BOARD OF DIRECTORS MEETING MINUTES February 7, 2018

BOARD OF DIRECTORS MEETING MINUTES February 7, 2018 The Board of Directors convened at 10:04 a.m. on Wednesday, February 7, at the North Carolina Museum of Art in Raleigh, NC with President Brenda Howerton presiding: OFFICERS PRESENT President Brenda Howerton, Durham County President-Elect Larry Phillips, Surry County 1 st Vice President Kevin Austin, Yadkin County 2 nd Vice President Ronnie Smith, Martin County Immediate Past President Fred McClure, Davidson County Executive Director Kevin Leonard DIRECTORS PRESENT District 1 Director District 2 Director District 4 Director District 5 Director District 6 Director District 7 Director District 8 Director District 9 Director District 11 Director District 12 Director District 13 Director District 14 Director District 15 Director District 16 Director District 17 Director District 18 Director NACo Director NACo Director NACo Director/Legislative Goals Co-Chair Environment Chair General Government Chair Human Services Chair Justice and Public Safety Chair Public Education Chair Joseph Winslow, Jr., Pasquotank County Ernestine Bazemore, Bertie County George Brown, Pender County Tony Hunt, Hoke County Marshall Faircloth, Cumberland County Viola Harris, Edgecombe County Dan Brummitt, Vance County Karen Howard, Chatham County Nate Hall, Caswell County Tom Keigher, Gaston County Mike LaBrose, CaldwellCounty Keith Elmore, Wilkes County Johnny Hutchins, Cleveland County Larry Chapman, Transylvania County C.B. McKinnon, Cherokee County Terry Renegar, Davie County Tracey Johnson, Washington County George Dunlap, Mecklenburg County Gloria Whisenhunt, Forsyth County Kitty Barnes, Catawba County Ronnie Beale, Macon County Darrell Frye, Randolph County Garry Meiggs, Camden County Kay Cashion, Guilford County Connie Orr, Graham County Renee Price, Orange County Sig Hutchinson, Wake County Carol McCall, Scotland County Ellen Reckhow, Durham County Bob Byrd, Alamance County Tare T Davis, Warren County Mark Richardson, Rockingham County

Tax & Finance Chair Legislative Goals Co-Chair Presidential Task Force Co-Chair Presidential Task Force Co-Chair Trustees Representative Johnnie Carswell, Burke County Trevor Fuller, Mecklenburg County Gary D. Blevins, Wilkes County Ed Booth, Beaufort County Ann Holton, Pamlico County THOSE ABSENT District 3 Director District 10 Director NACo Director Agriculture Chair Managers Representative-Nonvoting Jack Bright, Onslow County Jim Matheny, Montgomery County Ray Jeffers, Person County Glen Webb II, Pitt County Amy Dalrymple, Lee County Craig Honeycutt, Wayne County GUESTS Dr. Lawrence J. Wheeler, Director, NC Museum of Art Dave Richard, Deputy Secretary for Medical Assistance, NC DHHS Call to Order: Welcome and Introductions President Howerton called the meeting to order and recognized Immediate Past President Fred McClure to give the Invocation and lead the Board in the Pledge of Allegiance. President Howerton then introduced Dr. Larry Wheeler, NC Museum of Art Director, who announced his retirement at the end of 2018. Dr. Wheeler welcomed the Board of Directors to the museum. He remarked that the NCMA is a great example of public-private partnerships that belongs to every citizen in North Carolina. Anyone can come to the NCMA for free. The Museum also offers extraordinary exhibitions from great artists such as Rodin and Monet from time to time, which is all done with private dollars and exhibition fees. People from every North Carolina county, every state and 25 different countries have visited the NCMA. Board Business: Approve Meeting Minutes President Howerton asked for any discussion or changes to the minutes from the October 6-7, 2017 meeting. Action Taken: With no changes offered, President Howerton acknowledged first and second motions to approve the minutes. The minutes were unanimously approved. President s Report President Howerton and Executive Director Kevin Leonard attended the NCCAE meeting for Association Presidents and Executive Directors in Washington DC in January. President Howerton spent about 45 minutes each with Senator Burr, Senator Tillis, Congressman Butterfield, and Governor Cooper s Chief of Staff, providing them with an update on the 100 Counties: Helping our Children Thrive Presidential Initiative, as well as discussing other issues, including rural broadband. The time spent with other state Presidents and Executive Directors and presidents was invaluable and she expressed gratitude for the opportunity. Executive Officer Reports President-Elect Larry Phillips welcomed Board members and thanked everyone for attending. First Vice President Kevin Austin commented that the steering committee meetings were very productive and he encourages anyone to attend. The idea of holding the meetings jointly worked extremely well and the steering committee chairpersons are doing a great job. Second Vice President Ronnie Smith raised a concern about disconnected youth, those aged 16-24, who are not in school or in the workforce. Immediate Past President McClure wanted to bring the school bond to everyone s attention, as every county in the room has school construction needs.

