State law requires that the County end the year with a balanced budget, whereby funding sources are equal to financing uses. On a countywide basis, 2017-18 revenues ended the year $35.3 million less than budgeted amounts (a negative variance), while expenditures ended the year $125.7 million less than budgeted amounts (a positive variance). Altogether, combined year-end revenues and expenditures reflect a net positive variance of $90.4 million relative to budgeted amounts, as reflected in Attachment A.
While the overall County budget ended fiscal year 2017-18 in balance, budgetary control is established at the budget unit level, and year-end expenditures for several budget units exceed current appropriations. As a result, year-end appropriation adjustments are required to bring these budget units into balance. These appropriation adjustments are reflected in Exhibit 1 to Attachment B.
While Board action is required only for those budget units that have overdrawn current appropriations, this year-end variance analysis report examines all department variances whether positive or negative. Reviewing all year-end budget variances can be helpful in identifying budgetary trends or operational impacts that may need to be monitored. It also provides the opportunity to review and consider budgetary practices that may be out of line with actual results.
Overall, our analysis revealed that the favorable variance of $90.4 million was largely the result of three factors: (a) our conservative budgetary practices, including conservative revenue estimation, not budgeting for staff vacancies, and providing for cautious contingency amounts; (b) delay of major capital projects (roads and facilities), and postponement of program outlays; and (c) unusual one-time settlements and reimbursements.
The sections below provide narrative descriptions of the most significant department year-end variances. Emphasis is on explaining departments’ net variance, or the combined result of how actual revenues and expenditures compare to budgeted amounts.
Agriculture – $2,496,191 Positive Net Variance
Agriculture ended the fiscal year with a net positive variance of approximately $2.5 million, primarily due to a $1.2 million surplus in the Agriculture program and $1.3 million surplus in the Cannabis program.
In 2017-18, $1.3 million of the department’s equipment replacement fund balance was moved from the County’s main internal service fund into two new separate internal service funds, namely, Ag Building Replacement Fund and Agriculture Equipment Replacement Fund. The transfer of this funding was not budgeted and therefore resulted in a $1.3 million surplus. Additionally, Agriculture purchased two pick-up trucks during the year for $105,000 that were erroneously posted to the Agriculture operating fund instead of being posted to the new equipment replacement fund. The Department of Financial Services is working with Agriculture to correct this error in FY 2018-19.
The Cannabis Taskforce expenditures ended the year nearly $1.3 million below budget due primarily to lower than anticipated billing by various county departments, salary savings from vacant positions, and delays in equipment purchases.
Assessor/Clerk-Recorder/Elections - $1,065,326 Positive Net Variance
Assessor/Clerk-Recorder/Elections ended the fiscal year with a positive net variance of $1.1 million primarily due to positive variances in the Assessor and the Clerk-Recorder divisions. The Assessor’s office experienced a net budget surplus of $945,000, mainly due to salary savings from vacant positions, savings from IT related contracts, and an increase in property tax administration fee revenue. Clerk-Recorder realized a year-end net surplus of $610,000 as a result of salary savings from vacant positions, salary expense allocations not being completed at year-end, and an increase in revenue from recording fees.
Although overall the department experienced a positive net variance, the Administration budget unit realized a deficit of approximately $614,000; this was due to salary and benefit costs that were charged to the Administration budget unit but not allocated to the other divisions at year-end. This deficit is offset by the surpluses in the Assessor, Elections, and Clerk-Recorder budget units as the Administration salary expenses should have been allocated to each division.
Capital Improvement Program - $13,650,141 Net Positive Variance
The Capital Improvement Program (CIP) budget ended the fiscal year with a net positive variance of approximately $13.6 million. The Courthouse Reoccupancy Project accounted for approximately $4.1 million of this variance, as delays in demolition and additional abatement and design work caused a delay in construction. In addition, a delay in state approval of the Monroe and Leinberger jail expansions have pushed back the start of construction for those projects, though both are expected to remain on schedule. Finally, the full cost of the Esparto Park and Aquatic Center project was budgeted in 2017-18, while construction continued beyond the end of the fiscal year. It should be noted that many capital projects are multi-year in nature, and therefore are not expected to fully expend the entire project budget in a single fiscal year.
