State law requires that the Board consider a recommended budget prior to June 30 each year and allow departments to be heard regarding those recommendations. As part of the 2013-14 development process, a review of the current status of the County budget is necessary. Therefore, information regarding the third quarter of 2012-13 precedes the 2013-14 budget discussion. Overall, at this time our analysis indicates the 2012-13 budget will finish close to projections and remain balanced through planned use of contingency and no action is required at this time.
I. 2012-13 3rd Quarter Budget Update
As reported by departments, the third quarter outlook indicates that the majority of departments will end the year within their budgeted allocations. In a few cases, however, shortfalls remain due to a variety of factors.
The following is a list of the significant budget issues at the 2012-13 third quarter. Staff is not recommending that we take action to increase these budgets at this time. At year end, all accounts will be reviewed in order to assess a more accurate picture and a recommendation brought to the Board in July.
General Government
Assessor: At mid-year the department projected a $172,858 deficit. Since then, supplemental roll and property tax administration fee revenues have arrived higher than what was predicted at mid-year. As a result, the Assessor’s revised year-end deficit projection is now approximately $138,000.
Auditor-Controller / Treasurer-Tax Collector: Similar to the Assessor, the Auditor-Controller will realize fewer property tax administration fee revenues. This lower revenue combined with an unplanned staff retirement will cause the auditor’s budget to be in deficit by roughly $50,000.
General Services: The 2012-13 budget was created using a number of assumptions regarding the reduction in leases and the receipt of solar revenue. These assumptions were not met by approximately $60,000. Additionally, the new IT charging structure allocates costs to all users of IT services. There are small districts and agencies (i.e. school, fire and cemetery districts) which lack the funding to participate in the charging structure thus creating a revenue gap of approximately $60,000. Previously, this deficit was covered by General Fund; however, the charging structure was designed to minimize the use of general fund and thus the allocation was not provided during this fiscal year. The combined impact of these issues will require an additional $120,000 of General Fund contribution at year end.
Library: The department projects that the library budgets will end the fiscal year close to the budgeted expenditure amounts. Because of increases in other revenues it is anticipated that approximately $210,000 in fund balance will be needed, significantly less than the $620,000 projected in the adopted budget. CAO staff remain concerned, however, with the library's continued reliance on fund balance.
Law and Justice
County Counsel: It is anticipated that the department's revenue shortfall for 2012-13 will be $350,000. For the last three years the department has budgeted revenue to match their projected expenses by department or agency. However, many departments and/or agencies (i.e. Sheriff, fire districts) do not reimburse for their use of County Counsel which creates a deficit each year. General Fund contingency will be used to close the gap. The 2013-14 budget recommends reducing the revenue assumptions and replacing these revenues with General Fund in order to more accurately reflect the historical receipt of reimbursement funds for services provided.
Indigent Defense: Current contracts for the indigent defense panel providing representation on behalf are currently $40,000 over projected costs. It is recommended that we wait until the final year end figures are known before allocating additional General Fund.
Health and Human Services
ADMH: The department has seen an increase in Inpatient Bed expenditures due the length of stay for individual clients. It is anticipated the department will incur an additional $250,000 over budgeted amounts. While the department had set aside some funds to cover this increase, it may be necessary to utilize additional funds from the health and human services contingency.
Health: The department is estimating a $700,000 deficit at year end. Approximately $75,000 is the result of increased medication costs in the jail and the remaining amount is associated with the indigent health program. To date, the indigent health program enrollment figures have been below budgeted estimates, however, given the monthly (1/12) payment structure of the County Medical Services Program (CMSP) contract, the department is still anticipating a year end program deficit of over $600,000. It is important to note that the CMSP contract does have a true-up component if overpayment happens and current 2013-14 projections indicate this will occur. However, given the healthcare industry’s six month lag time of processing service payments, we will likely not see any such true-up payments until late in fiscal year 2013-14.
Although there is a $700,000 Health and Human Services contingency available to cover this deficit, it is recommended that we wait until the final year end figures are known before any such transfer takes place.
Contingencies
General Fund Contingency: The contingency has a remaining balance of $3,723,808 to cover shortfalls mentioned above and unanticipated expenses which may occur prior to year end. Any funds remaining will carry forward as part of the general purpose revenue allocations for 2013-14. The 2013-14 Recommended Budget includes a $3 million carry forward balance from remaining 2012-13 contingency.
