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HomeMy WebLinkAboutMINUTES - 02141995 - 2.6 TO: BOARD OF SUPERVISORS Contra r FROM: Phil Batchelor, County Administrator �'Tra Costa �is DATE: February 14, 1995 f�r'q�� k �_° Count y SUBJECT: SECOND QUARTER BUDGET REPORT SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: 1. ACCEPT this report and direct the County Administrator to continue to monitor the budget and implement corrective plans, where necessary. 2. ACKNOWLEDGE a budget problem for fiscal year 1995-96 of an estimated $29 to $34 million. BACKGROUND: Since 1984, the County Administrator's Office has prepared quarterly reports which analyze the status of the budget and highlights the budget units which deviate from the budget plan in terms of expenditures and revenues. Actions which are necessary to ensure a' healthy budget by the end of the year are recommended as part of the quarterly reporting process. Other items which have major fiscal impacts are also reviewed as part of this periodic report. General County Revenue At the half-year point, it appears that General County revenues will meet the budget target. Property tax revenues should be slightly above budgeted levels, after adjusting for city redevelopment agency and no and low city revenue losses and state mandated transfers to school districts. However, this revenue source is somewhat offset by property tax refunds which are much higher than budgeted and, if current experience continues, much more than last fiscal year. CONTINUED ON ATTACHMENT: YES SIGNATURE: ��-! RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE (S): ACTION OF BOARD ON /S APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. ATTESTED Contact: Tony Enea, 646-4094, PHIL BATCHELOR,CLERK OF HE BOARD OF CC: Sheriff-Coroner SUPERVISORS AND COUNTY ADMINISTRATOR Health Service Social Service Probation BY (A' DEPUTY County Administrator Page 2 The other major revenue sources are showing mixed results. Motor vehicle registration fees, transient occupancy taxes and business license fees are all above targeted levels and above last year's level for this point in time. On the other hand, sales taxes, property transfer taxes and interest earnings are below target and below last year's level at this period of time. Sheriff-Coroner The Sheriff-Coroner Agency is within acceptable expenditure levels for the second quarter of fiscal year 1994-95. In Budget Unit 0255 (Patrol and Operations) gross expenditures were approximately 49% and Budget Unit 0300 (Detention) gross expenditures were 48%. Budget Unit 0359 (Coroner Division) experienced 45% gross expenditures for the reporting period and 70% revenue generation. Actual revenues received through the second quarter of fiscal year 1994-95 were $10,662,172 in Budget Unit 0255 and $5,452,096 in Budget Unit 0300, 35% and 33% of budget respectively. Sales-Tax Public Protection revenue was budgeted Countywide in the amount of $38,183,000. At the half-year point, actual revenues are closely tracking with the budgeted amount. The Sheriff-Coroner Agency receives 82.6% of this revenue and the District Attorney receives the balance. Contract City revenues, which historically lag, generate 28% of the Sheriffs $30,636,469 budgeted for Budget Unit 0255. These revenues, which are currently at 40% of budget, will be received by year- end. The Department will have to continue its aggressive control of expenditures in order to achieve a balanced year-end budget. Probation Second quarter budget projections indicate that the net County cost for probation services is currently on target. Probation Department expenditure and revenue figures are both lower than the budgeted amount because of the impact of the placement diversion program on foster care expenses and intergovernmental aid. The placement diversion program was implemented in fiscal year 1993-94 as a means of financing the Juvenile Hall Serious Offender Unit which opened in January 1994. As reported to the Board on January 24, 1994, of primary concern at this point in the fiscal year are the overcrowded conditions at the Juvenile Hall. Although the Hall was recently inspected and certified to be in compliance with minimum standards, unmitigated overcrowding could pose a threat to continued certification of the Hall. For the first half of fiscal year 1994-95, the average daily population (ADP) exceeded the maximum capacity of 160 beds (raised in January 1994 from 140) on 50% of the total days. The average ADP for that period was 159. Short-range plans to control Hall population include expanding the use of home supervision and electronic monitoring, expediting placement of post-adjudicated youth, and sleeping youth in the previously closed Boys' Center (closed due to budget cuts in 1990). The 20-bed Boys' Center represents non-budgeted capacity. Continued utilization of the Boys' Center as an overflow unit will likely cause budget overages, which may require reductions in other probation programs. The County Administrator's Office will continue to monitor the Juvenile Hall population and work with the Probation Department and the Juvenile Court to control the problem. Health Services Three issues