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HomeMy WebLinkAboutMINUTES - 02281995 - 2.1 2 . 1 5- Contra TO: BOARD OF SUPERVISORS FROM: Phil Batchelor, County Administrator ;� Costa County i< February 23, 1995 DATE: SUBJECT: STATUS REPORT ON THE 1995-96 COUNTY BUDGET AND RECOMMENDED TIMETABLE FOR ADOPTION OF THE BUDGET SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1 . CONCUR with the County Administrator' s plan to request each County Department to submit a proposed budget which reflects a 20% reduction in Net County Cost (NCC) for the 1995-96 fiscal year in order to offset a projected known budget problem of approximately $21 million. 2 . AGREE with the need to impose a "hard freeze" on hiring and promotions and AUTHORIZE the County Administrator to administer the freeze in such a way as to continue essential functions of County government while reducing costs through leaving positions vacant whenever possible. 3 . AUTHORIZE the County Administrator to impose a freeze on the purchase of equipment and supplies and to administer the freeze in such a way as to continue essential functions of County government while reducing costs through delaying or eliminating the purchase of equipment and supplies whenever possible. 4 . ACKNOWLEDGE that the first meeting of the year for the Ad Hoc Budget Committee will take place on March 1, 1995 and that the County will be working with community business leaders, seeking their advice and input on the County Budget. 5 . DIRECT the County Administrator to prepare, with input from the Family and Human Services Committee, a Children and Family' s Program Budget for the 1995-96 fiscal year and present it to the Board of Supervisors at an appropriate time in connection with one of the three Workshops identified below. CONTINUED ON ATTACHMENT: YES SIGNATURE: �1JaJ1R4_(\ RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON February, 1999 APPROVED AS RECOMMENDED OTHER APPROVED the recommendations set forth above; AUTHORIZED the County Administrator to make allowances for small departments in meeting the 20 percent reduction requirement. VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE X 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 �4 / 2 Contact: PHIL BATCHELOR,KERK OF THE BOARD OF cc: County Administrator SUPERVISORS AND COUNTY ADMINISTRATOR All County Department Heads (Via CAO) BY !J• " DEPUTY 2 . 1 6 . DIRECT the County Administrator and Director of the Human Resources Department to meet with the employee unions to discuss the County Budget for the 1995-96 fiscal year. 7 . DIRECT the County Administrator to initiate a countywide re- engineering program, working closely with Department Heads and emphasizing training of County staff. 8 . AGREE to schedule Budget Workshops on Tuesday, April 4, 1995 at 2 : 00 P.M. , Tuesday, April 25, 1995 at 2 : 00 P.M. and Tuesday, May 16, 1995 at 2 : 00 P.M. for the purpose of providing the Board of Supervisors with information needed to make decisions on the 1995-96 County Budget, including: ❑ Background on the factors which impinge on the County Budget, such as State and Federal mandates, ❑ Where the County' s funds come from, ❑ What restrictions there are on the County ability' s to spend those funds, ❑ What reductions have been made in the County Budget in the past few years, ❑ What discretion the Board has to make reductions in specific program areas such as law and justice and children and family services, ❑ The impact of various types of reductions, and ❑ An array of options from which the Board can select in order to achieve a balanced Budget for the 1995-96 fiscal year. 9 . DIRECT the County Administrator to schedule public hearings and final consideration and adoption of the Proposed Budget for the 1995-96 fiscal year for Wednesday, June 7 , 1995, and Thursday, June 8, 1995, along with action on all related matters needed to eliminate the potential deficit resulting from the known budget problem. 10 . REQUEST the County Administrator to continue to monitor activities at the State and Federal level which may impact the County Budget for the 1995-96 fiscal year and report on those activities and his recommendations for action by the Board of Supervisors in response to those actions at appropriate intervals . BACKGROUND: As we reported to the Board of Supervisors on January 24, 1995, the County faces a known General Fund budget problem in the 1995-96 fiscal year of $20 . 3 to $25 . 9 million, regardless of what other actions may be taken by the State and Federal governments in the next few weeks or months . This level of known problem results from the actions of the State over the past two years in transferring one-half of the property tax revenue which the County used to receive to the schools in order to balance the State' s budget. In addition, there is likely to be an additional impact on the County from the Governor' s Budget in the neighborhood of $8 million. Thus, we appear to have a potential problem of approximately $30 million with which the Board will need to deal in the coming weeks . 2 2 . 