Health and Human Services Contingency: This contingency has a remaining balance of $700,000 and it is anticipated these funds will be needed to cover potential health and human services related shortfalls. Any funds remaining will carry forward as part of the general purpose revenue allocations for 2013-14.
Major Revenues
Countywide Revenues: Revenues from unrestricted revenue sources are projected to exceed the amount estimated in the adopted budget by $450,000. This additional revenue is reflected in the 2013-14 projected General Fund carryforward balance.
Realignment Revenue: This revenue is restricted to finance health, social services and mental health services. Based on the current trend, with the possible exception of health, staff projects this revenue source will meet, and in some cases, exceed the adopted budget estimate. Due to the improving economy, social services realignment revenue, in particular, has experienced significant sales tax growth ($1.5 million) for the first time in a number of years. As a result of this unanticipated growth, approximately two-thirds of this amount ($1 million) has been budgeted as carryforward in 2013-14, which allows the remaining amount to be utilized as needed to balance any health and human services related shortfalls at year end. If any monies are still available, it is recommended that the remaining funds be placed in a health and human services contingency for next fiscal year.
Public Safety Sales Tax: This revenue is restricted by Board policy to fund Sheriff, District Attorney and Probation services. Based on the current trend, staff projects that this revenue source will exceed the current adopted budget estimate by approximately $1.3 million. It is recommended that the increase in revenues be utilized to first fund the scheduled public safety loan repayment of $230,060. Of the remaining $1.1 million, $500,000 has been budgeted by departments as carryforward in 2013-14. In the event next year’s adjusted revenue estimates fall short of projection, it is recommended that the remaining amount (approximately $600,000) be set aside as a 2013-14 public safety contingency for use in the Sheriff, District Attorney and Probation department budgets.
II. 2013-14 Recommended Budget
The County Administrator’s fiscal year 2013-14 recommended budget provides information to assist the Board of Supervisors in conducting the public hearing and deliberating on the budget. The recommended budget is attached (Attachment A) and includes a department by department review of anticipated revenue and expenditures as well as information regarding the programs funded and the measures by which departments will gauge their progress and performance.
State law requires that the Board of Supervisors adopt a resolution each year setting the County’s budget. State law also prescribes the format required for such action. This resolution (Attachment B) adopts and implements the initial budget for fiscal year 2013-14 as considered and amended by the Board of Supervisors during the budget hearings. This budget will provide appropriation authority until the adoption of the final 2013-14 budget (Adopted Budget) anticipated in September. The Board may modify this budget at any time between now and the Adopted Budget hearing by a 3/5 vote.
Before adopting this resolution, the Board of Supervisors may make additional changes to the recommended appropriations, revenues and staff allocations. The fiscal year 2013-14 Budget Resolution includes Exhibit 1, which summarizes, by object level, budget unit appropriations and revenues. The 2013-14 budget resolution also includes the appropriation of special revenue funds and county service area funds.
Adoption of the recommended budget will allow the County to begin the fiscal year with a balanced financial plan in place. The County has experienced more than five consecutive years of a historic recession, declining revenues, State Budget cuts, layoffs, retirements and structural change. The County has weathered these challenges through productivity and efficiency gains, employee salary and benefit concessions, the use of one-time funds, program and service reductions and, unfortunately, a 24% reduction in our workforce. There are a number of items, described later in this staff report, which are not included in this recommended budget and for which staff will recommend revisiting at Adopted Budget.
At this time, the recommended budget does not require the issuance of layoff notices. It does require deleting the funding for 34 vacant positions which will impact the delivery of services. This budget does include the identification of positions that will be scheduled for layoff if AB 109 funds are not allocated to the subject departments. Also, if agreements are not reached with two labor groups to continue labor cost savings, there will be a budget shortfall starting July 1. If these two variables do not meet the assumptions included, it is likely additional cuts and layoffs will be necessary. Finally, this budget may need to be modified upon adoption of the State budget. There are items of importance, such as Affordable Care Act implementation, that staff is closely monitoring and actively addressing.
As the Board considers the recommended budget for approval, staff recommends the Board review the issues below which represent the challenges and risks presented in the recommended budget:
Revenue Assumptions
The initial General Fund allocations were based on a number of projected revenues which were developed in February, 2013. As we continue to receive additional data, these projections were refined. In February, Teeter revenue was projected to be $2,000,000 for use in 2013-14. At this time, the revenue is projecting lower by approximately $500,000. Teeter revenue is the penalties and interest on the delinquent taxes the county receives when those overdue taxes are collected. With an improving economy and fewer delinquent taxes, this revenue stream will naturally reduce to pre-recession averages of $600,000 to $700,000. This reduction has been made to the revenue projections and appropriate measures have been taken to reduce expenditures.
