Services Departments Government

Library District Advisory Committee Meeting Minutes

April 12, 2016
Clackamas County Development Services Building, Rm. 119

ATTENDANCE

Advisory Committee Voting Members

Others Present

The meeting was called to order @ 7:00 PM

Chair Hoyt welcomed the group. Chair Hoyt asked members to introduce themselves to the committee, so that the representatives could learn a little bit about each other and facilitate future, collaborative group work.

Each member introduced themselves, and provided a bit of biographical background. Chair Hoyt also introduced three current Clackamas County Library Directors in attendance who had been involved in the District’s creation (Pat Duke, Wilsonville Public Library; Bill Baars, Lake Oswego Public Library; Doris Grolbert, Happy Valley Public Library). Chair Hoyt also asked Gary Barth, Director of Clackamas County Business and Community Services to introduce himself.

Sandy Nelson moved that the minutes from the 2/11/2016 be approved as submitted. Nancy Niland seconded. The motion passed unanimously.

Chair Hoyt introduced Don Krupp, Clackamas County Administrator, and Chris Storey, Assistant County Counsel. Chair Hoyt gave a bit of background about Mr. Storey’s involvement in the creation of the Library District.

Mr. Krupp introduced Commissioner Paul Savas (in attendance), recognizing his deep and abiding interest in the Library District. Mr. Krupp also shared his belief that the County was very fortunate to have a library system which, while unique in its configuration, fostered the involvement and connection of library cities, Clackamas County, and community members.

Mr. Krupp shared some of his biographical details. He also gave a brief overview of his duties as County Administrator; Mr. Krupp oversees the County’s 21 departments, which employ 3000 people, and have a combined budget of approximately $934 million. He is also responsible for nine service districts, of which the Library District is one. In his capacity as District Administrator of the Library Service District, Mr. Krupp is (as per County Code), the budget officer for the Library District, and once a year, he is responsible for the presentation of the Library Service District budget (which involves the allocation and distribution of collected Library District funds to library cities) to the Budget Committee and the Board of County Commissioners for approval and adoption. In his role as County Administrator, Mr. Barth is one of his department directors, which means Mr. Krupp is also ultimately responsible for the operations of the Oak Lodge Library and the Library Network office.

Mr. Storey gave a brief overview of his role as Assistant County Counsel, focusing on his responsibility for advising the County Administrator and Board of County Commissioners about the County’s nine special districts. The Board of County Commissioners wears many hats in relation to these multiple service districts, and Mr. Storey works to assist the BCC in those efforts.

Mr. Krupp indicated that, given recent library-related events and activities within the County, he expects that he and Mr. Storey will likely be attending future LDAC meetings to work with the committee, and to serve as a liaison between the LDAC and the BCC (in their role as Board of Directors of the Library District). This evening, however, Don wanted to update the LDAC (and particularly newer members) on four topics:

  1. The current situation with the Oak Lodge and Gladstone libraries, including information on where the BCC (as Board of Directors of the Library District) is heading.
  2. Issues related to allowable expenses, and direction from the BCC about the use of library service district funds.
  3. An interest (shared by Mr. Krupp and the BCC) in regard to Mr. Krupp’s fiduciary responsibilities as the Library District’s budget officer.
  4. Encouragement by Commissioner Martha Schrader (and supported by the other Commissioners) for the Clackamas County Library Directors to serve LDAC as a technical advisory body and support resource.

Mr. Krupp shared that when he first arrived as County Administrator in September of 2013, there was an expectation that the cities of Happy Valley and Gladstone would take over operations of the two libraries which were, at that time, operated by the County. In July of 2015, the County did turn over operations of one County library to the City of Happy Valley, and the transition was successful and fairly seamless.

Mr. Krupp shared some history of library efforts in Gladstone. A 2012 City of Gladstone ballot measure did not pass. Afterwards, stakeholders worked to figure out what next steps to take. The BCC provided guidance and deadlines, and in the summer of 2014, a proposal was made by the City of Gladstone to move forward with the consolidation of the Gladstone and Oak Lodge libraries into a single facility located in Gladstone using Library District funds. At that time, the BCC expressed support. In the ensuing year, the City of Gladstone developed, and put forth to voters, plans for a consolidated City Hall/Library facility.

