HomeMy WebLinkAboutMINUTES - 04242011 - D.1RECOMMENDATION(S):
Open and conduct a public hearing to receive input on the FY 2012-13 Recommended
Budget;
1.
Acknowledge that, due to significant market losses in the Contra Costa County
Employees Retirement Association assets in 2008 and poor investment returns since
that time, retirement expenses are expected to increase in the next five years.
2.
Acknowledge that the Recommended Budget balances annual estimated expenditures
with estimated revenues in FY 2012-13, and is both technically and structurally
balanced;
3.
Acknowledge that action by the State regarding its budget may require subsequent
adjustments to the Recommended Budget adopted by the Board;
4.
Acknowledge that the Recommended Budget includes a specific appropriation for
contingency, and that the Board also maintains its ability to manage General Fund
contingencies during the fiscal year by use of reserve funds set aside for that purpose;
5.
Acknowledge that any restoration of any recommended program reductions will
require an equivalent reduction in funds from other County priorities in order to adhere
to our balanced budget policy;
6.
7.
APPROVE OTHER
RECOMMENDATION OF CNTY
ADMINISTRATOR
RECOMMENDATION OF BOARD
COMMITTEE
Action of Board On: 04/24/2012 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
Contact: Lisa Driscoll, County
Finance Director, 335-1023
I hereby certify that this is a true and correct copy of an action taken and
entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: April 24, 2012
David Twa, County Administrator and Clerk of the Board
of Supervisors
By: , Deputy
cc:
D. 1
To:Board of Supervisors
From:David Twa, County Administrator
Date:April 24, 2012
Contra
Costa
County
Subject:Recommended County and Special District Budgets FY 2012/13
RECOMMENDATION(S): (CONT'D)
Authorize and Request the Auditor-Controller to establish a fund entitled "Facility
Lifecycle Improvement Fund" (106000) as required for administration of the County's
Infrastructure and Facilities Maintenance program;
Direct the County Administrator to prepare for Board adoption on May 15, 2012, the
FY 2012-13 County and Special District Budgets, as modified, to incorporate any
changes directed by the Board during these public hearings; and
Direct the County Administrator to prepare for consideration by the Board of
Supervisors on May 15, 2012, vacant positions eliminations necessary to carry out
Board action on the Recommended Budget.
FISCAL IMPACT:
See attached FY 2012/13 Budget Message and Recommended Budget document.
BACKGROUND:
An explanation of the reasons behind the County Administrator’s recommendations
presented in the FY 2012/13 Recommended Budget and other background information is
presented in the attached – Budget Message to the Board of Supervisors.
MEET AND CONFER/LAY-OFF RESOLUTIONS
For the last several years at this point in the budget cycle, County Departments, in
cooperation with Labor Relations, have begun the meet and confer process with
employee representatives regarding the impact of program reductions on the terms and
conditions of employment for affected employees. No lay-offs are anticipated as a
consequence of FY 2012/13 Recommended Budget impacts. Pending Final Budget
adoption on May 15, Position Elimination lists will, however, be presented to the Board
for adoption on that day, with cancellation dates effective June 1 as all positions to be
canceled are vacant.
CLERK'S ADDENDUM
Speakers: Steve Mick, resident of Alamo; John Garfield Reese, Vietnam Veterans of
Diablo Valley, Veterans of Foreign Wars (VFW) Post 75; Mariana Moore, Human
Services Alliance of Contra Costa; and Rollie Katz, Public Employees Union Local 1.
The following people did not speak, but provided written comments for the Board's
consideration (attached): Mike Conklin, Chair, Sentinels of Freedom; Sandee
Wiedemann, resident of San Ramon; Luisa Oriti, President, East Bay Blue Star Moms
Chapter 101; Rockwell Nathan Greene, Commander and founding member of San
Ramon Valley VFW Post 75; Mary C. Walsh, resident of Contra Costa; Peggy Conklin,
East Bay Blue Star Moms CA101; Michelle Miller, Blue Star Moms Chapter 101; Pat
Soler, Blue Star Moms; Michael Slattengren, President, Viet Nam Veterans of Diablo
Valley;
County Administrator David Twa presented the staff report for the Fiscal Year
2012/2013 Recommended Budget. The following department heads provided further
input: Sheriff-Coroner David Livingston, District Attorney Mark Peterson; Probation
Chief Philip Kader, Public Defender Robin Lipetzky, Contra Costa Fire Protection
District Fire Chief Daryl Louder. (PowerPoint presentations given are attached)
CLOSED the public hearing and ADOPTED the recommendations as listed and
including further direction today for the County Administrator to place priority on
investigating possible funding for an additional position in the Veterans Services
Office.
ATTACHMENTS
FY 2012/13 Budget Message
April 2, 2012
Board of Supervisors
Contra Costa County
Martinez, CA 94553
Dear Board Members:
We have endured several years of significant financial challenge. Although it is too early to
celebrate, we have every reason to be cautiously optimistic that our 2012-13 budget represents
a structurally balanced budget based upon cost avoidance. There is no significant change
proposed in net County cost projected for 2012-13.
Contra Costa County has managed the economic downturn of the past several years through
cooperation between the County Board, Department Heads, and Employees to make prudent
fiscal choices, live within our means, and continue to plan ahead. None of this has been easy
nor has it been painless. However, it is through this combined effort that we have been able to
achieve a budget that is structurally balanced for 2012-13.
In spite of the fiscal challenges of the past few years, it is important to note a few
accomplishments this past year. As part of our effort to support a cleaner and healthier
environment by taking advantage of today's technology, the Tax Collector's Office implemented
a free subscription service delivering Secured Property Tax bills and notifications by e-mail.
Taxpayers may receive and/or send tax payments electronically reducing costs while increasing
efficiency. The service currently has over 6,000 E-Billing subscribers and over 7,000 E-
Reminder subscribers. We received a perfect score from the California Department of Veterans
Affairs audit thereby preserving subvention funding. We addressed patient flow in the
Emergency Room through participation in the Crisis Stabilization Unit admitting process
redesign. Visits to the Emergency Room were reduced by 600 per month, which equates to
1,000 hours per month of unnecessary waiting time for our patients. We continued to build-out
the 9-1-1 Wireless Program, which will ultimately reduce the response time of emergency
personnel. We began configuration of an electronic timekeeping system with a projected go-
live date of January 2013. It is important to note that implementation of this system will include
electronic capture of supervision thereby allowing the County to begin to report supervision
levels. This feature will provide key information required to support the County’s goal of
flattening the organization.
The Board, Department Heads, and the entire County workforce will continue to work together
to retain the balance in this $2.4 billion (all funds/$1.2 billion General Fund) budget for FY 2012-
13 and beyond.
Board of Supervisors
JOHN M. GIOIA
1st District
GAYLE B. UILKEMA
2nd District
MARY N. PIEPHO
3rd District
KAREN MITCHOFF
4th District
FEDERAL D. GLOVER
5th District
County Administrator
County Administration Building
651 Pine Street, 10th Floor
Martinez, California 94553-4068
V-925-335-1080
F-925-335-1098
David Twa
County Administrator
Contra Costa
County
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Budget Message
The Recommended Budget continues to provide for essential community services to our
residents and minimizes adverse impacts to the community. However, once the State budget is
adopted, we likely will need to consider budget adjustments and will provide the Board with
options at that time. By the end of the current fiscal year, we hope to have completed labor
negotiations with our labor unions. With their help we have begun implementing a long-term
rebalancing plan to reduce our expenditures and restructure our service delivery to provide the
most effective services within annual available resources. This collaboration has meant that we
can propose additional resources to augment public safety in the upcoming budget.
The County Board, Department Heads, and Employees have come together and have worked
collaboratively to address our fiscal challenges. I particularly want to thank Department Heads
and all of our employees for their dedication and sacrifice, as well as their valuable and
thoughtful input throughout the process. Our goal has been to ensure a fair and transparent
budget process and to produce a user-friendly budget document. A great deal of effort has
been put into developing and producing this budget.
The Recommended Budget represents a work plan to achieve our mission and priorities in the
coming year. Below are a number of key issues that have informed the development of our
budget for next year.