Executive Director Report Executive Director Kevin Leonard welcomed all those in attendance and, noted that a number of directors were not at the October 2017 Board meeting who needed to be sworn in; Kevin issued the oath of office to swear in new members of the 2017-2018 NCACC Board of Directors: Bob Byrd, Kay Cashion, Viola Harris, Carol McCall, Connie Orr and Terry Renegar. Kevin advised Board members that they may receive a letter from Henderson County regarding NCPTS, mentioning concerns related to capabilities of the software and responsiveness to isues. Kevin has contacted the county manager and assistant manager and Kevin along with David Baker will meet with Henderson County in the near future to address any issues. Kevin received a letter of thanks to the Board of Directors, from Patrice Roesler, which he read into the record (see addendum). Staff updates: NCACC Research Director Linda Millsaps resigned effective January 2. Please call the Association office with any research questions. Adam Pridemore began working with the Association December 1, 2017 as Legislative Counsel. Other staff announcements include Matt Bigelow has been promoted to Education Program Manager, as he has taken on steering committee tasks and worked towards building a more robust education offering. Also, Paige Worsham has been promoted to Associate General Counsel and Sara Mogilski has been named Chief Operations Officer. Cardinal Innovations: When the news broke regarding Cardinal Innovations, the Association received a call from Secretary Cohen. The Association acted as back office support, by preparing candidate books, securing a meeting location, IT support, and communications. Kevin and DHHS personnel, Dave Richard, said the Association should be proud of how we assisted to pull their meeting together in such a short timeframe. Person County Commissioner Ray Jeffers announced his candidacy in December 2017 in Texas for NACo 2 nd Vice President. Association staff will be engaged with his campaigning effort. The Association requests allocation of funding to a special account for Commissioner Jeffers 2 nd VP race. There is a $25,000 cap on campaign spending at the national level. A motion was made to allow staff to create a special account from the Association s undesignated fund balance for up to $25,000 to fund Commissioner Jeffers NACo 2 nd VP campaign. Action Taken: After discussion, the motion was seconded and approved. Open Board Discussion Commissioner Johnson mentioned that a number of counties have received warning letters from the Local Government Commission regarding late audit reporting, which is in turn putting these counties on the Local Government Commission s watch list. A number of counties who have received the warning letters were using the same auditing firm. Part of the issue appears to be as caseloads increase, the audit firms choose to work on the bigger accounts as opposed to the smaller county audits. Also, county audits have more regulation requirements as well as a big liability exposure, among other issues. The Association is reaching out to its audit firm as well as the NC State Auditor s office to help identify a solution to assist counties. Commissioner Hutchins noted the high cost of odd-year elections versus the low turnout and also believes that for the time and effort put in, there should be some retirement for commissioners. Commissioner McKinnon stated they had looked into it, had commissioners pay into it, but were not eligible to, so the money contributed was returned. Commissioner Chapman raised the concern that it creates long-term career politicians when there should be term limits instead. Commissioner Hall wanted to know what the total responsibilities are for the audit for counties and local governments. The Association will look into providing those statutory obligations for Board. Commissioner Harris, a member of the Local Government Commission, noted that Wake County came before them about obtaining an MOU with the Register of Deeds office, which they want Association attorneys to review.

