Posted by: thepinetree on 06/07/2010 10:44 AM
Updated by: thepinetree on 06/09/2010 07:27 PM
Expires: 01/01/2015 12:00 AM
:
Calaveras County Staff Budget Recommendation for Proposed 2010/11 Budget....Budget Approved By BOS on Wednesday June 9th, 2010
San Andreas, CA...Update 6/9/10: The Calaveras County Board of Supervisors approved the 2010/11 Preliminary Budget today.....Calaveras County Staff recommends that the Board of Supervisors conduct Fiscal Year 2010/11 Proposed Budget Hearings beginning June 8, 2010 upon conclusion of the Board’s Regular Agenda. Budget hearings will continue as necessary during the week of June 8-11, 2010. Upon completion of deliberations and discussion, staff recommends that the Board approve the FY 2010/11 Proposed Budget, inclusive of any changes adopted, for formal adoption by the Board at the June 22, 2010 Board meeting...
BUDGET OVERVIEW
Preparation of the FY 2010/11 Proposed Budget was extremely difficult and challenging due to the ongoing ramifications of the one of the nation’s worst recessions since the Great Depression, the State’s fiscal crisis and continued economic declines. Similar to the development of the FY 2009/10 budget and as discussed upon review of the County’s budget at mid-year, the FY 2010/11 Proposed Budget is premised upon certain assumptions and financial estimates utilizing current financial trends and known data.
The FY 2010/11 Proposed Budget is structurally balanced with all Funds totaling $144,354,090. This represents a decrease of (1.7%) or $2,474,107 from the FY 2009/10 Final Budget total for all Funds of $146,828,197. The Proposed Budget’s General Fund (GF) total of $56,106,639 is decreased by ($3,324,546) as compared to the FY 2009/10 Final Budget GF appropriation of $59,431,185 inclusive of Measure J Bond proceeds ($20 million) for the new Jail Project. The net result is a GF decline of 10% of the operating budget from prior year. The Proposed Budget, while structurally balanced, is tenuous at best and subject to significant exposure as federal and state legislative actions threaten to shift costs to counties without an adequate revenue source to fund such expenditures.
The FY 2010/11 Proposed Budget falls short of meeting the Board’s goal to budget GF Contingencies at three percent (3%) of GF appropriations. FY 2010/11 Proposed Budget GF Contingencies are budgeted at $396,078 or just 1.1% of the GF operating budget. The GF Reserve remains at $2 million dollars, considerably less than the desired goal of $3.6 million or 10% of the operating budget, in accordance with best financial practices. The budget relies on some one-time revenue increases and a reduction in budgeted expenditures. As proposed, the budget includes a significant reduction in the county workforce as discussed in more detail below.
The State’s fiscal crisis, ongoing State budget negotiations and the gravity of the State’s budget deficit ($19.1 billion) continue to pose a serious and daunting threat to the County’s financial stability. Calaveras County is experiencing revenue losses as a result of the declining state and regional economy. In the FY 2009/10 Calaveras County Mid-Year Financial Report, GF revenues as of December 31, 2009 declined ($1,083,748). Expenditures were forecast to decrease ($366,332) for a net loss to the GF of about ($717,416). As part of the FY 2009/10 budget, the Board provided direction to increase funds in the GF Reserve by $507,953 and deposit $450,000 (0.7%) in GF Contingencies. However at mid-year, there was an identified need to adjust the budget given an unexpected sharp decline in GF revenue caused in large part by continued national, state and local economic woes. The Board chose to utilize GF contingencies and agreed to forego the transfer to GF Reserves as part of a one-time stop gap measure to reduce the expected current year deficit rather than make additional mid-year budget reductions.
As a starting point for FY 2010/11 budget development, some revenue and expenditure assumptions were made which resulted in an estimated GF deficit of ($3.1 million) dollars absent any new infusion of federal or state funds or a strong economic rebound. The key assumptions were:
limited prior year unexpended cash (cash carry) reduced Transient Occupancy Taxes (TOT) collections reduced interest income a ten percent (10%) reduction of the property tax rolls due to the collapse of the housing market also resulting in a decline of vehicle license fee revenue continued high unemployment increased salary and benefit costs related to the expiration of negotiated concessions increased annual insurance premium costs due to continued high unemployment & COBRA revenue losses due to lapse of public safety concessions (AB443 and Vehicle License Fees) loss of A-87 revenue from Non-General Fund Departments.