• Property Tax Slowdown: The downturn in the housing market continues to impact the
County budget as over 83.1% of General Purpose revenues and 23.0% of total General
Fund revenues come from property taxes. As a result, the slowdown in the housing market
continues to have a greater impact on our County than most other Bay Area Counties. The
housing slowdown has been very severe in Contra Costa County. The County experienced
its third straight year of negative growth of assessed valuation with -0.49% growth in FY 11-
12. This is a cumulative -11.1% negative assessed valuation since FY 2008-09. The
County is projecting a 0% property tax growth rate for FY 2012-13. In years prior to FY
2008-09, growth has been atypically high and, unfortunately, our expenditures have counted
on that growth. Once recovery is achieved, a more modest 2-3% annual growth is
projected. This reduced growth rate means that less money will be available to fund current
and emerging service needs.
• Employee Benefits and Retiree Health Care/Other Post-Employment Benefits (OPEB):
Another key issue is the continued financial pressures related to the cost of benefits,
including health care, for employees and retirees. The County reached agreement with the
vast majority of our employee groups to reduce the County cost of current employees and
eliminate retiree health care costs for future employees. This action substantially reduced
our long-term liability relating to the provision of retiree health care. This action in
combination with pre-funding virtually eliminated growth in the County’s OPEB liability. The
budget continues the $20 million annual set-aside, which began in FY 2008-09, to reduce
our unfunded liability for retiree health care. While we would prefer a greater level of pre-
funding, the absence of any new resources makes this impossible without further service
cuts. Nevertheless, $20 million will continue to have an impact on the County’s OPEB
liability. Our most recent OPEB valuation indicated that over the last six years, the County
has reduced its OPEB liability by over 60% and reduced our annually required contribution
by over 71% (from $216.3 million to $59.8 million). None of these reductions could have
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been achieved without the support and cooperation of our employees. Continued
negotiations towards Countywide health care cost containment strategies and the
redirection of designated future resources remain key to resolving the OPEB dilemma. The
Board of Supervisors continues to make significant progress towards a solution for one of
the biggest fiscal challenges the County has faced to date.
• Pension Benefits: A major issue in FY 2012-13 and beyond continues to be the impact of
the 2008 equity market losses in our pension fund. Market gains in calendar year 2010 were
14%, 6.25% in excess of the Assumed Investment Rate (AIR). Gains for 2011 are
estimated to be only 2.7%, 5.05% below the AIR. Given the bleak pension cost outlook, last
year we stated that it was appropriate to look to employees for a more equal cost sharing on
pension contributions. Employees did step-up and the $15.8 million projected increase for
FY 2012-13 was offset by employees picking up their entire share of pension costs,
reducing the increase to $1.8 million (see the Retirement/Pension Costs – Future Year
Projection/Budgets section of this letter for more information on pension).
• Long-Term Rebalancing: One of the most important challenges we faced over the last year
was to rebalance and restructure the County's budget. A long-term solution including a
targeted negotiation strategy was developed and implemented. Our office will continue to
work with the Board and departments to review our historical trends, identify service
priorities, and to develop strategies to address any budget imbalance that exists between
our annual expenditure needs and our annual revenues. Our goal will be to provide the most
effective and efficient community services within our available resources.
• State Budget Uncertainties: Given that the County receives approximately 28% of its
General Fund revenues from the State, we are significantly impacted by State budget
uncertainties. For 2012–13, the State Legislative Analyst’s Office projects that the State’s
baseline General Fund revenues are $89.2 billion, while baseline General Fund spending is
$94.3 billion. In addition to this prospective annual budget shortfall of over $5 billion for
2012–13, the administration estimates that 2011–12 will end with a General Fund deficit of
over $4.1 billion. Combined, the State faces an estimated budget problem of $9.2 billion to
address between now and the start of the new fiscal year (down from $26.6 billion last year).
Our recommended budget includes a budgeted contingency reserve to allow us time to
adapt to the expected loss of program revenues. We will also continue to work with labor to
develop additional contingency options.
• Capital Improvement Plan: The County needs to adequately maintain its infrastructure to
provide high quality and accessible services to our residents. Given the age of many of our
facilities, we have accrued substantial deferred maintenance and capital renewal needs.
However, due to significant fiscal constraints, the FY 2008-09 through 2011-12 fiscal years
budgets included no appropriations for deferred facilities maintenance and capital renewal
from the general fund.
Because there were no appropriated funds, emergency funds were spent as critical
equipment failed and needed to be replaced. These emergency repairs often cost more
than regular maintenance of the facility would have cost. Non-general funds are sometimes
available for special projects. In 2009, $1.0 million was appropriated from the Criminal
Justice Construction Fund and allocated for Criminal Justice Facilities only; in FY 2011-12
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Land Development funds were used for a large $12 million dollar renovation of 30 and 40
Muir Road in Martinez; and approximately $5.5 million of identified deferred maintenance
were completed during this renovation.
A comprehensive building condition analysis report completed in FY 2007-08 revealed the
level of deferred maintenance and improvements that will be required to extend the useful
life of County facilities and promote the health and safety of employees and the public who
utilize our facilities. The report included comprehensive building condition assessments of
89 facilities and a total of 2.9 million square feet of building space. The report identified a
total of $251.2 million in deferred facilities maintenance and capital renewal requirements to
be addressed over 10 years. Up-to-date status of the deferred facilities maintenance and
capital renewal requirements are in a database, which currently total approximately $265.4
million.
The comprehensive building condition analysis report and database is the blueprint of our
Strategic Plan to address the County’s infrastructure needs. Deferred maintenance and
capital renewal projects were categorized as having a Priority 1 through Priority 4 ranking.
• Priority 1 projects are defined as needing immediate action to return a facility to normal
operation, stop accelerated deterioration, or correct a safety hazard: $2,208,294.
• Priority 2 projects are defined as needing correction within a year to avoid intermittent
interruptions, rapid deterioration, or potential safety hazards: $27,056,752.
• Priority 3 projects include conditions requiring appropriate attention to prevent
predictable deterioration or potential downtime and the associated damage or higher
costs if deferred further: $183,703,751.
• Priority 4 projects include items that represent a sensible improvement to existing
conditions. These projects are not required for the most basic functions of a facility;
however they will either improve overall usability and/or reduce long-term maintenance:
$52,390,671.
For FY 2012-13, $5,000,000 is recommended for appropriation for deferred facilities
maintenance and capital renewal. A new Capital Fund will be established for the
administration of the County’s Infrastructure and Facilities Maintenance Program. The
objective is to begin to strategically fund deferred facilities maintenance and capital renewal
on a yearly basis. There will be an emphasis on completing priority 1 projects. Projects
identified for FY 2012-13 are:
• Infrastructure improvements will be completed with the replacement of two chillers that
are in critical condition at the Martinez Detention Facility. The 30 year old chillers are 10
years beyond their useful life. The chillers will be replaced with new energy efficient
units that contain the latest ozone friendly refrigerant.
• Replacement of the metal roof, recondition of the ornamental roof components,
upgrades/repairs, and foundation wall waterproofing to the historic Finance Building.
• A sewer project at the Orin Allen Youth Rehabilitation Facility.
The County Administrator continues to work with Public Works’ staff to implement the Real
Estate Asset Management Plan Program (RAMP), which was formalized in FY 2009-10.
The department negotiates new rents that will reduce the County's facilities costs, focuses
on moving from leased to County owned space, and last year completed the acquisition of
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approximately 2.83 acres of land on Technology Way in Brentwood for the eventual
development of an East County Government Center. The Center will provide consolidated
services to the public, will allow the County to vacate existing leased spaces in far east
County, and to move those services into County-owned office space in order to realize long
term savings.
• Outstanding Debt: As of June 30, 2011, the County had a total of $717.9 million of
outstanding Pension Obligation Bonds and Lease Revenue Bonds, a detailed listing of
which is shown below. The County had a total of $729.6 million of outstanding Pension
Obligation Bonds and Lease Revenue Bonds as of June, 30, 1010. The County’s entire
debt portfolio is composed of fixed-rate debt issues. The Debt Policy permits variable rate
issues such as variable rate demand obligations only under special circumstances and does
not presently permit derivatives such as swaps. Even prior to the implementation of its
formal Debt Policy, the County had issued only fixed rate issues. This approach continues
to shield the County from the risks associated with swaps and variable rate issues. It should
be noted that Pension Obligation Bonds are taxable securities whereas the County’s Lease
Revenue Bonds are tax-exempt securities. Thus, the True Interest Costs for the Pension
Obligation Bonds are generally higher than those for Lease Revenue Bonds.
