HomeMy WebLinkAboutMINUTES - 01272015 - D.6RECOMMENDATION(S):
CONSIDER accepting report on Budget and Key Issues for FY 2015/16.
FISCAL IMPACT:
No fiscal impact. This is an informational report only.
BACKGROUND:
Attached is the FY 2015/16 report on Budget and Key Issues.
CONSEQUENCE OF NEGATIVE ACTION:
Not applicable.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD
COMMITTEE
Action of Board On: 01/27/2015 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Mary N. Piepho, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor
Contact: Lisa Driscoll, County Finance
Director (925) 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: January 27, 2015
David J. Twa, County Administrator and Clerk of the Board of Supervisors
By: June McHuen, Deputy
cc:
6.
To:Board of Supervisors
From:David Twa, County Administrator
Date:January 27, 2015
Contra
Costa
County
Subject:Board of Supervisors Annual Retreat Budget and Key Issues for FY 2015/16
ATTACHMENTS
Budget and Key
Issues
Budget and Key IssuesJanuary 27, 20151
FY 2015-2016 Topics•Budget•Budget Hearing Format•Health Plan Re-opener 2
Familiar Budget Drivers and Challenges for 2015/16 and Beyond•Recognize sacrifice by Employees that were needed to address long term structural issues and to insure delivery of essential services to the public and to achieve financial stability•Labor negotiations•Continue to support Pension Reform Options that achieve a stable and sustainable Pension System•Build Reserves•Fund Infrastructure Needs (Repair & Maintenance)•Federal Budget •Adequately Fund Public Safety Departments and Public Safety Realignment•Health & Human Services Realignment•Reduce hospital dependency on General Fund as national Health Care Funding occurs•As Successor Agency for Redevelopment, deal with issues of Bond indebtedness, disposal of assets, and related matters•Contra Costa County Fire Protection District structural deficit3
•Over the three year period between 2009/10 and 2011/12 property taxes declined by 11.08% . Over the last three years 2012/13 to 2014/15 the increase was 13.4%. •This means the total net increase over the past six year was only 2.32%•Actual Contra Costa County experience:•2009/10 (7.2% decline)•2010/11 (3.4% decline)•2011/12 (0.48% decline)•2012/13 0.86% increase•2013/14 3.45% increase•2014/15 9.09% increase•2015/16 Projected to increase 6.5%Contra Costa County4
“Prices reached all-time highs in San Mateo County in October and Santa Clara County in June, and came within 4.4 percent of an all-time high in Alameda County. Contra Costa County was still 35 percent below its pre-crash peak.”CC Times Article – December 17, 2014Contra Costa County5
FY 2014/15 Mid-Year Preliminary Stats6ALL FUNDS Budget Actual Percent Mid-Year FY 13-14Expenditures 2,841,414,173$ 1,236,176,873$ 43.5% 43.6%Revenues 2,694,641,354$ 1,186,413,559$ 44.0% 38.1%GENERAL FUNDBudget ActualPercentExpenditures 1,417,483,765$ 618,917,518$ 43.7% 43.0%Revenues 1,358,527,515$ 504,238,809$ 37.1% 34.4%GENERAL FUND Budget Actual PercentWages & Benefits 773,026,108 355,153,145 45.9% 44.8%Services & Supplies 438,889,648 181,234,538 41.3% 40.9%Other Charges 230,752,887 117,769,426 51.0% 49.1%Fixed Assets 51,759,773 7,830,204 15.1% 7.3%Inter-departmental Charges(81,000,304) (43,069,795)53.2% 50.1%Contingencies 4,055,653 0 0.0% 0.0%Total Expenses1,417,483,765$ 618,917,518$ 43.7% 43.0%GENERAL FUND Budget Actual PercentTaxes 312,017,000$ 204,486,725$ 65.5% 64.3%Licenses, Permits, Franchises 11,313,690 3,053,668 27.0% 22.9%Fines, Forfeitures, Penalties 26,691,183 1,872,448 7.0% 11.8%Use of Money & Property 2,146,252 1,285,565 59.9% 54.0%Federal/State Assistance 531,906,514 156,092,907 29.3% 22.7%Charges for Current Services 223,519,143 70,541,530 31.6% 0.8%Other Revenue 250,933,733 66,905,966 26.7% 30.8%Total Revenues1,358,527,515$ 504,238,809$ 37.1% 34.4%