To lessen the expected GF deficit, the Board agreed in concept to transfer realignment funds among realignment accounts, notably from Public Health to CalWorks and Human Services. This shift in funding helps to mitigate increased caseload costs for social services programs thereby reducing the GF allocation to social services for use elsewhere. The FY 2010/11 Proposed Budget includes estimated revenue of $163,371 resulting from a ten percent transfer of realignment from health to social services for FY 2010/11. A similar transfer is proposed for FY 2009/10 in the amount of $167,975. A Public Hearing regarding these proposed transfers must be held and will be scheduled before fiscal year-end.
Based on the projected revenue and expenditure funding gap, county departments were asked to reduce the county deficit by reducing net General Fund contributions to their departmental budget units by (17.5%). It was recognized and acknowledged that across-the-board reductions are less than optimal and not feasible in all cases given Board’s priorities, federal and state mandates and special circumstances involving health and safety. The proposed reductions and subsequent impacts upon service delivery are described in departmental memorandums and will be discussed during deliberations. It should be noted that this is the third year of budget reductions which magnifies the pain but also increases the need for retooling business operations.
Since the County’s Mid-Year Financial Report, county revenues have continued to decline and unemployment has increased from 15% to 17.1%. Many of the County’s key construction and consumer retail revenues have not improved but in some instances are worse than expected.
Updated revenue forecasts indicate continued declines in revenue of an estimated ($2,262,715) in FY 2010/11 as shown below:
Property tax devaluation of 10% or ($1,259,683) in reduced revenues
($620,011) in reduced Vehicle License Fees (VLF)
($103,021) in reduced A-87 Cost Allocation Plan revenues
($140,000) in reduced interest income
($40,000) in reduced Transient Occupancy Taxes (TOT)
($100,000) in reduced Rural Sheriff Funding (AB 443)
Earlier this year, the Board of Supervisors indicated its desire to retain as many jobs as possible while balancing the new realities of significant funding reductions and service demands. The Board encouraged the workforce to identify cost saving proposals recognizing that many proposed solutions require meet and confer with employee labor organizations. Labor negotiations are in progress with the Deputy Sheriff’s Association (DSA), the Calaveras County Public Safety Employees Association (CCPSEA), and the Service Employees International Union (SEIU). No labor agreements have been reached at this point in time.
With the depth of cuts needed to make up the deficit, GF departments reduced not only line item operating costs but a significant number of staff positions. The latter included layoffs, eliminating funding for vacant positions, increasing/decreasing time allocations for selective positions and utilizing voluntary time off (VTO) to reduce paid hours. The end result was painful management decisions and recommendations that were submitted under protest and with regret as most reductions will impact the delivery of quality public services.
COUNTY BUDGET IMPACT HIGHLIGHTS
Balancing the FY 2010/11 General Fund Proposed Budget
In order to bridge the projected General Fund budget deficit, a number of cost reductions and revenue solutions were included in the Proposed Budget as shown below:
Solutions Total
Cost Reductions
Layoff of 18.2 permanent positions ($1,100,771)
Unfund 12.1 positions that were vacant/funded in FY 2009/10 ($ 895,530)
Other Personnel actions (Increased/decreased time, vol. demotions, etc) ($ 23,260)
No refill of 34 positions that are currently vacant/unfunded ($ 0)
Reduced departmental operating costs ($ 584,439)
Sub Total ($2,604,000)
Revenue Enhancements
Receipt of prior year NG trial reimbursement revenue from Orange County ($ 371,000)
Deferral of 1/7th payroll period contribution ($25,000)
Sub Total ($ 496,000)
TOTAL ($3,100,000)
Non-General Fund Personnel Cost Reductions
Layoff of 1.0 position ($ 63,626)
Unfund 3.0 positions vacant/funded FY 2009/10
($ 255,498)
No refill of 14 vacant unfunded positions ($ 0)
Other Personnel Actions
($ 101,762)
Sub Total ($ 420,886)
Human Resources’ Summary of Personnel Increases and Inter-departmental Transfers
The following is a summary submitted by Human Resources of personnel changes by department that are recommended for approval by the County Administrative Office.
