This report provides the Board of Supervisors with a midyear update on the 2018-19 budget. As part of the monitoring process, year-end revenue and expenditure projections were developed by each department and reviewed by the Department of Financial Services. Overall, most departments are projected to end the year in balance. The sections below provide additional information on departments and program areas that are projecting significant variances or that require close monitoring. A detailed summary of the midyear projections for each department is provided in Attachment A. For those budget units where staff recommends a budget adjustment, it is noted in the narrative and included in the budget resolution provided in Attachment B.
Assessor/Clerk-Recorder/Elections: The Assessor/Clerk-Recorder/Elections department is projecting to end the year in balance overall, however the Clerk-Recorder division is projecting a deficit due to the replacement of the Recorder Document system. The department is requesting a budget adjustment of $175,500 for the system replacement which will be funded by the department’s Trust Funds; the agreement with the vendor to replace the existing system was approved by the Board on January 20, 2019.
Staff recommends adopting the budget resolution presented in Attachment B to increase appropriations and revenues by $175,500 for the replacement of the Recorder Document system.
Agriculture: Agriculture is projecting to end the fiscal year with a negative net variance of $105,200 due to posting of a post-closing corrective journal entry in the Agriculture Equipment Replacement Internal Service Fund (4013). In FY 2017-18, Agriculture purchased vehicles out of the main agriculture budget unit instead of the equipment replacement Internal Service Fund, where the funds were budgeted. In FY 18-19, Agriculture worked with DFS to correct this error. The department is requesting to utilize $105,242 in equipment replacement fund balance to cover the deficit in the equipment replacement fund due to the corrective journal entry.
Staff recommends a budget adjustment of $105,242 to cover this deficit using Equipment Replacement fund balance as reflected in Attachment B.
Capital Improvement Projects: A minor budget adjustment of $10k is needed for the Probation Juvenile Hall project to cover final project close-out costs. This adjustment will be funded by residual project fund balance.
Staff recommends adopting the budget resolution presented in Attachment B to increase the Juvenile Hall project budget for final project close-out costs.
Child Support Services: Child Support Services is projecting to end the fiscal year with a positive net variance of $37,000 which is primarily attributable to vacancy savings. The department is planning to consolidate their operations and negotiate their lease to occupy only the 1st floor of the 100 W Court Street building. Currently, both floors are occupied by the department and a portion of the 1st floor is subleased out to HHSA. Child Support Services is estimating a total of $354,568 in vacancy savings, which will be partially utilized to fund one-time moving costs, building improvements, and other real estate expenses, such as, real estate agent fees associated with building lease renewal.
Community Services: The Community Services department is projecting to end the fiscal year with a surplus of $8.0 million. Integrated Waste Management (IWM) is projecting a $4.5 million budget surplus, primarily due to a delay in capital projects and equipment purchases. IWM is requesting $30,000 to purchase security cameras and a new safety window to improve the security of the reception area at the landfill. A budget adjustment is not needed as there is sufficient funding budgeted for capital projects. Any surplus remaining at year-end will offset the budgeted use of fund balance. The IWM Post Closure fund is projecting a deficit of $248,700 which is attributable to a market value adjustment of the investment holdings. No budget adjustment is recommended at this time; staff will continue to monitor this area, and if needed, a budget adjustment will be requested once final year-end amounts are known.
Road Fund Construction and Maintenance is projecting a $3.9 million budget surplus. This is due to a delay in the 2019 SB1 Pavement Preservation Project and lower than anticipated construction bids for 2018 Pavement Preservation Project and the Highway Safety Improvement Program (HSIP) Striping Project. Salary savings from vacant positions and delays in equipment purchases are also contributing to the variance.
Cannabis is projecting a deficit of $432,000 due to a decrease in revenue as a result of the fee changes approved by the Board in December. The deficit will be balanced with reductions in expenditures and the use of fund balance. Staff will continue to closely monitor this area and will request a budget adjustment as part of the 3rd Quarter monitor when a more accurate estimate is available.
Building and Planning is projecting to maintain a balanced budget at year-end, however, the department is requesting an appropriation increase of $210,000 for Planning division expenses related to a mining and reclamation project application ($150,000) and additional energy efforts related to the PG&E grant ($60,000). These increases will be funded with project related fee revenue and additional PG&E grant funds. Although the Building and Planning budget unit is balanced, Code Enforcement is projecting a deficit of $62,000 due to the addition of a second Code Enforcement Officer position. This position was originally budgeted as a Building Inspector (under the Building division). There will likely be a General Fund impact as a result of this change as the department can’t use dedicated Building revenue to fund code enforcement activities. A budget adjustment is not being recommended at this time, however, staff will continue to closely monitor this area and request allocation adjustments if necessary.
