oregon’s counties: 2012 financial condition review

7/31/2019 Oregons Counties: 2012 Financial Condition Review

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Secretary of State Audit ReportKate Brown, Secretary of State

Gary Blackmer, Director, Audits Division

Report Number 2012-17 May 2012Counties Financial Condition Review Page 1

Oregons Counties: 2012 Financial Condition Review

The objective of this report is to analyze the financial condition of countygovernments within the State of Oregon, and to identify general strategies ofother states for addressing financial concerns.We also looked specifically atthe federal timber payments to counties, which are scheduled to end, toidentify the added financial strain. We did not propose specific solutions forcounties because the decisions about county taxes and the level of services are

based upon local priorities, within practical and legal requirements andlimitations.

Early identification of financial problems can enable a government tointroduce remedies sooner. State monitoring of local governments can provideassurance that key partners in service delivery are financially sound, and ifwarning trends appear, can also prompt action. One of the key challengesfacing several states and their local governments is the right solution when agovernment is in severe financial distress.We compiled and included in thisreport actions taken by other states to monitor the financial condition of theirlocal governments.

For purposes of our analysis of Oregons 36 counties, we selected 10 indicatorsthat provide a general assessment of the financial condition of Oregonscounties. For each indicator we present a detailed discussion and analysis.Using the results, we identified eight counties whose financial condition mayindicate a higher risk of distress than other counties. We performed additionalanalysis on these eight counties, which are individually portrayed in theCounties to Monitor section of this report:

Coos Curry Douglas Jackson Josephine Klamath Lane Polk

Many of the counties have initiated various strategies to address theirsituation and we summarized their actions and plans within this report.

Summary


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Table of ContentsBackground .................................................................................................................................................... 3

County and State Interrelationships ........................................................................................................... 3

Financial and Demographic Indicators....................................................................................................... 4

Analysis of Financial Condition of Oregon Counties ................................................................................ 5

County Indicators Overview .......................................................................................................................... 7

Local Support ............................................................................................................................................. 7

Timber Payment Dependence .................................................................................................................... 9

Debt Burden ............................................................................................................................................. 11

Liquidity ................................................................................................................................................... 12

Fund Balance ............................................................................................................................................ 13Retirement Benefit Obligation ................................................................................................................. 14

Public Safety ............................................................................................................................................ 15

Personal Income ....................................................................................................................................... 16

Population Trends..................................................................................................................................... 17

Unemployment ......................................................................................................................................... 19

Counties to Monitor...................................................................................................................................... 20

Coos County ............................................................................................................................................. 21

Curry County ............................................................................................................................................ 26

Douglas County ........................................................................................................................................ 31

Jackson County ........................................................................................................................................ 36

Josephine County ..................................................................................................................................... 41

Klamath County ....................................................................................................................................... 46

Lane County ............................................................................................................................................. 51

Polk County .............................................................................................................................................. 56

Approaches in Other States to Financial Monitoring and Intervention ........................................................ 61

Summary of State Legislation Pertaining to Distressed Local Governments .............................................. 65

Objectives, Scope and Methodology ............................................................................................................ 69

About the Secretary of State Audits Division ........................................................................................... 71


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Background

Counties play a key role in providing government services, and even precede Oregons statehood. OnceOregon Country and its counties were carved into states, Oregon transitioned from having aprovisional government to a territorial government, and finally to a state government. This evolutionwas mirrored at the county level as well, starting with four counties in 1843, with further dividingthrough the years to the current 36 counties in 1917.

Originally, all counties functioned almost exclusively as agents of state government; all their activity hadto be either authorized or mandated by state law.Under the provisional government, they wereresponsible for tracking property, probating estates, overseeing minor judicial functions, enforcinglaws, operating jails, and conducting elections.The territorial government added some responsibilityfor poor relief, public health, and agricultural services.

In 1958 an amendment to the Oregon Constitution authorized counties to adopt home rule charters,and a 1973 state law granted all counties the power to exercise broad home rule authority. Nine haveadopted home rule charters wherein voters have the power to adopt and amend their own countygovernment organization.

Todays counties provide a wide range of public services including: public health, mental health,community corrections, juvenile services, criminal prosecution, hospitals, nursing homes, airports,parks, libraries, land-use planning, building regulations, refuse disposal, elections, air-pollution control,veterans services, economic development, urban renewal, public housing, vector control, county fairs,museums, animal control, civil defense, and senior services.

Some of these services are supported with local taxes, whereas others rely in part upon state andfederal revenue for support such as public health and senior services. As shown in the following chart,

the Association of Oregon Counties (AOC) has identified major services provided by the State, Counties,and by both entities.

County and State Interrelationships


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The ability to evaluate the financial condition of a local government, whether by key decision makers

within the government, taxpayers, rating agencies, bondholders or other parties, is critically importantin todays economic environment.

Cities and counties around the country with long-term problems have found themselves pushed overthe edge by the recession and its lingering aftermath. In Alabama, Jefferson County filed the largestChapter 9 bankruptcy in American history. Officials in Michigan are negotiating the amount of aid, andsubsequent oversight and control that could be provided to the City of Detroit. The City of Stockton,California is currently in negotiations in an attempt to avoid becoming the largest American city todeclare bankruptcy.

Counties in Oregon are not immune to these and similar financial troubles. Public attention has beendirected to counties including Curry, Josephine, and Lane, which are reported as facing financialhardship. Revenues from local sources such as property taxes and interest income as well as

intergovernmental revenues from state and federal agencies have declined since 2008. Oregon, morethan some other states, is further impacted by the anticipated loss of federal timber payments. Howeach county has addressed the current situation has varied. Some have held back prior year receipts inreserve with plans to allocate out over the next few years when sources are no longer available. Somehave tried to pass local tax levies to support one or more programs such as Public Safety. Some haveexplored alternative sources of revenues such as wind farms and local sales taxes. Each is examiningexpenditures through staff reductions and program restructuring. Some have also looked tooutsourcing services such as libraries. The 2012 legislature passed legislation that allows somecounties to use Road Funds to help with the costs associated with Sheriffs patrols. A few counties have

Financial and Demographic Indicators


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made use of extensive interfund borrowings of dedicated funds to support ongoing services. This lastpractice has potential implications if the county is unable to repay these loans. So far none have issuedlong term debt to support current services.

Financially stressed local governments are not new. Economic conditions threatened local governmentsin the past and many states have developed mechanisms to monitor financial condition and respondwhen necessary.

Evaluating financial condition involves a number of factors including the national and local economies,population and composition of the community, and the internal finances of the local government.

Our research of how other states assess the financial condition of local governments found there are anumber of different approaches that are taken, as well as differing definitions of what constitutesdistress in a local government. Despite the differences, one thing is certain, a combination of carefullyselected indicators can provide a valuable tool for assessing the overall health of a local government.

The term financial condition can have many meanings. In a narrow accounting sense, financial conditionmeans a governments ability to generate enough cash over 30 or 60 days to pay its bills. In a broadersense, it can mean a governments ability to generate enough revenues over its normal budgetary

period to meet its expenditures and not incur deficits.

The objective of this report is to analyze the financial condition of county governments within the Stateof Oregon, and to identify approaches used by other states to address financial concerns. We also lookedat federal timber payments to counties. We did not propose specific solutions for counties because thedecisions about county taxes and the level of services are based upon local priorities, within practicaland legal requirements and limitations.

We prepared a financial condition report for the State of Oregon in 2011 based upon the methodologydeveloped by the International City and County Managers Association (ICMA: Evaluating FinancialCondition: A Handbook for Local Governments, 1985) and our research of efforts undertaken by otherstates. We applied the same general methodology to this effort but because it involves 36 counties, wefirst developed a means of identifying counties warranting particular attention.

For purposes of this report, we will define financial condition as a local governments ability to maintainexisting service levels, withstand local and regional economic disruptions, and meet the demands ofnatural growth, decline, and change.

One element of particular concern for Oregon counties is the end of federal timber payments, whichmany rely upon for their daily operations.We included timber payments as an indicator since somecounties are more reliant than other counties on timber monies.

