On Tuesday, Nov. 12, 2024, County Manager Dr. Heidi Welsch presented before the General Government and Policy Committee of the Whole about 2025 budget recommendations. Welsch’s presentation focused on four financial “potholes” within the county. These potholes are short-term funding for permanent positions, overfilled positions, over-reliance on CPA funds for staff, and low reserves level.
First Welsch spoke to the issue of permanent positions being funded by short-term sources. Thanks to the glut of federal funds surrounding the COVID-19 Pandemic, Dakota County was able to hire permanent staff for various roles. These staff, despite being hired in perpetuity, are funded via short-term or one-time funding sources meaning how they will be funded moving into the future is not necessarily clear.
Second, overfilled positions are roles designed for one Full-Time Equivalent (FTE), but are filled by more than one staff member. While this is not always a problem, hiring multiple people for a position designed for only one can be wasteful. Dr. Welsch gave the example of a staff member retiring. As that person retires, a replacement might be hired even before the retirement for training purposes. That position would be considered overfilled because two people have been hired and are being paid for a role designed for one person. While that example is one of positive, short-term overfill, according to Welsch, there are many positions the county that are overfilled on a longer-term basis.
“I’m sorry to say we have more than 20 positions that are overfilled,” said Welsch.
Third, Dakota County uses 93% of County Program Aid (CPA) from the state for on-going operations with the other 7% going towards capital or one-time expenses. CPA is state funding to counties for county services in order to allow counties to not fully rely on property taxes, according to the Minnesota Department of Revenue. This heavy reliance on state dollars for regular county operations could leave the county in need of serious cutbacks if the state decided to scale back its CPA, as has happened previously under former Gov. Tim Pawlenty in 2008.
Finally, Welsch spoke to Dakota County’s reserve level which currently sits at 20% of the annual budget. Based on the 2024 annual budget for Dakota County of $514.3 million, the county has a reserve of some $102 million. The Office of the State Auditor recommends an unreserved fund balance anywhere from 35-50% of fund operating revenues. At the lowest levels recommended by the State Auditor, Dakota County would be adding roughly $80 million to that unassigned balance fund, a proposition of which the commissioners seemed wary.
The issues outlined by Welsch are not ones to be solved in a single budget, but with longer-term plans stretching out years. Several steps taken in the 2025 budget, however, which will be finalized on Dec. 17, are to reduce the number of positions funded with short-term sources by eliminating some levy funded positions, repurposing positions, and holding some unfilled positions open. In addition, the county plans to add seven FTEs to reduce MnChoices waiting line with the county, positions which are, “more than fully funded, they provide revenue,” said Welsch.
Longer-term solutions to these potholes include shifting more CPA funds from on-going operations to one-time expenses, not creating future positions without securing permanent funding, and to increase the county’s reserves. Another shift to address these issues is a more centralized approach to the county’s finances.
Centralizing the county’s finances was a key issue toward addressing Welsch’s potholes long term. According to Dakota County Finance Director Paul Sikorski, the county’s increasingly decentralized finances stem from the county’s growth in the last decade and beyond with departments doing their own financial work and in some cases audits. This autonomy has led to policy workers in those departments doing financial work with which they potentially have no background.
Sikorski spoke to the centralization of county finances being spurned in part by a greater realization of the “sheer magnitude,” of how departments had been managing their own finances and the importance of allowing policy workers more time to do their own job instead of managing their department’s finances.
“There will be savings not having social workers making spreadsheets,” said Welsch.
The change will also allow the county more visibility into its own finances including “improve[d] overall reimbursement rate for CS programs, better overall control of budgets, and improved information for department planning,” according to Welsch’s presentation.
The issue of wait times for both MnChoices as well as Medical Assistance through the county was another issue brought up in the meeting. The average waiting time from the initial call to service for MnChoices is eight months. That number is below nearby counties like Hennepin and Ramsey, but more than twice that of Washington County. Medical Assistance wait times can range anywhere from 2.5 to five months, depending on the program. An issue faced by many in Dakota County has been to not apply for these services concurrently, waiting for one only to be told now they have to wait for the other.
While the seven additional FTEs added to MnChoices workers will shorten the wait time, Dr. Welsch estimated that an additional 20 eligibility workers would be needed to reduce wait times to within state standards. The cost of those 20 additional workers, though split 50% with the state, is estimated to be cost the county $1 million, or just under 1% of the levy.
Commissioners spoke to their frustration with the MnChoices system, a gripe widely known across the state.
“Absolutely we need a better system and absolutely I think it is a reasonable question to ask ‘should the state just take over this function?’” Said Welsch.
“We are out of compliance with the state’s lack of fixing a problem they know is there,” said Commissioner Liz Workman.
The Truth-in-Taxation meeting for the 2025 Dakota County budget will be held on at the Dec. 3 Board of Commissioners meeting with the budget set to be adopted at the Dec. 17 meeting.
For more information about the 2025 budget, visit the Dakota County website at https://www.co.dakota.mn.us/Government/BudgetFinance/2025/Pages/default.aspx