Finance Report As of December 31, 2017, the Association s financial position generated an unaudited surplus of $190,173. Investment returns for the six months were 5.2% net of fees. While total revenues were running below budget projections at 42.7%, this is consistent with the normal inflow of revenues to the Association. Sponsorships have exceeded projections and there are insurance proceeds from the fire. Some revenues were trailing, but this is because of the timing in which some of these revenues are collected. Total expenditures were slightly below target at 47.7%. Personnel costs were 46.6%, office operating costs were 40.7%, general program were 50.9%, special purpose were 8.9% and capital expenditures were 79.7% of the approved spending budget. The Association s liquidity remained extremely strong, with cash, investments and other Association current assets at $20.1 million and more than 8 times the amount of the short-term liabilities. Total investments were over $16.3 million and cash flow from operations was positive at $1.2 million. Action Taken: A motion and second were made to approve the finance report as presented. The motion was approved. Presidential Initiative Report - 100 Counties: Helping Our Children Thrive President Howerton thanked counties for completing the survey on the child welfare initiative. At the Institute for Emerging Issues summit in February, there was a lot of conversation about how to fund education for our children. Early childhood is where money can be spent most effectively and efficiently. Kids need to be in position by 1 st grade to be set up to succeed. We want to share best practices from our counties and focus on the child from cradle to their career to help children thrive. We want to have what has been described as an electric network that will spread to help all children across our counties. There will be a Thrive Summit March 21-22 at the Sheraton Four Seasons in Guilford County; registration is open and there is no cost to attend. The program encourages thinking outside the box, including keynote speaker Noran Sanford, founder of Growing Change of Scotland County (growingchange.org), who will discuss how they flip closed prisons into sustainable farms and valuable resource centers. The Task force has met twice in person and have gotten great input. They are scheduled to meet today at 3 pm by conference call. The Regional convenings were successful and Commissioners Booth and Blevins thanked President Howerton for her passion in helping children thrive in all our counties. Please email any ideas to assist in the Thrive effort to President Howerton or Association staff. Legal Update Deputy Director/General Counsel Amy Bason provided a legal update to the Board. Two cases were highlighted in which NCACC filed amicus briefs on behalf of all 100 counties. Cases of note include Swan Beach Corolla v. Currituck County, and Silver v. Halifax Board of County Commissioners. In Swan Beach, a default judgement in the amount of $39 million was entered against Currituck County, while the underlying case has not been heard on the merits. The NC Court of Appeals found in favor of the county, however a dissenting opinion allowed an appeal to the NC Supreme Court. NCACC will file an amicus brief in the Supreme Court and will continue to update the Board on this case. Silver v. Halifax Board of County Commissioners brought up the question of whether the Leandro school funding decision should apply to counties. This case is going to the Supreme Court, after a favorable opinion at the Court of Appeals level. As in Swan Beach, there was a dissenting opinion in this matter, allowing an appeal to the NC Supreme Court. NCACC is filing an amicus brief in this case, highlighting the potential impacts to all counties. Oral arguments will be held in this case on April 16, 2018. In the Matter of Appeal of Lowes Home Centers, the Forsyth County property tax appeal involving the dark store theory, the NC Court of Appeals overturned the lower court s dismissal and ruled in favor of Lowes. The appeal will shift the burden back to the county and return the case to the Property Tax Commission for further review.

