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HomeMy WebLinkAboutMINUTES - 12081998 - D4 TO: BOARD OF SUPERVISORS CONTRA 3 ` FROM: Phil Batchelor = CTA County Administrator ry COUNTY DATE: DECEMBER 8, 1998 SUBJECT: FIRST QUARTER BUDGET REPORT SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. ACCEPT this report and DIRECT the County Administrator to continue to monitor the budget and implement corrective pians, where necessary. BACKGROUND: Since 1984, the County Administrator's Office has prepared quarterly reports which analyze the status of the budget and highlight 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 past of the quarterly reporting process. Other items which have major fiscal impacts are also reviewed as part of this period report. The Administrators s Office review of budgets over this three month period indicated that the overall County budget is>s in a positive position. The Administrator's Office is working with Departments to bring all Departments in compliance with their budget authorizations. What follows is a discussion of seven key budgets for this period. GENERAL COUNTY REVENUE It is too early to determine the overall status of revenues relative to the budget plan. The status of property tax revenues, which make up 55% of general county revenues, will not be known until January when distributions are made to all taxing agencies. Nearly all major revenue sources are at or above their budget targets for this time period, seasonally adjusted. These revenues are CONTINUED ON ATTACHMENT: _YES SIGNATURE: 2��JE,_� RECOMMENDATION OF COUNTY ADMINISTRATOR—RECOMMENDATION OF BO RD COMMITTEE APPROVE _OTHER SIGNATURE(S): ACTION OF BOARD ON APPROVED AS RECOMMENDED VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A UNANIMOUS(ASSENT_ _ i TRUE AND CORRECT COPY OF AN X&_._--_ NOES: ACTION TAKEN AND ENTERED ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF SUPERVISORS THE HATE SHOWN. Contact: Tony Enea(5-1084) CC: Soclai Swwces ATT ESTEfi,g&7 Community Service PHIL BATCHELOR,CLERK OF Health Services THE BOARD OF SUPERVISORS Sheriff-Coroner ANDCTYADMINISTRATOR Trial CourtsProbation PUTY GENERAL COUNTY REVENUE continued motor vehicle registration fees, property transfer tax, transient occupancy tax, interest earnings and sales tax. Only the supplemental properly taxes and landfill surcharge revenue are below the budget target for the first quarter. The Keller Canyon Landfill surcharge revenue in this budget will be reduced in the future due to a temporary reduction of refuse handled at the Keller Landfill site. Additionally, a reduction in revenue will be required for the nine departments who budget Keller surcharge revenue. A continuing concern about property tax revenue remains the significant amount of property tax assessments being appealed by private industry. Major property tax assessment appeals by business and the oil industry total $5.6 billion in assessments with the potential loss of revenue in the millions to various units of local government. The County has hired Baker and O'Brien, a firm with international experience in the oil refinery sector to handle the appeals. These appeals are currently under study or being deliberated, with decisions expected this fiscal year and in fiscal year 1999-2000. SOCIAL SERVICES The Social Service Department is projecting a balanced budget for fiscal year 1998-99. During the first quarter, the state continued to finalize incremental funding allocations for expansion and implementation of welfare reform programs, largely targeting employment services. Additionally, the Department has received, or been notified of supplemental funding for children and families support services, including allocations for new child care programs. As the CaIWORKS funding works its way through the State's allocation process, the Department is continuing to phase-in program expansions. This has required an appropriate balance between expediting implementation while assuring continued fiscal integrity. Additionally, the significant expansion of new programs is causing increased pressure on the Department's infrastructure including office space, management information systems, and administrative services. Expansion has also created staffing pressures with the need to rapidly bring new staff on board and retain existing staff. Overall, the Department is experiencing challenges in the changeover and staffing required by CaIWORKS. The plethora of new programs and employment opportunities has resulted in many internal personnel transfers. Frequently the new positions offer better career advancement opportunities. Training for these new positions is extensive, time consuming and results in temporary decreases in employee productivity. Additionally, the internal transfers of personnel frequently results in vacancies in other programs. Program expansions throughout the State has also created a growing imbalance between experienced staff and the demand for workers. In addition, for CalWORKS employment services, the Department is currently Dandling a "bubble" of welfare-to-work participants. All CalWORKS clients are being enrolled in employment services for two years under welfare-to-work. This has required very rapid expansion in the new classification of Employment Specialists. The staffing requirement for welfare-to-work should subside once the "bubble" is through the system. In each of its divisions, the Social Service Department has received significant increases in categorical programs involving state or federal funding sources. Adult and Senior Services Adult service programs have had a $1.6 million