Analysis of Financial Condition of Oregon Counties


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For purposes of our analysis, we selected the following 10 indicators that we feel provide a generalassessment of the financial condition of Oregons counties.

Local Support Timber Payment Dependence Debt Burden

Liquidity Fund Balance Retirement Benefit Obligation Public Safety Personal Income Population Trends Unemployment

For each indicator, we present a detailed discussion and analysis. Much of the data included in thisreport was obtained from each countys audited financial statements. In addition, our analysis focusedon the financial condition of each countys governmental funds, which includes the General Fund. Unlessotherwise noted, the data is presented on a fiscal year basis (e.g., 2008 represents the fiscal year

beginning July 1, 2007 and ending June 30, 2008).

Using the results of our analysis, we identified eight counties whose financial condition may indicate ahigher risk of distress than other counties. These counties were selected for additional analysis, and arepresented in the Counties to Monitor section of this report.


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County Indicators Overview

Locally generated revenues need tobe sufficient to meet a countyscurrent and future service needs. Theability to generate local revenues isdependent on several factorsincluding property values, taxableproperty, and population.

Property taxes are one of the mostimportant sources of locallygenerated revenues for a county.Property taxes are composed of

three primary parts: 1) permanentrate and gap bond levies, 2) localoption levies, and 3) bond levies.Most taxing districts can utilize anyof these three types of taxes. Thepassage of statewide constitutionaltax limitations in the 1990s(Measures 5, 47, and 50), establishedpermanent rates for each taxingdistrict. A countys permanent taxrate is the maximum rate it canimpose without approval by voters.

Taxes from the permanent rates arediscretionary and fund the generaloperating budgets of the taxingdistricts. They account for the singlelargest component of property taxes.

Between 2008 and 2011, mostcounties generated an average of atleast $300 per capita in localrevenues.Gilliam and ShermanCounties, on average, generated thelargest local revenues per capita,

which were four times greater thanthe next highest county. Revenuesgenerated from wind farms and/orlandfill and recycling centerscontributed to the high averages inthese counties.

Local Support

$4,384

$4,156

$972

$851

$788

$764

$753

$708

$690

$670

$568

$535$517

$510

$494

$475

$475

$470

$431

$400

$387

$381

$369

$348

$334

$332

$310

$310

$308

$288

$252

$245

$237

$221

$202

$191

$0 $1,000 $2,000 $3,000 $4,000 $5,000

Sherman

Gilliam

Wheeler

Tillamook

Morrow

Grant

Harney

Multnomah

Lincoln

Clatsop

Clackamas

WallowaWashington

Klamath*

Deschutes

Hood River

Lake

Wasco

Jefferson

Crook

Columbia

Baker

Union

Yamhill

Linn

Curry

Jackson

Coos

Benton

Umatilla

Marion

Malheur

Douglas

Polk

Lane

Josephine

* 2011 data not available; figure shown is a 3-year average

Local Revenue per Capita

4-year average, FY 2008-2011


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The average permanent tax rate amongOregon counties is $2.81 per $1,000 ofassessed property value. Josephine andCurry Counties have the lowest permanenttax rates and are the only counties withrates below $1.00. Low permanent rates

combined with limited taxable property canconstrain a countys ability to raiserevenues. To illustrate, Josephine County,with the lowest permanent tax rate of $0.59and 62% of its area in non-taxable federallands, generated the least amount of localrevenues at $191 per capita in 2011.

$8.71

$8.53

$4.50

$4.34

$4.25

$4.13

$3.87

$3.85

$3.76

$3.73

$3.57

$3.03

$2.98

$2.88

$2.85

$2.85

$2.82

$2.58

$2.58

$2.54

$2.25$2.21

$2.01

$1.73

$1.72

$1.53

$1.50

$1.42

$1.40

$1.28

$1.28

$1.27$1.11

$1.08

$0.60

$0.59

$0 $2 $4 $6 $8 $10

Sherman

Wheeler

Harney

Multnomah

Wasco

Morrow

Crook

Gilliam

Lake

BakerJefferson

Marion

Clackamas

Grant

Union

Umatilla

Lincoln

Malheur

Yamhill

Wallowa

WashingtonBenton

Jackson

Klamath

Polk

Clatsop

Tillamook

Hood River

Columbia

Lane

Deschutes

LinnDouglas

Coos

Curry

Josephine

Property Tax RatesPermanent rate per $1,000, FY 2010-11


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Revenues determine the capacity of agovernment to provide services to citizensand are affected by economic and policy

changes.Oregon counties generaterevenues from a number of sources,including other governments. The federalgovernment provided timber payments toeligible counties for 1) loss of property taxrevenue, which results from an inability toimpose taxes on federally owned forestlands, and 2) reduction in the amount oflogging allowed on federal forest lands.Federal timber payments are oftenrestricted for specific purposes such asfunding schools or road maintenance. The

portion of the timber payments that are notrestricted can be used by the county forgeneral operating expenditures. Forpurposes of our analysis, we focused thisindicator solely on the portion of the federaltimber payments provided through theDepartment of Interiors Bureau of LandManagement (BLM) to 18 Oregon counties.These timber payments, known as Oregonand California (O&C) and Coos Bay WagonRoad (CBWR) payments, are generally notrestricted and the availability of these

moneys greatly impacts a countys GeneralFund. The BLM timber payment totals usedin our analysis include amounts retainedfor Resource Advisory Committees (RAC),which work with the BLM to supportprojects on federal lands. Counties do notreceive the RAC monies, however, it wasconsidered immaterial to our analysis. Forcounties that depend heavily on timberpayments, the loss of this revenue sourcemay result in cash flow problems and fewerservices provided to its citizens.

Over the four-year period between 2008and 2011, the average federal timberpayments in five counties totaled more than10% of their respective governmental fundrevenues.

Timber Payment Dependence

0.1%

0.2%

0.7%

0.9%

1.4%

1.5%

1.6%

3.2%

3.7%

5.9%

6.1%

6.1%

6.4%

10.6%

15.1%

17.7%

22.4%

24.2%

0% 5% 10% 15% 20% 25% 30%

Multnomah

Washington

Lincoln

Marion

Yamhill

Tillamook

Clackamas

Linn

Klamath*

Columbia

Benton

Polk

Lane

Jackson

Coos

Curry

Douglas

Josephine

* 2011 data not available; figure shown is 3-year average

Percent of Governmental Fund Revenuefrom Federal BLM Timber Payments4-year average, FY 2008-2011Only includes recipient counties


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Counties also receive and depend uponfunding for roadways from the United StatesForest Service (USFS) and the state of Oregon.We did not include these transportationfunds in our analysis of counties to monitorbecause they are restricted for specific

purposes and not available for generaloperations. According to the Association ofOregon Counties, Oregon counties receivedabout $85 million in federal funding directedto roads in FY2009-10. This amount, whichwas based upon past timber payments toOregon counties ended in October 2011. Thecounties also received about $158 millionfrom the state of Oregon in FY2009-10, whichwas based upon their number of registeredmotor vehicles. The Oregon Constitutionrestricts the use of these federal and state

revenues to roadway improvements.

For many of the larger counties with moremiles of roads but fewer registered motorvehicles, the federal funds were a substantialsupplement to their state road funds. Thesecounties will now only receive state revenuerelated to their registered vehicles, adverselyaffecting their transportation programs.Collectively, Oregons counties are losingmore than one-third of their roadmaintenance funding.

Inadequate spending on road maintenancecould have immediate consequences formany counties, though some have builtsubstantial reserves in an effort to delay itsimpact. The extent of the loss, the restricteduse of the funds, and the difficulty indetermining the timing and magnitude ofeconomic impact make it difficult to assessthe effect on financial conditions.

The chart shows the reliance of Oregoncounties on federal road funds to help pay the

cost of road maintenance. Counties receiveother federal revenue such as Payment inLieu of Taxes and State Forest Payments, butthe amounts have less impact on the countysgovernment funds.