affect the Health Services Department's ability to maintain a positive fund balance for fiscal year 1994-95. These include SB910 revenues, drug abuse/methadone services and the SB1255 voluntary donation program. Page 3 SB 910 SB910 is a mechanism under which the state allowed the counties to claim federal revenue for eligible Medi-Cal administration. As with many federal programs, the state acted as the fiduciary agency in packaging the claims and receiving and distributing the revenues. County revenues under SB910 have received a double blow in the 1994-95 fiscal year: • As a means of balancing its fiscal year 1994-95 budget, the state seized $200 million of county SB910 revenues. Contra Costa County's share of the seizure was $3.28 million, which exceeded total SB910 revenues for the County in the 1993-94 fiscal year. • Following this action, the federal government suspended all SB910 payments to the State of California following a finding of discrepancies in an audit of Los Angeles County. No discrepancies were found in two subsequently audited counties. At this time, there is a considerable debate concerning California's regulations under SB910. A delegation recently went to Washington to discuss resolution of the federal concerns and resumption of SB910 payments. There are indications that the federal government is leaning in the direction of denying reimbursement for all of California's SB910 program at least retroactively and most likely prospectively, unless California changes its claiming methodology. According to the state, more should be known within 60-90 days. The Department currently has submitted claims totaling $14.2 million; $1 million of the claimed amount has been paid; an additional claim of $7.0 million will be submitted for the 1994-95 fiscal period. $3.0 million of the claimed amount has been budgeted in Public Health, Mental Health, Clinics and the Health Plan; an additional $3.2 million is "due" to the state as a result of the state seizure of the $200 million. In the event limited or no reimbursement is allowed for this program, it is unclear when (1994-95 or 1995-96) or how the state would recapture the $3.2 million. Total loss exposure in the current fiscal year ranges from a low of$1.0 million to a high of $6.2 million. Drug Abuse/Methadone On December 7, 1994, Contra Costa County Community Substance Abuse Services Division of the Health Services Department received a copy of the Eastern District Federal Court's Order for Permanent Injunction Re: 42 U.S.C. Section 1396a(a)(8) and (10) in the case of Sobky v. Smoley from the Department of Alcohol and Drug Programs. The cover memo states, "The Order requires that all Medi-Cal eligible individuals meeting appropriate, lawful standards for participation in methadone maintenance programs shall receive methadone maintenance treatment services with reasonable promptness and shall not be placed on waiting lists for such services due to lack of funding for such services." A federal suit was filed against the state on behalf of persons receiving or wishing to receive outpatient methadone maintenance treatment. The suit asserted a statewide "right to treatment". The court either found or consented to an agreement between the disputing parties that there existed a requirement for "accessibility and statewideness" in drug Medi-Cal methadone maintenance services. The State Department of Alcohol and Drug Programs' (ADP) response to this court ruling includes elements that seriously threaten counties' ability to carry out their existing range of critical prevention, early intervention and treatment programs. Page 4 The court order is retroactive to July 1, 1994, and, since that time, methadone maintenance population in our two contract programs located in Pittsburg and Richmond has increased from approximately 225 to 560. Without legislative relief, this increase in capacity will result in cost overruns of approximately $456,000. SB 1255 Voluntary Donation Program On January 25, 1995, the California Medi-Cal Assistance Commission voted to allow disproportionate share hospitals to participate in the voluntary transfer program for fiscal year 1994-95. Net potential annual income to Merrithew is $2 - $3 million. Overall Budget Status The ability of the Department to balance by year-end is dependent upon resolution of the above cited items. The Health Services Department and County Administrator's Office will report back to the Board as more information on these issues becomes available. Social Service The Social Service Department is within budget as of the end of the second quarter for fiscal year 1994-95; however, two issues negatively affect the department's ability to maintain a positive fund balance this fiscal year: General Assistance and the adoptions program. General Assistance Effective January 1, 1995 the state legislature allowed sunsetting of language in the Welfare & Institutions Code that provided for reduced shared housing grants. This action by the state eliminated the county's ability to adjust General Assistance grants in cases where a GA recipient was residing with friends or relatives. In addition, settlement of the "Williams" lawsuit