Berks County Chief Financial Officer Laura Jones

Commissioner Michael Rivera discusses the County of Berks budget process with Chief Financial Officer Laura Jones.

Transcript

SPEAKER_01 0:10

Good evening and welcome to Burks County Connections. I'm Burts County Commissioner Michael Rivera. And the purpose of this show is to highlight county departments, organizations throughout Burts County, and different services that are offered here in Burks County. And today I have the county's new CFO, our chief financial officer here with me, to talk a little bit with her. And there's three things we're going to touch on today. One, who is Laura Jones, who's the new CFO, what is the role of the CFO in the county, and also we're going to talk a little bit about the county budget, what was the 2025 actual versus budgeted, and what the 2026 budget looks like. So we're going to have some interesting conversation here with Laura. So, Laura, welcome to County Connection. Thank you for having me. Okay. So, like I said at the beginning, we were talking with uh Laura earlier, and this is her first show, uh, first BCTV show, so she said she's a little bit nervous. But so we'll just have a conversation, have the people of Burst County listen to what you have to say. I told her you've been doing this for 17 years, so I'm sure you can talk for half an hour here on our show. So you'll you'll do fine. So, Laura, uh, welcome. Uh, and you are new to the role as the county CFO, but you are not new to the county. So, talk to me about your career path before the county and while you were at the county.

SPEAKER_00 1:35

Well, uh before the county, um, when I was fresh out of high school, I knew I wanted to help people and serve the community. So my original career path, I thought, was nursing, and I had gotten a CNA license and was going to work my way through college, and uh and quickly realized that that that role was probably not best for me. So I had gotten into bank telling, I was a bank teller for some time, and then I worked as an office manager for a family-owned business in South Jersey, and an accountant there sort of spoke to me and said, you know, you'd make a really great accountant. So uh I went back to college as an adult student and had attended RAC. Um I got my associate's degree there. I graduated uh with a 4.0 GPA, and uh RAC had recommended me for an open position at the county. Uh so I had interviewed at the county back in 2008 and was hired originally as a payroll financial analyst. And so uh with my associate's degree in my pocket, I started the accelerated degree program at Albright to get my bachelor's degree in accounting, and meanwhile uh worked as the payroll financial analyst, and I was promoted to senior financial analyst, and then I was promoted to a financial manager, and then I was promoted to a deputy director, and now I've been promoted to chief financial officer. So that since the 17 years that I've been working for the county, I've just kind of moved up through the ranks and worked really hard to get to where I am.

SPEAKER_01 3:20

So a great story. Started as entry level and made it all the way up to the to CFO. Now you've been training under or mentoring under Bob Patrizio, who was the county CFO who retired just no this week, no, last week. Uh anyway, just a few days ago, uh Bob retired. And Bob had told us, I think this may be going on three, four years, uh, that when he was going to retire, when that time was, and that he felt you were the person uh to uh take over for him, and you have been working with him closely during that period uh to make sure that you are up to speed with everything that the CFO does at the county. That's correct.

SPEAKER_00 4:05

Bob uh has been a great mentor and he's a quite brilliant man, and I was lucky enough to learn from him uh very directly, and uh over the last year uh we have had intensive uh sessions every week going over different things that that you know kind of looking at things from a perspective of what would Bob do? So I've got a pile of notes and perspective of looking at things as what would what would Bob do?

SPEAKER_01 4:33

So do you have on your on your desk something WW uh V D? What would Bob No Bob Bob did a great job for the county and we'll we're sure that you will do the same thing as well. So Bob was very, very dedicated to the county just as you are, and your your whole team is very dedicated to the county as well. So uh Bob, we would call Bob Kindly Budget Bob. Uh and uh he liked that uh nickname very much. Uh he felt proud of what he did for the county and and uh he should be because he did a great job for us. So uh and um we're glad that he did take the time to let us know far in advance uh that he was retiring and that he took the time to prepare someone to be able to fit in that role because it is a uh a very involved role. There's a lot that you need to know, a lot that goes on there. We're talking about a very large budget, which we'll talk about uh in a in a little bit here, about 2,100 employees, funding sources from the state, from the federal government, from taxes. I mean, there's a lot that goes that goes into it. Uh so it's uh it does take a time, uh it does take time to learn that and know what's going on there. Okay. So, Laura, what does your day today involve as the CFO of the county?