0.1%

0.2%

0.5%

0.7%

0.9%

0.9%

1.2%

1.3%

1.5%

2.1%

2.5%

3.2%

3.5%

3.7%

4.7%

4.9%

6.7%

6.9%6.9%

7.6%

9.4%

9.9%

9.9%

13.2%

13.3%

13.8%

16.4%

23.9%

25.0%

0% 5% 10% 15% 20% 25% 30%

Multnomah

Umatilla

Benton

Yamhill

Coos

Clackamas

Marion

Morrow

Deschutes

Jackson

Jefferson

Josephine

Tillamook

Union

Lincoln

Baker

Wasco

LinnLane

Hood River

Crook

Wallawa

Douglas

Klamath*

Curry

Harney

Wheeler

Lake

Grant

* Based on 2010 Government Fund revenues

USFS Funding for Roads as a Percent ofCounty Governmental Fund Revenues4-year average, FY 2008-2011Only includes recipient counties


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The issuance of debt is one strategy acounty can use to provide cash to fundexpenditures. However, increasing debt

service (principal and interestpayments on outstanding debt) reducesexpenditure flexibility by adding to acountys obligations. It can be a majorpart of a countys fixed costs, and itsincrease may indicate excessive debtand fiscal strain. A key indicator thatcan be used to evaluate a countys debtburden is the percentage of debt serviceto revenues. States recognized as havingsound debt management practicestypically use a range between five and

eight percent of revenues. The State ofOregon uses a target of five percent.

From 2008-2011, seven counties had anaverage debt service to governmentalfund revenues percentage thatexceeded five percent; however, all 36counties were within the rangerecognized as sound debt management.

Debt Burden

0.0%0.0%

0.0%

0.0%

0.2%

0.2%

0.2%

0.3%

0.4%

0.4%

0.5%

1.2%

1.3%1.4%

2.0%

2.1%

2.6%

2.9%

3.0%

3.0%

3.1%

3.5%

3.7%

4.3%

4.3%

4.8%

4.8%

4.9%

4.9%

5.1%

5.6%

6.3%

6.4%

6.5%

6.7%

7.8%

0% 2% 4% 6% 8%

BakerHarney

Lake

Wheeler

Douglas

Curry

Morrow

Sherman

Yamhill

Union

Linn

Crook

GrantLincoln

Wallowa

Gilliam

Wasco

Benton

Malheur

Lane

Marion

Klamath*

Hood River

Josephine

Clatsop

Multnomah

Clackamas

Umatilla

Deschutes

Tillamook

Columbia

Jackson

Washington

Jefferson

Coos

Polk

* 2011 data not available; ratio shown is a 3-year average

Debt Service as a Percentage ofGovernmental Fund Revenues4-year average, FY 2008-2011


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A good measure of a countys short-term financial condition is its liquidityor cash position. Cash position

determines a countys ability to pay itsshort-term obligations by measuringthe amount of cash on hand at the endof the year in relation to the amount ofcurrent liabilities. A ratio of less thanone indicates the countys cashposition is not sufficient to meet itsshort-term obligations.

During 2008-2011, all but one countyhad an average cash position that wassufficient to meet their short-term

liabilities. Over half of the countiesshowed a favorable cash position of atleast 5:1, indicating the counties had aminimum of five dollars available tocover each dollar obligated.

Liquidity

100.0

55.4

47.3

46.2

37.8

29.1

28.6

17.7

17.3

12.112.1

11.5

8.8

7.9

7.5

7.4

6.7

5.6

5.4

5.3

5.0

4.8

4.0

3.7

3.5

3.5

3.4

2.9

2.9

2.5

2.3

1.9

1.9

1.6

1.2

0.8

0 50 100 150

Sherman **

Wallowa

Harney

Lake

Grant

Curry

Crook

Klamath*

Gilliam

DouglasWheeler

Tillamook

Umatilla

Jackson

Wasco

Hood River

Jefferson

Benton

Lincoln

Clatsop

Josephine

Lane

Morrow

Columbia

Yamhill

Coos

Marion

Washington

Linn

Polk

Baker

Union

Clackamas

Multnomah

Deschutes

Malheur

*2011 data not available; ratio shown is a 3-year average

**Sherman County reported no liabilities in their governmental

fund; ratio of 100 represents perfect liquidity.

Liquidity Ratio4-year average, FY 2008-2011


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Most counties rely upon propertytax revenue as a primary source ofincome to cover operating costs for

the year. The general fundunreserved fund balance helpscounties cover costs from July untilNovember, when property taxes aregenerally collected. A positive fundbalance provides a cushion to helpwith revenue shortfalls orexpenditure overruns. Continuousreductions in fund balance couldlead to problems in the future, evenif the current fund balance ispositive.

Due to changes in county fundstructures resulting fromimplementation of GASB StatementNumber 54, fund balanceinformation beginning with 2011 isno longer comparable to previousyears. As a result, this indicatorfocused on the three-year periodfrom 2008 to 2010. During thisperiod, a total of 15 countiesexperienced decreases in their

respective general fund unreservedfund balance. The most significantdecrease, of about $2 million,occurred in Linn County, whichreported a negative general fundunreserved fund balance in two ofthe three-years analyzed. LinnCounty officials reported that thenegative General Fund balance was aresult of extensive use of interfundloans from the countys Road Fund.Twelve other counties experienced

decreases of about 10% during thisperiod.

Fund Balance

-260.3%

-77.1%

-53.1%

-50.5%

-42.8%

-33.2%

-29.6%

-27.2%

-23.0%

-22.9%

-15.0%

-12.4%

-9.7%

-9.3%

-5.6%

3.8%

4.2%

17.5%

17.9%

18.9%20.8%

21.6%

25.9%

27.7%

28.4%

38.6%

39.3%

42.2%

43.0%

47.6%

54.3%

60.2%

93.3%

144.7%

202.3%

646.6%

-500% -300% -100% 100% 300% 500% 700%

Linn

Klamath

Morrow

Lincoln

Marion

Multnomah

Coos

Yamhill

Benton

Polk

Wheeler

Josephine

Washington

Umatilla

Baker

Hood River

Columbia

Wasco

Tillamook

ClackamasJackson

Wallowa

Douglas

Jefferson

Gilliam

Grant

Malheur

Harney

Curry

Deschutes

Lake

Clatsop

Lane

Sherman

Union

Crook

Percentage Change in General FundUnreserved Fund BalanceFY 2008-2010


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An unfunded liability is a liability that hasbeen incurred during the current or aprior year that does not have to be paid

until a future year, and for which reserveshave not been set aside to pay theliability. It is similar to long-term debt inthat it represents a legal commitment topay at some time in the future. If suchobligations are permitted to grow over along period of time, they can have asubstantial effect on a countys financialcondition. This indicator measures theburden of a countys unfunded actuarialliability associated with its pension andother post-employment benefit plans

(OPEB) on its citizens.

In 2011, Sherman and Gilliam Countieshad the largest total pension benefitobligations, both exceeding $900 percitzen. The average obligation in 2011was $302 per capita. Pension plans inthree counties were fully funded. Fullyfunded plans are those with nooutstanding liability. Counties withretirement benefit obligations per capitaof $0 or less are considered fully funded.

A negative amount indicates a county thatis more than 100% funded. This generallyoccurs when pension bonds were issuedto reduce the countys retirementobligation.

Retirement Benefit Obligation

-$270

$0

$0

$11

$15

$22

$52

$81

$92

$116

$120

$156

$157

$175

$197

$212

$222

$245

$261

$267

$290

$300

$321

$334$352

$374

$380

$437

$454

$465

$469

$491

$709

$779

$989

$1,602

-$400 $0 $400 $800 $1,200 $1,600

Grant

Union

Wheeler

Wallowa

Yamhill

Crook

Lincoln

Hood River

Malheur

Columbia

Umatilla

Jefferson

Klamath

Benton

Clatsop

Polk

Marion

Jackson

Baker

Washington

Josephine

Wasco

Deschutes

CoosLake

Linn

Curry*

Lane

Clackamas

Harney

Morrow

Multnomah

Douglas

Tillamook

Gilliam

Sherman

*OPEB obligations not reported

Retirement Benefit Obligation Per CapitaFY 2011


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Public safety is a primaryresponsibility of a county toensure that its citizens are

protected. Between 2008 and2011, Sherman and GilliamCounties significantly out spentall other counties for publicsafety related activities. On theother hand, Yamhill and BentonCounties spent the least onpublic safety during theseyears.