Community Services - $19,661,653 Positive Net Variance
The Department of Community Services ended the fiscal year with a positive net variance of approximately $19.7 million as a result of both lower than anticipated expenditures and increased revenues. Planning and Building realized a year-end net surplus of $550,000 from salary savings due to vacant positions, a reduction in the use of professional service contracts, and not purchasing equipment this fiscal year. The savings was partially offset by lower than anticipated allocated costs being charged to the Cannabis program. Environmental Health experienced a year-end net surplus of $491,000 due to a combination of salary savings from vacant positions and a delay in building a facility for Hazmat vehicle storage.
The Road Fund experienced a positive net variance of $12.3 million at the end of the fiscal year. The division experienced significant expenditure savings of $14.8 million primarily due to capital projects as the construction phase of several projects, including the 2018 Pavement Preservation Project, did not start before the end of the fiscal year. In addition, the division experienced savings from position vacancies and professional services contracts. Partially offsetting the expenditure savings, the Road Fund realized a $2.3 million decrease in Federal reimbursement revenue as a result of lower capital project expenditures.
Integrated Waste Management ended the fiscal year with a positive net variance of approximately $6.3 million due to both lower than budgeted expenditures and increased revenue. The division experienced $2.8 million in expenditure savings due primarily to a delay in the completion of capital projects and savings from professional service contracts. Salary savings as a result of position vacancies also contributed to the surplus. Additionally, Integrated Waste Management realized $3.5 million in higher than anticipated revenue as a result of a one-time liability adjustment for Closure/Post Closure costs ($2.7 million), increased waste volume, and higher franchise waste fees.
County Administrator’s Office - $381,420 Positive Net Variance
The County Administrator’s Office ended the fiscal year with a positive net variance of approximately $381,000, primarily due to higher than anticipated gravel revenue from the Cache Creek Area Plan. In addition, housing programs received higher than anticipated program revenue as well as lower than anticipated expenditures in the First Time Homebuyer Program. These positive variances are partially offset by a negative variance in the Office of Emergency Services due to a delay in reimbursements related to Department of Water Resources grants.
Countywide - $21,772,438 Positive Net Variance
The Countywide department ended the fiscal year with a positive net variance of approximately $21.8 million. The most significant contributor to this was a $9.2 million increase in general purpose revenues, combined with a $5.1 million reduction in general fund transfers to other departments. The increase in general purpose revenue was primarily due to a one-time $3.5 million reimbursement from the state for mandated costs in prior years, repayment of a $2.5 million bridge loan to the Monroe jail expansion project, and $1.7 million in higher than anticipated cost plan reimbursements.
Other significant variances include $3.3 million in unspent contingency funds, $1.6 million in unbudgeted development impact fee revenues, and a $1.5 million surplus in the Pension Funding Internal Service Fund due to prepayment savings and department charges that exceeded the County’s required unfunded liability contribution. Any balances in the Pension ISF will be used to adjust department charges in future years or make additional contributions to the pension trust.
District Attorney - $ 2,995,243 Positive Net Variance
The District Attorney’s Office ended the fiscal year with positive net variance of $3 million, primarily due to variances in the Consumer Fraud & Environmental Protection, Criminal Prosecution, and the Special Investigation units.
The Consumer Fraud and Environmental Protection Unit had a net positive variance of $3.2 million, primarily due to $2.6 million in higher revenue receipts for settlements and investigations. Additionally, expenditures for contracted services, such as lab testing of retail products, outside Attorney services, and investigation services were $502,000 lower than budget due reduction in the need to utilize these services as a result of shifting workloads.
The Criminal Prosecution unit had a net positive variance of approximately $306,000, which is largely a result of delays in the ESCARS software development due to coordination issues at the state level. Additionally, DA’s office realized vacancy savings by deferring recruitment of the IT Innovation Technician position until February 2018 and postponing the IT Programmer position until after the ESCARS software has been developed.
In addition, the Special Investigations unit reflects a negative net variance of $511,000. The DA’s office had $550,000 in pending revenues from the Child Abduction program attributable to FY 2016-17, which were billed for but were not received in FY 2017-18 due to processing delays at the state level. These lower revenue receipts are offset by $187,000 in vacancy savings and miscellaneous savings in services and supplies.
Financial Services - $274,491 Positive Net Variance
The Department of Financial Services ended the fiscal year with positive net variance of approximately $274,000, primarily due to salary savings from vacant positions ($202,000). The department also received additional revenue as a result of increased auditing and accounting fees and collection fees.