SPEAKER_00 5:54

Well, my title is chief financial officer, but I really see myself more as like a financial leader. Um I lead uh a group effort by working with my budget team and our controller's office, our COO team, department heads, and the commissioners to gather and verify and present financial data to provide to our decision makers and stakeholders some insight into our county and our county's finances.

SPEAKER_01 6:23

Okay. What has been so far the most rewarding part of your job?

SPEAKER_00 6:28

Overall, I I think um the biggest rewarding thing is just being a part of such a financial, successful county. Um anytime we can find savings or solutions to how we can do more in our communities with very limited resources, uh, that feels really good. Uh our county has a triple-A bond rating, uh, adequate cash reserves, an adequate fund balance, and that's not by accident. That's the outcome of all of the hard work that we do uh to keep the county's finances in order. So whether it's a five-year forecast or a cash forecast or budget monitoring or annual budget cycle or revising processes to obtain efficiencies, uh, we're working hard at this every single day to get to the end of one of these processes successfully, and that's the great feeling that I get.

SPEAKER_01 7:21

And the triple A bond rating, uh, just so that people are aware, very few counties have that bond rating. We're one of either three or four within the Commonwealth that have a triple A, which is the highest Moody's bond rating that a county can get. And it's very hard to get, and it's very hard to keep it there as well. You have to have there's a lot of things that that go into having and keeping that bond rating because it is looked at on a regular basis. It's not something you get and you keep for five or ten years. It's something that's continually looked at uh to make sure that you are still meeting the guidelines.

SPEAKER_00 7:57

That's right. It's kind of like a credit score where if you you know make a a mistake, your credit score drops, and when you make financial improvements, your credit score could increase. It's it's our credit score as a county for uh people who are looking to purchase bonds, and it's a way of rating our financial success.

SPEAKER_01 8:15

Yeah. And some people think that being financially solid is not having to raise taxes when that is not the reality. Because just like everyone who has their job, they want their increases, your utilities at your home go up, your cost of food goes up, your cost of gas goes up, cost of heating your home goes up, everything goes up. And you get an annual increase at your job, but your expenses go up as well. And the same thing is with the county. We have expenses that continue uh to go up, and we need to make sure that we have enough revenue to be able to cover that. And although we have a good amount of money in reserves, you don't want to use that to pay your everyday expenses. Just like in your home, you don't want to use your savings account to pay for your food or or for your rent or your mortgage.

SPEAKER_00 9:07

That's right. That's right. So we look at um trying to balance a budget without using reserves, and and it's quite a challenge as uh expenses might go up higher than the rate of our our typical revenue does, and and so we look to cut or change things to maintain a balanced budget. What is the main source of revenue for the county? Uh real estate taxes is our our main way of generating revenue. Um it is not the largest revenue component on our books. Grant revenue is. Uh but grant revenue varies in such a way where uh many times it can only pay for specific expenses. So grant revenues may not be available to fund general government expenses, and so for that we primarily look to our real estate taxes.

SPEAKER_01 9:55

And what is that amount of real estate taxes uh that the county collects on an annual basis?

SPEAKER_00 10:02

I believe in the 26th budget it's $180 million of tax revenue.

SPEAKER_01 10:06

Okay. That's only part of the overall budget, which is what?

SPEAKER_00 10:11

Um our overall revenue budget. And I got my budget Bible here.

SPEAKER_01 10:19

You can get that online. And if anyone wants more information on the budget, all of this information is online as well.

SPEAKER_00 10:25

That's correct. Uh and there's a lot of information not only in our budget book, but also in our budget message where it's a very detailed narrative of how we arrived at many of our budgeted values and how that compares to our prior year budget. But for 2026, our total revenue budget is $677 million.