1 Recognizing the magnitude of the budget problem and the fact that serious budget reductions have taken place over the last several years, we must present the Board with as many options as possible so that the Board can exercise its discretion in allocating funds consistent with its priorities and the reality of the budget situation with which the County is faced. We are, therefore, recommending that each Department prepare a plan which eliminates 20% of the Net County Funds which are presently allocated to the Department. This should generate approximately $27 million in potential reductions . Reductions of this level will clearly impact the service delivery systems and the way the County does business . For this reason, we are recommending that the Board schedule a series of three Budget Workshops spread over a period of six weeks . These Workshops will provide the Board with an opportunity to review revenue and expenditure data related to the County Budget, recall the decisions which have been made in the past few years, explore the impact of reductions in one program versus another and see graphically the impact of various decisions . In the final of these three Workshops, we would propose to outline a variety of potential ways in which the Budget can be balanced, laying out for the Board the available revenue and expenditure options, and exploring a variety of ways to implement the necessary reductions . Finally, we recommend that the Board plan to adopt the Proposed Budget for the 1995-96 fiscal year on June 8, 1995 and take the related actions which are necessary to implement that Proposed Budget. This action is necessary before the end of the fiscal year in order to continue to operate between July 1, 1995 and the time the Board adopts the Final Budget for the 1995-96 fiscal year, generally sometime in July or August. Between June 8, 1995 and final budget hearings, staff will review the adopted State Budget, actions taken to date on the fiscal year 1996 Federal Budget and their impact on the County and make additional recommendations for actions which are needed in order to insure that the Final County Budget is, and remains, balanced. The other recommendations are included in order to begin to reduce expenditures immediately, seek input from community leaders from the business, labor and other concerned sectors of the community, respond to the Board' s directives regarding a Children and Family' s Program Budget, and insure that we are aware of the impacts which actions at the State and Federal level may have on the County. In addition, we are proposing a re-engineering program be initiated by the County Administrator to enhance our current efforts to improve productivity and streamline County government. We anticipate that, from what we know at this time, we may well face some of the most difficult decisions this Board has had to consider in the past 17 years since the passage of Proposition 13 . For this reason, we believe that it is essential that the Board be prepared to spend some substantial blocks of time over the next three months reviewing County operations and funding streams in order to be prepared to make the decisions which will need to be made to balance the 1995-96 County Budget. 3 a' 2/95 Proposed Re-engineering Initiative Purpose: To comply.with Board requests and to focus cost savings efforts through the fashionable "re-engineering" approach. Program: The CAO staff will direct re-engineering studies of County operations with the assistance of the following parties: • consultants (through RFP process) • staff of participating department • Auditor staff • Personnel staff • Data Processing staff A centralized approach is essential so as to focus energy on re- engineering and insure that a body of knowledge is developed and transferred to County departments. The current Payroll/Personnel records re-engineering project can be used a model. County-City or other multi-jurisdictional studies could be included. Selecting Re-engineering Projects: Optional Approach - Departments would be encouraged to submit suggested projects. CAO staff would select from the project selected. Non-Optional Approach - CAO staff would select Departments and programs within Departments. Financing: Costs would be incurred when consultants are hired as well as for travel, supplies and training. Costs for re-engineering projects could be shared by the departments being "re-engineered" and the Productivity Investment Fund. Two possible cost sharing options could be: • the PIF would finance a project in proportion to a Department's net county cost • the PIF and the Department would share 50% and 50% #3notesl-6 2/95 Page 2 Timeframe: Immediately Training: Training on re-engineering strategy, skills and techniques is an essential pre-requisite to implementing a study. Moreover, training during and after completion of a study is critical for an effective program. #3notes2A Transcript of motion on item 2 . 1 from 2/28/95 Supervisor Bishop: We are back in session and we are going to go to Mr. Batchelor for a report on the County budget or the State of the County budget and that is item no. 2 . 1 . Phil Batchelor: Madam Chair, members of the Board. AS we reported to you on January 24th, the County is facing at least a 30 million dollar problem this next year if the projections that are contained within the Governor' s budget are to happen. We feel that it is imperative that we begin to take action immediately to deal with the budget problem. We are recommending to the Board that we have a series of three workshops, two in April, one in May and then deal with the budget in Board session in June . And that we try to correct the known deficit . The known deficit right now before the State takes action is 21 million dollars . In order to be able to save 21 million dollars, we have to look at what part of a 900 million dollar budget is discretionary. And that' s less than 150 million. In fact, it' s closer to 135 . Therefore, in order to give the Board some options, we would ask the departments to prepare a 20 percent reduction plan on net County cost . Allow us to array that and to bring you some options . To look at revenue options, to look at reduction options, to look at any alternatives that will assist us either raising revenue or