General Purpose Revenue7Note: FY 2012/13 Charges for Services revenue includes net of adverse decision regarding property tax admin loss ($5.3 million)FY 2007/08 FY 2008/09 FY 2009/10 FY 2010/11FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15ActualsActualsActualsActualsActualsActualsActualsAdoptedProperty Taxes 292,844,817 290,226,190 271,340,322 263,410,494 266,177,126 270,099,929 287,429,702 291,200,000Other Taxes 20,254,974 19,784,051 16,952,226 17,129,427 16,117,187 19,843,785 23,543,390 17,817,000Licenses, Permits & Franchises 8,608,175 10,266,183 7,549,279 7,648,768 7,347,466 7,402,661 8,186,705 7,400,000Fines, Foreitures & Penalties 10,648,126 9,381,467 9,400,863 12,493,236 9,833,684 18,402,209 13,430,864 22,500,000Earnings on Investment 12,766,633 5,465,546 1,344,994 1,620,945 1,823,372 4,415,052 1,944,178 1,450,000Intergovernmental 6,824,242 7,281,018 7,937,202 8,297,228 5,251,426 4,661,882 6,551,028 4,194,000Charges for Current Services 8,959,053 9,226,290 8,001,888 7,234,435 7,578,851 722,065 7,522,655 7,000,000Other Revenue 1,883,2251,619,071992,706910,1731,215,8561,043,9971,752,502360,000Total $362,789,245 $353,249,816 $323,519,480 $318,744,706 $315,344,968 $326,591,580 $350,361,024 $351,921,000
General Fund/General Purpose RevenueFY 2015/16 Projections•Property Tax – 6% budgeted growth – General Fund increase of $18.2 million, Property Tax-In Lieu of VLF $10.1 million –Total Taxes for Current Property increase of $29.4 million•Public Safety Half-Cent Sales Tax (Prop 172) – 1.9% budgeted growth including pro-rata decrease - $1.4 million •Sales Tax – Flat – County projected to receive $14.1 million for FY 2015/16 –appears the State will eliminate In Lieu Sales Tax (no net impact)•State – Mostly stable•Federal - Unknown8
Continue General Purpose Revenue Cost Avoidance 9•Contribution to Hospital/CCHP Enterprise Funds: •2008/09 $61,349,686•2014/15 $30,408,776 (50% decrease)•Potential reduction in General Fund Contribution to the Hospital as the Affordable Care Act (National Health Care) is implemented •2015/16 No further reduction•2016/17 reduce by additional $10 Million •2017/18 reduce by additional $10 Million•2018/19 and beyond – Expected Annual Contribution = $10 Million •Assumption is that we will likely have $10 Million Uncompensated Care burden even after National Health Care
General Fund Balance Assumptions•June 30, 2014:▫Total general fund revenues were $1,297,393,000 and total fund balance including reserves were $237,204,000. ▫Total fund balance is 18.3% of total revenue ▫Of the $237.2 million in reservesx$142.3 million was unassigned x$94.9 million was assigned, committed, restricted or nonspendable▫Minimum fund balances of 5% and 10% would be $64.9 million and $129.7 million respectively. There was $107.5 million available over the 10% reserve minimum.•June 30, 2015:▫It is planned and anticipated that Total General Fund Balance including Reserves will remain stable. Projections depend upon labor negotiations.•June 30, 2016:▫No fund balance use is recommended in FY 2015-1610
Importance of Reserves for Cash Flow•Although revenues are volatile, expenses (majority for salaries) are quite smooth.•Even with a General Fund Reserve of $237.2 Million, the General Fund has a negative cash flow at least 9 months of the year.•The General Fund cash balance begins the year with a negative cash balance due to large disbursements for advances, pension pre-pay costs, and accrued expenses.•Cash flow is not positive until the second installment of property tax receipts are received in late spring.•The Tax Losses Reserve Fund helps with the Treasury operations (cash flow) as it relates to the Teeter Advance of Taxes.These are reasons why it is important to maintain a reasonable balance in the Tax Losses Reserve Fund, rather than the minimum level. 11