SPEAKER_01 10:46

So $677 of that, about $180 million comes from uh property tax. The other is great uh grant money from either mostly from the state or federal government, is uh where a lot of the other uh money comes from.

SPEAKER_00 11:00

That's correct. Our our largest category of uh grant revenue and then also grant use would be our health choices department, uh, which is um they they provide uh behavioral health services uh through the Medicaid program that that money filters through our county to provide those services. So uh that is the largest uh use and and generator of of grant revenue.

SPEAKER_01 11:26

And something that's important to understand that at the county level, the county, the county's main way of generating revenue is property taxes. You have school districts, you have municipalities who have property taxes, but then they have business privilege tax, they have uh per capita tax, they have this tax, that tax, uh and the law allows that. But for counties, really the main way uh is property taxes. So we don't have any of the other resources that many school districts and municipalities like the city of Reading have.

SPEAKER_00 12:01

That's correct. And uh our tax revenue is based on assessed value, which uh doesn't always increase at the same level uh as inflation, which is what sort of puts us in that that challenge of our expenses could increase at a pace larger than the revenue that we can generate.

SPEAKER_01 12:18

Okay. So, Laura, what has been one of your biggest challenges in your current role? It could be a CFO, it could be before that, but it's growing in the county, what has been one of the biggest challenges you have faced?

SPEAKER_00 12:34

Uh I think I would say turnover. Turnover uh can be an enormous challenge for for multiple reasons. Um, you know, sometimes we have really fantastic employees and and and they, you know, uh their career might further outside of the county, and to replace those employees, sometimes one really fantastic person can do the job of two people. And uh so someone coming through the door may not be as tenured or experienced as the person who left. So uh that that's a a challenge. Um not to mention uh you know, when there's an extended vacancy, sort of distributing that work uh to myself or other other staff members can be a challenge when when we're already have a heavy workload. Um you know that kind of sticks out in my mind as is one of the more difficult things to handle. Um, you know, numbers it they you know, two plus two is always four and they always add up, and we can analyze and make recommendations, but you know, turnover, you you you know, it's a challenge to to select the right candidate and match people to positions where they're happiest or most effective. And figuring out um, you know, what that is for for each person uh is a challenge. It it's a fun challenge and and and rewarding when you can uh you know uh lead happy employees, but uh sometimes the road to get there is quite difficult. Yeah.

SPEAKER_01 13:59

And are you fully staffed now in your department?

SPEAKER_00 14:01

Uh we are not. Uh we have one senior financial analyst opening, um, and then we're also looking at other fiscal positions at the county, and we currently have an opening in our employment and training department as well.

SPEAKER_01 14:14

Okay. So if anyone out there is looking for a job in finances, reach out to the county HR and we'll give you information about the opportunities that are available at the county. So good. So let's talk a little bit about 2025 budget. You know it's still early in the year and you don't have all the numbers yet from 2025 to give a complete overview as to what the actual for 2025 was versus the budgeted for 2025. But 10,000 feet, what are you seeing?

SPEAKER_00 14:48

Well, we do a very detailed, extensive projection, typically in October, that um assists us with our our annual budget cycle. In order to put together our budget book, we need to know where we're going to end this year, well, 25 and begin our next fiscal year. So in in doing those projections, what we saw in 2025 from a revenue perspective, uh, we had anticipated to do a bond issuance, and we made a decision to wait so that we could leverage better rates. So we'll be doing that in 2026 instead. So um that was a a large variance. Uh originally we anticipated that bond issuance to be about 35 million, but after further analysis and evaluating our fund balance levels, uh we determined that uh financing 25 million would be more prudent, and so that's included in our 26 budget now, and we intend to do that in the first quarter. Also in 25, uh we saw much lower interest revenue than we had budgeted and initially projected. Uh that's because of the state and federal budget in pass. Uh we utilized our own cash reserves to continue services in our community, and because we did that, our cash reserves weren't generating interest revenue. And therefore, we're we're seeing lower interest revenue for 25 than anticipated.

unknown 16:14

Okay.