Environmental Health is projecting to end the year in balance but is requesting to purchase a replacement vehicle ($28,500). A budget adjustment is not needed as the vehicle will be funded with savings from construction of the Hazmat vehicle storage facility.
Staff recommends adopting the budget resolution presented in Attachment B to increase appropriations and revenues for Building and Planning and approving an amendment the 2018-19 Authorized Equipment list to include the IWM and Environmental Health items as described above.
County Administrator’s Office: The County Administrator’s Office (CAO) is projecting to end the fiscal year in balance.
County Service Areas: Most County Service Areas (CSAs) and Assessment Districts are projected to end the year within budgeted amounts. However, budget adjustments are needed in several areas. The Esparto Park Maintenance & Assessment District needs a budget increase of $15k to reflect costs incurred related to the establishment and management of districts assessments. The Rolling Acres Assessment District requires a budget increase of $2k related to an increase in management services. North Davis Meadows needs an increase of $58k for legal services related to a challenge of the recent Proposition 218 assessment. This expense will be funded by an additional use of fund balance. The Wild Wings Golf Course requires a budget increase of $250k to pre-fund operational expenses for the golf course management company. Finally, Wild Wings Sewer requires a budget increase of $141k related to the fourth amendment with EEI WSD Joint Venture that was approved by the Board on January 29.
Staff recommends adopting the budget resolution in Attachment B to adjust the County Service Area budgets as described above.
Debt Service: An appropriation adjustment of $3,500 is being requested for CIP Debt Service due to unbudgeted expenses for arbitrage and debt compliance reporting. Additionally, an adjustment of $500 is being requested for continuing disclosure services for the DA Building Debt Service. These appropriation adjustments will be funded by an additional transfer from the ACO fund.
Staff recommends adopting the budget resolution reflected in Attachment B to adjust appropriations and revenues in the Debt Service funds as described above.
District Attorney: District Attorney is projecting to end the year with a positive net variance of $458,100. The Neighborhood Court and Special Investigation units reflect a projected surplus of $575,003 primarily due to vacancy savings and posting of prior year State Child Abduction revenues in the current FY. This surplus is partially offset by deficits of $117,100 in the Multi-Disciplinary Investigation (MDIC) Unit and $30,000 in the Vehicle Theft Program.
In efforts to minimize the projected deficit in the MDIC unit, the department is looking to do a grant modification with Cal OES to partially fund the expenditures that are not currently covered by the CAC grant. Additionally, DA is expecting lower levels of program expenditures, which will partially offset the overall revenue shortfall. If a deficit is realized at year-end, the department will use the MDIC fund balance to cover it.
In regards to the Vehicle Theft program deficit, Yolo County’s current Vehicle License Fees (VLF) are insufficient to sustain the operating costs of the program. This program has been operating in a deficit for the last two years. For this reason, the DA’s office will bring an item before the Board in March 2019 to increase the Yolo County VLF fees. This fee increase will allow the program revenues to be in-sync with the program expenditures going forward.
General Services: An appropriation adjustment of $10,591 is being requested for the Graphics division due to the payment of interest for a copier lease. The interest on this seller financed purchase was unknown and not included in the Adopted Budget. Funding for the entry will be an increase in the total loan repayment.
Staff recommends adopting the budget resolution reflected in Attachment B to adjust appropriations and revenues for the Graphics division of General Services as described above.
Health and Human Services Agency: The Health & Human Services Agency (HHSA) is projecting to end the year within budgeted amounts. However, an emerging issue that is not currently reflected in the midyear projections is a statewide recoupment of $180.7 million in erroneous Medi-Cal specialty mental health service (SMHS) claims. In August 2018, the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services released a report finding that California did not always comply with Federal and State requirements when claiming Federal reimbursement for SMHS. The OIG estimated that the State claimed at least $180.7 million in unallowable Federal reimbursement. Based on this audit, in December 2018 the Centers for Medicare and Medicaid Services recouped $180.7 from California, which the State will recoup from counties. It is currently estimated that Yolo County’s share of this recoupment will be approximately $560k. While the timing and exact methodology of this recoupment is still being finalized, counties have been advised that at least a portion will be paid back beginning in 2018-19. Staff will continue to monitor this situation closely.
The sections below describe the significant variances and recommended budget adjustments for each major divisions.