Public Safety

$150

$159

$163

$185

$188

$205

$209

$209

$210

$216

$219

$221$223

$229

$229

$234

$249

$249

$251

$255

$259

$265

$271$271

$274

$282

$287

$297

$341

$365

$371

$439

$478

$522

$807

$1,095

$0 $400 $800 $1,200

Yamhill

Benton

Coos

Columbia

Polk

Jackson

Marion

Lane

Curry

Douglas

Union

JosephineCrook

Hood River

Washington

Klamath*

Wallowa

Malheur

Wasco

Clackamas

Grant

Umatilla

TillamookLinn

Harney

Baker

Jefferson

Multnomah

Lake

Lincoln

Clatsop

Deschutes

Morrow

Wheeler

Gilliam

Sherman

* 2011 data not available; amount shown is a 3-year average

Public Safety Spending Per Capita4-year average, FY 2008-2011


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Personal income per capita is one measureof a countys ability to raise taxes: thehigher the per capita income, the more

property tax, income tax, and business taxthe county can generate. If income isevenly distributed, a higher per capitaincome will usually mean a lowerdependency on government services suchas transportation, health, recreation, andwelfare. A decline in per capita incomecauses a drop in consumer purchasingpower and can provide advance notice thatbusinesses, especially in the retail sector,will suffer a decline that can ripple throughthe rest of the countys economy.

Income data for 2009 was the latestavailable; based upon 2009 figures, the percapita personal income among Oregons 36counties ranged from about $24,000 to$44,000. Every county experiencedincreases in per capita personal incomeover the period from 2000-2009. Gilliamand Sherman Counties had the largestgains over that decade, with increases ofabout 80%.

Personal Income

$43,646

$41,049$40,490

$39,465

$37,922

$37,450

$35,966

$34,683

$34,314

$33,979

$33,810

$33,562

$33,545$33,446

$33,325

$32,894

$32,876

$32,773

$32,725

$31,686

$31,669

$31,614

$31,269

$31,163$30,193

$30,056

$29,981

$29,686

$29,451

$29,447

$29,387

$29,098

$29,059

$27,339

$26,116

$23,960

$0 $10,000 $20,000 $30,000 $40,000 $50,000

Clackamas

ShermanMultnomah

Washington

Benton

Gilliam

Deschutes

Curry

Jackson

Wasco

Lincoln

Lane

ClatsopHood River

Columbia

Yamhill

Marion

Tillamook

Wallowa

Douglas

Grant

Coos

Lake

UnionUmatilla

Polk

Josephine

Morrow

Linn

Harney

Klamath

Baker

Jefferson

Wheeler

Crook

Malheur

Personal Income per CapitaFY 2009


17/71


Population change can directlyaffect governmental revenues. Forexample, some taxes are collected

on a per capita basis, and manyintergovernmental revenues andgrants are distributed according topopulation. A decline in populationwould, at first glance, appear torelieve the pressure forexpenditures, because thepopulation requiring services issmaller. In practice though, a countyfaced with population decline israrely able to make reductions inexpenditures that are proportional

to the population loss.

During the 60-year period from1950 through 2010, most countiesexperienced an overall growth inpopulation. Populations more thandoubled during this period in 17counties, while an additional sixcounties saw an increase of over50% in their respective populations.Deschutes and Washington Countiesexperienced the largest shifts in

population with increases of135,921 (623%) and 468,441(765%), respectively.

A number of counties, however,experienced declines in totalpopulation during this period.Wheeler, Gilliam, Sherman andGrant Counties all experienceddeclines greater than 10%. Wheelerand Gilliam Counties were impactedthe most with decreases of 1,872

(57%) and 946 (34%), respectively.

Population Trends

468,441

289,276

263,797

225,939213,934

144,696

135,921

65,709

62,355

56,171

54,009

53,118

49,086

34,186

26,384

24,726

24,230

20,778

16,316

16,184

11,987

9,661

9,606

8,090

7,786

6,644

6,390

6,263

1,309

1,246

(41)

(256)

(506)

(884)

(946)

(1,872)

-50,000 150,000 350,000 550,000 750,000

Washington

Clackamas

Multnomah

Lane

Marion

Jackson

Deschutes

Yamhill

Linn

Josephine

Benton

Douglas

Polk

Umatilla

Columbia

Lincoln

Klamath

Coos

Curry

Jefferson

Crook

Wasco

Hood River

Malheur

Union

Tillamook

Morrow

Clatsop

Harney

Lake

Baker

Wallowa

Sherman

Grant

Gilliam

Wheeler

Population Change 1950 to 2010

1950Population

Increase to 2010


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Certain age groups within a countyspopulation require more resourcesthan others. A high percentage ofcitizens in these age groups may be anindication of future financial stresswithin the county. The percentage of

individuals living in the county whoare under 20 and over 64 is a measureof the countys needs, as thesepopulation groups tend to requiremore services than the averageworking individual. In contrast,individuals between the ages of 20and 50 generally require fewerservices while at the same timecontributing the most revenue.

From 1950 to 2010, most counties

saw an increase in the population of20-50 year olds. Significant increasesoccurred in 13 counties where thispopulation category more thandoubled. However, in six counties thiscategory declined about 20%.Wheeler, Gilliam, Grant and ShermanCounties experienced the greatestdeclines while Washington Countysaw the greatest gain within this agerange.

818.7%

536.2%

298.1%

221.3%

200.1%

195.5%

195.4%

161.5%

149.1%

147.9%

142.5%

141.8%

102.9%

98.4%

89.4%

69.9%

69.4%

68.6%

68.2%

63.2%

45.2%

31.8%

29.1%

28.3%

20.3%

7.9%

-0.7%

-2.8%

-10.2%

-10.9%

-22.0%

-33.7%-41.3%

-41.8%

-54.2%

-74.0%

-200% 0% 200% 400% 600% 800% 1000%

Washington

Deschutes

Clackamas

Jefferson

Jackson

Marion

Yamhill

Polk

Benton

Lane

Curry

Josephine

Morrow

Columbia

Linn

Lincoln

Hood River

Multnomah

Crook

Umatilla

Douglas

Wasco

Malheur

Union

Klamath

Coos

Tillamook

Clatsop

Lake

Harney

Baker

WallowaGrant

Sherman

Gilliam

Wheeler

Change in 20- to 50-year olds1950 to 2010


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A countys unemployment rate is a keyindicator of the health of its economy,as well as, the countys long-term

financial prospects. During 2011,average county unemployment ratesranged from a low of 6.4% to a high of15.8%. The State of Oregonsunemployment rate during this periodwas 9.6%. Unemployment in 22counties met or exceeded the staterate.

Unemployment

6.4%

6.6%

7.8%

7.8%

8.2%

8.5%

8.5%

8.7%

8.8%

8.8%

8.8%

9.1%

9.1%

9.4%

9.6%

9.9%

9.9%

10.0%

10.3%

10.4%

10.4%

10.6%

11.5%

11.5%

11.5%

11.7%

11.8%

12.4%

12.6%

12.6%

12.7%

13.2%

13.2%

13.5%

14.3%

15.8%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Benton

Gilliam

Hood River

Washington

Morrow

Clatsop

Wasco

Multnomah

Clackamas

Polk

Tillamook

Sherman

Umatilla

Yamhill

Lane

Union

Wheeler

Lincoln

Marion

Baker

Malheur

Columbia

Coos

Jackson

Wallowa

Linn

Curry

Klamath

Josephine

Lake

Deschutes

Douglas

Jefferson

Grant

Harney

Crook

Unemployment RateFY 2011


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Counties to Monitor

As presented in the prior section, for the purposes of our analysis of Oregons36 counties, we selected 10 indicators that provide a general assessment of thefinancial condition of Oregons counties. We included timber payments as anindicator since some counties are heavily reliant on timber monies.