Recent Tax Losses Reserve ActivityRecent higher than ‘normal’ delinquency deposits into the Tax Losses Reserve have allowed the County to:•Transfer larger annual amounts into the General Fund for general purpose; •Fund property tax related losses such as the recent adverse decision regarding Property Tax Administration Fees ($5.3 million) without impacting services in the General Fund; and •Fund much needed facility repairs, which would otherwise be funded with General Fund dollars.Balance of Tax Losses reserve $90.6 million, down from high of $101.4 million in FY 2011-12Fiscal YearTax Losses Reserve TransfersFY 93-946,225,373FY 94-9515,321,481FY 95-9614,389,022FY 96-979,889,000FY 97-98 thru FY 02-037,389,000FY 03-0420,889,000FY 04-059,000,000FY 05-069,000,000FY 06-078,000,000FY 07-0810,000,000FY 08-099,000,000FY 09-109,000,000FY 10-1112,000,000FY 11-129,000,000FY 12-1322,300,000FY 13-1422,000,000Budgeted FY 14-1522,000,000Total Since 1993252,347,87612,000,000Budget for General Purpose Revenue Transfer10,000,000Budget for deferred maintenance facility projects12
Infrastructure•$5 Million was Budgeted in FY 2012/13,•$10 Million in FY 2013/14, and •$10 Million in FY 2014/15; however •Delays have occurred and all the monies have not been expended•Plan to budget approximately $10 million for FY 2015/16•Continue to fund facility lifecycle on a by-building cost-per-square foot basis – target $750k set by Finance Committee •Continue to explore ‘cloud’ IT opportunities13
Labor14
15Retirements Calendar Years 2007-2014
Unemployment Rate 8 Year Comparison16Note 2014 5.7% figure is November data.
Historical Labor Costs General Fund17* Projection is double six months.** Change column is between FY 13/14 and projected 14/15.FY 2008/09 FY 2009/10 FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15GENERAL FUNDActualsActualsActualsActualsActualsActualsProjected*Change**Permanent Salaries 364,404,976 337,566,573 330,685,736 323,214,116 321,605,335 338,133,888 348,802,484 10,668,596Temporary Salaries 12,497,305 14,051,898 17,931,056 20,842,008 23,594,345 21,696,754 23,925,158 2,228,404Permanent Overtime 12,264,219 12,055,264 14,237,551 16,185,558 17,759,366 17,677,239 19,033,598 1,356,359Deferred Comp 1,011,277 886,956 922,829953,934 1,157,366 1,643,967 1,821,794 177,827Comp & SDI Recoveries -1,589,507 -1,719,857 -1,856,792-1,687,531 -1,847,033 -2,070,813 -2,102,762 -31,949FICA/Medicare 22,691,254 21,091,543 20,988,471 20,882,816 21,126,905 22,041,020 22,630,342 589,322Ret Exp-Pre 97 Retirees 1,956,847 1,892,272 1,878,723 1,869,642 1,845,967 1,873,514 1,873,448 -66Retirement Expense 148,644,974 128,057,220 133,238,617 136,824,603 150,156,939 168,113,121 184,485,796 16,372,675Employee Group Insurance 56,005,178 54,337,009 53,668,49153,002,293 52,577,358 53,256,070 51,635,988 -1,620,082Retiree Health Insurance 25,692,908 26,714,761 28,677,012 31,270,838 31,632,649 31,197,356 31,462,490 265,134OPEB Pre-Pay 13,911,579 13,741,036 13,721,448 13,723,499 13,785,604 13,065,598 13,281,956 216,358Unemployment Insurance 775,489 1,633,117 2,153,845 1,284,237 1,374,314 1,400,057 1,166,324 -233,733Workers Comp Insurance 13,963,367 13,144,008 13,455,147 11,246,660 11,274,142 11,576,087 11,972,820 396,733Labor Received/Provided 322,613661,279487,961581,832570,971302,254316,85814,604 Salaries and Benefits 672,552,479 624,113,079 630,190,095 630,194,505 646,614,228 679,906,112 710,306,294 30,400,182Increase/(Decrease) 8,524,784 -48,439,4006,077,016 4,410 16,419,723 33,291,884 30,400,182