Increase in Time
Auditor Controller
1.0 03-04 Accountant Auditor I Increased in Time
(0.5 to 0.8 FTE)
1.0 03-07 Office Technician I Increase in Time
(0.5 to 0.55 FTE)
Inter-departmental Transfers
Sheriff – OES
1.0 32-66 Deputy Sheriff II Inter-departmental Transfer
Sheriff – CNEU
1.0 35-07 Deputy Sheriff II Inter-departmental Transfer
1.0 35-08 Deputy Sheriff II Inter-departmental Transfer
Public Works – Administration
1.0 81-03 Engineer I/II Inter-departmental Transfer
1.0 81-04 Public Works Analyst III Inter-departmental Transfer
1.0 81-06 Admin. Services Officer I/II Inter-departmental Transfer
Human Resources’ Summary of Personnel Deletions, Demotions, Layoffs, and Downgrades The proposed budget also includes department recommendations addressing cost saving measures such as proposing to delete or hold vacant positions for salary savings, voluntary time off usage, voluntary reductions in time, voluntary demotions or downgrades and staff reductions (layoffs). The recommended changes listed below by function and department are as follows:
Education, Recreation & Culture
Farm Advisor (1.0 Position)
.20 4-H Coordinator Reduction in Time to .80
Enterprise Funds None
General Government
Auditor Controller (1.0 Position)
1.0 Assistant Auditor Controller Lay Off (12/2010)
Assessor’s Office (2.0 Positions)
1.0 Assessment Technician II Lay Off
1.0 Cadastral Specialist I Downgrade to Assessment Technician II
Human Resources (2.0 Positions)
1.0 Human Resources Program Assistant I Lay Off
1.0 Human Resources Program Assistant I Lay Off
County Counsel (1.0 Position)
1.0 Paralegal (08-04) Vacant Position - Delete
Treasurer Tax Collector (1.0 Position)
1.0 Tax Technician II Lay Off
Health & Sanitation
Public Health (3.0 Positions)
1.0 Community Health Assistant II Lay Off
1.0 Clinical Services Technician (52-05) Vacant Position – Delete
1.0 Medical Assistant (51-03) Vacant Position – Delete
Public Assistance None
Public Protection
District Attorney (3.0 Positions)
1.0 D.A. Investigator I Lay Off
1.0 Deputy District Attorney I Lay Off (12/2010)
1.0 Paralegal Criminal Lay off (12/2010)
Probation (4.0 Positions)
1.0 Accounting Technician IV Lay Off
1.0 Deputy Probation Officer II Lay Off
1.0 Deputy Probation Officer II Lay Off
1.0 Juvenile Hall Program Coordinator Downgrade to Administrative Assistant .80
Sheriff OES (1.0 Position)
1.0 HazMat Specialist Evidence Technician Lay Off
Sheriff – Animal Services (1.0 Position)
1.0 Sheriff Service Technician II Lay Off
Sheriff – Dispatch (2.0 Positions)
1.0 Dispatch Clerk Lay Off
1.0 Sheriff Service Technician II Bumped/Lay Off
Sheriff – Jail (1.0 Position)
1.0 Correctional Cook I Lay Off
Sheriff – Patrol (2.0 Positions)
1.0 Deputy Sheriff II Lay Off
1.0Deputy Sheriff II Lay Off
Public Ways & Facilities
Public Works – Equip.Svc.Center (1.0 Position)
1.0 Lead Mechanic Downgrade to Mechanic
Public Works – Land Dev. (1.0 Position)
1.0 Deputy Director Public Works/Engineering Downgrade to Senior Engineer
Special Districts None
The County workforce will be reduced by 64.3 allocated positions in FY 2010/11. The downsizing of government is real and will not likely change any time soon. In FY 2010/11, there are 18.2 employee positions on the layoff list (includes reductions in time); 12.1 positions that are currently vacant and will not be funded and 34 positions that were not funded in FY 2009/10 nor FY 2010/11 yet remain on the position allocation control list. The County has maintained vacant unfunded positions on its position control list for the past several years. The Administrative Office recommends to the Board that as part of Final Budget unfunded positions be deleted and removed from the position allocation control list.