General Services - $1,932,872 Positive Net Variance
General Services ended the fiscal year with a positive net variance of $1.9 million, due to surpluses in various division. The Telecommunications Internal Service Fund ended the year with a net positive variance of $717,000. Due to the upcoming phone system project, various equipment was not replaced as originally scheduled and the conduit project came in under budget. In addition, revenue for telecom services increased.The IT division ended the year with a $382,000 positive variance, all due to the increase in unanticipated department systems project work. Due to improved billing efficiencies, the Facilities division has increased its expense reimbursements by approximately $301,800. In addition, changes to levels of countywide security contracts have resulted in a cost savings of $40,350.
Health & Human Services Agency - $25,373,873 Positive Net Variance
The Health & Human Services Agency ended the fiscal year with a net positive variance of approximately $25.4 million. Of this amount, $11.8 million was due to higher than anticipated revenues and lower than anticipated expenditures in the 1991 and 2011 realignment funds, which are essentially a pass-through to fund Agency operations. Not counting the realignment funds, the Agency ended the year with a net positive variance of $13.6 million, due primarily to expenditures savings in Behavioral Health and Public Health program.
Behavioral Health ended the fiscal year with a net positive operating variance (not counting realignment funds) of approximately $5.8 million. Mental Health Services Act (MHSA) programs reflected a positive variance of $6.8 million due to higher than anticipated state revenue allocations, as well a delay in the acquisition of a residential treatment facility. This was partially offset by an $833,000 negative net variance in the Substance Use Disorder program due to a lower transfer in of realignment funds than budgeted. Total expenditures in the core Mental Health unit were nearly $5.7 million lower than budget due to substantially lower inpatient placement costs; however, these savings were largely offset by lower Medi-Cal revenues.
Public Health ended the fiscal year with a net positive variance of $7.2 million primarily due to Intergovernmental Transfer (IGT) funds that were budgeted but not fully expended. Typically, all available IGT balances as well as any new funds expected to be received are included in the budget to allow maximum flexibility in the use of those funds for programs within the IGT spending plan. However, these funds have historically not been expended in the course of one fiscal year. A new policy and procedure for the expenditure of IGT funds is currently being developed, and will address the use of any carryforward balances.
Library - $916,265 Positive Net Variance
The Library ended the fiscal year with a positive net variance of approximately $916,000. Library Services realized an expenditure savings of $497,000 primarily due to savings from position vacancies in Library Central Services and the Davis Library. Additionally, the Davis Library Measure A Fund ended the year with a savings of $544,000, which is also due to vacancy savings as a lower parcel tax transfer was needed to supplement Davis Library expenditures.
Probation - $1,174,755 Positive Net Variance
Probation ended the year with a positive net variance of $1.2 million, due to $1.8 million in vacancy savings and $1.1 million in lower expenditures related to mental health service contracts, wrap costs, placement charges, and AB109 treatment services. These savings were offset by $414,000 in lower Proposition 47, Proposition 57, Second Striker, Work Program, and Office of Refugee Resettlement (ORR) revenue receipts. Additionally, the General Fund allocation needed at year-end was $1.2 million lower than budget due to lower level of program expenditures.
Public Defender - $385,607 Positive Net Variance
Public Defender ended the year with a positive net variance of $386,000 due mostly to a reduction of expenses in the operating division and savings in the revocation fund. Total expenditures in the operating division came in $198,700 less than budget due primarily to salary savings by underfilling two retired attorney positions, and a vacant Paralegal position for a portion of the year. Service and supplies were slightly under budget due to lower than anticipated professional services and discovery costs for court related expenses.
The Public Defender revocation fund ended the year with a positive net variance of $197,000. These funds are used to cover the shortfall that the CCP allocation does not cover for the cost of a Social Worker and Legal Secretary. Revocation funds also cover the cost of a Paralegal. Any excess revenue goes to fund balance to pay the on-going costs for these positions.
Sheriff - $186,255 Positive Net Variance
The Sheriff’s Office ended the year with a positive net variance of $186,000. The Public Safety fund units ended the year with a net deficit of $186k due primarily to overtime in the Patrol division, which exceeded budget by $243,000 but was partially offset by savings in service and supplies. This deficit was offset by positive variances in the Small and Rural ($305k) and COPS ($108k) funds. Both of these special revenue funds had expenditure savings due to supplies or equipment that were budgeted but not purchased.
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