SPEAKER_01 16:15

When we talk about uh bonds, uh Laura, that is not to make up for the uh operating budget that is used for capital expenditures that are needed at the county. That's correct.

SPEAKER_00 16:27

You wouldn't want to borrow money to pay your electric bill, so we only uh do bond financing when uh we absolutely need to. It's really um kind of uh an analysis that's based on how much fund balance we have that we could use to contribute towards capital. Um and uh there is a best practice or recommendation that we have 60 days of operating expense on hand in our fund balance reserves. That's also uh criteria in maintaining our our bond rating. So as we evaluate what we're using from fund balance or what that value would be in future periods, we instead look to bond financing to provide for our capital needs. Okay.

SPEAKER_01 17:13

What is the county's uh reserve balance at this point approximately?

SPEAKER_00 17:18

Well, uh for the end of 2025, we projected our total fund balance to be $197.9 million. Um, the unassigned general fund fund balance, which is what we would utilize for capital improvements, uh, we're projecting that to be $154 million to begin 2026 or or end 25.

SPEAKER_01 17:43

Good. No, a few years ago it was around 130, so now it's around 154 finishing the year. So going in a in a good trend. Yes. And that and having that helped us to get through the period where the state took four months to balance their budget, and we didn't have a federal budget for about six weeks. But we did the county did bal uh pass our budget, a balanced budget. We did pass that on time. So that's right.

SPEAKER_00 18:08

We worked nights and weekends, and we were not missing that deadline.

SPEAKER_01 18:11

Yep. So let's talk about the 2026 budget. I'd like you to focus on a few things. One, can you talk to us a little bit about the process? So right now we're in 26. When do you start working on 2027's budget? I know we also do a five-year outlook, so talk to me a little bit about that. And then let's get in a little bit into what the 2026 budget looks like.

SPEAKER_00 18:37

Sure. So uh typically we begin our annual budget process. Uh, usually it's the last Friday in April. It's a very collaborative effort. We start with a budget kickoff where our commissioners and our department heads and our budget team all attend a meeting and talk about what our goals and parameters for the budget would be. Uh at that point in time, the departments formulate a budget request that uh comes to the budget office, and then we review that request uh line by line. We compare it to prior years, we uh evaluate resources, um, we make recommendations to department heads on uh any changes we think might uh add value to the request that they've made. Um we also evaluate community requests and grant funding allocations, and um you know that process continues through the summer. Um there are several uh components of our budget that we do uh it uh from a centralized perspective at the budget office. We work with our HR department to do a countywide position budget. Um the budget office does utilities, we have an indirect cost plan, so we're doing those um, you know, particular budgets over the summer. Uh usually once we get to September and we've got uh nine months or eight months of actuals, we start to do more recent projections and updated trends for values. We do extensive number scrubbing where we're comparing our projected budget to prior year actuals, current year budget. Um we do an extensive one-year projection again to understand where our budget will start, what resources we have to use. And then uh in November we present that budget to our board of commissioners. And then in October, after the budget's on the table for 20 days per per county code, uh our commissioners come back and and vote to accept or or not accept uh our budget. Um after that happens, uh we take our adopted budget and we turn that budget into a five-year forecast. Uh so that's what our office is currently working on this week. Uh we look at inflation trends and um provided inflation values uh um from federal resources and and we look at uh our position budget and we take all of those values and we forecast them uh five years into the future, where our our current budget is year one of five, and then we develop a forecast for four additional years. Um we also look at contracts, and we generate our forecast from the lowest level of detail. Uh we think that that provides a lot of granularity to developing um more precise projections on what would probably happen. Um so we use that five-year forecast to um educate and provide uh data to our decision makers uh so that they can prepare for our financial future. Uh, in addition to our five year forecast, we do a very, very detailed cash forecast for our current year and then an additional two years after that. And what that does is that helps us model. Cash coming in and out of the county. If we are missing a grant, we can follow up and get that cash sooner. Or if a payment is not what we expect it to be, over or under, we can research and understand why and use that information to update projections or include in our budget. So in addition to the budget, the forecast, and the cash forecast, we do budget to actual monitoring and we do cash variance analysis to keep an eye on the finances and and follow up and work through our departments to uh collect cash or utilize funds in the best way possible.