County of Contra Costa (County Only)
Outstanding Lease Revenue and Pension Obligation Bonds and True Interest Cost
(as of June 30, 2011)
Bond Issues
Date
of Issue
Principal
Amount Issued
($000s)
Outstanding
Principal
($000s)
True
Interest
Cost (%)1
Lease Revenue Bond Issues (LRBs):
1999 Series A (Refunding and Various Capital Projects)03/04/99 $74,685 $16,835 NA
2001 Series A (Various Capital Projects) 01/25/01 18,030 2,650 4.62%
2001 Series B (Various Capital Projects) 05/10/01 23,775 765 5.26%
2002 Series A (Various Capital Projects) 06/27/02 12,650 2,615 4.73%
2002 Series B (Refunding and Various Capital Projects)09/05/02 25,440 9,715 3.97%
2003 Series A (Various Capital Projects) 08/14/03 18,500 5,060 4.46%
2007 Series A (Refunding and Various Capital Projects)03/14/07 122,065 121,185 4.27%
2007 Series B (Medical Center Refunding) 08/07/07 110,265 78,640 4.27%
2009 Series A (Various Capital Projects) 06/03/09 25,062 22,587 4.55%
2010 Series A‐1 (Capital Project I – Tax Exempt) 11/16/10 6,790 6,790 4.15%2
2010 Series A‐2 (Capital Project I – Taxable BABs)11/16/10 13,130 13,130 4.15%2
2010 Series A‐3 (Capital Project I – Taxable RZBs)11/16/10 20,700 20,700 4.15%2
2010 Series B (Refunding) 11/16/10 17,435 17,435 3.84%2
Total LRBs $488,527 $318,107
Pension Obligation Bond Issues (POBs):
Refunding Series 2001 (Taxable) 03/20/01 107,005 94,105 6.23%
Series 2003 A (Taxable) 05/01/03 322,710 305,735 5.36%
Total POBs $429,715 $399,840
Grand Total $918,242 $717,947
1 The yield shown for the Refunding Series 2001 POBs is the arbitrage yield, not the TIC.
2 The yield shown is the blended TIC for all three indicated series, net of the receipt of federal subsidies of interest cost.
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• Bonded Debt Limitation and Assessed Valuation Growth: The statutory debt limitation
for counties is 5% of assessed valuation (Government Code Section 29909), but it is
actually 1.25% of assessed valuation pursuant to the California Constitution that requires
taxable property to be assessed at full cash value rather than ¼ of that value. For Fiscal
Year 2010-11, the growth rate of total assessed valuation in the County was -3.0%,
reflecting housing sector weakness in response to the demise of the sub-prime mortgage
market. The total assessed valuation base was $144.3 billion, resulting in a statutory
bonded debt limitation of $7.2 billion and a California Constitution limit of $1.8 billion. This
limit applies to all County-controlled agencies, including the County General and Enterprise
funds, Redevelopment, Housing Authority and Special Districts. For technical auditing
purposes, only pension obligation bonds and tax allocation bonds are counted as “general
obligation bonded debt” even though neither form of debt requires voter approval; lease
revenue bonded debt and assessment district debt are not required to be included. As of
June 30, 2011 the County’s outstanding bonded debt was $521.4 million leaving a statutory
margin of $6.7 billion and a Constitutional margin of $1.28 billion.
• Debt Service Requirement: The County has debt service requirements for Outstanding
Lease Revenue and Pension Obligation Bonds that must be provisioned in each fiscal year.
The following obligations are current as of June 30, 2011. Note that these are County
obligations and do not include Special Districts or Redevelopment obligations (also excluded
are capital leases) and that years 2030-2040 are the average - each year is $2.47 million.
Debt Service Requirements for Outstanding Lease Revenue and Pension Obligation Bonds
(As of June 30, 2011)
Fiscal Year
Ending 6/30
Total Lease Debt
Service (1)
Total POB Debt
Service Total Debt Service
2012 32,299,164 63,262,285 95,561,449
2013 32,312,422 67,939,535 100,251,956
2014 32,807,347 68,401,567 101,208,913
2015 32,848,691 35,409,894 68,258,584
2016 32,840,993 36,914,526 69,755,519
2017 30,440,233 38,484,360 68,924,593
2018 29,915,133 40,114,901 70,030,034
2019 29,796,021 41,821,636 71,617,657
2020 28,271,581 43,600,400 71,871,980
2021 28,268,331 45,452,243 73,720,574
2022 25,748,535 47,382,398 73,130,933
2023 25,637,015 25,637,015
2024 15,721,919 15,721,919
2025 13,337,400 13,337,400
2026 11,695,462 11,695,462
2027 10,494,758 10,494,758
2028 5,477,077 5,477,077
2029 2,471,648 2,471,648
2030-2040 2,473,052 2,473,052
TOTAL 447,588,707 528,783,742 976,372,448
(1) Excludes capital leases; includes federal subsidy receipts for certain lease revenue bonds (Build America Bonds and
Recovery Zone Bonds).
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• Refundings: The County Finance Director monitors market conditions for refunding
opportunities that, pursuant to the Debt Management Policy, will produce at least 2% net
present value savings for each maturity of bonds refunded and a minimum of 4% overall
present value savings. The table below sets forth the amount of savings achieved on
refundings undertaken since 2002. A total of $9.61 million of net debt service savings were
achieved over the remaining terms of bonds refunded since 2002. The County’s largest
refunding occurred in Fiscal Year 2006-07 when $200.9 million of prior Certificates of
Participation and Lease Revenue Bonds were refunded as part of the plan of finance for the
2007 Series A and 2007 Series B Lease Revenue Bonds. To the extent that federal and/or
State programs offset debt service cost for projects funded with Lease Revenue Bonds, the
County must share the refunding savings attributable to such projects with the Federal
and/or State program.
Refunding Lease Revenue Bond Issue
Amount Refunded
($ millions)
Refunding
Term
. Savings
($ millions)
Annual Average
Savings
2002 Series B 25.870 18 years 0.850 49,906
2007 Series A (advance refunding) 61.220 21 years 3.830 182,380
2007 Series A (current refunding) 26.815 14 years 0.900 64,286
2007 Series B 112.845 15 years 2.930 195,333
2010 Series B (current refunding) 17.400 15 years 1.100 73,330
Total 244.150 9.610 565,235
(as of June 30, 2011)
Lease Revenue Bond Refunding Savings Since 2002
• State Realignment: In October 2011, the Governor began implementing massive changes
to the relationship between State funding and management of county operated programs.
The realignment of public safety programs has transferred to counties the fiscal and
programmatic responsibility for many Criminal Justice and Health and Human Service
programs previously administered by the State. Phase I of 2011 realignment transferred
oversight of felons exiting State prison for nonviolent, non-serious and non-sex crimes from
the State to county probation departments and custody of newly convicted "non, non, non"
felons to county sheriffs instead of State prison as part of an effort to reduce bulging
populations at the prisons. County public safety departments began implementing Phase I
of realignment with the Board’s October 4, 2011 adoption of the Community Corrections
Partnership (CCP) Plan. The CCP Executive Committee has been meeting monthly to
monitor the progress of plan implementation and to discuss the need for modifications, if
needed.
In exchange, the Governor’s proposed spending plan for 2012-13 reflects the continued
dedication of two State funding sources to support 2011 Realignment: a State special fund
sales tax of 1.0625% totaling $5.1 billion and $462.1 million in Vehicle License Fees for
2011-12. These funds are deposited in the Local Revenue Fund 2011 and are intended to
be continuously appropriated and allocated to counties for the purposes of 2011
realignment. However, the ongoing appropriations to the Local Revenue Fund are not
guaranteed and are subject to the vagaries of the annual State budget process. In
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response to county appeals, the Governor has proposed a November 2012 ballot initiative
that, if approved, would provide constitutional protection for counties' realignment funding.
According to the State’s revenue estimates, counties should have $842.9 million available
for implementation of realignment in 2012-13, which is approximately a 78% increase over
the annualized statewide allocation in 2011-12. It is unknown how these funds will be
allocated amongst counties in 2012-13 because the current allocation formula will likely be
revised. It is probable that under any decision the Realignment Allocation Committee
makes for a Year 2 allocation, each jurisdiction will be guaranteed its Year 1 allocation, with
additional resources on top. The Realignment Allocation Committee (nine county
administrators) has already begun meeting to contemplate approaches for a Year 2
allocation formula and its recommendation is expected at any time.