The Social Services division is projecting a net surplus of approximately $820k, due primarily to salary and benefit savings in the Public Assistance unit due to staff coding their time to other activities. In addition, the General Assistance unit is projecting a surplus of $100k due to lower average direct-to-client assistance payments. The Community Services Block Grant (CSBG) unit is projecting both revenues and expenditures to exceed current budgeted amounts by approximately $2.5 million due to several grants that have been awarded but were not budgeted, including $213k for Homeless & Mentally Ill Outreach & Treatment (HMIOT), $864k for California Emergency Solutions and Housing (CESH), and $1.3 million for Homeless Emergency Aid Program (HEAP).
Staff recommends adopting the budget resolution presented in Attachment B to appropriate these grant funds for the CSBG program.
The Behavioral Health division is projecting a net surplus of approximately $2.8 million, due primarily to lower than anticipated contract expenditures in the Core Mental Health unit, and a ramp up in the Drug Medi-Cal program in the Substance Use Disorder (SUD) unit. The savings in the SUD unit are partially offset due to redirecting $1 million in realignment funds to the Core Mental Health unit.
As discussed in the 2018-19 Adopted Budget staff report, the Mental Health fund has been operating with a deficit for more than 10 years. In 2017-18, the County received $2.9 million in one-time state repayments for County costs related to mandated mental health services in prior years. As part of the 2018-19 Adopted Budget, the Board approved the transfer of this $2.9 million to the Mental Health fund to partially balance the long-standing deficit. To mitigate the balance of the deficit, staff is now proposing a one-time shift of $3.1 million in 1991 and 2011 realignment balances to the Mental Health fund. With these actions, the Mental Health fund will be balanced for the first time in many years.
Staff recommends adopting the budget resolution presented in Attachment B to shift 1991 and 2011 realignment funds to the Mental Health fund for this purpose.
The Public Health division is projecting a surplus of approximately $152k, primarily related to $101k in ORR-related jail medical costs that have been billed to Probation and will be funded by ORR funds under the revised agreement with the federal government.
Probation: Probation is projecting to end the year with a positive net variance of $582,000, which is primarily attributable to vacancy savings, reduction in group home placements, and lower expense reimbursements from other county departments related to the Federal Office of Refugee Resettlement (ORR) grant.
The department is requesting five budget adjustments in Administration, Juvenile Detention, and DNA Identification budget units.
Administration Unit: Probation’s is requesting to use AB109 Planning Fund Balance to cover a $71,817 increase in programming costs related to Law Suite system development. Additionally, $6,000 in additional appropriation is being requested for funding the Standard Training for Corrections ( STC ) cost increases stemming from higher staffing levels. These cost increases which will be funded by additional STC revenues from the State.
Juvenile Detention Unit: Probation is requesting a $57,709 appropriation increase in the ORR Grant revenues to fund the purchase of two new metal detecting body scanners ($28,000) and other increases in ORR transportation costs ($29,709).
DNA Identification Unit: Probation is requesting to use an additional $3,121 in DNA Identification Fund Balance to cover the cost of increased staff time spent on DNA collection activities.
Staff recommends approving these budget adjustments as reflected in Attachment B.
Sheriff: The Sheriff’s Office is projecting an overall deficit of $811,560, due to overtime, rising inmate food costs, and the cost of background investigations. Patrol is anticipating a $642,000 deficit due primarily to overtime. Overtime in FY18-19 at the midyear point is approximately 4,900 hours, compared to just under 6,000 hours for all of FY17-18. Approximately 950 reimbursable hours is attributed to mutual aid help for the northern California fires. But even with the exclusion of this exception, the projection is for overtime to be $394,000 over budget.
Detention is projecting a $201,000 deficit due to overtime and the increasing cost of food for the inmates. Overtime is expecting to exceed budget by $224,000 due mostly from vacant correction officer positions. Salary savings were used to balance the FY18-19 Detention budget so the benefit of salary savings from the current vacant positions is not able to offset the overtime. Also contributing to the excess overtime is the number of major crime investigations by the Detectives. Due to the rising cost of food for the inmates, food expense is projected to exceed budget by $80,000. These increases in costs are partially offset by the receipt of a FY16-17 State Criminal Alien Assistance Program (SCAAP) payment and unbudgeted reimbursement of Probation juvenile hall meals.
The Management division is projecting a $118,000 deficit due mostly to an increase in extra help (background investigators) and a vacation payout for the conversion of a staff member to an elected official.
A budget adjustment is not recommended at this time. However, the Sheriff’s office will be working on strategies to reduce the current projected deficits before year-end by reviewing recruiting challenges to filling vacant correctional officer positions and reviewing current organizational structure for improved efficiencies. Overtime is being analyzed and other areas of concern, such as food costs, are being monitored.