In the U.S. Supreme Court, an important case to counties is on the docket - South Dakota v. Wayfair. This case raises the question of whether the Supreme Court should follow Quill V. North Dakota s sales tax only physical presence requirement. The Board will be updated on developments as these cases move forward. Amy Bason also provided an update on opioid-related litigation issues in North Carolina and action items on the part of NCACC. A Forum on Opioid Legal Matters for county attorneys was held in November 2017. Presentations were provided by law firms, as well as the NC Attorney General s Office. Counties providing feedback have consistently asked that NCACC inform the AG s Office that counties be a part of any damages discussions, in order to ensure this does not track the tobacco master settlement A number of counties have passed resolutions declaring the Opioid Crisis a public nuisance and have signed on to be part of a federal multi-district lawsuit. Next steps include following up with the Attorney General s office on assessment of county impacts from the opioid crisis, participation on a panel discussion to be held at the NACo Legislative conference; and continued updates to counties. Risk Management Report The Risk Management pools are healthy and if your county is not a member, please look at what the Pools can do for your county. Renewal season officially started February 1. The next Board of Trustees meeting is March 15. Risk Management is broadening some services this year, including an increasing emphasis on law enforcement and setting up advisory committees for sheriffs and jailers. The Board recessed for lunch at noon. Government Relations Update / Legislative Goals Committee Report All goals remain the same but with a narrower focus for the short session. Staff recommended focusing on four goals PE1, PE2, TF1 and GG3, with the committee adding PE4, aligning K-12 and the community college calendar. The committee also expressed concerns over the K-3 classroom size issue and recommends Government Relations staff monitor any actions related to the issue, with staff referring to the Guiding Principles to address advocacy efforts on any issues as they arise. Action Taken: A motion was made to accept moving forward the goals as presented for the 2018 NC Legislative Short Session. After a thorough discussion, the motion to adopt the goals as presented was approved. At request of Public Education Steering Committee Chair Mark Richardson, a request was made to ask staff to gather information regarding class size reduction and draft a resolution regarding the need for a class size fix to present to the legislature if necessary. Action Taken: A motion was made and seconded. The motion was approved. Medicaid Transformation Dave Richard, Deputy Secretary for Medical Assistance, NC DHHS, discussed Medicaid Transformation and the DHHS vision and priorities for the future. Medicaid affects every segment of our population. DHHS envisions a North Carolina that optimizes health and well-being for all people by effectively stewarding resources that bridge our communities and our healthcare system. The vision includes addressing social determinants of health and adverse childhood experiences. Moving to a Managed Care system was negotiated between the House & Senate under then Governor McCrory. Medicaid covers more than 2 million people of which 30% are children, 15% seniors and 45% with disabilities. Medicaid is a complex program which serves a multitude of citizens. In 2017, they began CMS negotiations and expect the 115 waiver to be approved, after which they will have 18 months to start and are targeting July 1, 2019 to go live. Tennessee is a good example and model of a managed care program. DHHS is taking those best practices from other states. DHHS views

success as keeping doctors in the program (Supporting Providers through Transition) and will offer provider support to simplify administrative processes. Key themes of The Medicaid Managed Care program include wanting to improve health and wellbeing of North Carolinians, focus on health of the whole person, supporting clinicians in delivering high-quality care at good value and addressing both medical and non-medical drivers of health. Building Update The Association has issued a letter to extend its lease with Hobbs Properties through the 2018 calendar year. The Association extended an offer to purchase the sixth floor Quorum Center, but the LGFCU Board made a decision to keep that space as their backup. The Association has now offered to purchase an additional 3,000 square feet on the Quorum Center s fifth floor and could possibly move there by the end of 2018, for the temporary timeframe of 3-5 years. National firm CBRE is leading the group consisting of NCACC, NCLM and LGFCU through a visioning process for what to do with the Coates office space. Kevin Leonard along with President Howerton, President-Elect Phillips and 1 st Vice President Austin are members of this group. Kevin Leonard has a weekly call with the working group to discuss updates. O Brien Atkins is also looking at our current space needs through 2035. All options are on the table currently. The group will meet again March 16 to discuss looking at bringing a full recommendation to this Board by June. NACo Legislative Conference Preview NACo Legislative Conference events begin Sunday, March 4. North Carolina usually has one of the largest contingents at NACo. Please schedule meetings with your legislators for Tuesday and Wednesday and make plans to attend any of the steering committee meetings that are of interest to you. Per Johanna, the Association s Federal goals are on a 2-year cycle, so they are still current and in place. The Association has scheduled a meeting with legislative directors on Friday, March 2, to brief staff members on our federal goals. The General Assembly is in town today and tomorrow and items that may possibly be on the everchanging schedule include discussions on Medicaid, GenX, redistricting and possibly class size. Also, in other news, Bertie County Commissioner Ron Wesson has announced he is running for the newly aligned House District 1 seat. Conclusion and Adjournment President Howerton thanked all in attendance for the work to make this meeting and the Association successful as well as for your efforts at home in your counties. Please contact President Howerton or Kevin Leonard if you have any questions. A motion and second were made to adjourn the meeting at 2:12 p.m.; the motion was approved and meeting adjourned at 2:12 p.m. Brenda Howerton President Kevin Leonard Executive Director