After Gladstone voters approved the measure in November of 2015, significant concern emerged from the citizens of the Oak Lodge service area regarding a lack of engagement or involvement in the process of developing plans for the new library facility. The BCC (serving as the District Board) heard those concerns, and felt there needed to be some effort undertaken to try and bring the Gladstone and Oak Lodge communities together to resolve and reconcile concerns and differences.

In March of 2016, the BCC issued a letter to the City of Gladstone invoking the termination clause of the intergovernmental agreement (IGA) between the City of Gladstone and the County. The termination would be effective in 180 days, and the BCC hoped and desired that during this period, the Gladstone and Oak Grove communities could get together and work through issues. The BCC currently hopes that a task force (whose membership would presumably be proportionally representative of citizens from both service areas) will be formed to discuss proposals and seek a solution that might alter the termination of the IGA. The BCC wants the task force to be successful, but wanted to make sure that if a solution couldn’t be found, another 6 months would not have to elapse before any other actions could be taken. Don shared his concern that 6 months will pass very quickly, and that 30 days had already elapsed. If there is no solution, next steps and alternatives will have to be considered.

Mr. Krupp asked if LDAC members had any questions. Katie Lewis asked Mr. Krupp if he could elaborate on the definition of proportional (in reference to the composition of the proposed task force). Mr. Krupp said his understanding is that the BCC would like task force representation to be reflective of the population split of the proposed combined service area, namely 70% Oak Lodge residents, 30% Gladstone residents. Katie asked if a task force consisting of both the Oak Lodge and Gladstone library boards would satisfy these criteria, and Jeff Bornefeld provided counts of each board’s memberships (5 members and 2 alternates on the Oak Lodge board, 5 members on the Gladstone board). Mr. Krupp indicated this proposal was similar to one he had suggested to Erik Swanson, Gladstone City Manager. The one concern Don had about the proposal was to ensure that the five-member Gladstone library board, in and of itself, included both city and unincorporated residents. If the Gladstone board is so constituted, Mr. Krupp believed such a task force this would address the BCC’s desire for proportional representation.

Katie then asked for some clearer direction about the specific goal of the task force. Mr. Krupp answered that the best outcome would be a proposal that both the Oak Lodge and Gladstone communities would support. To facilitate, the County is willing to provide, at the County’s expense, the assistance of the County’s Resolution Services Department to help facilitate dialog and discussion.

Jeff Bornefeld asked for some clarification regarding the ballot measure. Jeff indicated his understanding that the ballot measure was clear that the district was intended to provide perpetual funding of library operations and services, while cities would be responsible for library buildings. Jeff also pointed out that the ballot measure stated that this dedicated funding would allow libraries in Clackamas County to stay open and continue their programs, and that the Hoodland and Happy Valley libraries are indeed still open. Jeff indicated concern that the current Gladstone proposal will close the library used by 29,000 unincorporated residents. He also felt that while he could have supported a previous proposal for a “destination” library on Oatfield, the current proposal isn’t reflective of what voters approved.

Jeff expressed a concern that the master IGA differs in several ways from what the ballot measure says. He also expressed concern that the BCC has the authority to revise the November, 2008 master order, and the only way to prevent a potential revision (which the BCC has already directed County staff to prepare for BCC consideration) would be for 15,000 voters to object within a short time period. Jeff then asked Mr. Krupp and Mr. Storey to address the apparent “drift” from the ballot measure, and how to honor what voters originally approved.

Mr. Krupp confirmed that the BCC had directed staff to prepare possible revisions to the master order which would allow library district funds to be used for capital purposes in addition to being used to provide operations and services.

Mr. Storey expressed his belief that revising the master order would not be inconsistent with the will of voters, as voters approved the creation of the Library District under ORS 451, which does grant the District Board the authority to amend the master order.

Mr. Storey also addressed the closure of the Oak Lodge library and the language of the ballot measure pertaining to library closures. Mr. Storey indicated there were contemporaneous discussions and informational materials from the County which addressed the planned closure of the Oak Lodge library. That information was not included in the text of the ballot measure as, under ORS, ballot measures must follow a “one question” rule; when a question goes to voters, it must be a single question which can be answered “Yes” or “No.” It is not permissible to create ballot measures with compound questions or addressing multiple issues. In this case, the single question was “create a library district, or do not create a library district”. The decision for the County to discontinue direct library service provision (while continuing to provide regional support through, for example, the Library Network office) was a related, but distinct, policy, which was addressed in ancillary, contemporaneous materials. Based on that policy direction, the operations of the Hoodland Library were transferred to the City of Sandy, and the operations of the Sunnyside Library were transferred to Happy Valley. The current conversation is whether or not the current Gladstone proposal meets the needs of the unincorporated residents in the combined service area, and how to achieve the goal of providing quality library services to everyone in the service area.