Health and Human Services
Alcohol, Drug and Mental Health: The department continues to work toward the implementation of Laura’s Law and the fiscal impact is not yet fully analyzed. More information will be provided during the upcoming ADMH workshop on Laura's Law and at Adopted Budget.
Employment and Social Services: The Governor’s May budget revision proposes a realignment of human services programs to counties which would shift fiscal responsibility for CalWORKs, including child care, and CalFresh administration to counties in 2016-17; counties would be at risk for caseload growth, future state and federal law changes and adverse court actions. If this revision becomes part of the adopted State budget, staff recommends developing a funding strategy for this potential impact.
The recommended budget includes four new positions which will be utilized for child protective services and are funded by State realignment, Federal reimbursement and leaving one management position vacant and unfunded.
Health Department: The recommended budget includes partial funding of the contract with CMSP due to the mid-year implementation of the Affordable Care Act (ACA). The contract amount represents an assumption of continued enrollment percentages similar to 2012-13. There will be a residual uninsured population not covered by the ACA (indigent populations ineligible for Medi-Cal under Welfare and Institutions Code Section 17000) which will remain a county cost. The State budget currently assumes extracting from counties 1991 health realignment funds for the State's purported costs associated with ACA implementation on January 1, 2014. This would represent a shortfall for the 2013-14 budget of approximately $1,020,263. Should this assumption remain in the adopted 2013-14 State budget, staff will present options for covering this gap at Adopted Budget.
The recommended budget includes five new positions for home visitation, tobacco prevention, child injury prevention, communicable disease care and activities that will reduce youth high risk behavior. The positions are funded though Federal intergovernmental transfer (IGT) revenues.
Planning and Public Works
Integrated Waste Management Division: The budget has increased approximately $10 million, for construction of the Biogreen Digester project, which will be used to digest yard waste and food waste to produce biogas and compost. As part of this project, the division secured a $500,000 grant from PG&E to help purchase a micro-turbine that will be used to generate electricity from methane gas produced by the BioGreen Digester project. $250,000 will be received in 2014. These expenses will only be incurred if the project is approved for development by the Board of Supervisors as a future separate action.
Public Works and Roads: The budget has increased approximately $11 million, for the construction of the CR98 Safety Improvement Project that will include: improvement of intersections at CR25, CR27, CR29, and the reconstruction of both the Willow and Dry Slough bridges.
General Government
Assessor: With the lower than projected Property Tax Administration Fees mentioned under the third quarter monitor, the department’s projected revenue must be reduced by an additional $100,000 over the Assessor’s requested budget. This loss combined with increased staffing costs and additional funds needed to keep up with workload, will necessitate an increased General Fund contribution of $90,366.
Auditor-Controller/Treasurer-Tax Collector: As the Auditor prepares to transition to the Department of Finance model, in order to address the provisions included with Measure H, additional audit staff may be necessary. It will also be necessary to add temporary staff to support the department while existing staff implement the new financial software. Both items will be considered this fall and additional board action will be requested.
Board of Supervisors: The requested budget does not include funding of two vacant Assistant Deputy Supervisor positions for Districts 3 and 5.
County Administrator’s Office: The requested budget includes funding of the vacant Chief Budget Official position which will be needed to continue the progress being made on integrating fiscal functions through the Department of Finance model. It also funds six months of one additional, currently vacant, position within the CAOs office in order to advance the tactical plan, countywide performance measures and countywide initiative analysis (i.e. HHS study). Staff recommends adding the remaining six months of this position should additional funds become available at Adopted Budget. One new human resources technician position is added to the Human Resources division for advancement of the numerous tactical plan items assigned to HR for completion in 2013-14 for an increased expense of $30,000.
This fiscal year, requests for proposals will be disseminated to replace the existing and outdated human resource and fiscal information systems. It may be necessary to increase the budgeted amount for the implementation of these new systems. Staff recommends revisiting both of these issues at Adopted Budget.
At this time, the airport budget is insufficient to support a full-time Airport Manager. While development activities in support of increasing available revenue are being undertaken, staff recommends General Fund support for three months of salary to allow these activities to come to fruition. Within the next three months staff will return to the Board with a budget balancing strategy designed to minimize reliance on existing General Fund allocations.