increase in new allocations or approved grant proposals to serve mostly older adults. The state has also augmented the adult protective services allocation by approximately $800,000. In addition, after a period of stable or declining caseloads, the In Home Supportive Services (IHSS) program is experiencing an increase in the number of,participants. It is still too early to determine if the program can be maintained within the State's $29.8 million allocation for this fiscal year. This does not include any increased costs associated with the implementation of the Public Authority or potential increases to IHSS provider salaries or benefits. Children and Family Services The State has increased allocations for existing services (foster care, adoptions) as well as provided funding for new programs for children and families. An additional $4.0 million for Foster Care payments reflects increasing caseloads, a 6% State approved increase in foster home rates, and the impact of a State court ruling which allows certain relative caregivers to qualify for foster care payment. At the same time, an additional $1.0 million in Aid to Adaptions reams the success of the Department in reducing long term faster care placements by increasing adoptions. Additionally, the State has provided $782,000 to re-determine eligibility of clients now receiving Medical under Aid Code 38 and $1.2 million to CWS as an emergency workload relief. The Department expects to receive $18 million for subsidized child care. The bulk of the funding goes to CalWORKS recipients who are in training or in the process of complying with Welfare-to-Work program requirements. State-wide the general consensus among counties is that state funding levels for child care are insufficient to fully meet the needs under CaIWORKS. The gap may be covered by CalWorks incentive funding (see below). The CaIWORKS program is mandated to provide client referrals to Mental Health and Substance Abuse programs. Referrals for these support services are likely to increase' dramatically as clients move through the Job Club/Job Search and assessment' components of the welfare-tel-work programs. This is a potentially huge area of financial exposure to the department. Neither Mental Health nor Substance Abuse has the resources to fully provide services to referrals absent supplemental funding from Social Services (Mental Health's allocation from the State for CalWORKS is limited). The Department is closely monitoring the costs associated with these support service referrals. Employment Services In addition to the budgeted increase of $5.9 million for continuedimplementation of CalWORKS work programs, the department successfully competed for a $788,000 Non- Custodial Parent Grant and a $784,000 for a Welfare-to-Work Transportation Project. The Stag is implementing an incentive program to reward County successes in meeting CalWORKS performance goals. Social Services estimates incentive funds at$3.4 million, and potentially up to $6.8 million. While not currently budgeted, these funds cannot be used to offset County match_ The incentive funds may be needed to supplement child care services as described above. The Social Service Department and County Administrator's Office will continue to monitor expenditures and revenues and provide the Board of Supervisors with appropriate recommendations for corrective action as necessary. COMMUNITY SERVICE The Community Service Department is operating within its expected expenditure level and is expected to be within approved budget levels for fiscal year 1998199. All five of the divisions are operating within budget parameters. In September the Department began a pilot Child Start program designed to expand sites that were formerly part-day part-year programs into full-day full-yeas programs. The pilot program is a partnership between the federally funded Head Start program and the State funded Child Development program. In addition the Social Service Department is providing $188,000 to support expenditures not eligible for reimbursement from Head Start or Child Development. Child Start is seen as an important support service to parents transitioning from welfare to work. Head Start The Head Start Division has received an additional $3.3 million in grant funding for Early Head Start services (birth to three years of age) to be expended by the end of 1999. This includes over $2 million for construction of three modular classrooms and playgrounds. Preliminary estimates from General Services indicate that the scope of this project may need reductions in order to meet grant funding limits. The Department stili anticipates that there will be no net county cost. Child Development As expected the Child Development Division has experienced its normal under-enrollment for the first quarter but is expected to earn its contract by increased enrollment over the required level during the remainder of the year. Other Programs The Department's ether major programs (CSBG, LIHEAP and DOE'Weatherization) are all expected to be earned with little net county cost. The weatherization portion of the State LIHEAP contract is expected to result in a reserve of about $4,000, which will be used to offset anticipated ouerexpenditures in other areas of the LIHEAP contract. HEALTH SERVICES The Health Services Department is currently facing a revenue shortfall of approximately $5.2 million. The $5.2 million shortfall is primarily due to employee COLAs, contractor COLAs, pay equity and other salary and benefit increases including the introduction of the Tier Ill retirement plan. The shortfall estimate includes the Department's