The results of our analysis indicated the following eight counties may be at ahigher risk of distress than other counties. Because the circumstances of eachcounty are different, much more information is needed to rank them in orderof severity, and to draw a clear distinction between those with a healthy andweak financial condition. They are presented in alphabetical order.

Coos Curry Douglas Jackson Josephine Klamath Lane Polk

We performed additional analysis of these counties and contacted countyofficials to determine what action they are taking to address the financialcondition of their county. Their responses are presented within theirindividual sections of this report.

We did not propose any specific solutions because the decisions about countytaxes and the level of services are based upon local priorities, within practicaland legal requirements and limitations.


21/71


Overview

Coos County has an area of 1,629 square miles, with timber and fishing as thefoundation of its economy.About 61% of the countys land is publicly owned.As a result, the county is heavily reliant on federal timber payments, while itlevies the third lowest property tax rate among the counties. Some financialmanagement indicators are positive, such as good debt management, strong

liquidity, and a healthy fund balance at year end.

However, county spending on public safety is already among the lowest in thestate and achieving a balanced budget will become more difficult with furtherreductions in discretionary revenues. While per capita income has shownsome growth, Coos ranks 22nd among the counties. Longer term, its populationhas shown only modest growth with the possibility of a shrinking work forceand an increasingly older population to serve.

County Response

County officials indicated that its long-term debt is primarily related to thecountys pipeline and that poor economic conditions have resulted in an

increased demand for services. The county anticipates further declines inrevenues, reserves, and fund balances as a result of the poor economy and theloss of federal timber revenues. County officials report that they haveundertaken a series of steps to address the loss of federal timber payments.Reported efforts include the creation of two citizen advisory committees andthe reduction of discrentionary spending. Future tax revenues are limited dueto the permanent tax rate. As a result, county officials indicated they will needto consider liquidating county assets in order to pay expenses.

Coos County


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CoosCoun

ty

Local Support

From 2004 to 2011, the countysability to support itself throughlocally generated revenues hasdeclined. Local revenues totaled $19.5million in 2011, representing a

decrease of 5% from the $20.5 milliongenerated during 2004. In 2011, localrevenues per capita were the eighthlowest in the state.The countyspermanent tax rate of $1.08 per$1,000 of assessed property value isthe third lowest rate in Oregon.

Timber Payment DependenceIn 2011, Coos County received about$5.6 million in federal timberpayments, which represented about12% of the countys totalgovernmental fund revenues. In 2004,these payments were almost $8.8million or about 17% of totalgovernmental fund revenues. Thecountys 2011 federal timberpayments provided roughly $90 inrevenues per capita, which ranks it

fourth among all counties independence on federal timberpayments.

Debt Burden

Coos Countys long-term debt isprimarily for the county ownedpipeline. Debt service payments grewfrom $3.1 million in 2004 to $4.1million in 2009. However, those

payments subsequently dropped to$2.4 million by 2011. At 5% of 2011total revenues, the countys debtservice level ranks sixth highestamong Oregons counties. However, itfalls within the range recognized assound debt management.

$327$337

$391 $362$343 $330

$292$310

$0

$100

$200

$300

$400

$500

2004 2005 2006 2007 2008 2009 2010 2011

Local Revenue Per CapitaAdjusted for inflation

$0

$50

$100

$150

$200

$250

$300

$350

2004 2005 2006 2007 2008 2009 2010 2011

Timber Dependence Per CapitaAdjusted for inflation

6.1% 5.8% 5.6% 6.0% 6.6%

9.7%

5.6% 5.1%

0%

2%

4%

6%

8%10%

12%

14%

2004 2005 2006 2007 2008 2009 2010 2011

Debt Service as a Percentage ofGovernmental Fund RevenuesAdjusted for inflation


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CoosCoun

ty

Liquidity

After dropping significantly from2004 to 2005, the countys liquidityratio has steadily increased. At itscurrent level, the county has sufficientcash to meet its short-term liabilities.

Fund Balance

Coos Countys general fundunreserved fund balance as a

percentage of total general fundexpenditures increased about 28%from 2004 to 2010. A contributingfactor is the reduction in the countysgeneral fund expenditures, from$22.8 million in 2004 to $15.5 millionin 2010. During this same period, thegeneral fund unreserved fund balanceincreased about 35%.


The county provides pension andother retirement benefits to itsemployees.The unfunded liability,and resulting per capita obligation,associated with these benefitsdropped significantly between 2006and 2007 but spiked beginning in2009. The increase in 2009 appears tobe a result of the poor economy and a

change in reporting standards, whichrequired the county to report theunfunded liability associated withother postemployment benefitsoffered to county employees.

6.6

1.6 1.82.4 2.7

3.9 3.7 4.1

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2004 2005 2006 2007 2008 2009 2010 2011

Liquidity RatioAdjusted for inflation

$0

$5

$10

$15$20

$25

2004 2005 2006 2007 2008 2009 2010

Millions

Fund BalanceAdjusted for inflation

General Fund Unreserved Fund Balance

Total General Fund Expenditures

$268$316 $302

$72 $68

$472 $468

$334

$0$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2004 2005 2006 2007 2008 2009 2010 2011

Retirement Benefit Obligation Per CapitaAdjusted for inflation


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CoosCoun

ty

Public Safety

Historically, Coos County has one ofthe lowest rates of public safetyspending per capita.Per capitaspending on public safety relatedprograms peaked in 2006, and after

two years of declines, has increased ineach of the past three years.

Personal Income

Per capita personal income levels inCoos County grew steadily between2004 and 2009. Despite this growth,the countys 2009 per capita personalincome level of roughly $33,000remains in the bottom half amongOregon counties.

Population Trends

Coos County is 16th among Oregoncounties, with a population of 63,043

in 2010. The countys population hasremained about the same over thepast 30 years, after an increase of50% between 1950 and 1980.

$198 $187 $200 $197

$159 $164$173 $176

$0

$50

$100

$150

$200

$250

$300

2004 2005 2006 2007 2008 2009 2010 2011

Public Safety Expenditures Per CapitaAdjusted for inflation

$0

$10,000

$20,000

$30,000

$40,000

2004 2005 2006 2007 2008 2009 2010 2011

Personal Income per CapitaAdjusted for inflation

0

20,000

40,000

60,000

80,000

1950 1960 1970 1980 1990 2000 2010

Population


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CoosCoun

ty

The age profile in Coos County isolder than in the past. The under 20age group has declined 13% since1950, while the 20-49 age group hasdecreased 12%. In contrast, thepopulation over 50 has increased

25%. These trends could reduce thesize of the future workforce and alsoplace greater demand on the countyto provide health and other services.

Unemployment

Coos Countys unemployment ratejumped 4.6% in 2009 and has

remained above 11% the past twoyears. In 2011, the countysunemployment rate was about 2%above the States unemploymentrate.

9.0% 7.5%6.8% 6.6%

8.2%

12.8% 12.6% 11.5%

0%

5%

10%

15%

2004 2005 2006 2007 2008 2009 2010 2011

County Unemployment Rates

0%

10%

20%

30%

40%

Under 20 20 to 34 35 to 49 50 to 64 65 andover

Aging Population TrendPercentage of total population

% of Population in 1950 % of Population in 2010


26/71


Overview

Curry County is approximately 1,648 square miles, of which about 61% ispublicly owned.The countysmajor industries are agriculture, forest products,and mining.Curry has the second lowest property tax rate in Oregon and is heavilyreliant on federal timber payments. The countys unemployment rate has remained

high, and spending on public safety is in the bottom 10 among counties. Despitethese trends, the county has shown good debt management practices and has strong

liquidity. It also has one of the top per capita personal income levels among Oregon

counties.