Public Safety- Law Enforcement
In keeping with the Board’s requirement to prioritize public safety spending, the General Fund Proposed Budget includes funding for five (5) Correctional Officers. The cost for these positions was initially included in the Sheriff’s cost reduction strategies to meet a (17.5%) cut for the County Jail budget. However, based on identified risks and the receipt of correspondence from the California Board of Corrections, it was determined that if the Sheriff’s Office were to reduce these positions, the jail would be out of state compliance and present a high level of risk to both the inmates and employees in the jail. The cost for the five (5) Correctional Officers is $359,831 and has been included in the General Fund balance.
The Courts have raised an issue with regards to the release of inmates from the jail due to jail bed capacity issues. The Superior Court Judges have met with the Sheriff, Chief Probation Officer, the District Attorney, Public Defender, Administrative Officer and County Counsel to express concerns about an immediate need to implement changes as to how inmates are selected for release which led to discussions about implementing an alternative to incarceration. An Electronic Monitoring Program has been suggested as a way to address the Court’s issues as well as prevent the potential for additional county GF costs to manage jail bed capacity. Law enforcement and criminal justice partners will discuss this issue with the Board for your consideration during budget hearings. Possible solutions will require an investment by the County to fund a Probation Officer (GF cost) as well as equipment (recommended to be funded utilizing the Criminal Justice Facility Designated Fund).
Land Use Departments
Revenues are flat and in most instances fees do not provide full cost recovery for services provided. For instance, while the Building Department’s revenues do not include a direct GF contribution to the budget, the GF does pay for Building’s A-87 costs which are indirect costs attributed to goods and services provided by general service departments (i.e. County Counsel, Auditor-Controller, Treasurer, Administration, Buildings and Grounds, Human Resources, Insurance etc.). Various employee staff reductions are expected to impact service delivery and will be so noted during budget hearings.
General Government
Technology upgrades are needed both in hardware and software to help the county operate more efficiently. Teeter Funds are included in the budget to pay for an ArcGIS server, McAfee Email and Internet Upgrade, Enterprise Vault, and other telecommunication equipment and software.
Proposed employee layoffs, vacant positions not refilled and the use of Voluntary Time Off (VTO) are impacting the timely delivery of services. Individual department heads will speak to issues of concern during the budget hearing as expressed in departmental memos.
Administration and Finance
Indirect costs of providing services to departments that are recouped through the County’s A-87 Cost Allocation Plan is an expressed concern. More analysis is required to determine if there are different strategies that could be implemented in an effort to realize costs in the year in which the expense is incurred rather than 2 years in arrears. Proposed layoffs, not refilling positions and use of Voluntary Time Off are projected to impact timeliness of service delivery.
Health and Human Services
Decreased realignment revenue, which is derived from sales tax and vehicle license fees, continues to be problematic. Significant unemployment (17.1%) has resulted in increased requests for assistance as individuals lose their jobs, lose employment based health coverage and find themselves in dire straits. State budget proposals threaten to seriously undermine the safety net as it exists today for the poor and disenfranchised. The budget includes shifting realignment funding from health to social services to help to reduce increased county GF share of expenditures for social services programs. Public Health has prior year savings and reduced clinic services and nursing hours in anticipation of the need to shift realignment revenue to support families in need of basic food and shelter for both the current fiscal year and next fiscal year.
STATE BUDGET: COST SHIFTS/UNCERTAINTIES - Public Safety and Health and Human Services Main Targets
During the analysis of the FY 2009/10 County budget at mid-year, it was pointed out that California’s fiscal crisis would likely continue into FY 2010/11 and with it significant economic uncertainty. This has proven true and economists do not see the trend changing for the next few years. In January 2010, the Legislative Analyst’s Office (LAO) forecasted a ($19.9 billion) state budget gap and the need for the state to take immediate action. In response, the Governor declared a state fiscal emergency and convened the Legislature for a Special Session. During that session, the Governor proposed ($8.9 billion) of cost reduction solutions to be adopted before March 1, 2010. He pointed out that delaying these actions would result in a loss of more than ($2 billion) in additional state revenues and would necessitate even deeper cuts. Unfortunately, the solutions adopted by the Legislature and signed into law by the Governor, have resulted in less than $1.4 billion in solutions thus far. The budget deficit continues to be attributed to reduced state revenues as the economy has declined, policy restrictions due to federal law, ongoing litigation and court decisions, increased population and caseload growth, as well the need for a prudent reserve. This leaves the state budget with a net deficit for FY 2010/11 of ($19.1 billion.)