reducing cost . We would like to ask the departments to begin this immediately. We also want to impose a hard freeze that says except for essential positions such as police and health, that we do not refill positions in order to minimize the number of people that will be impacted by layoff . We would put our freeze on purchases of equipment and supplies . We would meet with the Ad Hoc Budget Committee, with the several other committees that have indicated an interest in being able to participate in the budget process and invite them to the workshops . The workshops would be instructional to bring the Board up to date as to the latest information we have as to the parameters that are going to keep us from being able to cut in some areas and necessitate having to cut in other areas . we would suggest that public hearings be held on June 7th and 8th and on the 9th if needed and that we continue to monitor what is happening on the State and Federal scene . That is a quick summary of the budget report . Supervisor Bishop: Any comments from members of the Board? Now, what' s the good news . Supervisor Smith: There isn' t any good news . Again, you know, the budget is very disturbing this year and I think we do need to move ahead. My only question for Phil is that in the past we've always approached this issue by asking the Department Heads to come up with a fixed percentage reduction in the net County cost across the Board and it became painfully evident last year, I think it' s been evident for a long time, that certain departments who have very small net County revenue from the start or who have very small budget in certain departments from the start, really I/ have absolutely no discretion to come up with such cuts whereas larger departments with other revenue from other sources have at least some discretion. I wonder if it would be reasonable to make some exemption of some of the very small departments so that we don' t go through an exercise that we know we' re not going to follow through on. For example, Veteran' s Affairs and Co-Op Extension and I mean we know if we try to eliminate 20 percent of their net County cost, we've killed the department . Phil Batchelor: Right, we can see that that is a problem and we have adjusted that out in the past . The thing that becomes painfully obvious is that we have made 175 million dollars in reductions already. You' re not going to find a dollar in any department that' s going to be easy to come by and we are going to see great pain in even the large departments plus the mandates that continually come on us say now we don' t just cut law and justice . We have to now take into account we have Prop 172 that says we have to maintain a base level . We have cut so much of the overmatch that the places that we have overmatch left, for example social services, is adoptions, but we just added staff today. It' s really difficult . Supervisor Smith: Well, I'd move the staff' s recommendations just with a caveat in asking the departments for their reduction list, that we authorize the County Administrator to make allowances for small departments and very small net County contributions so that we don' t do anything across the Board that doesn' t make sense from a programmatic . . . Supervisor Torlakson: I' ll second that motion and if I can report Madam Chair from the Finance Committee yesterday. It' s not in front of you as a report but we could add the same thought we had to this motion which is that the extreme depths we've already cut this takes us to that level further where we really should examine and ask all the department heads to look at programs that may not really be realistic to operate as County programs, to identify those areas that really should be turned back over to the State or as ABAG has suggested maybe some of the programs shouldn' t be done in 9 separate County jurisdictions but should be done in some regional level where you get rid of 8 administrators and have one administrator instead of 9 running that particular program but the way we've done business in the past can' t be the way we continue because there' s no room for that, so that if the department heads and managers and all the line workers can look at things as we look at how deep the cuts may be it may not just make any sense to try to fake continuing that program and deceiving the public that we can really offer that service and that we should tell the State we' re out of it or in some fashion it should be regionalized or taken out of the County' s hands to be able to continue. Supervisor Bishop: I would like to make some comment of response . I think a few years ago, we were all talking about reinventing government as a goal of streamlining government but I think we' re going to have to reinvent government as a way of meeting our budget crisis and certainly tomorrow, or I guess it is tomorrow, March 1st, the Budget Committee will meet and my question would be have we notified all members of the Ad Hoc budget. committee, I mean what time is that meeting and where is that meeting. Phil Batchelor: It' s at 2 o' clock. It' s at George Gordon Training Institute. We have sent out invitations to I think like 40 to 50 people to be involved in that . Supervisor Bishop: And I think it' s very important to involve the community and lay people from the County, sole proprietors, large business people who are involved in industry in the County, I think we need a real broad cross section in input and I will say again Mr. Batchelor, the inclusion of number five, in the staff recommendation, I think reemphasizes this Board' s commitment to families and children and that whatever we do and the outcome of the budget, that