While it is clear that significant changes to the State and County relationship will continue
over the next few years as the State deals with its deficit, it remains to be seen if sufficient
funding for Contra Costa County will materialize.
Historical Perspective
Between FY 2001-02 and FY 2007-08, total expenditures for the General Fund grew by an
average of 4.0%. They declined by 2.6% in FY 2008-09 and another 6.1% in FY 2009-10.
Although they were budgeted to grow by approximately 4.3% in FY 2010-11, actual growth was
within 2% and was funded with one-time resources. A decline of 0.6% overall is budgeted for
FY 2012-13 based on revenue projections and negotiated salary and benefit concessions.
10 Year Actual Expenditure History (in millions)
$1,019
$1,059
$1,103
$1,128
$1,172
$1,270
$1,288
$1,255
$1,179 $1,203
$1,229 $1,222
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
2001-02
Actual
2002-03
Actual
2003-04
Actual
2004-05
Actual
2005-06
Actual
2006-07
Actual
2007-08
Actual
2008-09
Actual
2009-10
Actual
2010-11
Actual
2011-12
Budgeted
2012-13
Recom'd
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As depicted in the following chart, total revenues began a two year decline in FY 2008-09 and
have been relatively flat since then. Although a 1.2% growth is included in the Recommended
Budget, the next several years are expected to be relatively flat. These revenues are projected
based on historical trends, which have been negatively impacted by the property tax slowdown
(as described above).
10 Year Revenue Generation (in millions)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2001‐02
Actual
2002‐03
Actual
2003‐04
Actual
2004‐05
Actual
2005‐06
Actual
2006‐07
Actual
2007‐08
Actual
2008‐09
Actual
2009‐10
Actual
2010‐11
Actual
2011‐12
Budget
2012‐13
Recom'd
General Purpose Revenue Other Local Revenue Federal Assistance State Assistance
As shown below, the County has struggled with maintaining a structurally balanced budget over
the years. We are projecting to balance the current year and Recommended budget with
available annual revenues; however, State impacts are unknown and may require the use of
reserves. Appropriations for Contingency have been budgeted in preparation of State impact.
Change in General Fund Actual Status (in millions)
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
2001‐02
Actual
2002‐03
Actual
2003‐04
Actual
2004‐05
Actual
2005‐06
Actual
2006‐07
Actual
2007‐08
Actual
2008‐09
Actual
2009‐10
Actual
2010‐11
Actual
2011‐12
Budget
2012‐13
Recom'd
Total Expenditures Gross Revenue
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Prior to the housing market collapse, the County had reversed the declining reserves trend
experienced in the last decade and achieved a balanced General Fund budget for fiscal years
2005-06 and 2006-07. However, as is their purpose, reserves were spent in FY 2007-08 and
FY 2008-09 to alleviate two fiscally difficult years. In FY 2009-10 and FY 2010-11, due to
Federal Stimulus funding and negotiated compensation concessions, the budgets were
balanced. The FY 2012-13 Recommended Budget does not anticipate reserve spending for
on-going program expenses and it fact projects a $3 million repayment of reserves from the FY
2010-11 loan to Doctor’s Hospital.
Fiscal year-end 2010-11 marked a change in the calculation of the County’s General Fund
Reserve to comply with terminology revisions required by the Governmental Accounting
Standards Board (GASB) Statement No. 54-Fund Balance Reporting and Governmental Fund
Type Definitions. GASB issued Statement No. 54 in an effort to improve consistency in
reporting fund balance components, enhance fund balance presentation, and improve the
usefulness of fund balance information reported annually. The Statement required a revision to
the County’s 2005 Reserve Policy – unreserved was changed to unassigned. The impact was
that $32.5 million of previously categorized unreserved balance is now considered either
assigned or committed. In the following chart, the ten year history of unreserved balance has
been over-laid with year-end 2010-11 figures calculated using both definitions and the current
and budget year calculated pursuant to the revised policy. There was no change in the total
fund balance. The County is still meeting the minimum 5% target (Unassigned Fund Balance
was 6.4% of total General Fund Revenues).
Unreserved/Unassigned Fund Balance (as of June 30)
11.7%
9.7%
7.3%
5.5%
8.3%
9.1%
9.6%
8.6%8.6%8.7%
6.4%
6.7%6.9%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
2001‐02
Actual
2002‐03
Actual
2003‐04
Actual
2004‐05
Actual
2005‐06
Actual
2006‐07
Actual
2007‐08
Actual
2008‐09
Actual
2009‐10
Actual
2010‐11
Actual
2011‐12
Budget
2012‐13
Recom'd
Unreserved Unassigned
- 11 -
General Fund Revenue and Appropriations
The County Summary Information available beginning on page B-1 of the Recommended
Budget depicts history and recommendations for all revenue sources and uses for all County
funds. The recommended General Fund budget of $1.222 billion is supported by local, federal,
and State resources. Almost half of our revenue, $551.7 million (45.1%) is dependent on State
and Federal allocations. Our general purpose revenue available from sources such as property
tax and interest income is $314.8 million. The remaining ‘Other Local’ revenue is generated
primarily by fees, fines, and licenses. Note that the difference between revenues and
expenditures is due to the “repayment” of reserves from the West Contra Costa Healthcare
District (see page C1-69 for more information). In the two fiscal years prior to 2007/08, the
assessed valuations of the County’s tax rolls had increased by double digits due to the strong
housing market. The continued economic downturn has eliminated growth in assessed
valuation and has greatly reduced almost all revenue sources.
Total Revenues: $1.225 Billion
Other Local,
$357,993,662
29%
Federal,
$202,828,899
17%
State,
$348,856,714
28%
General
Purpose,
$314,826,999
26%
Other Local Federal State General Purpose
These revenue resources are used to fund programs throughout the County. All categories
below are self-explanatory, except ‘Other Charges’, which includes contributions to other funds
such as the Enterprise Funds and interest expense on bonds and other debt. The following
chart breaks out recommended expenditures between the major expense areas.
Total Expenditures: $1.222 Billion
Salaries and
Benefits,
$686,524,005
50%
Provisions for
Contingencies,
$5,035,561
<1%
Services and
Supplies,
$370,476,755
27%
Other Charges,
$233,527,543
17%
Fixed Assets,
$5,149,530
<1%
Expenditure
Transfers,
($79,207,120)
6%
- 12 -
Our General Fund resources fund three functional areas: General Government, Law and
Justice, and Health and Human Services. The following chart shows the distribution of
resources in these three areas in the FY 2012-13 Recommended Budget. There is no ratio
change from last year.
Distribution of Expenditures ($1.222 Billion)
General
Government
$210,391,603
17%
Health &
Human Services
$677,855,059,
56%
Law & Justice
$333,259,612,
27%
Each department of the County is included in one of these functional areas and is described in
detail in the Recommended Budget. The General Government Functional Group includes
Agriculture, Appropriations for Contingency, Assessor, Auditor-Controller, Board of Supervisors,
Central Support Services, Clerk-Recorder, Conservation and Development, County
Administrator, County Counsel, Crockett/Rodeo Revenues, Debt Service, Department of
Information Technology, Employee/Retiree Benefits, Human Resources, Public Works, and
Treasurer-Tax Collector. The Law and Justice Functional Group includes Animal Services,
Conflict Defense, District Attorney, Justice Systems Development/Planning, Probation, Public
Defender, Sheriff-Coroner, and Superior Court Related Functions. The Health and Human
Services Functional Group includes Child Support Services, Employment and Human Services,
Health Services Department, and Veterans Services.
Each department was asked to submit a budget that balanced its requirement to provide
services with the County’s goals of adopting a FY 2012-13 General Fund budget that balances
annual expenses and revenues, addresses revenue challenges, pension cost increases, and
includes an appropriation for partially pre-funding the County’s OPEB liability.
The chart on the following page summarizes data for the General Fund. The budget is
balanced and reflects sound financial practices. For example, ongoing revenues are used for
ongoing expenditures while one-time revenues support one-time spending. As was mentioned
above, a portion of General Fund sources is obligated to support debt service payments.
