were limited to about $22 million and paid with available cash. Investments included:

• $11.6 million to improve multiple County facilities including the Cabarrus County Senior Center in Concord and Frank Liske Park
• $8.2 million for CCS and KCS to fund deferred maintenance projects ranging from roof replacements to security cameras

The barn at Frank Liske Park was lost to an intentionally set fire in March 2020. County staff immediately started the process of replacing the iconic facility, which hosted thousands of reunions, weddings and other celebrations through the years. The new two-story, 12,700-square-foot barn and 47-foot silo, has a planned summer 2023 opening.

Although not part of the FY23 budget, two initiatives are worth noting where significant and critical progress was made during the fiscal year.

First, the County received $32.5 million from the State to design and construct the Cabarrus County Regional Behavioral Health Center off Kannapolis Parkway. Originally, the plan was to follow the lead of Guilford County by constructing two facilities with a total of 32 facility-based crisis (FBC) beds and 16 behavioral health urgent care (BHUC) chairs.

After evaluating options to maximize return on this once-in-a-lifetime investment, the County and its design team, human eXperience, received approval from the Board of Commissioners on a plan that will better meet community and regional needs. The revised plan consolidates the services into one facility, with a total of 44 inpatient beds and 32 23-hour BHUC chairs. This addresses complex navigation challenges by providing a “no wrong door” approach to receiving walk-in and drop-off patients in behavioral health crises. Beds will serve FBC, substance use disorder and psychiatric residential treatment needs. The facility is currently in the design phase, with an intended opening of mid-2025.

Second, County residents continue to benefit from the Board’s decision to invest most American Rescue Plan Act (ARPA) funds into local nonprofits. These organizations submitted proposals on ways they could provide affordable housing, behavioral health services, food assistance, education, afterschool care and healthcare services to residents. They are reimbursed for those services after documentation is reviewed. The County provides ongoing support to the organizations through education and counsel on federal grant administration guidelines, data measurement and reporting, and the benefits of collective impact goals.

The County voluntarily reports documentation of local ARPA-funded impacts to the federal government and posts it on our website for the public. Since the community rollout of ARPA funding, local organizations have reported more than 86,000 need-based transactions with Cabarrus County residents. For example, each month an average of 563 residents are receiving mental health treatment, 274 are receiving healthcare services and more than 1,300 are receiving meals due to ARPA funds.

We’ve intentionally focused on addressing the housing crisis with federal ARPA funding. In November, WeBuild Concord hosted a groundbreaking for the Lincoln Street Townhome project, a 26-unit development in the Logan Community that received partial support through the County’s ARPA allocation. In March, the Board approved an additional $1 million for Cooperative Christian Ministry (CCM) to acquire historic Brown Mill. CCM will locate The Rebuilders College to the site, providing 48 transitional housing units along with wraparound care and education services.

Although position needs exist across departments, the proposed budget focuses heavily on retaining existing employees and enhancing our ability to attract talent through strategic employee investments. During FY23, the turnover rate exceeded 20%, with rates over 50% in divisions such as Human Services Transportation and Fire Services. By comparison, the FY20 turnover rate was 14%. Increased employee turnover makes it clear action is required to ensure our workforce can continue delivering the high-quality services residents depend on.

In response to wage increases nationwide, and for comparable local governments in North Carolina, the budget accelerates the review of market data for all position salaries from a four-year to a two-year cycle. These routine market studies ensure we provide competitive compensation compared to other jurisdictions. The budget funds pay adjustments recommended by the latest study with increases ranging from 5% to 30% for more than 150 employees. Impacted employees work in various departments including Active Living and Parks, Infrastructure and Asset Management, the Public Library System and Tax.

Although the Department of Human Services (DHS) and internal pay compression across all departments will be reviewed during FY24, with adjustments planned for the FY25 budget, we do not believe DHS can wait that long for action to address their elevated turnover. As mentioned earlier, turnover in some DHS divisions has topped 50% with pay a significant driver. Therefore, the budget reserves funds to accelerate the market study for DHS so adjustments can be implemented by December 2023 to help stabilize the department.

In the early 1990s, the County eliminated longevity pay for all newly hired employees. In recent years, local governments reinstituted longevity pay to reward and retain employees. Earlier this calendar year, the City of Kannapolis restored longevity pay for their employees. The proposed budget funds longevity payments for permanent full-time and part-time employees with at least five years of continuous service to the County. Longevity payments, which will be paid annually in November, will range from $375 to $2,500 depending on employment type and tenure. These payments for eligible employees will help retain experienced and knowledgeable workers with significant institutional knowledge. Additionally, by reducing turnover the County can avoid the costs associated with recruiting, training and onboarding new employees.