Historical Labor Costs All County Funds18* Projection is double six months.** Change column is between FY 13/14 and projected 14/15.FY 2008/09 FY 2009/10 FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15COUNTYActualsActualsActualsActualsActualsActualsProjected*Change**Permanent Salaries 514,394,873 492,801,239 487,322,501 481,217,812 480,546,483 503,057,399 523,557,882 20,500,483Temporary Salaries 32,721,949 37,337,487 40,912,512 46,635,323 52,468,685 51,266,968 52,174,236 907,268Permanent Overtime 16,639,812 15,740,598 17,862,642 21,723,606 23,466,747 23,007,597 25,443,366 2,435,769Deferred Comp 1,243,273 1,160,883 1,197,053 1,253,245 1,552,211 2,161,730 2,454,414 292,684Hrly Physician Salaries 1,817,809 1,891,972 2,161,730 2,134,980 2,626,854 2,399,872 2,744,522 344,650Perm Physicians Salaries 28,806,831 31,213,084 31,173,790 33,118,707 35,632,415 37,469,448 39,289,532 1,820,084Perm Phys Addnl Duty Pay 1,823,452 1,826,335 1,956,341 1,891,438 1,976,098 1,962,461 2,588,666 626,205Comp & SDI Recoveries -2,400,931 -2,632,322 -2,796,169 -2,332,274 -2,557,280 -2,921,425 -2,778,860 142,565Vacation/Sick Leave Accrual328,684 338,576 -422,707 559,247 242,303 4,277,040 0 -4,277,040FICA/Medicare 37,231,115 36,364,870 36,288,855 36,696,440 37,362,344 38,895,210 39,541,048 645,838Ret Exp-Pre 97 Retirees 2,751,898 2,752,131 2,752,614 2,751,672 2,750,979 2,751,464 2,749,624 -1,840Retirement Expense 207,114,048 184,140,541 192,892,090 202,105,619 221,505,843 246,812,805 271,580,626 24,767,821Employee Group Insurance 86,510,577 85,891,576 85,811,334 85,433,103 84,392,571 85,364,402 83,418,348 -1,946,054Retiree Health Insurance 33,388,058 35,170,431 37,741,416 41,709,278 42,578,927 42,573,182 43,186,060 612,878OPEB Pre-Pay 17,968,343 18,942,232 18,573,163 18,625,208 18,637,346 17,413,840 17,480,198 66,358Unemployment Insurance 1,188,580 2,609,671 3,463,678 2,096,833 2,265,484 2,302,337 1,928,718 -373,619Workers Comp Insurance 20,405,944 19,544,807 19,763,721 16,821,150 17,044,418 17,290,639 17,965,846 675,207Labor Received/Provided 287,080611,851453,732646,985550,728293,186315,60222,416 Salaries and Benefits 1,002,221,395 965,705,962 977,108,296 993,088,372 1,023,043,156 1,076,378,155 1,123,639,828 47,261,673Increase/(Decrease) 29,072,144 -36,515,433 11,402,334 15,980,076 29,954,784 53,334,999 47,261,673
OPEB Liability Significantly Reduced due to Board Actions and Collective Bargaining•Most recent 7507 actuarial reports were received in September 2014•Reduction in 2006 OPEB Liability from $2.6 billion to $783.1 million (using assets of $129.4 million)•ARC from $216.3 million to $86.8 million•Total OPEB Trust assets $147.5 million as of September 2014 •Reduction reflects health plan changes, caps on County contributions and labor agreements•The Board’s actions have made it possible for the County to continue to provide much needed services, including health services, to County residents including the indigent.•In March 2012, a lawsuit was filed by a retiree organization challenging the changes in retiree health care member subsidies. If the retirees prevail, the County could be liable for past and future premium costs.•Ratio of retirees to active employees is climbing progressively•On April 1, 2014, the Board modified the allocation of future resources for funding Other Post-Employment Benefits, redirecting POB monies towards the County’s pension liability rather than the County’s Other Post Employment Benefit Trust Fund.19Census Data2006 TotalActive/Retiree2014 TotalActive/RetireeActives 8,428 63% 8,089 57%Retirees and Survivors 4,856 37% 6,206 43%Total Counts 13,284 14,295