- 13 -
Summary of General Fund Expenditures and Revenues
General Fund
2010-11
Actual
2011-12
Budget
2012-13
Baseline
2012-13
Recommended
Change
EXPENDITURES
Salaries and Benefits 630,190,094 681,789,439 686,327,206 686,524,005 196,799
Services and Supplies 382,651,424 382,140,605 370,497,369 370,476,755 -20,614
Other Charges 258,259,527 243,321,110 236,739,543 233,527,543 -3,212,000
Fixed Assets 8,390,741 11,294,431 5,149,530 5,149,530 0
Expenditure Transfers -76,352,355 -89,998,607 -79,070,042 -79,207,120 -137,078
TOTAL EXPENDITURES 1,203,139,432 1,228,546,978 1,219,643,606 1,221,506,274 1,862,668
REVENUE
Other Local Revenue 596,221,651 623,864,177 668,962,989 670,825,661 1,862,672
Federal Assistance 188,620,401 214,396,446 202,828,899 202,828,899 0
State Assistance 427,382,625 371,533,061 350,851,718 350,851,714 -4
GROSS REVENUE 1,212,224,676 1,209,793,684 1,222,643,606 1,224,506,274 1,862,668
NET COUNTY COST (NCC) -9,085,245 18,753,294 -3,000,000 -3,000,000 0
Allocated Positions (FTE) 5,134 5,230 5,363 5,357 -6
FINANCIAL INDICATORS
Salaries as % of Total Exp 49% 52% 53% 53%
% Change in Total Exp 2% -1% 0%
% Change in Total Rev 0% 1% 0%
% Change in NCC -306% -116% 0%
COMPENSATION INFORMATION
Permanent Salaries 328,024,204 349,260,697 347,522,381 347,524,136 1,755
Temporary Salaries 17,931,056 10,778,974 10,701,774 10,684,726 -17,048
Permanent Overtime 14,237,551 12,583,678 12,408,611 12,408,611 0
Deferred Comp 922,829 1,795,546 2,444,056 2,400,856 -43,200
Hrly Physician Salaries 45,215 31,039 122,869 122,869 0
Perm Physicians Salaries 2,596,323 3,704,163 3,666,346 3,666,346 0
Perm Phys Addnl Duty Pay 19,994 30,369 51,860 51,860 0
Comp & SDI Recoveries -1,856,792 -1,782,569 -1,550,905 -1,550,905 0
FICA/Medicare 20,988,471 22,613,738 22,565,877 22,568,159 2,282
Ret Exp-Pre 97 Retirees 1,878,723 2,099,561 2,093,129 2,093,129 0
Retirement Expense 133,235,442 162,904,050 163,129,770 163,410,030 280,260
Excess Retirement 3,175 0 0 0 0
Employee Group Insurance 53,668,491 62,113,803 65,139,882 65,127,166 -12,716
Retiree Health Insurance 28,677,012 28,871,537 31,641,895 31,641,893 -2
OPEB Pre-Pay 13,721,448 13,641,734 13,622,075 13,622,073 -2
Unemployment Insurance 2,153,845 1,367,732 1,396,288 1,413,411 17,123
Workers Comp Insurance 13,455,147 11,657,980 11,371,299 11,339,646 -31,653
Labor Received/Provided 487,961 117,408 0 0 0
- 14 -
The following table compares the Recommended Budget’s share of general purpose revenue
between Departments to the current year Adopted Budget (adjusted for carryforward).
Changes in Overall Department Share of General Purpose Revenue
FY 2011/12
Adopted Budget
Share of
Total
FY 2012/13
Recommended
Share of
Total
Agriculture - Weights & Measures 1,920,085 0.6% 1,824,000 0.6%
Animal Services 3,155,367 1.0% 3,200,000 1.0%
Appropriations for Contingencies 0 0.0% 5,035,561 1.6%
Assessor 14,914,949 4.8% 14,735,733 4.7%
Auditor-Controller 2,904,778 0.9% 2,985,000 1.0%
Board of Supevisors 4,722,462 1.5% 5,199,500 1.7%
Conservation & Development (250,000)-0.1% 0 0.0%
County Administration 6,447,133 2.1% 3,675,784 1.2%
County Clerk-Recorder 4,108,343 1.3% 4,108,000 1.3%
County Counsel 1,603,822 0.5% 1,524,000 0.5%
District Attorney 13,388,579 4.3% 13,940,527 4.5%
Employment & Human Services 18,047,765 5.8% 18,050,000 5.8%
Health Services 89,654,532 28.7% 86,980,000 27.9%
Human Resources 1,888,211 0.6% 2,001,000 0.6%
Justice System Planning 3,500,620 1.1% 3,500,670 1.1%
Miscellaneous Services 7,259,921 2.3% 7,297,694 2.3%
Plant Acquisition 42,127 0.0% 40,000 0.0%
Probation 36,585,257 11.7% 35,792,176 11.5%
Public Defender 16,722,142 5.3% 17,158,535 5.5%
Public Works 11,745,276 3.8% 11,484,328 3.7%
Sheriff-Coroner 62,184,298 19.9% 61,243,123 19.6%
Superior Court - Jury Comission 10,183,219 3.3% 9,947,739 3.2%
Treasurer-Tax Collector 1,438,513 0.5% 1,566,649 0.5%
Veterans Services 559,341 0.2% 536,978 0.2%
312,726,740 1 100.0% 311,826,997
2 100.0%
1 The difference between the FY 2011-12 total and total General Purpose Revenue on page C1-77 is due to
carryforward.
2 The difference between the totals shown here and total General Purpose Revenue on page C1-77 ($3 million) is
due to the West Contra Costa Healthcare District’s agreement with the County. The Board has committed these
funds back to the reserve (see page C1-69).
- 15 -
The following table compares the Recommended Budget’s share of general purpose revenue
between Agencies to the Baseline Budget Request. The Baseline Budget identifies the funding
gap by projecting the level of appropriations and resources that would be required to provide in
the budget year the same level of service provided in the prior year.
Comparison of Share between Recommended Budget and Baseline Request
FY 2012/13
Baseline Request
Share of
Total
FY 2012/13
Recommended
Share of
Total
Agriculture-Weights & Measures 1,913,748 0.6% 1,824,000 0.6%
Animal Services 3,200,000 1.0% 3,200,000 1.0%
Appropriations for Contingencies 0 0.0% 5,035,561 1.6%
Assessor 14,735,733 4.7% 14,735,733 4.7%
Auditor-Contoller 2,985,000 1.0% 2,985,000 1.0%
Board of Supervisors 5,199,500 1.7% 5,199,500 1.7%
Clerk-Recorder 4,108,000 1.3% 4,108,000 1.3%
County Administrator 3,453,231 1.1% 3,675,784 1.2%
County Counsel 1,810,758 0.6% 1,524,000 0.5%
District Attorney 13,347,487 4.3% 13,940,527 4.5%
Employment & Human Services 18,050,000 5.8% 18,050,000 5.8%
Health Services 90,230,000 29.0% 86,980,000 27.9%
Human Resources 2,001,000 0.6% 2,001,000 0.6%
Justice System Planning 3,500,670 1.1% 3,500,670 1.1%
Miscellaneous Services 7,297,694 2.3% 7,297,694 2.3%
Plant Acquisition 40,000 0.0% 40,000 0.0%
Probation 36,212,522 11.6% 35,792,176 11.5%
Public Defender 17,086,655 5.5% 17,158,535 5.5%
Public Works 13,629,190 4.4% 11,484,328 3.7%
Sheriff-Coroner 59,917,818 19.3% 61,243,123 19.6%
Superior Court-Jury Commission 10,313,676 3.3% 9,947,739 3.2%
Treasurer-Tax Collector 1,612,680 0.5% 1,566,649 0.5%
Veteran's Services 536,978 0.2% 536,978 0.2%
311,182,340 1 100.0% 311,826,997
1 100.0%
1 The difference between the totals shown here and total General Purpose Revenue on page C-177 ($3 million) is
due to the West Contra Costa Healthcare District’s agreement with the County. The Board has committed these
funds back to the reserve (see page C1-69).
- 16 -
As shown in the Recommended Budget the majority of General Purpose Revenue is allocated
to a handful of County departments; in fact 79.5% of our general purpose revenue is spent in
just seven departments. The table below shows the ranking of Department share (including
Appropriations for Contingencies) of general purpose revenue.
