How saying ‘no’ helped Butler County avoid a financial crisis

Butler County officials say it took team work and the ability to say “no” to pull the county off a fiscal cliff and up to a top shelf Moody’s bond rating.

Less than one decade ago the county faced a $7 million budget gap, reserves that had dropped below $9 million in 2009 — which impacts the ability to borrow money — and seriously considered a 0.25 percent sales tax increase.

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“There was a lot of loose spending in the early 2000s …,” County Treasurer Nancy Nix said. “There was a lot of growth and a lot of money they hadn’t been used to … I think there was a lot of irresponsibility going on before what I would call the clean up team. The new wave of office holders, it was a different mentality to watch every penny.”

Today, the county has reached the pinnacle of financial success with a Moody’s Investors Service bond rating upgrade to Aaa, about $50 million in reserves and general fund debt — that stood at $92.3 million in 2009 — that will be down to $17.6 million by year’s end with a plan to have it erased in 2020.

In 2009 Commissioner Don Dixon and now Supreme Court Justice Sharon Kennedy, who was the domestic relations judge then, convened a summit of office holders, department heads and business leaders, to deal with what was dubbed a “perfect storm.”

“We have the equivalent of a Category 5 financial hurricane headed our way, and if we choose to ignore that reality, our county will be in financial ruin,” Dixon warned at the time, after his fellow commissioners unilaterally cut $2.6 million in July 2009 as a stopgap measure. “We cannot continue with business as usual. It’s a recipe for disaster.”

But for the “blueprint” drafted by the budget group and adopted by the commissioners — that is still an active document today — the county would have defaulted and its finances likely would have been taken over by the state, according to Dixon. He said people were routinely getting double-digit raises and some got multiple salary bumps in a year and spending had gone unchecked. He said the group did a deep dive into the actual debt and spending levels and how people were being paid.

“We were able to identify where the major problems were and how we could cut costs the quickest,” Dixon said. “One of the ways to cut costs the quickest was we had to put a hiring freeze on and we had to stop the compounding pay increases.”

Layoffs were imposed nearly county-wide and the sheriff’s office — with by far the most employees and biggest budget — took the brunt of the staff reductions, losing about 100 full-and-part-time people.

Butler County Sheriff’s Chief Tony Dwyer said it was rough for a few years. At one point, one guard patrolled two pods at the jail, something he said is an unacceptable practice, and all non-essential programs, such at D.A.R.E., had to be stopped.

“Everyone took such a significant hit when the crash came,” he said. “It was very painful. We did take a heck of a hit… It stressed our agency out significantly. We had to made huge changes in our operation and find creative ways to do what we’re charged to do.”

Dixon said commissioners couldn’t just keep cutting, they needed a sustainability plan and that included things like a mandatory infusion of cash into reserve funds and the change in the way people were getting compensated. It took Commissioner Cindy Carpenter getting elected to get a wage study done — previous commissioners thwarted Dixon’s attempts to get the $100,000 study started — to see how the county sized up to its peers and employers in the private sector.

Almost all offices and departments and most unions countywide have since bought into the commissioners pay-for-performance plan. It provides for up to two percent added to an employee’s base salary and another bump — up to two percent — in lump sum raises. The county estimates it will save $18.5 million over 10 years on the merit-based raise policy.

Butler County Administrator Charlie Young said revenues for the foreseeable future are expected to increase about two percent annually, so they have needed to come up with plans like pay-for-performance to keep costs in check.

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“The county had to adopt policies that would allow us to keep our cost growth at or below that,” he said. “One through the performance compensation plans and second looking to automate, to change policies and procedures to streamline in order to reduce the amount of staff to serve the public.”

Kennedy said the county couldn’t have turned the financial ship around without the help of all the office holders, especially Dixon and the other commissioners, she said, who “hold the purse.”

“Other office holders and businessmen throughout the county, they really got behind the movement and they’re the ones who did the hard work of pushing that boulder up,” she told the Journal-News. “Really writing some pretty significant, common sense policy of how to remain fiscally sound when your fiscal circumstances may turn on the winds of the whole economy.”

Butler County Auditor Roger Reynolds, who cut his staff from 74 when he took office in 2008 to 39 last year, agreed, saying before he took office the various offices throughout the county were not operating in unison.

“I saw a lot of offices were their own individual silos,” he said. “They weren’t working together, we had a lot of little islands going on and we weren’t synced up with our financial systems. Don Dixon came in and he made it very clear his goal was to pay down debt and that hasn’t changed.”

Slowly the county has been reinstating services and addressing needs that had to be foregone during the budget crisis, like replacing vehicles that had well over 100,000 miles on them, the Juvenile Court complex finally got much needed repairs and the duct-taped carpets are gone. The courts could have ordered the commissioners to approve budget items, but they didn’t.

“I think it’s been a great relationship over the years, it’s professional, it’s respected, it’s not antagonistic,” Common Pleas Court Judge Keith Spaeth said of the judge’s relationship with the commissioners. “We’re not going to war, we’re working for the same set of citizens and trying to provide good government.”

And the county’s efforts aren’t over, once the debt is retired in two years the commissioners have committed to supporting other local jurisdictions enhance economic development, which will even better the bottom line and services to taxpayers. The commissioners have already committed $2.5 million for road work at the Spooky Nook mega sports complex.

“As we enter this period where we don’t have debt, we do have the resources for opportunities within the county with our cities and townships for economic growth and infrastructure enhancements,” Commissioner T.C. Rogers said. “But we are always going to make the decision to treat it as an investment, meaning if we spend the money we’re going to seek a measured return.”

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