Delta Advocacy: The 2013-14 budget includes funding for a consultant to assist staff in this area. The total expenditures for Delta related activities is $565,532 with roughly half that amount supported by General Fund.
Clerk Recorder: The Clerk Recorder saw a 17% increase in recorded documents in 2012. This also resulted in a $125,000 increase over budgeted revenue for the year. While too early to assume that the current volume of recordings will allow for as dramatic an increase, the 2013-2014 budget is assuming a 10% increase over 2012-2013 budgeted. The budget utilizes a 31% increased usage of special funds next year (from $311,550 in 2012-13 to $408,700 in 2013-14).
Library: The library budget utilizes special revenue funds at a slightly higher rate than the funds they anticipate receiving. Since the budget is conservative, it is anticipated that the use of special funds will be roughly equal to the receipt of funds by year end, similar to the same use of funds in 2012-13.
General Services: The recommended initial General Fund allocations did not fully fund the General Services requested budget. Staff recommends reducing contracts and supplying a one-time General Fund contribution to close the gap. The primary gap resulted from an inability to fully charge the cost of IT programming to department requests. The department systems costs include funding of staff to provide needed software maintenance and/or development to departments. Staff is only utilized as departments have a need; if the need is not known at the time of budget development, the cost of the staff is not covered. The 2013-14 requests for system maintenance and/or development does not require the full complement of staff the county employs. Therefore, in order to retain the staff and their availability on an as needed basis, the General Fund is needed to fund the fiscal gap.
Staff Recommendation: Work with the General Services department on a strategy to address IT programming services provided to county departments.
Cooperative Extension Regional Management: The University of California is moving forward with a plan to combine Yolo County’s Cooperative Extension program with Sacramento and Solano’s programs creating a Multi-County Partnership (MCP) designed to increase service to all three counties. The MCP is currently scheduled for implementation in January, 2014. However, until the contract is in place, that date may be adjusted. The budget presented assumes a full-year operational budget. Should the MCP take over in January, the remaining funds will be used to pay for Yolo County’s share of the MCP. Future budget years will not include a separate budget for Cooperative Extension and instead will be a contract with the MCP presented to the board for approval.
Capital Improvement Plan (CIP) – The Accumulated Capital Outlay (ACO) budget is presented and includes funding for one capital project. SB 1022 provides an opportunity for counties to apply for jail construction funding. Staff is working with consultants on the application which is due in September. If successful in our application for modernization and program space funding, ACO will fund initial planning for the project which will occur this fiscal year. Future matching funds to a total of 10% of the project cost, can also be drawn from ACO as well as development impact fees.
Additional funds will be needed as the CIP begins to assign timelines to the various projects. Staff will return in September with an updated analysis of the CIP which will include funding scenarios and timelines.
Law and Justice
As noted below, the primary strategy for closing the funding gap between requested public safety budgets and available revenue is to increase our previous assumption of public safety revenue receipts by $497,211. With an anticipated 2012-13 year end fund balance of $1,034,429, this represents a conservative approach and staff recommends reviewing the fund balance at Adopted Budget with the goal of creating a Public Safety contingency for use in the event these revenue assumptions are not realized.
District Attorney: The recommended budget does not fully fund the DA requested budget. Staff recommends a combination of increased public safety sales tax revenue projections, continued AB 109 funding, increasing the General Fund allocation by $27,919 for IT charges and eliminating the funding for four vacant positions as a balancing strategy.
Probation: The recommended budget does not fully fund the Probation requested budget. Staff recommends increasing the public safety sales tax revenue projections as a balancing strategy.
Sheriff: The recommended budget does not fully fund the Sheriff’s requested budget. Staff recommends a combination of an increased General Fund contribution of $252,265, continued AB 109 funding, increasing the General Fund allocation for IT charges ($4,371), increasing the public safety sales tax revenue projections, and funding the Sheriff's requested six new positions solely with Sheriff special funds ($510,457 from Local Assistance for Rural and Small County Law Enforcement Grant). It is anticipated Rural and Small grant funds will be available for these positions for the next three years. The chart below describes the six new positions and five positions which were requested and are recommended to remain vacant and unfunded.