allocation of$2.4 million to partially offset COLA related increases. Revenues from the State's recently negotiated tobacco suit settlement may provide some fiscal relief to the Department. The agreement with the four largest tobacco companies, will bring $25 billion to California over 25 years. No money is expected from the settlement until June, 2000, Health Services performance data indicates that enrollment in the local initiative has stabilized, although expenditures continue to increase. Contra Costa Health Plan (CCHP) continues to maintain the highest level of MediCal participants of any local initiative, at 89%. Both inpatient days per 1,000 and visits per year per client are increasing. The hospital discharge rate is increasing and the average length of stay is decreasing. Nursing hours per patient day are also increasing. Pharmaceutical costs continue to increase dramatically, from $7,404,320 in 3093{94 to $35,878,391 in 1997/98, representing a 114% increase. With more than 90% of the total Health Services budget dependent on non-general fund revenue the department is vulnerable to shifts in state and federal policy. Currently, there are a number of unresolved policy issues which could significantly affect the status of the Health Services budget. Several of these policy issues are further complicated due to pending changes within the Governor's Administration. These include: Medi-Cal Managed Care -Aid Code 38 While the local initiative continues to maintain high enrollment levels despite entry of Blue Cross as the new commercial provider, the Contra Costa Health Plan (CCHP) could be significantly impacted by the pending discontinuation of MediCal patients enrolled under Aid Code 38. These Social Service clients no longer receive cash benefits but have temporarily maintained eligibility for MediCal pending verification of continued eligibility based on income. The State is initiating a program to require these clients to reapply for MediCal benefits or be automatically discontinued. There are approximately 15,000 to 18,000 individuals categorized as Aid Code 38 in the County with 10,550 enrolled in CCHP. Social Services has sent eligibility packets to the last known address of all Aid Code 38 clients. The state has .set a deadline of January 1, 1999 for responses from participants. MediCal benefits will automatically be discontinued if the client fails to respond. There is little actual incentive for clients to respond as they are already discontinued from cash aid and can reapply for MediCal coverage when medical needs arise. Health Services estimates that revenues could decrease by up to $907,000 monthly, or $10.9 million annually. Statewide, the Directors of Social Services Departments are submitting a letter to the State requesting that the cutoff date for client responses be extended from January 1, 1999, to February 1, 1999. Additionally, they are requesting one year to redetermine eligibility for those who do respond. Home Health The federal Balanced Budget Act implemented a "Per Beneficiary Annual Payment Limit" for Medicare home health benefits. Contra Costa's FY 1998/99limit is $3,114 per beneficiary. Nationally, many home health agencies have closed due to the new limitations on reimbursement for services. This change in Medicare's home health program seems to conflict with prior public policy decisions designed to reduce inpatient services. In response to the new reimbursement policy, the Health Department's Home Health' Agency is reducing costs in an effort to stay within Medicare's maximum payment limit. Operations at three sites are being consolidated at one site and, as necessary, staff is being', transferred from Home Health to other vacancies in Public Health.' Other cost saving measures may need to be implemented this fiscal year to maintain a balanced budget. Methadone Services Due to the Sobsky vs. Smoley court decision methadone services are now an entitlement and the County cannot legally limit treatment. Because the State's allocation for substance abuse programs is capitated, a significant increase in demand for methadone services could farce reductions in other priority alcohol and drug treatment programs, including services for youth. Projections based on methadone services during the first quarter indicate a $352,000 increase above budgeted levels. Federally Qualified Health Center (FQHC) Status Health Services continues to work/negotiate/argue with State and federal authorities over the classification of health center clinics a "provider based" or"free standing". The final classification will have a significant fiscal impact: $5 million in retroactive FQHC payments to the County are included in the approved budget. Other factors that could impact the Health Services' overall fiscal status in 1998199 include: • Operating costs associated with Richmond's new Center for Health, scheduled to open in February 1999 • Newly mandated' Compliance Programs to ensure billing accuracy will continue to increase administrative costs • Potential Health Plan rate increase from the State • Upcoming salary and benefit negotiations with physician employee organizations The Health Services Department and County Administrator's Office will continue to monitor expenditures and revenues and provide the Board of Supervisors with appropriate recommendations for corrective action as necessary. SHERIFF-CORONER The Sheriff Coroner Agency is within acceptable expenditure levels through October 31 of fiscal year 1998-99. Patrol and Operations gross expenditures were 35% and Custody Services'were 30%. The Department's significant vacancy