changed the county's regulations for progressive sanctions. Progressive sanctions provided a one month, three month and six month sanction for the first, second and third violation of program regulations. Under the Williams settlement, the slate was "wiped clean" of past sanctions. In addition, the county now "forgives" the first violation, sending out a warning notice only. The General Assistance Aids budget is $11 million and projected at $12.2 million by end of fiscal year, an overrun of approximately $1.2 million. Adoptions Program In accordance with directions from the Board, the department has augmented its adoption staff with addition of four social casework specialists and one social work supervisor for adoptions. The cost of these positions, plus ancillary support services as well as cost of the independent program evaluator, will run over$600,000 this year. This was an unbudgeted expense. Overall Budget Status Overall, the department anticipates that they will be able to achieve a positive fund balance by end of year. This will be achieved through continued careful control of department expenditures and recognition of one time revenue from the Family Preservation Program Incentive Award and IHSS(In Home Supportive Services) program expenditure credit. In addition, according to sales tax forecasts by the State Department of Finance, realignment revenues should come in higher than budgeted. Staff is very cautious, however, about relying too heavily on the state estimates. The state makes year-end realignment adjustments which last year resulted in the county receiving almost a half a million dollars less than anticipated, based on a straight line projection. The Social Service Department and the County Administrator's Office will continue to closely monitor the budget and report back to the Board of Supervisors for adjustments as necessary. Page 5 County Budget Problem for 1995-96 On January 24, the County Administrator reported to the Board on the estimated local budget problem for next year and the financial impact of the Governor's 1995-96 Budget on the County. The Board adopted 34 recommendations designed to closely monitor and further study the budget situation and advise various government officials of the County's concern with various aspects of the Governor's Budget. The total budget problem for next fiscal year was estimated at between $29 - $34 million. The local budget portion of that shortfall was estimated at between $20 and $26 million. A breakdown of the how the local problem was estimated is presented below. Item Amount Non-Recurring Revenue $9,300,000 Retiree Health Benefits 7,500,000 Retirement Plan Rates for Employees 5,500,000 to 10,600,000 Existing Employee Contractual Obligations 2,015,000 General County Revenues <4,000,000> to <3,500,000> TOTAL $20,315,000 to $25,915,000 In addition to the above items, a number of potential revenue losses and cost increases were identified which could not be quantified this early in the budget formulation process. These items are listed below. 1. General Assistance 2. SB910 3. Future Employee Contractual Obligations 4. The Impact of "Three Strikes" on the Justice System 5. Juvenile Hall 6. Uncontrollable Cost Increases 7. 1994-95 Fund Balance The impact of the Governor's Budget on the County was estimated at $8 million. Analysis of the Governors Budget indicated that the County would be negatively impacted by the proposed transfer of more Aid to Families with Dependent Children (AFDC) costs to the County for more state revenues to operate the court system or Trial Court Funding. In addition, the Governor's Budget proposed to shift the costs and responsibilities for foster care, adoptions, child welfare services and other social services programs to the County. In exchange, the state would allocate a portion of their sales tax revenues to offset the added program costs to the County. This proposal is an expansion of the Realignment Program established in 1991. The County analysis of the Governor's realignment proposal identified a number of financial risks to the County, which are outlined below. • The accuracy of the state's calculation of revenue projections for sales tax revenues. • Whether sales tax revenue growth will match costs for caseload growth in the future, particularly during economic recessions. Page 6 • The formula of allocating sales tax revenue among the counties for the Realignment Program. • New unfunded state mandated costs associated with the Realignment Program. The County analysis of the Governor's swap of AFDC costs for Trial Court revenue identified a number of risk factors, which are presented below. • The underfunding of the Trial Courts by the state, given recent experience with Trial Court Funding. • AFDC caseload growth and associated costs outstripping revenue growth. • The Governor's ability to persuade the State Legislature to reduce or eliminate the shortfall in revenue to offset AFDC costs. • The Governor's ability to persuade the State Legislature to reduce AFDC grants as well as to secure the federal government's approval. • The impact of a stricter AFDC program on the 100% county financed General Assistance program.