Also in attendance were James O. McReynolds, County Administrator; and James E. Barnett, County Attorney.

School Board Members Present: Barbara Haywood, Chairman; Page Minter; Barrent M. Henry; and Don Felling.

Also present were Dr. Steven R. Staples, Superintendent of Schools; Richard M. Hixson, Deputy Superintendent of Operations; and Dr. James Tucker, Assistant Superintendent for Instruction.

Mr. Dennis Jarrett, School Division Director of Finance, made a presentation on the revenue outlook for the School Division in FY2004. The revenue assumptions included an enrollment projection of 12,500 students and an impact aid projection of $250,000 based on the FY2002 proposed Federal budget. He then discussed State revenue, stating that it was the second year of the biennium, and the composite index will not change.

Mrs. Carol White, Director of Financial and Management Services, then briefed the two boards on the FY2004 County revenue projections. In terms of local revenue, staff is expecting property taxes to increase 5 to 6 percent, with a 2-4 percent increase expected for other local taxes. A 28 percent decrease from FY03 is expected in all other local revenues due to continued low return on investments. On the State side, the County should see a reduction over FY03 of about 5-11 percent for shared expenses from the Compensation Board, and categorical aid and grants will be reduced by 11-15 percent. Other revenue and transfers for activities such as grounds maintenance and law enforcement should remain level with the 2003 budget. Compared to FY03, minimal growth is expected. Concerns for the FY04 budget include reductions in state funding and the strength of the economy. Overall, the County can expect a $3 million to $3.5 million increase over last year. She then discussed the employee compensation system, explaining that a benchmarking system is used for the non-licensed (non-teaching) employees, both County and School Division, through a comparison of pay scales in market areas to maintain competitiveness of the County’s pay plan. Based on the benchmarking study, a 3 percent market adjustment has been identified, but no recommendation for FY2004 non-licensed County and School personnel is being made at this time due to the uncertainty of the State budget. She noted that staff did not feel a 3 percent increase would be possible at this time.

Mr. Jarrett then briefed the Boards on the licensed personnel (teaching) salary scale, noting that the scale was based on the work of the 1995 Compensation Committee. He explained the compensation lanes, indicating they were based on education level obtained, and that the goal of the Committee was for the personnel to be in the top third of the local market. He noted the County model maintains a pay plan that places starting salaries for positions near the middle of statewide market area pay scales. He also indicated the school staff was not making a recommendation for licensed employee compensation in FY2004 at this time, but the market study identified a need for a 1.1 percent market adjustment.

A brief discussed ensued concerning the importance of maintaining the County’s pay plans to remain competitive with other jurisdictions.

Mrs. White addressed the estimated County funding requirements and issues for Fiscal Year 2003, which include:

• Contribution to Schools $1,300,000
• New Programs/Personnel 0
• Employee compensation (steps) 530,000
• Health Insurance 325,000
• Capital/Debt—Schools 200,000
• CIP Debt Service – County 225,000
• Communications Upgrade 225,000
• Economic Development 200,000
• Other 250,000