Labor Negotiations20Total NumberContractof EmployeesExpiration DateCurrently Negotiating California Nurses Association 917 7/31/2014IHSS SEIU - United Healthcare Workers West 3/31/20121United Chief Officers’ Association 12 6/30/2014SettledAFSCME Local 2700, United Clerical, Technical and Specialized Employees 1,671 6/30/2017AFSCME Local 512, Professional and Technical Employees277 6/30/2016CCC Deputy District Attorneys’ Association 83 6/30/20152Contra Costa County Defenders Association 76 6/30/20152Deputy Sheriff’s Association, Mgmt Unit and Rank and File Unit 800 6/30/2016District Attorney Investigator’s Association 13 6/30/2016IAFF Local 1230251 6/30/2017Physicians and Dentists of Contra Costa 256 10/31/2016Probation Peace Officers Association247 6/30/20152Professional & Technical Engineers – Local 21, AFL-CIO899 6/30/2016Public Employees Union, FACS Site Supervisor Unit 15 6/30/2016Public Employees Union, Local One2,426 6/30/2016SEIU Local 1021, Rank and File and Service Line Supervisors Units999 6/30/2016Western Council of Engineers 23 6/30/2017Management Classified & Exempt & Management Project343 9,6861. Extension through March 31, 2015 in process, 2. Expire June of this year.
Preliminary Salary Projection Data for FY 2015/16•General Fund increase of $32.4 million (includes cost of previously funded vacancies)–$37.4 million increase in permanent salaries–$14.5 million decrease in retirement expense–$2.3 million in group health insurance–$2.0 million increase in FICA•All County Funds increase of $91.1 million (includes cost of previously funded vacancies)–$97.8 increase million in permanent salaries–$18.9 million decrease in retirement expense–$4.1 million increase in group health insurance–$1.5 million increase in FICA•We continue to be challenged by pension costs due to pending lawsuits and changes to Contra Costa County Employees’ Retirement Association policies and adopted rates–Rates may be much higher or lower in the future21
Future•Succession Planning•Health Insurance22
Continued Reasons for Optimism•Positive Economic Outlook ▫State Revenues Up▫State Budget reasonably stable▫AV revenue up 6.%+ for 2014/15▫Projecting 6.0% growth AV revenue in 2016/17•Positive County Results▫Budget structurally balanced for 2015/16▫OPEB managed▫Have begun pre-funding Infrastructure needs▫Fund Balance Increased▫Standard & Poor’s Rating Increase to AAA▫Pension Obligation Bond Matured 6/1/2014 ($32,991,000)23
Reasons for Concern•Extremely high number of vacant positions•High number of vacant key management positions•Labor Negotiations ▫Pent-up demand▫Increased costs of benefits▫Limited resources▫Unreasonable expectations•Pension Liability•DMC – Hospital Debt & Future Impacts•Health Insurance Exchange Call Center•AB 109 – Structure & Formula reductions for 2016 and beyond24
FY 2015-16 Budget Hearing Format•Draft Agenda for Discussion Purposes▫Introduction/Summary by County Administrator▫Departmental PresentationsxSheriff-CoronerxDistrict AttorneyxChief Probation OfficerxHealth Services DirectorxEmployment and Human Services Director▫Deliberation•Recommend holding all hearing on April 21st25
Heath Plan Re-OpenerAgreement will open on April 1, 2015, for the limited purpose of bargaining over Health, Life & Dental Care, to explore changes effective in the 2016 Plan year. The County is committed to evaluating alternative approaches to sharing health care premiums for the 2016 Plan year, taking into consideration any effect on its budget. During the reopener, the County will not propose reducing the current dollar amount of the County’s premium subsidy for health plans and will not unilaterally impose a reduction in the current dollar amount of the County’s health plan premium subsidy for the 2016 Plan year. In the event the parties fail to reach an agreement by January 1, 2016, the unions reserves the right to strike with respect to the subject of the reopener. 26
“We are at a crossroads,”… the challenge is to build for the future, not steal from it, to live within our means and to keep California ever golden and creative, as our forebears have shown and our descendants would expect.”Jerry Brown27
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