Ranking of Department Share of General Purpose Revenue
FY 2012/13
Baseline Request
Share of
Total
FY 2012/13
Recommended
Share of
Total
Health Services 90,230,000 29.0% 86,980,000 27.9%
Sheriff-Coroner 59,917,818 19.3% 61,243,123 19.6%
Probation 36,212,522 11.6% 35,792,176 11.5%
Employment & Human Services 18,050,000 5.8% 18,050,000 5.8% 79.5%
Public Defender 17,086,655 5.5% 17,158,535 5.5%
Assessor 14,735,733 4.7% 14,735,733 4.7%
District Attorney 13,347,487 4.3% 13,940,527 4.5%
Public Works 13,629,190 4.4% 11,484,328 3.7%
Superior Court-Jury Commission 10,313,676 3.3% 9,947,739 3.2%
Miscellaneous Services 7,297,694 2.3% 7,297,694 2.3%
Board of Supervisors 5,199,500 1.7% 5,199,500 1.7%
Appropriations for Contingencies 0 0.0% 5,035,561 1.6%
Clerk-Recorder 4,108,000 1.3% 4,108,000 1.3%
County Administrator 3,453,231 1.1% 3,675,784 1.2%
Justice System Planning 3,500,670 1.1% 3,500,670 1.1% 20.5%
Animal Services 3,200,000 1.0% 3,200,000 1.0%
Auditor-Contoller 2,985,000 1.0% 2,985,000 1.0%
Human Resources 2,001,000 0.6% 2,001,000 0.6%
Agriculture-Weights & Measures 1,913,748 0.6% 1,824,000 0.6%
Treasurer-Tax Collector 1,612,680 0.5% 1,566,649 0.5%
County Counsel 1,810,758 0.6% 1,524,000 0.5%
Veteran's Services 536,978 0.2% 536,978 0.2%
Plant Acquisition 40,000 0.0% 40,000 0.0%
311,182,340 1 100.0% 311,826,997
1 100.0%
1 The difference between the totals shown here and total General Purpose Revenue on page C-177 ($3 million) is
due to the West Contra Costa Healthcare District’s agreement with the County. The Board has committed these
funds back to the reserve (see page C1-69).
- 17 -
The following table shows total appropriations by department regardless of the funding source.
Please note that several departments – such as the Library and Child Support – do not appear
in the charts above because they do not receive any general purpose revenues.
County Departments
FY 2012/13
Baseline Request
FY 2012/13
Recommended Difference
Agriculture-Weights & Measures 5,769,773 5,680,025 (89,748)
Animal Services 11,502,716 11,502,716 0
Appropriations for Contingencies 0 5,035,561 5,035,561
Assessor 19,286,500 19,286,500 0
Auditor-Controller 8,114,400 8,114,400 0
Board of Supervisors 6,531,038 6,531,038 0
Child Support Services 18,902,523 18,902,523 0
County Administrator 15,151,959 15,372,433 220,474
County Clerk-Recorder 25,184,419 25,184,419 0
County Counsel 5,682,639 5,395,881 (286,758)
District Attorney 53,384,500 53,336,500 (48,000)
District Attorney 31,009,741 32,102,781 1,093,040
Employment & Human Services 472,575,309 472,575,309 0
Health Services 1,101,875,995 1,098,625,995 (3,250,000)
Human Resrouces 8,549,242 8,549,242 0
Justice System Planning 15,744,775 15,744,775 0
Library 24,036,965 24,036,965 0
Miscellaneous Services 86,697,367 86,697,367 0
Plant Acquisition 7,696,626 7,696,626 0
Probation 67,108,916 67,347,034 238,118
Public Defender 17,406,774 17,540,280 133,506
Public Works 193,047,179 190,716,779 (2,330,400)
Sheriff-Coroner 224,648,858 225,974,163 1,325,305
Superior Court-Jury Commission 17,703,002 17,337,065 (365,937)
Treasurer-Tax Collector 4,612,180 4,566,149 (46,031)
Veteran's Services 711,978 711,978 0
Total County 2,442,935,374 2,444,564,504 1,629,130
Special Districts
CCC Fire Protection District 127,832,683 125,743,960 (2,088,723)
Crockett/Carquinez Fire 462,550 515,275 52,725
Special Districts (other than Fire) 136,113,375 136,113,375 0
Appropriations Grand Total 2,707,343,982 2,706,937,114 (406,868)
- 18 -
Many departments provide more than one area of service. The charts below categorizes total
County Appropriations by State Function Code.
All Funds Appropriations by State Function Code ($2.44 Billion)
General,
$171,203,176 7%
Public Protection,
$474,317,598 20%
Health and
Sanitation,
$1,078,761,318 44%
Public Assistance,
$492,877,251 20%
Education,
$24,036,965 1%
Public Ways and
Facilities,
$124,191,372 5%
Debt Service,
$74,141,263 3%
Appropriations for
Contingencies,
$5,035,561 <1%
General Fund Appropriations by State Function Code ($1.22 Billion)
General,
$139,605,893 12%
Public Protection,
$365,013,644 30%
Health and
Sanitation,
$271,772,121 22%
Public Assistance,
$402,186,905 33%
Public Ways and
Facilities,
$37,892,150 3%
Appropriations for
Contingencies,
$5,035,561 <1%
- 19 -
Full-Time Equivalent Positions (FTEs)
The table below provides FTE positions for all funds for the prior year (2010-11 Actual), current
year (2011-12 Budget), Projected Year (2012-13 Baseline), and for the 2012-13 Recommended
Budget. Current year figures reflect total estimated net position counts as of today for all
departments. All of the positions targeted for elimination are in the General Fund and were
funded this year. Please note that these numbers represent rounded/funded FTEs and all are
vacant (not filled). The actual number of positions recommended for elimination on May 15 will
be higher; this is due to a County wide clean-up of additional unfunded vacant positions. The
actual number of lay-offs is expected to be zero.
2010-11
Actual
2011-12
Budget
2012-13
Baseline
2012-13
Recommended Change
County Departments
Agriculture-Weights & Measures 47 49 49 48 (1)
Animal Services 76 78 78 78 0
Assessor 122 122 122 122 0
Auditor-Controller 54 54 55 55 0
Board of Supervisors 28 28 28 28 0
Child Support Services 170 170 170 170 0
Conservation & Development 181 166 166 162 (4)
County Administrator 106 107 107 107 0
County Clerk-Recorder 80 81 81 81 0
County Counsel 49 49 49 49 0
District Attorney 169 170 169 174 5
Employment & Human Services 1,688 1,712 1,805 1,805 0
Health Services 2,803 2,951 2,944 2,944 0
Human Resources 44 39 41 41 0
Library 169 175 175 175 0
Miscellaneous Services 32 32 32 32 0
Probation 330 324 325 325 0
Public Defender 83 84 84 87 3
Public Works 508 506 507 481 (26)
Sheriff-Coroner 990 1,023 1,013 1,024 11
Treasurer-Tax Collector 28 26 27 27 0
Veterans Services 6 6 6 6 0
TOTAL COUNTY FTE 7,763 7,952 8,033 8,021 (12)
Special Districts
CCC Fire Protection District 365 365 365 365 0
Special Districts (non-Fire) 12 12 12 12 0
All Funds FTE 8,140 8,329 8,410 8,398 (12)
- 20 -
The County is currently carrying an abnormally high number of vacant positions due to
unprecedented numbers of retirements during calendar year 2011. The chart below provides
the last six years of retirement history by year and for the month of March. Historically March
retirements are the highest because retirees must be retired by April 1 in order to receive a
cost-of-living adjustment from the Contra Costa County Employees’ Retirement Association.
0
100
200
300
400
500
600
2006 2007 2008 2009 2010 2011
160 144 130
221 179
409138
99 85
66 105
208
Retirements
Calendar Years 2006 - 2011
Balance of Year Month of March
298 287
215243
617
284
American Recovery and Reinvestment Act of 2009
Department and County Administration staff continue to be involved in tracking and pursuing
opportunities available through the American Recovery and Reinvestment Act of 2009 (Federal
Stimulus), which was signed into law on February 17, 2009. The $787 billion stimulus package
provided for unprecedented levels of transparency and accountability and offers a unique
opportunity to strengthen our local economy, create jobs, and fund a variety of local and
regional projects. As of February 2012, Contra Costa County has been awarded over
$71.6 million in ARRA funds and has received $66.0 million. Over $16 million of these one-time
monies are included in the current year budget; however, only $4.3 million are expected in the
2012-13 fiscal year. In an effort to keep the residents informed about the American Recovery
and Reinvestment Act and our efforts in Contra Costa County, the County Administrator’s Office
has posted a report that tracks the County’s efforts in securing stimulus funding for various
projects and programs that will improve the lives of our residents and stimulate the economy.
