HomeMy WebLinkAboutMINUTES - 11062001 - SD.2 -� SE L
TO: BOARD OF SUPERVISORS �' ` =�F: Contra
FROM: JOHN SWEETEN Costa
COUNTY ADMINISTRATOR .-1 Y
co. 4°
up
County
DATE: NOVEMBER 6, 2001 �D•
SUBJECT: FIRST QUARTER BUDGET STATUS REPORT
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
ACCEPT the report from the County Administrator's Office on the status of the County Budget.
BACKGROUND/REASON(S) FOR RECOMMENDATION(S):
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 part of the quarterly reporting process. Other items, which have major fiscal impacts are
also reviewed as part of this period's report. The Administrator's Office review of budgets over this three-
month period indicated that the overall County budget is in a positive position. The Administrator's Office
is working with departmental staff to bring all Departments in compliance with their budget
authorizations and is recommending specific actions to insure a year-end balanced budget. At this point
the Employment and Human Services Department and Health Services Department have the most
challenging budget situations.
This report provides an overview regarding the status of the County's fiscal year 2001-02 budget as of
September 30, 2001. Included in the report are tables that summarize the County's first quarter fiscal
condition by type of fund,by categories of expenses and revenues in the General Fund, and by General
Fund department(Attachment 1).
Discussion
OVERVIEW.- The County's implementation of its FY 2001-02 Board-approved spending plan is
proceeding as anticipated. As of September 30, 2001, with 25% of the fiscal year having passed, actual
expenditures for all County funds totaled 2 1.1% of planned spending; while actual revenues totaled
16.7%of amounts anticipated for the year. For the General Fund alone, actual expenditures totaled
21.4%of planned spending, and actual revenues totaled 13.6%of amounts anticipated for the year. The
specific numbers were as follows:
CONTINUED ON ATTACHMENT: _� YES SIGNATURE. 4j
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMN} NDATION rOF BOARD COMMITTEE
APPROVE OTHER /V/
SIGNATURE(S):
ACTION OF BOARD ON LOVe,rN!yam 6 �'O�1 APPROVED AS RECOMMENDED OTHER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT
COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF
UNANIMOUS(ABSENT
THE BOARD OF SUPERVISORS ON THE DATE SHOWN.
)
AYES: NOES:
ABSENT: ABSTAIN:
Contact: Tony Enea,5-1094
Cc: CAO ATTESTED O V e'M&tlt l'J
HS JOHN SWEETEN,CLERK OF THE BOARD OFSUPERVISORS
EHS
Auditor
BY: DEPUTY
ALL FUNDS
First Quarter Summary
Budget Actual Percent
Expenditures $ 1,646,094,070 $ 346,922,001 21.1%
Revenues $ 1,440,480,996 $ 240,687,873 16.7%
........................................................................................................................................................................................................................
GENERALFUND
First Quarter Summary
Budget Actual Percent
Expenditures $ 1,077,058,850 $ 230,664,010 21.4%
Revenues $ 947,219,459 $ 128,918,524 13.6%
........................................................................................................................................................................................................................
GENERALFUND
First Quarter Expenditure Summary
Budget Actual Percent
Wages & Benefits $ 500,474,036 $ 111,286,073 22.2%
Services-Supplies $ 412,741,301 $ 70,616,099 17.1%
Other Charges $ 226,810,292 $ 62,610,616 27.6%
Fixed Assets $ 74,287,600 $ 6,355,446 8.6%
Inter-departmental
Charges $ (147,503,523) 0.0%
Provisions for
Contingencies $ 10,249,144 $ (20,204,225) -197.1%
Total Expenses $ 1,077,058,850 $ 230,664,009 21.4%
........................................................................................................................................................................................................................
GENERALFUND
First Quarter Revenue Summary
Budget Actual Percent
Taxes $ 126,893,499 $ 72,889,794 57.4%
Licenses, Permits,
Franchises $ 7,335,297 $ 1,088,898 14.8%
Fines, Forfeitures,
Penalties $ 13,431,212 $ 1,221,816 9.1%
Use of Money&
Property $ 12,311,883 $ (498,427) -4.0%
Federal/State
Assistance $ 548,227,406 $ 24,567,923 4.5%
Charges for Current
Services $ 155,065,413 $ 18,247,446 11.8%
Other Revenue $ 83,954,749 $ 11,401,073 13.6%
Total Revenues $ 947,219,459 $ 128,918,523 13.6%
........................................................................................................................................................................................................................
County expenditures and revenues after the first quarter were within acceptable parameters. No action by
your Board is required at this time to assure continued operation within approved allocations. The
reasons for the significant variances over this three-month period, or 25% of the budget year are listed
below.
Revenues
• Revenue from state and federal sources are typically late in being realized because much of it is
based on expenditure claims paid in arrears. Therefore, the federal and state revenue category
and departments receiving this revenue will reflect a two to three month lag in revenues.
• Charges for services are also typically late in being realized because billing cycles are from one to
three months after services are rendered. Departments which charge for services include the
Health Services Department, Community Development and County Counsel.
• Revenue accrued last fiscal year is accounted for as a negative revenue this year. Therefore,
some revenues are reported as negative at this point in time. However, when revenue is received
and credited to the prior year budget, the negative revenue is eliminated in this year's budget.
• Appropriation adjustments either increasing or decreasing revenue are currently being processed
which will impact the revenue percentages presented in the tables above.
Expenditures
• Salary costs are generally understated at this period of time because the budget includes cost of
living adjustments and most employee COLAS are effective starting in October—the second
quarter. Unanticipated vacant positions also lessen salary costs
• Employee benefit costs are generally understated at this period of time because the budget
includes health plan increases from January through June 2002, and the actual expenses will not
be incurred until the second half of the year.