County Response

Curry County officials report that they have taken a number of steps to addressthe loss of federal timber payments. These actions include combiningdepartments and placing general fund monies into reserves for the future. Inaddition, the county has privatized its Home Health and Hospice departmentresulting in a decrease of approximately 35 employees. In September 2012,Curry County is scheduled to transfer its Developmental Disabilities Program

to the State of Oregon. Plans are also being considered to privatize additionaldepartments such as the Health and Human Services Department.

Curry County


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CurryCount

y

Local Support

Local revenues totaled $5.9 million in2011, representing a decrease of 3.6%from the $6.1 million generatedduring 2004. The countys permanenttax rate of $0.60 per $1,000 of

assessed property value is the secondlowest rate in Oregon.


Since 2004, federal timber paymentshave accounted for an average ofabout 18% of the countys annualtotal governmental fund revenues. In

2011, the county received about $3.1million in federal timber payments,which provided roughly $147 inrevenues per capita. Curry is one ofthe more dependent counties on thesetimber payments.

The county reported that 53% of its2004 general fund revenue wasderived from federal timberpayments. In 2013, the countyestimates the General Fund will

receive about $4.5 million in revenuecompared to the $7.4 million receivedin 2004. Of that amount, the countyexpects to receive $350,000 in federaltimber payments during 2013,compared to $4 million in 2004.

Debt Burden

At less than a quarter percent of 2010total governmental fund revenues,

Currys debt service level is one of thelowest among Oregons counties.

$0

$50

$100

$150

$200

$250

$300

$350

2004 2005 2006 2007 2008 2009 2010 2011


$290 $298$341

$306$338

$442

$308$282

$0

$100

$200

$300

$400

$500

2004 2005 2006 2007 2008 2009 2010 2011


0.0% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%0%

2%

4%

6%

8%

10%12%

14%

2004 2005 2006 2007 2008 2009 2010 2011

Debt Service as a Percentage ofGovernmental Fund Revenues


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CurryCount

y

Liquidity

Curry has consistently maintained aliquidity ratio greater than 19 duringthe seven-year period from 2004 to2011. At this level, it has more thanenough cash to meet its short-term

liabilities. County officials reportedthat the liquidity level is a result ofefforts to put general fund moniesinto reserves in anticipation of theloss of federal timber payments.

Fund Balance

The countys general fund unreservedfund balance as a percentage of total

general fund expenditures nearlydoubled between 2004 and 2010. At$6.5 million, Curry Countys generalfund unreserved fund balance rankedin the top third among counties. Thecounty reported that these resultsdepict its efforts to put money inreserve for the future.


The county provides pension andother retirement benefits to itsemployees.There was a significantspike in the countys unfundedliability and resulting per capitaobligation in 2009. The spike appearsto be related to the economicdownturn that reduced the value of

the retirement plan investments.

19.4

26.3

20.4

39.143.9

26.0

37.4

20.8

0.0

10.0

20.0

30.0

40.0

50.0

2004 2005 2006 2007 2008 2009 2010 2011


$0

$5

$10

$15

$20

$25

2004 2005 2006 2007 2008 2009 2010

Millions




$48

$343 $326

-$21 -$20

$550 $549

$380

-$100

$0$100

$200

$300

$400

$500

$600

2004 2005 2006 2007 2008 2009 2010 2011

*County did not report its OPEB obligation

Retirement Benefit Obligation Per Capita*Adjusted for inflation


29/71


CurryCount

y

Public Safety

Since 2004, public safetyexpenditures have increased about2.0%. After a couple years ofreduced spending, the countyappears to be dedicating more funds

toward these programs. Spendingincreased about 20% between 2008and 2011. Despite the increase, thecounty remains one of the lowest inpublic safety spending per capita.

Personal Income

Personal income per capita levels inCurry County increased steadilybetween 2004 and 2009. The countys2009 per capita personal income levelof $36,300 is in the top ten amongOregon counties.

Population Trends

Curry had a population of 22,364 in2010, an increase of about 270%since 1950. The most significantincreases occurred between 1950 and1960, and again between 1970 and1980. Over the past two decades thecounty has experienced growth ofabout 5%.

$0

$10,000

$20,000

$30,000

$40,000

2004 2005 2006 2007 2008 2009 2010 2011

Personal Income Per CapitaAdjusted for inflation

0

5,000

10,000

15,000

20,000

25,000

1950 1960 1970 1980 1990 2000 2010

Population

$220 $210

$256

$229

$184

$213

$241$224

$0

$50

$100

$150

$200

$250

$300

2004 2005 2006 2007 2008 2009 2010 2011



30/71


CurryCount

y

The make-up of the population haschanged dramatically since 1950. Thetwo age groups over 50 increased acombined 28% since 1950, resultingin a decline of the three younger agegroups. This trend, if continued, could

reduce the size of the futureworkforce and also place greaterdemand on the county to providehealth and other social services.

Unemployment

The countys unemployment ratespiked in 2009 and has remainedsteady. The countys unemploymentrate in 2011 was in the top thirdamong Oregon counties and wasabout 2% higher than the Statesunemployment rate for the year.

7.5% 7.0% 6.8% 6.5%

8.0%

13.1%12.8%11.8%

0%

5%

10%

15%

2004 2005 2006 2007 2008 2009 2010 2011


0%

10%

20%

30%

40%



% of 1950 Population % of 2010 Population


31/71


Overview

Approximately 50% of Douglas Countys 5,071 square miles is public land,with forest products and agriculture being key to its economy.The selectedfinancial management indicators show that the county has sound debtmanagement practices and one of the largest fund balances among counties.

The indicators also show that Douglas County has strong liquidity and hasexperienced steady population growth over the past several decades.

The county levies the fourth lowest property tax rate in Oregon, which limitsits ability to generate local revenues. It is the most dependent among countieson federal timber payments, has high unemployment and a high pensionobligation per capita.

County Response

Douglas County officials report that in order to address the loss of federaltimber payments and the decline in local revenues, it plans to eliminate 24positions and is in the process of negotiating new collective bargaining

agreements with its unions. The county also plans to use current reserves tooffset the expected decline in revenues. The County Board of Commissionerscontinues to work with Congress on the reauthorization of the federal timberpayments, as well as a future management plan for federal timber lands.

Douglas County


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D

ouglasCoun

ty

$224 $247$264 $310 $270

$247 $228 $228

$0

$100

$200

$300

$400

$500

2004 2005 2006 2007 2008 2009 2010 2011


0.16% 0.14% 0.16% 0.15% 0.15% 0.15% 0.16% 0.15%

0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 2010 2011

Debt Service as a Percentage of TotalGovernmental Fund Revenues

Local Support

The countys local revenues increasedfrom $22.9 million in 2004 to $24.0million in 2011; an increase of about5%. Local revenues per capita in 2011were the fourth lowest per capita

total in the state. Its permanent taxrate of $1.11 per $1,000 of assessedproperty value is the fourth lowestrate in Oregon.


Douglas is the most dependent countyon federal timber payments. Those

resources contributed an average of24% of the countys totalgovernmental fund revenues betweenfiscal years 2004 and 2011. In 2011,payments were $21.3 million or about20% of total governmental fundrevenues, and provided roughly $203in revenues per capita.

Debt Burden

The countys debt service paymentsremained stable from 2004 to 2011.At less than a quarter percent of 2011total governmental fund revenues, thedebt service level is one of the best inOregon and indicates that the countyhas implemented sound debtmanagement practices.

$0

$50

$100

$150

$200

$250

$300

$350

2004 2005 2006 2007 2008 2009 2010 2011



33/71


D

ouglasCoun

ty

Liquidity

Douglas County has consistentlymaintained a liquidity ratio greaterthan 10 from 2004 to 2011. At itscurrent level, the county hassufficient cash to meet its short-

term liabilities.

Fund Balance

The countys general fundunreserved fund balanceincreased $18.5 million (36.7%)between 2004 and 2010. Duringthis same period, total generalfund expenditures decreasedabout $7.3 million. As a result, thegeneral fund unreserved fundbalance as a percent of totalgeneral fund expenditures morethan doubled over the seven yearspan. The countys 2010 generalfund unreserved fund balance of$69.3 million gives it the secondlargest fund balance amongOregon counties.