Amid record-high inflation, the County has maintained an on-call pay rate of $50 per week for impacted employees. On-call pay is reserved for employees required to be available to work outside of their regular work hours, usually on short notice. It is important to recognize the value of this sacrifice. This includes social workers responding to after-hour reports of neglect and maintenance staff ensuring buildings are continually operational. The budget increases the on-call pay rate for eligible employees from $50 per week to $160 per week, better aligning the County with our competition.

In addition to restoring longevity pay, ensuring our market rates are competitive and increasing weekly on-call pay, the budget follows our compensation policy by funding a 1% Cost-of-Living Adjustment (COLA) for all employees and a merit pay increase of up to 4% based on individual performance. These adjustments serve two different purposes. The COLA accounts for the rising costs of goods and services that can lead to employees falling behind financially and struggling to make ends meet. Merit pay is not distributed equally among employees; it is awarded based on individual job performance during the review period. The COLA will be provided to all employees beginning with the first paycheck in July, while merit pay (if applicable) is provided on each employee’s review date.

For the first time since 2017, all employees can now choose between two healthcare plans based on their individual needs. The traditional Open Access Plan (OAP) provides competitive co-payments, deductibles and out-of-pocket maximums, while those who enroll in the High Deductible Health Plan (HDHP) will benefit from a Health Savings Account employer contribution increase of $250, taking it from $750 to $1,000 annually. Allowing employees to choose between the two plans is a win-win: it benefits employees while avoiding costs for the County. Both plans have employee premiums, deductibles and out-of-pocket maximums that are consistent with the prior year.

Several new position needs are addressed in the proposed budget to reduce workload and related stress while ensuring we keep up with growth and deliver high-quality services to residents.

The proposed budget adds five new Sheriff’s Office positions, including:

• A Sex Offender Registry Investigator (Detective) to maintain records and investigate possible violations. These investigators conduct more than 300 sex offender home and business checks each year and have produced nearly 30 arrests for registry violations over the last two years.
• A detective sergeant and two detectives for the Town of Harrisburg Division, with expenses paid by the Town through their contract for law enforcement services
• A Records Management System (RMS) Administrator to oversee the new RMS and Computer-Aided Dispatch (CAD). The administrator will oversee training, system updates and data integrity.

Emergency Medical Services (EMS) has experienced a 20% increase in call volume over the last two years. This increase elevates the importance of ensuring staff are well-trained and prepared. The budget adds a Training and Education Captain to lead agency-wide simulations, training and education, and certifications/compliance made possible at the new EMS headquarters.

The County expects three new facilities to open toward the end of calendar year 2024. The Public Library and Active Living Center at Afton Ridge will become the sixth Library branch and third Active Living Center in the County. The expanded Public Library and Active Living Center at Mt. Pleasant and the adjacent Virginia Foil Park will also open. The budget includes 36.4 positions to staff these new and expanded facilities with recruitment expected to begin late in the fiscal year.

As usage has increased, the budget proposes extending service at the Midland Branch to six days a week, which is consistent with our other branches. To make this possible, the budget includes a branch manager, part-time library assistant, and increases part-time position hours from 16 to 25 hours per week.

Data breaches and ransomware attacks negatively impact organizations across the globe daily. The budget adds a Cybersecurity Analyst to further enhance our ability to defend against such events and enable proactive countermeasures.

Although additional positions are not part of the budget, it is worth noting that after years of negotiation in Raleigh, Medicaid Expansion will become law if the State adopts its 2023-2024 budget. Locally, we expect at least 15,000 residents to become eligible for Medicaid, resulting in a significant workload increase. Since enactment is contingent on the adoption of a State budget, our budget does not include the 30 new positions needed to manage eligibility determinations and redeterminations. An agenda item to authorize the new positions will be brought before the Board once a State budget is adopted. At present, it’s expected that all costs associated with Medicaid expansion will be covered by State and Federal governments.

We cannot overstate the importance of making strategic investments in our education partners: Cabarrus County Schools (CCS), Kannapolis City Schools (KCS) and Rowan-Cabarrus Community College (RCCC).

Unfortunately, retention and recruitment challenges also impact our education partners. Both CCS and KCS are dealing with elevated turnover and less availability of substitute teachers. High-quality educators in each classroom are crucial to a thriving economy. Since statewide pay for teachers is the same, locally paid supplements can provide a competitive advantage. The proposed budget provides additional funding to maintain the CCS supplement at 12%. For KCS, the budget includes funding for a 0.5% increase to the local supplement for Kannapolis City Schools, bringing their total to 9%.

In addition to the supplement, the proposed CCS and KCS budgets include funding to cover the rising costs of locally paid staff, operating expenses and technology. The proposed CCS and KCS budgets total $81.7 million and $9.3 million respectively.