Public Safety Sales Tax and Realignment Revenue
A 2-month delay exists in sales tax revenue receipt; therefore, about five months of data (July thru November) was utilized to project the Public Safety and Realignment Revenues. The summary of the revenues is as follows:
- 1991 Realignment: The year-to-date 1991 Realignment revenues are 25.1% ($2.9 million) above budget due to receipt of higher growth payments in Social Services, Family Support, and Child Poverty and Family Support Supplemental Subaccounts. The year-end forecast reflects 1991 Realignment revenues about 10.5% ($2.9 million) over budget. A significant portion of the surplus is due to accelerated caseload growth and redirected County Medical Services Program (CMSP) growth, which will be offset by higher expenditures related to the IHSS cost shift.
- 2011 Realignment Health and Human Services: The current year-to-date revenues are 0.6% ($43,000) below budget as growth payments arrived $97,000 below budget. This revenue stream is estimated to be 0.3% ($43,000) under budget at year-end.
- 2011 Realignment Public Safety: The current year-to-date revenues are 1.3% ($89,000) over budget due to receipt of higher base payments during the year. Growth came in about 12% below budget which partially offset these revenues. The current year-end estimates are 0.6% ($89,000) above budget.
- Public Safety Sales Tax (Proposition 172): To date, the Proposition 172 revenues received are 4% ($323,000) above budget as actual statewide sales tax revenues have been coming in higher than budget. The year-end projection reflects that this revenue stream will be 1.2% ($323,000) above budget at the end of this FY.
General Purpose Revenue
General purpose revenue projections for the fiscal year are lower than expected by $228,000. Property taxes, the County’s largest source of general purpose revenue, is projected to end the year on budget. However, year-end projections are reflecting potential reductions in Redevelopment pass-through payments and justice collections. Staff will continue to closely monitor general purpose revenues throughout the year.
Contingency Appropriations: The table below reflects the balance of all contingency appropriations as of January 29, 2019.
| Contingency Designation |
Original Allocation |
Amount Remaining as of 1/29/19 |
| General |
$ 2,500,000 |
$ 2,335,044 |
| Health |
$ 1,500,000 |
$ 1,500,000 |
| IT Innovation |
$ 500,000 |
$ 486,700 |
| Public Safety |
$ 500,000 |
$ 500,000 |
| Safety & Security |
$ 100,000 |
$ 51,204 |
| County Service Areas |
$ 100,000 |
$ 100,000 |
| Roads/Planning |
$ 350,000 |
$ 350,000 |
| Homeless |
$ 200,000 |
$ 200,000 |
| Equity Adjustments |
$ 250,000 |
$ 250,000 |
| Staffing Needs |
$ 85,000 |
$ 85,000 |
| Total |
$ 6,085,000 |
$ 5,857,948 |
Staff is requesting Board approval to utilize the $200,000 homeless contingency for identified projects, including a temporary shelter expansion and winter shelter in Woodland, and winter shelters and the New Pathways transitional housing in Davis. It is recommended that all other contingency balances remain unallocated at this time to provide a safeguard against unanticipated events that may occur throughout the remainder of the fiscal year, or until specific needs are identified.
Staff recommends adopting the budget resolution in Attachment B to provide access to the $200,000 in homeless contingency funds.
2019-20 Budget Principles
Staff is also recommending that the Board approve the 2019-20 Budget Principles. The Budget Principles serve to highlight some of the best practices that underlie budget development each year, and to guide budget planning for the upcoming year. A few of the notable provisions in the 2019-20 Budget Principles include:
- The budget shall be developed in accordance with key best practices and principles established in County financial policies;
- The budget will take advantage of opportunities included in the 2019-2020 State Budget, particularly related to funding for permanent supportive housing and other homeless programs;
- The budget shall continue efforts to strengthen financial sustainability by continuing to fund pension and OPEB liabilities, build reserves and limit General Fund position growth;
- New position requests that increase net county cost are unlikely to be funded, and departments are encouraged to identify alternate funding strategies.
The draft Budget Principles were reviewed with the Chair and Vice Chair on February 5, and presented to the full Board as part of the budget workshop on February 19.
Public Defender/District Attorney Staffing Comparison
At the May 8, 2018 Board meeting, during the Public Defender’s department update to the Board, Supervisors Saylor and Provenza requested that staff analyze the staffing parity between the Public Defender and the District Attorney’s offices. Staff is continuing to refine this analysis and will review the results with the Board Chair and Vice Chair at an upcoming Budget Ad Hoc Subcommittee meeting. |