| Position |
Vacant/Unfunded |
New |
| Sergeant – Deputy Sheriff |
|
2.0 FTE |
| Correctional Sergeant |
|
2.0 FTE |
| Volunteer Coordinator |
|
1.0 FTE |
| Deputy Coroner |
|
1.0 FTE |
| Deputy Recruit |
2.0 FTE |
|
| Animal Care Attendant |
2.0 FTE |
|
| Legal Secretary |
1.0 FTE |
|
As in 2012-13, the Sheriff’s requested vehicles are included with the equipment list and four of the ten requested vehicles have yet to be funded. Staff recommends that the funding be revisited as part of Adopted Budget hearings. (Related to vehicle purchases, PPW will be coming forward this summer with an updated Fleet Policy that will allow for greater intervals in routine maintenance schedules and longer vehicle durability/longevity, both aspects could result in reduced expenditures overall if vehicles are utilized appropriately. To help ensure the safe and effective use of the county fleet, the criteria for determining the need for vehicle repairs and/or purchase of new vehicles is also being strengthened and better defined. The proposed policy changes are also intended to more accurately identify departmental responsibilities relative to the use of these county assets.)
AB109 Funding: AB 109 funding was expected to increase from $6,036,683 in 2012-13 to $7,154,122 for 2013-14. The Governor’s budget threatens to reduce this anticipated increase. Probation and DA budgets contemplate ongoing AB 109 funding and the Sheriff budget includes an increased funding of $238,453. Should the Community Corrections Partnership (CCP) decided to reduce funding, there may be associated staff reductions. Staff does not recommend reducing personnel at this time in order to allow the State budget to be adopted and the Community Corrections Partnership time to develop their recommended spending plan and for Board consideration of that plan. The CCP is anticipating their June 10 meeting will address the recommended budget appropriations from each of the subcommittees in order to bring their recommendation to the Board upon State budget adoption.
County Affiliated Agencies
Yolo County Children’s Alliance (YCCA): The County annually provides $175,000 to YCCA so that they can leverage funding from other agencies. During their April 9 presentation to the board, YCCA indicated they are able to leverage $4 for health and essential services and $8.50 for child abuse prevention services for every dollar provided by the County. This 2013-14 contribution is included in the base recommended budget.
Other
CalPERS Rate Changes: At the April 17, 2013 CalPERS Board meeting, the Board approved new amortization and smoothing methods to derive the employer contribution method. While this does not impact our 2013-14 budget, it will have a significant impact on future budgets and thus merits discussion. The new method will be utilized for the 2015-16 employer rate setting. It is anticipated that the initial impact will be a 1% increase over what would have otherwise been the employer rate using the current method. Currently CalPERS estimates our 2015-16 rate to be 20.6%; the new methodology would increase it to 21.6%. However, over the ensuing five-year period, CalPERS estimates a net increase (difference between current method and new method) of 6.2% for miscellaneous and 10.2% for safety. This would represent an increase in costs to the county of roughly $7.2 million over the current method of rate setting. Staff recommends developing a plan to address the impact of this transition.
Contingency and Reserves: In accordance with the Board’s policy on Fund Balances and Reserves, the recommended budget includes the reserves outlined below. The recommended budget also provides the appropriations for contingency described below.
Reserve balances incorporated with recommended budget:
General Reserve ..................................................................... $5,631,577
Reserve for Unfunded Liabilities ............................................. $ 890,000
Other Post Employment Benefits Trust .................................. $ 800,000
Reserve for Other Post Employment Benefits ....................... $ 300,000
2013-14 Budgeted Contingencies:
General Fund Contingency ..................................................... $2,000,000
General Fund - Designation for Indigent Healthcare ............... $ 600,000
General Fund – IT Innovation................................................... $ 100,000
Use of Additional Funds
The recommended budget does not allocate funds to several areas which will need to be addressed with the Adopted Budget. Many are mentioned in the details above and a summary of those items follows.
OPEB Contribution............................................................................ $ 500,000
Landfill Loan Repayment – Public Safety......................................... $ 669,507*
Landfill Loan Repayment – Mental Health........................................ $ 408,401*
Road Maintenance............................................................................ $ varies
Major Fund Contingencies (Public Safety, Health & Human Svcs). $ tbd**
Board Staffing.................................................................................... $ 108,992
Assessor Staffing.............................................................................. $ 88,000
Sheriff Vehicle Replacement............................................................ $ 181,353
Auditor-Controller Staffing................................................................. $ 93,000
CAO Staffing..................................................................................... $ 60,000
HR/Fiscal Information Systems........................................................ $ 1,000,000
*These amounts are the General Fund obligation with support from department one-time fund balances.
**Policy for major fund contingencies is based on Adopted Budget. The recommended amount needed will be determined with the Adopted Budget. |