• Service and supply costs are generally understated throughout most of the fiscal year because of
the time required to process payments to vendors and contractors. The payment cycle averages
about one month.
• Appropriation adjustments either increasing or decreasing expenditure levels are currently being
processed,which will impact the expenditure percentages presented in the tables above.
HEALTH SERVICES DEPARTMENT.- The Health Services Department projects a balanced budget at
the end of FY 01-02, with an expected positive fund balance of$225,000. This projection assumes no
significant change in Realignment revenue from the budgeted level. For the entire Health Services
Department, expenditures are 2% ($11.6 million)below targeted expenditures for the first quarter.
Unrealized expenses are mainly in the General Fund budget units' encumbrances and for contractors'
claims not yet filed with the department. The two Enterprise Funds (HMO Enterprise and Hospital
Enterprise) are operating within their budget. The department is on target with its cost reduction plan
with the exception of uncontrollable costs in the pharmaceutical market. Updates on revenue forecasts for
FY 01-02 and on the progress of cost reductions will be discussed in the second quarter budget status
report.
Cost savings are realized, but not to the full extent exyected
The cost savings outlined in the Recommended Budget have been partially achieved. Savings in
compensation costs were to be realized through reductions in overtime, per diem and contract employees.
Additional savings were to be realized in pharmaceuticals and in lab work. CAO staff has worked with
the Department to develop a streamlined approach to the hiring of critical patient care positions to insure
a lower use of registry contracts and overtime. The hiring of permanent employees to replace contracts
and overtime, however,was delayed because of a very tight healthcare labor market. Cost savings
through the first quarter of the fiscal year are approximately $395,000 compared to last year. The largest
personnel line item cost reduction was achieved in per diem payments to physicians - approximately
$114,000. Although the Contra Costa Health Plan was successful in reducing its pharmacy expenses
internally compared to the market, overall expenses exceed the quarterly target by$1.67 million due to
uncontrollable cost increases. Purchasing practices for pharmaceuticals shall be addressed in the
upcoming management audit of the Health Services Department with the objective to find new ways for
bulk or group purchases to reduce the cost per drug. The cost reduction plan outlined in the
Recommended Budget identified $100,000 in outside laboratory expenses to be reduced over the length
of FY 01-02. Currently savings are approximately $55,000.
Rising healthcare costs are highest in a decade
The"Center for Studying Health System Change"reports that national health care costs rose an average
of 7.2% last year, the "largest jump in a decade", due primarily to increasing hospital and pharmaceutical
costs. Nationally, demand for specialty care has risen 11.2% in outpatient services, and inpatient care
rose by 2.8% last year. In response to higher costs and the slowing economy,workers will be forced to
pay more for their health care through increased premiums and co-payments, and employers may have to
scale back their coverage. This would increase the number of uninsured patients demanding care in
emergency rooms.
State revenues are expected to fall behind expected public health costs this fiscal Year
Public officials statewide are asking the Governor for a quarter-cent sales tax increase to cover rising
public health, emergency room and hazardous materials program costs. It is unlikely, however, that the
Legislature will support this tax increase given the declining California economy. In addition, Contra
Costa Health Services Department is currently assessing the impact on its programs of the Governor's
requested 15% across-the-board cut for State budgets. Realignment and Mental Health Realignment
revenue forecasts are scheduled to be reported to the Board in the second quarter budget status report,
when the trend line for sales tax and vehicle license fee revenues will be available. Although there have
been a number of new legislative proposals, no new revenues for direct healthcare services have been
made available in the new legislation signed by Governor Davis before October 14, 2001.
EMPLOYMENTAND HUMANSERVICES: The Employment and Human Services Department
(EHSD)projects a balanced budget for the current fiscal year.
In the first quarter, EHSD received notification that increases in State and federal revenue for the current
year would be less than previously anticipated. The impact on EHSD programs is mixed, with some
allocations less and some greater than the levels anticipated. The overall effect of these changes is a$9.8
million decrease in State and federal revenues compared to budgeted levels. The CalWORKs and Medi-
Cal programs received the greatest revenue reductions, with CalWORKs revenues declining by$11.9
million and Medi-Cal revenues down$3.3 million.
EHSD will adjust to decreases in program allocations through a combination of spending reductions and
increased use of TANF Incentive funds to offset the gap between revenue and expenditures in core
programs. The department will not fill 47 currently vacant positions in the CalWORKs program and will
not add 28 new positions in the Medi-Cal program previously budgeted for this fiscal year. Costs in the
CalWORKs program will also be curtailed by eliminating or reducing contracts for supportive services
with community based providers. The department will also control costs by partially reducing plans for
additional staffing in Adult Protective Services, In-Home Supportive Services (IHSS) and Child Welfare
Services that were previously budgeted to address caseload growth in these programs.
Spending cuts alone will not fully offset reductions in State and federal program allocations. To achieve a
balanced budget, EHSD will also increase utilization of TANF Incentive funds earned in prior years.
EHSD entered this fiscal year with a balance of$14.48 million in earned TANF Incentive funds and plans
to spend$8.6 million in the current year. To offset allocation reductions, the department now anticipates
a need to increase spending of TANF Incentive funds by $1.05 million to a new total of$9.6 million this
fiscal year, leaving a balance of$4.8 million in reserves.
The practice of using TANF Incentive funds to backfill revenue reductions in core program allocations is
not sustainable. At the projected rate of use,TANF Incentive funds will be exhausted next fiscal year,
resulting in an increased.County cost unless further spending reductions are made.
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