Jeff expressed concern that ancillary information was not part of the ballot measure, and reiterated his opinion that the ballot measure states that new funding provided by the passage of the measure would prevent closure of the County-operated libraries. Mr. Storey once again reiterated that the decision on the County’s part to exit the retail library business was a distinct, but related, policy issue.

Chair Hoyt asked Mr. Storey if there was anything preventing alternative “linkages” of the Oak Lodge service area with other library cities. Mr. Storey indicated there was no such prohibition.

From the audience, Jack Frick (who indicated he served as Treasurer of the PAC who worked on passage of the Library District) asked Mr. Storey to confirm that the BCC does have the authority to allow district funds to be used for capital purposes. Mr. Storey confirmed that the BCC can change the master order (which was entered after passage of the ballot measure and defines the purposes of the Library District). Mr. Frick then asked, if the master order can be changed to permit use of district funds for capital, why the original ballot measure seemed to preclude the use of district funds for capital purposes. Mr. Storey gave some background on the original ballot measure; at the time, a County district (created at the request of the City of Estacada) already existed to collect funds for construction of the Estacada Public Library. ORS prohibits two overlapping taxing districts with the same purpose; accordingly, in order to allow Estacada to be part of the new Library District, the new district’s funds could not be used for capital purposes. Now, however, the Estacada capital bonds have been paid off, and the capital district is in the final phases of being dissolved, so the statutory prohibition against overlapping districts no longer applies, and some cities are desirous of using district funds for capital purposes. Mr. Frick asked if the Estacada district remained, whether that would prevent Library District funds from being used for capital. Mr. Storey indicated such an argument could be made, but noted that, at this point, the dissolution of the Estacada district is nearly complete.

Chair Hoyt then asked Mr. Krupp to proceed with his discussion of the other issues he intended to discuss. Mr. Krupp indicated the preceding discussion had largely covered the second item on his agenda, and he hoped the information he and Mr. Storey had shared had proven useful.

Mr. Krupp moved on to the third topic on his agenda, the desire for the BCC (as District Board) to reengage in the fiduciary activities of the Library District. Currently, Mr. Krupp has a very limited role as District Administrator, and the County is interested in having a discussion about how Mr. Krupp (as Budget Officer) and the District Board can be more involved, as much of the fiduciary oversight duty has been delegated to LDAC. Both Chair Hoyt and Mr. Krupp acknowledged that LDAC’s role and authority would have to be examined and discussed going forward. Chair Hoyt indicated his belief that fiduciary oversight responsibility does belong with LDAC, however the current LDAC structure does not reflect that role. Mr. Krupp indicated that these discussions would also need to include the library cities. Mr. Krupp indicated his discomfort at being a budget officer with financial accountability but no corresponding authority under the current IGA. Chair Hoyt agreed that LDAC is in a similar position, with the desire to act in an oversight role but no capacity or direction to exercise any authority.

Mr. Krupp mentioned again Commissioner Schrader’s suggestion for the creation of a formal Technical Committee consisting of Clackamas County Library Directors, and with that, he felt he had covered the topics on his agenda.

From the audience, Commissioner Savas expressed personal interest in and support of greater District Board involvement in the Library District. Commissioner Savas also spoke to the previously-discussed issue of utilizing district funds for capital purposes. He expressed a concern that if there was an intent for the Library District to fund future capital spending, the rate of $0.3974 per $1,000 AV was not sufficient to do so, and that Library District funds are insufficient to fund both operations and capital. His primary concern, which was also indicated in the ballot measure, is for the Library District to provide for permanent, long-term stable funding for all libraries. He offered the City of Milwaukie’s approach to library capital funding as an appropriate method which would not jeopardize operating funds. He wants all Clackamas County libraries to be successful and financially stable.

Chair Hoyt provided some historical context, observing that after the library district passed, the additional funds allowed libraries to build contingency funds (as it took some time to “ramp up” operations to take advantage of increased funding). Now, however, as operations have increased, Chair Hoyt agrees that tapping into operational funds for other purposes would have a negative effect in many cities. Mr. Storey noted that the contingency funds Chair Hoyt described should not be spent on capital purposes under the current Library District structure. This has also prompted feedback from and discussion with cities on the appropriate uses of Library District funds. Nancy Niland asked if District funds could be spent on basic repairs and improvements, and Jeff Bornefeld indicated that such expenditures seemed permissible.

