A concentrated effort is underway to reverse two major Luzerne County government downgrades, but it will take time, county acting Manager C. David Pedri told the county in his “state of the county” report last week.
The state reduced the county Children and Youth agency’s license to provisional status in October after a review stemming from the death of a child.
A month later, Standard & Poor’s lowered the county’s credit rating two notches from investment grade to a speculative BB+, citing the county’s “political gridlock,” insufficient financial monitoring and lack of a reserve cushion.
Pedri, who became acting manger Jan. 4 following Robert Lawton’s resignation, told the council Tuesday he had hoped the Children and Youth license would be restored within six months, but that may not be possible because the agency still has no executive director.
The state licensing inspection summary imposing the downgrade cited “serious concerns regarding agency practice” and “regulatory violations,” identifying staffing shortages as a major cause of the agency’s issues.
State officials have informed Pedri the county is “making progress” implementing corrective actions, but Pedri does not expect a license restoration will be possible until a qualified director is on board.
Krista McIlhaney resigned as Children and Youth overseer at the end of 2015. Several finalists for the position were interviewed last week, Pedri said.
The staffing shortage has been addressed, with 20 of the 30 vacant caseworker positions filled, he said. Interviews were conducted last week for the remaining 10 openings, he said. Pedri also updated the council on the varying stages of filling 17 other agency job vacancies in addition to the executive director position.
Pedri warned a learning curve will be necessary because the agency is hiring an “incredible amount” of new employees who must complete training and become acclimated.
Former local state representative Phyllis Mundy and other representatives of the Area Agency on Aging Advisory Board also have complained about administration delays filling positions in that human service agency.
Pedri told the council he has stepped up approval on job descriptions and authorizations to get all positions filled. The administration has made job offers to fill some of the 11 aging openings and is conducting recruitment to fill additional alternate food service and operator positions at senior centers.
“There’s nothing sitting,” Pedri said. “I don’t know why it took so long to do these things, but I’ve been actively working to try to resolve them.”
The administration also is exploring options to move human service agencies scattered at several locations into one building for increased efficiency, he said.
Standard & Poor’s probably won’t consider raising the county’s credit rating until spring 2017, Pedri said during the county status report, which is required under the home rule charter.
Pedri said he concluded through his own analysis that four milestones must be achieved before the rating agency will consider a rating upgrade:
• A 2015 audit completed on time that shows the county’s deficit did not grow larger last year.
The county ended 2014 with a general fund deficit of $16.9 million. The 2015 audit is due June 30 under the home rule charter, and Pedri said the administration is committed to meeting that deadline.
• A 2017 council-approved budget that ends reliance on one-time revenue streams and puts a dent in the deficit to build a reserve.
The council’s 2016 budget used about $7 million in non-recurring revenue to fund operating expenses, including $4.7 million from the suspended county homestead tax break on primary residences initially earmarked for deficit reduction. This $130 million budget kept real estate taxes the same and was estimated to shrink the deficit to about $13.5 million.
• A balanced, on-time 2016 audit.
• Implementation of recommendations in a five-year financial recovery plan completed by Harrisburg-based Public Financial Management in October.
The 253-page report suggests dozens of changes that can help avoid future projected shortfalls without a tax hike.
For example, Pedri said the council agreed to add two workers in the assessor’s office as advised in the recovery plan in an effort to add more newly constructed structures and building expansions to the tax rolls. The administration also is reviewing properties that are tax-exempt or in tax-break programs to verify they meet requirements, he said.
An upgraded credit rating from Standard & Poor’s would allow the county to refinance outstanding debt at lower interest rates, Pedri said. The county owed $321 million in principal and interest on past borrowing as of Dec. 31, he said.
“We have really 14 months to get this thing right,” Pedri said.