In addition to CCS and KCS funding, the County is also required to provide equal per-pupil funding for students attending a charter school. Charter school enrollment is estimated to be nearly 3,000 students for the 2023-2024 school year. This results in direct charter school funding to CCS and KCS of just over $6.5 million, with an additional $680,022 held in Board contingency should charter school enrollment exceed current projections.

RCCC serves over 20,000 students each year through 55 degrees, 36 diplomas and 101 certificate programs. The College plays a vital role in workforce and economic development throughout the County and region with $238 million of income added to the local economy each year. Additional funding for salary and benefit increases, utilities, a new locksmith position and a new safety assistant director position is included in the budget. Both new positions are co-funded by Rowan County. This results in total funding of $4.3 million, an increase of 9.2% from the prior year.

The proposed FY24 budget includes a transfer of $38.2 million from the General Fund to the Community Investment Fund (CIF) for current and future debt payments. The County will issue up to $180 million of new debt in FY24, which is consistent with our every-other-year cycle. Debt funded projects include:

• Up to $60.1 million to acquire and renovate a space for a new Human Services facility in Concord. The facility will replace leased space in Kannapolis, costing the County about $1 million annually until 2027.
• Up to $35 million to construct a new Public Safety Training Facility for the Sheriff’s Office, Squad 410, and volunteer fire departments.
• Up to $19 million for KCS to design and construct an additional classroom building at Fred L. Wilson Elementary School and replace the HVAC system at Forest Park Elementary School. The County is hopeful Rowan County will cover a portion of the project cost based on their share of the student population.
• Up to $18 million for CCS to complete HVAC replacements at Central Cabarrus High School and Concord High School.
• Up to $17.5 million to complete the upfit for the new Public Library and Active Living Center at Afton Ridge
• Up to $11 million for CCS to renovate the current R. Brown McAllister Elementary School to become the new Mary Frances Wall Center
• Up to $7 million for CCS to design and construct a replacement Opportunity School that would allow relocation from the aging Glenn Center
• Up to $7.05 million for CCS to complete roof replacements at Cox Mill Elementary School, Wolf Meadow Elementary School and Hickory Ridge High School.
• Up to $5.3 million to replace the HVAC system at the RCCC South Campus

Funding the above projects would leave several high priority projects for our education partners unfunded. These include:

• Up to $13 million to design and construct a new Royal Oaks Arts High School for CCS
• Up to $8.8 million for RCCC to design and renovate South Campus Building 201 ($5.5 million) and/or 203 ($3.3 million)
• Up to $7 million for RCCC to design and renovate the first and second floors of the North Carolina Research Campus building
• Up to $3.8 million for RCCC to design a new Workforce Innovations Center to house public safety, healthcare, education, physical education and career credit programs at South Campus. Design funding would bring the project to “shovel-ready” status, but construction funding of nearly $50 million would be needed to complete the project.

The budget also includes $18.5 million from the County’s pay-as-you-go (PAYGO) program. PAYGO is the use of cash rather than debt to pay for needed capital projects. PAYGO will fund a significant number of essential projects, including:

• About $5.8 million for CCS to fund 29 of their top 36 deferred maintenance projects. Project examples include enhancing access controls, roof repairs, parking lot repairs and flooring replacements.
• $4 million reserved for future land acquisition. County staff have identified the likelihood that land will be needed in the future for school, library, active living center and/or animal shelter use.
• $2 million to design a new Human Services facility in Concord
• $2 million to acquire a new CAD and RMS for the Sheriff’s Office
• $1.5 million for KCS to fund various deferred maintenance projects. Project examples include improving the security of parent entrances and replacement of flooring, digital signage and furniture.
• $1.1 million to construct a new park office and ADA-accessible mini-golf course at Frank Liske Park
• $1 million to replace the building chiller at the Sheriff’s Office Administration Building
• $935,000 to replace the compactor at the Cabarrus County Landfill on Irish Potato Road

Funding sources for these projects are noted in the Cabarrus County Capital Project Ordinance scheduled for adoption by commissioners in June 2023. Capital projects planned for beyond FY24 are included in the budget document for informational purposes and will require a staff recommendation and formal adoption by the Board before proceeding.

In closing, I would like to thank our team members for their dedication and unmatched customer service, which makes Cabarrus County such a special place. In particular, numerous team members contributed to the development of a budget responsive to community needs, with a few I want to mention specifically: Rodney Harris, Kyle Bilafer, Kelly Sifford, Lundee Covington, Rosh Khatri, Yesenia Pineda, Sophia Politis, Kasia Thompson, Elie Landrum, Jim Howden, Suzanne Burgess and our department leadership.

I would also like to commend the Board for your leadership over the past year. Your dedication to the citizens of our county is admirable and noticed by our staff and those that live, work and play in our growing county.

We look forward to your thoughtful consideration of the recommended budget and input from residents and businesses before the budget adoption on June 19.

Respectfully submitted,

Michael K. Downs

County Manager