The county provides pension andother retirement benefits to itsemployees. The unfunded liabilityassociated with these benefits hasfluctuated over the past eight years.Douglas Countys retirementobligations steadily declined from2005 through 2008. For 2009 forward,the increase in the retirement

obligation appears to be related to achange in reporting standards thatrequired the county to begin reportingpostemployment benefits and to theeconomic downturn that reduced thevalue of the countys retirement planinvestments. In 2011, the retirementbenefit obligation ranked in the top fourcounties.

12.615.1

14.0

10.611.7 12.6

12.711.5

0.0

10.0

20.0

2004 2005 2006 2007 2008 2009 2010 2011


$0

$10

$20

$30

$40

$50

$60

$70

2004 2005 2006 2007 2008 2009 2010

Millions




$421

$510 $484

$181 $172

$896 $888

$709

$0

$100$200

$300

$400

$500

$600

$700

$800

$900

$1,000

2004 2005 2006 2007 2008 2009 2010 2011



34/71


D

ouglasCoun

ty

Public Safety

Spending per capita on publicsafety related programsdecreased slightly over the lasteight years. Public safetyexpenditures decreased almost

7% since 2004. At its currentfunding level, the county is in thebottom third for public safetyspending per capita.

Personal Income

Per capita personal incomelevels in Douglas County haverisen from about $32,000 in2004 to about $33,000 in 2009,an increase of 3.7%.

Population Trends

Douglas ranks ninth amongOregon counties with a populationof 107,667 in 2010. Thepopulation has nearly doubledsince 1950, and has grown about5% in each of the past twodecades.

$227$214

$223 $226 $223 $235 $220$212

$0

$50

$100

$150

$200

$250

$300

2004 2005 2006 2007 2008 2009 2010 2011


$0

$10,000

$20,000

$30,000

$40,000

2004 2005 2006 2007 2008 2009 2010 2011


-

20,000

40,000

60,000

80,000

100,000

120,000

1950 1960 1970 1980 1990 2000 2010

Population


35/71


D

ouglasCoun

ty

The countys population is aging. TheUnder 20 age group has declined 14%since 1950, while the 20-34 and 35-49 age groups have decreased acombined 11.6%. The population inthe two groups over 50 increased a

combined 25.4%. This shift, ifcontinued, could reduce the size of thefuture workforce and also placegreater demand on the county toprovide health and social services.

Unemployment

Douglas Countys unemployment rate,although high, was relatively stablefrom 2004 through 2008. In 2009, therate spiked but has declined about2.1% over the last two years. Thecountys unemployment rate in 2011was the fifth highest rate in Oregon,and was almost 4% higher than theStates unemployment rate for theyear.

9.2%

8.2% 7.5% 7.7%

9.9%

15.3%14.6% 13.2%

0%

5%

10%

15%

20%

2004 2005 2006 2007 2008 2009 2010 2011


0%

10%

20%

30%

40%





36/71


Overview

Jackson County is 2,801 square miles (47% is publicly owned), withagriculture, manufacturing, and recreation as its primary industries.Thecounty is heavily reliant on federal timber payments, and is experiencing highunemployment. Some of the positive financial management indicators includegood debt management, strong liquidity, and high personal income per capita.

Jackson County also had the largest fund balance among counties at year end.

County Response

County officials report that they have implemented many cost saving measuresincluding outsourcing of library operations, establishing a self-insurancehealth plan for managers, setting up a side account with the Public EmployeesRetirement System to offset increases, and reducing staff related to reducedservices. The County relies on its healthy fund balance and reserves to coverthe estimated operating deficit of $6.3 million per year. The Countys budgetgenerally continues to fund programs at current service levels. However, as alast resort, the County could close libraries or raise fees if needed to decreasethe operating deficit.

Jackson County


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JacksonCounty

Local Support

Jacksons ability to support itselfthrough local revenues has weakenedsince 2004. Local revenues totaled$59.9 million in 2011, a decrease ofabout 10% from 2004. Similarly, local

revenues per capita decreased 17.5%between 2004 and 2011 and is theseventh lowest per capita total in thestate.The decline in local revenues islikely due to a combination of factors,including population change,economic conditions, and inflation.The countys permanent tax rate is$2.01 per $1,000 of assessed propertyvalue.


In 2011, Jackson County received$13.3 million in federal timberpayments, which represented about9% of the countys total governmentalfund revenues. Federal timberpayments have steadily declined since2005. They contributed roughly $64in revenues per capita during 2011,which ranks it fifth among all countiesin dependence.

Debt Burden

Significant fluctuations occurred inJackson Countys debt servicepayments between 2004 and 2011.Large spikes were noted in 2005,2007, and 2009 as a result of thecounty paying off large portions of its

outstanding bonds. At 4.2% of 2011total governmental fund revenues, thecountys debt service level ranks 11thhighest. However, it falls within therange recognized as sound debtmanagement.

$348$384 $368 $367

$354 $336$299 $287

$0

$100

$200

$300

$400

$500

2004 2005 2006 2007 2008 2009 2010 2011


$0

$50

$100

$150

$200

$250

$300

$350

2004 2005 2006 2007 2008 2009 2010 2011


5.9%

11.1%

5.5%

13.3%

4.5%

11.9%

4.6% 4.2%

0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 2010 2011



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JacksonCounty

Liquidity

The countys liquidity ratio remainedrelatively stable from 2004 to 2007.In 2008, its ratio doubled and hasremained above 7 the past threeyears. At its current level, Jackson

County has sufficient cash to meet itsshort-term liabilities.

Fund Balance

The countys general fund

unreserved fund balance nearlydoubled from 2004 to 2010. At$74.3 million, Jackson County hadthe largest general fund unreservedfund balance, among counties, in2010. During this same time, totalgeneral fund expenditures declinedabout 5%. As a result, the generalfund unreserved fund balance as apercentage of total general fundexpenditures also doubled overthis seven year span.


The county provides pension andother retirement benefits to itsemployees.The unfunded liability,and resulting per capita obligation,associated with these benefitsdropped about 93% between 2004and 2008. In 2009, the county wasrequired under reporting standardsto report the unfunded liabilityassociated with its otherpostemployment retirement benefits.The county has reduced the obligationin each of the past two years.

4.75.3

4.2 4.1

8.7

7.47.9 7.6

0.0

5.0

10.0

2004 2005 2006 2007 2008 2009 2010 2011


$0

$20

$40

$60

$80

2004 2005 2006 2007 2008 2009 2010

Millions




$43

$211$192

$4 $3

$359 $342

$245

$0

$50$100

$150

$200

$250

$300

$350

$400

2004 2005 2006 2007 2008 2009 2010 2011



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JacksonCounty

Public Safety

Spending per capita on public safetyincreased slightly between 2004 and2011. Jackson County is in thebottom third among counties inpublic safety spending per capita.

Personal Income

After increasing slightly between

2004 to 2006, per capita personalincome levels in Jackson Countyhave declined about 4%. In 2009 ittotaled about $36,000. Despite thedecrease, the countys level remainsin the top 10 among Oregoncounties.

Population Trends

Jackson ranks sixth among Oregoncounties, with a population of203,206 in 2010. The population hasnearly tripled since 1950 and hasgrown about 10% in each of the pastthree decades.

$216 $213$229 $230

$202 $207$215 $220

$0

$50

$100

$150

$200

$250

$300

2004 2005 2006 2007 2008 2009 2010 2011


$0

$10,000

$20,000

$30,000

$40,000

2004 2005 2006 2007 2008 2009 2010 2011

Personal Income per CapitaAdjusted for inflation

0

50,000

100,000

150,000

200,000

250,000

1950 1960 1970 1980 1990 2000 2010

Population


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JacksonCounty

The population demographics havechanged since 1950. In 1950, 75%of the population was under the ageof 50. In 2011, that grouprepresents only 60% of the countyspopulation. The population of

residents older than 50, however,has increased from 25% to 40%, butdoes not appear to reflect anunbalanced or alarming shift indemographics.