The Governor’s proposals make significant changes in health and human services that have potentially significant new GF costs for counties. The Governor has proposed to shift some of the state’s prison populations to county jails as well as state juvenile parolees to County Probation. As in the Governor’s January proposal, there are no subvention funds for the Williamson Act. For good news, the Governor has included funds to repay the county for the Special Election held in May 2009 and has made no additional changes to transportation funding since the spring when the gas tax swap proposal was passed and signed into law.
Governor’s May Revise Proposal and Legislative Budget Proposals
The Governor released his May Revision on May 14, 2010. The Governor proposes three (3) solutions to close the budget gap. First, implement various fund shifts and revenue enhancements, including a $650 million loan of excise taxes on gasoline, which accounts for $3.3 billion in savings. Second, the receipt of $3.4 billion in federal funding, including $1.7 billion from the extension of the temporary increase in the Federal Medical Assistance Percentage, $125 million from the American Recovery and Reinvestment Act and $1.6 billion in additional federal funds for Health and Human Services Programs and the Department of Corrections and Rehabilitation. Third, $12.4 billion in various spending reductions, including the elimination of child care programs (except pre-school and after school care), elimination of the California Work Opportunity and Responsibility to Kids (CalWORKS) Program, and a (60%) reduction ($600 million) in funding for local mental health programs shifted to social services. The Governor’s May Revision continues to project that the state will have sufficient cash to meet the State’s financial obligations.
Subsequent to the May Revise, the Senate Democrats have offered a budget proposal that extends some tax measures, contains some program reductions and discusses the opportunity to realign programs and revenues to the local level. Similarly, the Assembly Democrats offered their budget proposal which includes a multi-step borrowing/securitization and tax initiative to fully fund programs and avoid the elimination of programs.
The Legislative Budget Conference Committee began its work this week. It is unclear how the Conference Committee will handle three distinct budget proposals and time will tell how much influence members of the Conference Committee will have on overall state budget negotiations. It is rumored that it is may take awhile for the Legislature and Governor to come to agreement on how to resolve the state’s deficit. It is also highly likely that counties will bear a large brunt of any budget solution whether it is a reduction in revenues or a shift of programs to counties without adequate revenue to pay for additional program or service costs.
HEALTH CARE REFORM AND POTENTIAL FINANCIAL IMPACT
The County’s Human Resources Director has relayed that Democratic leaders in the House and Senate announced that they have agreed on legislation that would extend through the end of 2010 long term unemployment benefits and a federal subsidy to provide laid-off workers with health insurance coverage through the COBRA program. The Temporary Extension Act of 2010 (HR 4213) passed the House on May 28, 2010. It is pending hearing in the U.S. Senate. If passed and signed, the bill will extend the filing deadline for unemployment benefits until November 30, 2010. During FY 2009/10, unemployment costs for Calaveras County were $564,660.67. (In FY 2007/08 and FY 2008/09, costs were $109,334.72 and $137,897.27 respectfully.) Costs for FY 2010/11 are budgeted at $800,000.
In addition to unemployment benefits, HR 4213 would also extend COBRA health care subsidies. The federal subsidy will pay 65% of the cost of health insurance premiums for workers who have lost their jobs. To date, the County has paid $47,653.16 for COBRA costs and has received reimbursements equal to $27,727.69. COBRA reimbursements are taking longer to collect affecting the County’s cash flow. COBRA costs for FY 2010/11 are projected to be $61,200.
There are a number of future impacts to federal health care reform. Most immediately, there is a provision that concerns extending health care coverage for children up to age 26. It is expected that this new requirement will increase overall health care costs by 2-5% by requiring insurance companies to cover dependants until age 26. Analysis continues on this issue as more information is obtained.
CONCLUSION
While the County’s FY 2010/11 Proposed Budget is structurally balanced, with a minimum GF contingency in the amount $396,078, the overall size of County government has been significantly reduced and there is no quick fix to ongoing budget problems as revenues continue to decline and the economy is slow to recover.
Between now and FY 2010/11 Final Budget deliberations in September, the Board and staff must prepare for additional expenditure reductions as it is highly likely that the state deficit will negatively impact the county’s already tenuous finances. There are no more quick fixes or one time revenues available to bridge future gaps between revenues and expenditures.
|