factor is budgeted entirely in Patrol and Operations which causes the disparity in expenditures between the two units. Figures for the Custody Services' division include in excess of$5 million in bailiff costs that are Trial Court Funding eligible expenses reimbursed by the Courts. As a trial court eligible cost, any over-expenditure in this area is a matter of Court concern and not a General Fund obligation. (Please see write-up on the Courts for more information.) The Coroner Division has stayed within 31% in net expenditures for the reporting period and exceeded targeted revenue for the period. Actual revenues received through October 1998 were $5,733,991 for Patrol and Operations and $4,678,160 in Custody Services, 15% and 19% of budget respectively. Sales-Tax Public Protection revenue was budgeted County-wide in the amount of$44,003,223 and is expected to be realized by year-end. The Sheriff-Coroner Agency receives 82.6% of this revenue and the District Attorney receives the balance. Contract City revenues, which historically lag, generate 27% of the Sheriff's $38,948,273 budgeted for Patrol and Operations. These revenues, which are currently at 5% of budget, will be received by year end. The Department is maintaining control of expenditures and is expected to achieve a balanced year-end budget. It should be noted that there is no provision in the current year's budget for a COLA, which is currently under negotiation. TRIAL COURT PROGRAMS Pursuant to the passage of AB 233, California boards of supervisors no longer have fiscal control over most court programs. Per the law, the County transferred court appropriations to a non- Board governed Agency Fund, which is under the discretion of the Presiding Judge. In order to facilitate continued relationships, the Board of Supervisors authorized a Memorandum of Understanding (MOU) between the County, the Court and the Auditor-Controller to clarify new roles and responsibilities required by the 1997 Trial Court Funding Act. Based upon the passage of AB 2788 the County received approximately $750,000 as the first installment in a',three year mitigation of losses to the County due to the delay in implementing (until 1998-1999) State approved based year trial court funding adjustments. These receipts will, unfortunately, be more than offset by refunds the County is required to mare under AB 1590. AB 1594 requires the County to refund, to the Court, 1997-98 charges for County-provided services juvenile dependency and janitorial services estimated at $1,488,004. PROBATION Probation Department expenditures are at anticipated levels for the first four months of fiscal year 1998-99. Actual revenues, however appear low due to the customary lag time in the receipt of state and federal revenues. For example, several grant revenues are received late because of the need to submit reimbursement claims and, although the Probation Department anticipates receiving $4.4 million in TANF funds and $1.4 million in bound 2 Challenge Grant funds over a 30-month period, revenues earned in these categories are behind schedule.' Although the Department's budget is currently within target levels, the County Administrator and Probation Department will continue to closely monitor expenditures. The average daily population (ADP) at the Juvenile Hall has tapered off slightly over the last few months from the very high levels experienced in June and July 1998. However, the October ADP of 177.7 is still unacceptably high. The department is making efforts to reduce the population by placing appropriate juveniles on home detention. The anticipated January 1999 completion of the 26-bed dormitory at the Boys' Ranch should also alleviate crowding at the Hall because about one third of the Hall population is awaiting placement at the Ranch. In addition to juvenile detention costs, juvenile placement costs are expected to exceed budgeted levels. These overruns can be mitigated by savings in otherexpenditure categories and to some extent by TANF revenues. At this time, it appears that the Department will be balanced by the end of the fiscal year. However, because of excessive juvenile detention and placement costs in the first quarter, the County Administrator will work closely with the County Probation Officer to monitor the budget and anticipate potential problems'. The 1998-99 State budget allocated $93.4 million in Federal Crime Bill grants for the construction and/or expansion of local detention facilities. Approximately $12 million of the allocation is reserved for adult and juvenile facilities and the remainder, $81.4 million, is reserved only for juvenile facilities. The grants will require a 25% local match, 10% of which'must be cash. Counties will receive more favorable consideration if more snatching funds are proposed. The State Board of Corrections (BOC) has been appointed to administer the award of these funds. The Governor also signed AB 2798 which appropriated $100 million to award competitive grants for the renovation, reconstruction, construction and replacement on county juvenile facilities (juvenile halls or camps) and the performance of deferred maintenance on those facilities with a useful life of at least ten years. These grants also require a 25% local match, at least 10% of which must be cash, and the BOC has also been appointed to administer the award of funds. The specific criteria on which awards will be based for 1998-99 funds is not yet known. However, the BOC is hosting a bidder's conference in December 1998 to advise counties on how the funds will be allocated and whether or not larger projects will be considered.