The report, which is updated regularly, is available for review at www.cccounty.us. In addition,
the County took advantage of special ARRA bond structures known as Build America Bonds
and Recovery Zone Facility Bonds in 2010 to finance the West County Clinic. The County’s
interest cost expense on these $33.8 million in bonds will be reduced by about $8.9 million over
the term of the bonds when compared to traditional tax-exempt bonds.
- 21 -
Fleet/Internal Services Fund
The FY 2012-13 Recommended Budget includes a fully funded vehicle budget, including full
vehicle depreciation expense. The budget was reduced to reflect the elimination of two vacant
positions resulting from the planned merger with Public Works. Requiring the annual budgeting
of full vehicle depreciation will continue to facilitate regularly scheduled replacement of County
vehicles, which began in FY 2008-09.
Retirement/Pension Costs - Future Year Projections/Budgets
As was discussed above, the rising costs of pension benefits are a key issue in Contra Costa.
In the 2009 Budget Message, a graph was included that projected the impact of the 2008
Contra Costa County Employees’ Retirement Association (CCCERA) market losses (26.5%) in
combination with an unachieved earning assumption (then 7.8%) to be a negative impact of
over 34%. Even using a five-year smoothing model, County costs were expected to begin to
rise in FY 2010-11 and virtually double by FY 2015-16. Since that time:
• Positive market experience for calendar year 2009 of 21.9% drastically changed the original
projection however; pension costs were still expected to increase significantly over the next
five years.
• Positive market experience for calendar year 2010 of 14% again reduced projected
increases however; pension costs were still expected to increase significantly over the next
five years.
• Market experience for 2011 was disappointing at 2.7%. Although this is a positive number it
has a negative impact on costs because it is below the earning assumption of 7.75%.
In a letter dated March 22, 2012, CCCERA’s actuary issued a report which projected employer
contribution rate changes based on an estimated 2.7% market value return for 2011. The
projection is derived from the December 31, 2010 actuarial valuation results, which are the
most current available. A new five year projection will be available in the Fall using updated
valuation figures. Historically, the updated projection has been higher than the original
projection; however, the current valuation data includes active payroll growth at 4.25% per
annum. When this element is replaced with actual data, the result may be a slightly reduced
projection. The rate changes for the average rate for the aggregate plan were provided. Note
that because the actuary estimated the allocation of the rate changes across the cost groups,
the actual rate changes by group may differ from those shown in the exhibit, even if the plan-
wide rate changes are close to those shown below.
As can be seen in the chart, the cumulative impact of smoothing gains and losses is projected
to be 8.2% (as of 12/31/15). These projected rate increases are implemented 18 months after
the actuarial date. Therefore, the projected increase of 3.39% in in the chart below for 2011 will
be implemented on July 1, 2013. The total impact to the County, all things considered, is
expected to be very close to these figures.
- 22 -
$224 $227
$202 $210
$229
$264
$272
$247 $251 $253 $255
$175
$195
$215
$235
$255
$275
$295
FY 07‐08
Actual
FY 08‐09
Actual
FY 09‐10
Actual
FY 10‐11
Actual
FY 11‐12
Proj
FY 12‐13
Recom'd
FY 13‐14
Proj.
FY 14‐15
Proj.
FY 15‐16
Proj.
FY 16‐17
Proj.
FY 17‐18
Proj.
Actual and Projected* Retirement ExpensesMillions
Rate Change Component Valuation Date (12/31)
2011 2012 2013 2014 2015
Deferred (Gains)/Losses 2.64%3.15%0.51%‐0.36% 0.06%
Loss of Investment Income on
Difference Between AVA and MVA 0.27%0.29%0.04%0.01% 0.03%
18 Month Rate Delay 0.48%0.41%0.42%0.22% 0.03%
Incremental Rate Change 3.39%3.85%0.97%‐0.13% 0.12%
Cumulative Rate Change 3.39%7.24%8.21%8.08% 8.20%
The chart below, which County Administration staff and the Auditor prepared together, uses all
of the latest information available for a new five year projection of total County pension costs,
including Fire. The cumulative effect of the market rate improvements is dramatic. Presented
in the chart are four years of actual data, a projection of the current year (straight-lining eight
months of actual data), the Recommended Budget for FY 2012-13, and a projection based on
the Recommended Budget for FY 2013-14 and beyond (no increases in FTE or wages). There
is a significant drop in projected expenses in FY 2014-15; this is due to the retirement of one of
the County’s pension obligation bonds. Note that per the Board’s OPEB funding policy the
savings achieved will be redirected to the County’s OPEB Trust. The projected impact of
increased pension costs, given current policy, is shown in red.
*Assumes 7.75% AIR, all 3 POBs, and 2011 market impacts. The compounded impact of the projected
increases is 8.4%.
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Summary of Impacts
The following impact statements from several of our major departments depict the tone of the
budget proposed. Last year’s goal was to make the cuts sustainable into FY 2012-13. In that
way we would resolve most of our immediate problems. The goal was met. For this year’s
budget, County departments either reduced their operating expenses or kept them at a zero
increase. Due to mandates on service levels, we have enacted budget reform primarily in the
area of employee compensation. We have reduced the salaries of the majority of our County
employees by an average of 3.3%; employees were also asked to pick up a larger share of their
pension costs – the impact ranges to a high of 5.8%. Taken together the County will save an
annual average of 5% of wages and benefits. The annual structural savings from these
negotiated changes is estimated to be $30.9 million. These decreases not only affect
employees’ current salaries, but depending upon when they retire, may reduce their future
retirement as well. We also reduced future retirement costs for new employees by beginning
the process to implement new, lower, retirement tiers. The majority of our employee unions
have negotiated a general 2% at 60 benefit and a safety benefit of 3% at 55 (compare to 2% at
55 & 3% at 50). These changes were on top of major health care premium sharing shifts
negotiated over the prior two years, which froze the County’s share of premium for the majority
of County employees and eliminated retiree health care for new hires. These savings not only
funded the Baseline Budget, but have also allowed for the addition of five (5) attorneys and
eleven (11) deputies/dispatchers in Law and Government.
GENERAL GOVERNMENT
Human Resources:
In last year’s budget message, we used the Human Resources department as an example of
the impacts that don’t usually get as much attention as the reduction of deputies, nurses, or
district attorneys. The department lost two positions, which increased the workload of existing
employees and reduced the overall effectiveness of the department. The impact was felt by all
departments attempting to fill positions throughout the year. During the current year, the
County Administrator was able to restore two positions to the department. As with most
departments, Human Resources costs decreased in the current year due to the negotiated
salary and benefit reductions. The decreased costs, in conjunction with anticipated increases in
revenue from the A-87 cost plan, will enable the department to fill the two important support
positions.
Library:
The County Library is not part of the General Fund. In excess of 80% of the County Library
budget is dependent upon property tax revenue, therefore it was impacted by recent reductions
in assessed valuations. In years prior to the economic downturn, annual revenues exceeded
on-going expenditure needs and the Library was able to not only fund one-time projects and
enhance materials, but was also able to build a reserve. Due to sound financial planning,
reserve use was only required in FY 2010-11 and the majority of that use was one-time
expenses such as library materials and on-line databases. The Library budget and Fund is
structurally sound.
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HEALTH AND HUMAN SERVICES
Employment and Human Services:
The Employment and Human Services Department (EHSD) general fund allocation has
decreased each of the last five years while the demand for services has increased. Reductions
in salary and benefit costs due to the negotiated contract changes combined with lower case
load projections, restructuring program design and administration, and increases in State
realignment revenue have combined to produce a balanced budget without the need for
program or staff reductions. As with all of our FY 2012-13 recommendations, this budget does
not take into account any unknown impacts to funding due to the State budget. There are a
number of proposals pending to reduce State costs by restructuring California Work
Opportunities and Responsibility to Kids (CalWORKs), In-Home Supportive Services (IHSS)
and Child Welfare. The realignment of State revenues has resulted in a reorganization of how
the Department is providing services. EHSD is continuing a redesign of how social services are
provided in Contra Costa County to better utilize strategic partnerships, innovative data
management and emerging technologies to provide more efficient and effective services.