Unemployment

The countys unemployment ratejumped 4.7% in 2009 and hasremained above 11% the past twoyears. The countys rate in 2011 wasin the top third among Oregoncounties and was about 2% higherthan the States rate for the year.

7.1% 6.2% 5.7% 5.6%

7.9%

12.6% 12.7% 11.5%

0%

5%

10%

15%

2004 2005 2006 2007 2008 2009 2010 2011


0%

10%

20%

30%

40%



% of 1950 population % of 2010 population


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Overview

Josephine County is the last county created before statehood and relies onlumber, tourism, and agriculture.Roughly 62% of its 1,641 square miles ispublicly owned.

Josephine is one of the most dependent on federal timber payments, and levies

the lowest property tax rate. While a number of financial managementindicators, such as the countys debt burden and liquidity are positive, themajority indicate a high degree of risk. For example, the countys low propertytax rate limits its ability to generate local revenues. In addition, unemploymentis high and per capita personal income ranks in the bottom third amongcounties. Josephines population, while steadily growing, is also aging, whichcould place even more financial pressure on the countys available resources.

County Response

County officials report they have proactively planned for the decline in federaltimber payments. Officials have also required that the majority of countyprograms be self-sustaining through fees, grants, state contracts, and other

revenue sources that do not rely on property taxes or General Fund support.However, a recent local option levy, intended to provide funding for thecountys Public Safety Fund for four years, failed to receive voter approval.

Josephine County


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JosephineCounty

Local Support

Local revenues have decreased byhalf since 2004, to $14.8 million in2011. Local revenues per capita in2011 was the lowest in the state. Thedecline in local revenues is likely due

to a combination of factors, includingpopulation change, economicconditions, and inflation.The countyspermanent tax rate of $0.59 per$1,000 of assessed property value isthe lowest rate in Oregon.


Federal timber payments decreasedabout 35% over the last eight years,while the countys dependence onfederal timber payments increased.As revenues from all other sourcesdeclined about 43%, federal reliancegrew from 19% of total governmentalfund revenues in 2004 to 22% in2011.

Debt Burden

The countys debt service payments,as a percentage of totalgovernmental fund revenues,remained stable between 2004 and2011.This trend indicates that thecounty has implemented sound debtmanagement practices.

$370$347

$309$283

$225 $207$179 $177

$0

$100

$200

$300

$400

$500

2004 2005 2006 2007 2008 2009 2010 2011


3.1% 2.6% 3.0% 4.4% 3.9% 4.2%4.6% 4.6%

0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 2010 2011


$203 $198 $190 $184 $173$158

$141$122

$0

$50

$100

$150

$200

$250

$300

$350

2004 2005 2006 2007 2008 2009 2010 2011



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JosephineCounty

Liquidity

The county has maintained aliquidity ratio above 2.0 the lasteight years. At its current level, thecounty has sufficient cash to meetits existing short-term liabilities.

Fund Balance

The countys general fundunreserved fund balance has

remained stable since 2004. As apercentage of total general fundexpenditures, the general fundunreserved fund balance hasincreased 90% from 2004 to 2010.The primary cause for thisimprovement is a significantreduction in the countys generalfund expenditures, which droppedfrom $28.3 million in 2004 to $3.6million in 2010. Between 2006 and2007 general fund expenditures

decreased about $24.9 million (91%)due in part to the creation of thePublic Safety Fund.


The county provides pension andother retirement benefits to itsemployees.The unfunded liabilityand resulting per capita obligationassociated with these benefits

dropped significantly in 2007.However, implementation of newreporting standards for thedisclosure of otherpostemployment retirementbenefits led to an increase in percapita obligation beginning in2009.

2.3 2.4 2.42.8

4.4

6.1 5.7

4.2

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2004 2005 2006 2007 2008 2009 2010 2011


$0

$10

$20

$30

$40

2004 2005 2006 2007 2008 2009 2010

Millions




$264$292 $275

-$10 -$10

$331 $328$290

-$50

$0

$50

$100$150

$200

$250

$300

$350

2004 2005 2006 2007 2008 2009 2010 2011



44/71


JosephineCounty

Public Safety

County per capita spending onpublic safety related programshas remained relatively stablewith only slight fluctuations fromyear to year.

Personal Income

Per capita personal income levelshave increased about 6% since2004. In 2009, the county rankedin the bottom third among Oregoncounties.

Population Trends

In 2010, Josephine County was 12thlargest among Oregon counties witha population of 82,713. Thepopulation has more than tripledsince 1950. Significant increasesoccurred between 1970 and 1980,and again between 1990 and 2000.The county has experienced doubledigit growth in population in four ofthe last six decades.

0

20,000

40,000

60,000

80,000

100,000

1950 1960 1970 1980 1990 2000 2010

Population

$249 $253 $242 $235$225 $222

$232 $231

$0

$50

$100

$150

$200

$250

$300

2004 2005 2006 2007 2008 2009 2010 2011


$0

$10,000

$20,000

$30,000

$40,000

2004 2005 2006 2007 2008 2009 2010 2011



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JosephineCounty

The countys population is aging. In1950, 75% of the population wasunder the age of 50; however, thatgroup represented only 54% of thepopulation by 2010. Conversely, thepopulation of individuals over the

age of 50 increased from 25% to46% during this same period. Thisshift, if continued, could reduce thesize of the future workforce and alsocreate greater demand for moreprovide health and social services.

Unemployment

The countys unemployment rate

has remained above 12% since2009. In 2011, the countysunemployment was one of 10highest rates in Oregon and was 3%higher than the States rate thatyear.

8.3% 7.3%6.6%

7.1%9.1%

14.2% 14.2%12.6%

0%

5%

10%

15%

2004 2005 2006 2007 2008 2009 2010 2011


0%

10%

20%

30%

40%





46/71


Overview

Klamath County covers 6,135 square miles and approximately 56% is publiclyowned. Historically, its economy has relied on forest products and agriculture.The county is not overly reliant on federal timber payments, has strongliquidity, and sound debt management practices. However, it has one of thelowest fund balances among counties, and has experienced high

unemployment. In addition, personal income per capita remained virtuallyunchanged over the last eight years and is the sixth lowest among counties.

Unless otherwise noted, the information presented only includes financial datathrough 2010. Klamath County requested a filing extension from the OregonSecretary of State, Audits Division for its 2011 financial statements. As a result,the countys 2011 financial data was not available for our analysis.

County Response

County officials report that they have been actively working to resolve thecurrent financial situation. For example, they have been involved in proposingfederal legislation that would significantly modify the operation of the O&C

forest lands. The county has also worked to stimulate its local economythrough a number of job creating economic development projects, including:1) Swan Lake Hydroelectric Project; 2) Klamath Biomass Project; and 3)Sanford Pediatric Clinic. Finally, the county intends to transfer moneys fromthe Road Reserve Fund to the General Fund to pay for Sheriff patrols and tominimize the impact of the loss of federal timber payments on General Fundservices.

Klamath County


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KlamathCou

nty

Local Support

From 2004-2007, the countysability to support itself throughlocally generated revenuesprogressively increased. However,after peaking at $42.3 million in

2007, local revenues declined about40% by 2010. This decline is likelydue to a combination of factors,including population change,economic conditions, and inflation.The countys permanent tax rate is$1.73 per $1,000 of assessedproperty value.


The county does not appear to beheavily dependent upon federaltimber payments. Payments onlycontributed an average of 4% of thecountys total governmental fundrevenues between fiscal years 2004and 2010. In 2010, the countyreceived approximately $2.2 millionin timber payments, which providedroughly $34 in revenues per capita.

Debt Burden

The countys debt service paymentsremained stable from 2004 to 2010.At these levels, Klamath Countyappears to be following sound debtmanagement practices.

3.9% 3.4% 3.6% 3.2% 3.6% 3.3% 3.5%

0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 2010

Debt Service as a Percentage ofGo

oregon’s counties: 2012 financial condition review

Documents