From the audience, Jack Frick asked if there had ever been, or if there should be, some sort of audit on City use of Library District funds. Mr. Krupp indicated that each city did conduct their own audits, and as part of those audits, evaluations of appropriate use and proper accounting are made. Mr. Frick asked if the County conducted any review of those audits. Mr. Krupp replied that the intent of the IGAs is to afford great authority and deference to cities on the use of Library District funds in the provision of library services. The primary measurement of proper fund utilization is the degree to which service standards are being met, and one of the primary roles of LDAC is to ensure adherence to standards. There is no County involvement in day-to-day expenditures or operational decisions at the City level. Mr. Frick asked if there was any examination of allocated costs. Mr. Krupp answered that the cost allocations are legal uses of district funds. Different cities use different methodologies, but recovery of allocated costs is a legal and appropriate practice.

Mr. Storey asked to respond to Nancy Niland’s previous question, and indicated that the intent of the ballot measure was to allow district funds to be used for “low-level” repairs and improvements, but not major capital improvements.

From the audience, Haley Fish, City of Canby Finance Director, shared information about the City of Canby’s allocation plan, which is based on consistent and defensible cost allocation methods. The City is audited on an annual basis, and there have been no negative findings while she has been there. The city maintains transparency, and she believes that the City of Canby is in compliance with the IGA and the ballot measure. Ms. Fish also brought copies, for those interested, of the City allocation plan, as well as white papers on cost allocations from the Government Finance Officers Association.

Jeff Bornefeld observed that the when the BCC approved considering the new master order, they indicated that while they considered it disruptive to require cities to repay district funds that may have been improperly spent, any modification of the master order should be linked to additional oversight of the use of those funds. He also observed that the ballot measure indicated that an annual audit of district finances would be performed. He also observed that the current IGA prohibits the use of district funds to support general city overhead or administrative costs, except to the extent that those costs are directly related to the provision of library services or library operations. Jeff indicated his concern that while a general audit might find certain costs allowable, the IGA signed by all cities and the County might specifically prohibit the use of district funds to pay for those costs. Jeff expressed a concern that the BCC’s desire to avoid disruption might allow this situation to persist.

Chair Hoyt acknowledged that there were many issues to clarify, and he indicated his appreciation for Mr. Krupp’s and Mr. Storey’s willingness to work on these issues in conjunction with the LDAC.

Mr. Storey offered some clarification about what the BCC was referring to when indicating there was no intent to cause disruption to city partners. He explained the BCC was referring to use of accumulated savings, not allocated expenses. Mr. Storey offered the example of Oregon City, where accumulated savings had been used to support the current library expansion. He indicated that requiring the City to repay those accumulated savings from the general fund is an option. However, in response to requests from cities, the BCC has expressed a willingness to allow cities more flexibility in how District funds may be used, in exchange for greater County oversight in the use of those funds. The two issues (flexibility and oversight) are linked, and Mr. Storey anticipates LDAC will be one of the key players in future discussions on the topic.

Chair Hoyt once again thanked Mr. Krupp and Mr. Storey for their time and the information they provided. Chair Hoyt indicated that further discussions, especially on the issue of allocated charges, would best be saved for a future meeting. Mr. Storey did provide the LDAC with a brief example of the County’s general approach to allocated expenses, specifically when looking at the Oak Lodge library, namely that it was appropriate to use district funds to pay for costs the Oak Lodge Library might incur if it were a separate, standalaone business (e.g., HR, accounting, janitorial).

Mr. Krupp thanked the LDAC for the opportunity to appear, and indicated that he or Chris would be happy to answer any other questions the committee members might have going forward. Chair Hoyt once again thanked Mr. Krupp and Mr. Storey for their time and the information they had provided.

A brief discussion for future meeting dates and times ensued. Chair Hoyt recommended continuing to meet on the 2nd Tuesday of each month. In response to a question from Katie Lewis, Greg Williams reported that that the 2nd or 4th Tuesday were, the days on which the largest number of LDAC members were able to attend. The next meeting was set for May 10th. The group also indicated that continuing to meet at the County Campus was acceptable.

The meeting adjourned at 8:31 PM.

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