SPEAKER_01 22:40

Okay. So a a lot involved in running the county's budget.

SPEAKER_00 22:45

Yes, uh, it's a year-round process, and um and I I really think that we benefit from being in the lowest level of detail and and and we work very well with departments who are in an even lower level of detail than our our budget team would be. They they know their business and their business processes best, and by utilizing their knowledge or their understanding um or their goals and and and it it suspected outcomes, you know, we can we can use that information to provide for better numbers for our budget.

SPEAKER_01 23:17

Okay. So you spoke about how we prepare the budget, how uh the 2025 budget was. Give me highlights of the 2026 budget. What should people know?

SPEAKER_00 23:30

In 2026, uh we're going to do a bond issuance in the first quarter uh for $25 million. Our 2026 capital plan uh is about $33 million. We have a continuation of our uh Ag Center. Uh we're I believe phase two of construction. Uh we're continuing our downtown campus improvements with uh construction and renovations to our services center. Um our 2026 budget, the the biggest and best thing is that it's a balanced budget and there's no tax increase, so we're very happy about that. Um and then uh we're you know just going to keep monitoring and and and and reviewing those outcomes and preparing for those as we move through the year.

SPEAKER_01 24:20

Okay. Good. What are some of the county's largest expenditure areas? I know there's a lot of different moving parts in the county. What are the largest expenditure areas that we have?

SPEAKER_00 24:34

Well, we could look at expenditures in in two ways. We could look at it either by type or by function. And so for type, some of the categories of type would include personnel, operating expenses, capital expenses, interfund transfers. Uh our personnel budget is about $212 million, but it's not our largest category of type, operating expenses. And the reason being is uh as I had mentioned earlier, uh some of those operating expenses are the services that we provide for uh grant funds, and so our our health choices department would be the largest department of operating expense. Um by function, um we um there are several different functions uh for for our county government, and if we were comparing that to our neighbors, even uh counties vary in the different functions or services they provide. Um many are are are very common, like judicial or public safety, uh general government, our county has a nursing home, Berksheim. Uh we provide human services among some of the other functions. The largest function, uh the largest expense would be our public safety function. Um and that particular function includes our jail, our juvenile probation office, and our adult probation office.

SPEAKER_01 26:02

Okay. Very interesting. So we have about two minutes left, Laura. Is there anything we haven't gone over that you would like our viewers to know about you or your role or about the county today?

SPEAKER_00 26:17

Um well, I'm very excited for this opportunity to further serve the public. Uh, budget Bob, Robert Patricio, our former CFO, has been an incredible mentor to me. And we have been planning and training for this transition for a number of years. Uh I am committed to continuing the county's tradition of financial stewardship. And uh our future priorities include cost-effective service delivery, leveraging technology, and addressing challenges such as reduced grant funding, inflation, and our aging infrastructure. Uh the goal uh remains to maintain high service levels without overburdening our taxpayers, and I'm really excited to be a part of that mission.

SPEAKER_01 27:01

Good. You've done a great job so far, and we're looking forward to you continue doing that. Great, thank you. You're also uh Laura's also part of what we call our savings and efficiency team, where we're constantly looking at ways we can be more efficient or save our taxpayer uh money in the way we do things at the county. So that's an important part of what of what your role is as well. So I want to thank you for watching us today. I hope you found this uh show uh beneficial and educational. If you want to learn more about our budget, please visit us at burkspa.gov. Again, that's burks p that's burkspa.gov. And you can go to the finance department and find a copy of our budget there. There's a lot of information on that. So please review it. If you have any questions about it, any concerns, please feel free to reach out to my office. Thank you for watching County Connections. Enjoy the rest of your evening.