is our top priority of delivering those services because we know that family preservation and support of the family is absolutely essential, that you can' t just look at dollars, you have to look at outcomes and focusing on families gives us that result . One last comment, someone faxed this to my office. Has this been factored into our calculations as far as reduced revenues . And again, I was out of the country until this morning and the headline, the State is Facing a 315 medical loss and that the Counties are banking on reimbursement and that we are Counties throughout California are going to be short 315 I think we talked about this with respect to the hospital and this seems to put a rather gloomy you know perspective on reimbursement to the County, so. . . Phil Batchelor: Yeah, we have several areas that are of concern. One is 1255, 855 and SB 910 . All of those require the Federal Government to cooperate and reimburse us . We anticipate that 910 will continue to be a problem, that there could be as much as a 6 . 2 million dollar local problem. That 1255 will probably go through and help to reimburse some of the money that we will lose on 910 . 855 is new on the horizon. We don' t know the impact yet as to what will happen. When you talk about 350 million dollars, that is tens of millions of dollars for some counties . We don' t know what will happen. To assume that the Federal Government will completely pull the plug, we think is probably not rational at this point . Supervisor Bishop: Maybe we can ask Dr. Zaretsky to come back and maybe he can tell us what' s going to happen. Supervisor Smith: Well, actually we had this in our budget review, what, a month ago. And it this headline is very misleading because it implies that money will not be coming to the State and all the counties mentioned but actually that' s a billing for 910 reimbursement for administrative services and as you remember, about a month ago, when we approved the budget, I there was a two million, I guess three million now, dollar question mark on the 910 reimbursement ,because that' s all that' s been actually budgeted in our Health Services budget for the 910 reimbursement, although there' s been charges in the 23 million dollar range, so you know it implies in the story that we' re at risk for 32 million dollars of loss, that' s not true, we' re at risk for about 3 million at this point 'and the likelihood of the Feds actually not reimbursing all of that money is extremely low. We' re in much better shape than the rest of the counties and all of this came from an audit of LA county which is probably in the worst shape of all of the counties because they have the least ability to document their reimbursement, requirements for administrative service. So, I really think it' s misleading but Phil Batchelor: The issue is one of claiming methodology. Los Angeles County was clearly violating what they should have been doing according to the Federal Government . They were disturbed at Los Angeles, so put it on hold for the whole state . A delegation from Sacramento , representing the State, went back to Washington, explored this with them and, they said we don' t like the methodology the State' s using. We said to them as a State, you helped us to design it through your regional office. They said we don' t care . So, we' re continuing to negotiate with them on that . We have interestingly enough lost 2 hundred million dollars this last go round because the State took 2 hundred million dollars of 910 money. Now if it doesn' t come in does the State lose it or do we lose it . So, there' s 3 .2 million dollars we are giving to the State of 910 money: because they took it off the top. If it doesn' t come in, then the State is out the money. It' s an interesting dilemma. Supervisor Bishop: You had a comment, Supervisor Rogers? Supervisor Rogers : I just wanted to make sure Phil that you agree with Supervisor Smith' s assessment which is that if the Feds do go through with this pulling the rug out from under counties once again, that our I guess worst case potential scenario is somewhere in the range of 3 million dollars . Phil Batchelor: We were saying that the problem was about 5 million. We think we' ll get at least 21in 1255, so we' re down to about 3 . We think we' ll reduce that down to 1 to 2 by the time we get finished. Supervisor Rogers : Well, I would like for us as a Board and I'm not sure how to do it procedurally, I think that we as a Board need to go on record that this is one more case where the rhetoric out of Washington D.C. is all about getting rid of unfunded mandates but when the rubber hits the road once again, they' re actually playing the same old game of dealing with their financial problems by cutting away at things at the local level which in my opinion are much more directly needed by our citizens and I think we need to go on record once more I know it' s kind of a broken record at this point as just pointing out to the public that this is an outrageous shell game and that these people in Washington need to be held responsible whether they' re of whatever party they are or in the legislative branch or executive branch it' s an outrageous shell game . I think we need to put a - resolution on for the next time we can to express our opposition to that . Phil Batchelor: What we have if you say your priority is children and families and public safety, then we need to put the rest of the budget on a recussitator. And that' s where we are . Supervisor Bishop:Alright, we have a motion before the Board to adopt the recommendations of staff . All those in support of the motion, indicate by saying aye . It carries unanimously.