Health Services:
The Recommended Budget for the Health Services Department for the 2012-13 fiscal year
includes a $3.25 million reduction from baseline costs. This reduction is being achieved through
offsetting revenue. This revenue will be generated by increased focus on ambulatory care and
preventive services at the County clinics. These services drive State and Federal revenue and
help reduce and prevent more expensive visits to the emergency room and hospitalizations.
Management reorganization and service delivery modifications continue to be implemented at
the Hospital and Health Centers to improve accountability, standardization and efficiency. The
Department is actively pursuing enrollment of individuals in the Low Income Health Program,
restructuring the delivery system, and implementing an Electronic Medical Record as part of the
Health Care Reform transition plan.
LAW AND JUSTICE
District Attorney:
In the last budget cycle, the Board agreed to permit the District Attorney to absorb a $2 million
cost reduction through the prudent management of staff vacancies. In order to maintain a
balanced budget, the District Attorney has had to hold positions vacant throughout the year,
impacting the office’s ability to manage caseloads and prosecute felony domestic violence and
first time sex offender crimes and the 11,000 average annual misdemeanor crimes.
The 2012-13 budget reduces the budgeted vacancy factor to a level that will likely be achieved
through normal staff turnover and, moreover, augments attorney staffing by five positions. The
District Attorney advises that the addition of five attorney positions will enable him to staff and
successfully carry out critical public safety programs such as the Richmond Ceasefire,
augmented gang prosecution, domestic violence prosecution including the Family Justice
Center, and sexual assault, human trafficking and firearm prosecution. The recommended staff
increase, which is contingent upon anticipated cost savings from negotiated wage and benefit
reductions, will bring the number of attorney positions from 89 to 94, providing more resources
for the prosecution of general and special crimes.
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The Recommended Budget also maintains appropriations for the District Attorney’s portion of
the Community Corrections Initiative under Public Safety Realignment (AB 109). Under
Realignment, we expect more parolees will be released to our County with less supervision.
Because of the state’s high recidivism rate of nearly 70%, the realignment of state prisoners
and parolees to county jurisdiction will likely result in more work for the District Attorney’s
Office. The District Attorney’s Office received limited funding to provide increased victim
advocacy and to staff parole revocation hearings.
Probation:
In the last budget cycle, the Probation Department was saved from staff layoffs and potentially
disastrous service cuts by an eleventh-hour funding allocation by the State for adult probation
services. Nevertheless, the department still had to close one Juvenile Hall housing unit and
make other juvenile probation reductions in order to meet its budget target.
The 2012-13 budget augments the current year budget by adding one administrative position
and making increased provision for AB 109 public safety realignment services. Probation has
assumed a leadership role in providing case management for realigned offenders and ensuring
that helpful services are available, with the goal of providing the client the best possible chance
to avoid further negative contact with the justice system.
Adoption of a State Budget may bring further challenges to Probation pending the outcome of a
proposal to extend adult offender realignment to juvenile offenders. The Governor has
announced in his proposed budget his intention to stop the intake of new juvenile offenders to
the Division of Juvenile Justice (DJJ) effective January 1, 2013. Recognizing that counties will
need resources and support to secure appropriate placements and treatment options for
additional offenders, many of whom need mental health and substance abuse treatment, the
State Budget proposes $10 million from the State General Fund in FY 2012-13 for counties to
begin planning for this population. These funds are not anticipated in the County’s
Recommended Budget as it is not yet known how they will be allocated amongst counties. To
help with the transition and prevent the disinvestment of funds in juvenile justice at the local
level, the State has delayed collection of trigger fees (fees for continuing to place wards at DJJ
beyond the closure date) for those wards housed in the DJJ.
The Probation Department has begun to research the facility improvements that would be
required to ready one of the units in the old Juvenile Hall in the event we must develop a local
alternative to DJJ.
Public Defender:
In the last budget cycle, the Public Defender was required to cut three attorney positions,
impacting the ability to accept all cases assigned by the Superior Court for legal defense
services.
The 2012-13 budget adds back three attorney positions and also maintains the additional
services provided through AB 109 public safety realignment. With additional funding for three
attorney positions, the department should be able to accept additional cases assigned by the
Superior Court and meet current workload demands.
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Sheriff-Coroner:
In the last budget cycle, the Sheriff closed a $16.4 million funding gap through a combination of
increased ongoing and one-time revenue, and unspecified reductions in staff and operating
expenses.
The 2012-13 budget restores more than half of the reduced services and, moreover, augments
staffing by eight patrol deputy and three dispatcher positions. Successive years of cost-cutting
had severely impacted patrol services in the unincorporated county area. In the interest of
safeguarding local communities, restoration of patrol services has been given a high priority for
funding in the new budget year. The addition of eight patrol deputies is an incremental step in
rebuilding patrol coverage and improving 9-1-1 and overall response time on service calls.
Dispatch services are augmented pursuant to new service agreements with outside agencies.
Costs for the recommended additional three Dispatcher positions are offset by new contract
revenue.
The Recommended Budget also maintains the new services provided in the current budget
year under AB 109 public safety realignment. The key role of the Sheriff’s Office under
realignment is to manage the incarceration of lower-level offenders in county jail. The AB 109
detention population comes from State parole violators and new nonviolent, nonserious, nonsex
offenders whose crimes would have merited a prison sentence prior to realignment. The
current realignment plan provides for the operation of two additional jail housing units and an
increase in electronic monitoring capacity by 100 units.
FIRE DISTRICT
Contra Costa County Fire District:
The Contra Costa County Fire District, a Special District within the County, continues to face
fiscal difficulties. Over 8% or $8.4 million of its $102.3 operating budget is projected to be
funded with operating reserves; and an additional $6.2 million is funded from the Stabilization
Fund with annual on-going revenues of only $2.6 million. With the anticipated utilization of
essentially all remaining reserves in 2012-13, the District is proposing to place a tax initiative on
the November 6, 2012 ballot. If this measure is not successful at the general election, the
District will face severe service delivery cuts in 2013-14. More detailed information is included
in the departmental narrative section of the budget beginning on Page D-2.
Conclusion
This budget continues to reflect years of careful comprehensive and continuing review of
County operations to cope with exceptionally difficult economic times. In our assessment of
County operations – and at every opportunity – we have made changes in delivering services
that are more efficient and less costly. These changes, which could not have been
accomplished without financial sacrifices from our employees, have allowed us to protect the
services that residents need and expect from county government.
The County will continue to adapt to changing circumstances. Our strategy in the coming years
is to harness our organizational discipline and innovation to reduce our spending and continue
our Mission: “to provide public services that improve the quality of life of our residents and the
economic viability of our businesses”.
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Recommendations
This Recommended Budget provides for a General Fund budget of $1.2 billion, and an All
Funds County budget of $2.4 billion ($2.7 billion including Fire). Based on this proposed
budget, it is recommended that the Contra Costa Board of Supervisors:
1. Open and conduct a public hearing to receive input on the FY 2012-13 Recommended
Budget;
2. Acknowledge that, due to significant market losses in the Contra Costa County Employees
Retirement Association assets in 2008 and poor investment returns since that time,
retirement expenses are expected to increase in the next five years.
3. Acknowledge that the Recommended Budget balances annual estimated expenditures
with estimated revenues in FY 2012-13, and is both technically and structurally balanced;
4. Acknowledge that action by the State regarding its budget may require subsequent
adjustments to the Recommended Budget adopted by the Board;
5. Acknowledge that the Recommended Budget includes a specific appropriation for
contingency, and that the Board also maintains its ability to manage General Fund
contingencies during the fiscal year by use of reserve funds set aside for that purpose;
6. Acknowledge that any restoration of any recommended program reductions will require an
equivalent reduction in funds from other County priorities in order to adhere to our
balanced budget policy;
7. Authorize and Request the Auditor-Controller to establish a fund entitled "Facility Lifecycle
Improvement Fund" (106000) as required for administration of the County's Infrastructure
and Facilities Maintenance program; sincerely
8. Direct the County Administrator to prepare for Board adoption on May 15, 2012, the FY
2012-13 County and Special District Budgets, as modified, to incorporate any changes
directed by the Board during these public hearings; and
9. Direct the County Administrator to prepare for consideration by the Board of Supervisors
on May 15, 2012, vacant positions eliminations necessary to carry out Board action on the
Recommended Budget.
Sincerely,
DAVID TWA
County Administrator
DT:LD