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HomeMy WebLinkAboutMINUTES - 02252003 - SD4 Contra TO: BOARD OF SUPERVISORS FROM: John Sweeten , : ° Costa County Administrator ounty, DATE: February 10, 2003 - SUBJECT: 2002-03 FY SECOND QUARTER BUDGET STATUS REPORT SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDED ACTION: 1. ACCEPT this report from the County Administrator regarding the mid-year status of the County Budget, 2. ACKNOWLEDGE the impact of possible adjustments to the State's FY 2002-03 Budget to current year County programs. 3. RECOGNIZE, that the County's FY 2003-04 Budget is at risk due to an anticipated $36 billion State shortfall in the coming fiscal year. BACKGROUND: The Administrator's Office reviews the status of the County Budget on a quarterly basis to determine whether departmental expenses and revenues to date are consistent with the spending plan adopted, and amended from time to time, by the Board of Supervisors. Quarterly reviews provide an opportunity to identify variances from anticipated expenditures and revenue receipts, and permit budget staff to confer with departments regarding the potential need for budgetary adjustments. The mid-year Budget status report is particularly important in that(a)it is based',on a sufficient amount of experience during the budget year to permit a reasonably accurate assessment of how closely actual expenses and revenues are likely to track with the approved budget, and(b)it permits a relatively accurate prediction of year-end fund balance available for budget planning for the ensuing fiscal year. CONTINUED ON ATTACHMENT ry�x YES. �..__ _____-SIGNATUtE � _. _ -_-____--_.--___ _--_-----__- ____.______.__._-- RECOMMENDATION OF COUNTY ADMINISTRATOR € MMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON APPROVE AS RECOMMENDED OTHER See attaiied a3derl m. VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN X UNANIMOUS(ABSENT } AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN, ABSENT: ABSTAIN: ATTESTED Fly 25, M CONTACT: Dorothy Sansoe 335-10343 JOHN SWEETEN,CLERK OF THE Tony Enea 335-1494 BOARD OF SUPERVISORS AND COUNTY CC: CAO ADMINISTRATOR HSD, EHSD Auditor Sheriff BY v l 'o„� C3EPUTY Page 2 of 4 Our review of departmental budgets at this mid-year juncture suggests that departmental expenditures and revenues are performing substantially in accord with the approved budget. No actions of the Board are required at this time. This assessment could change based on intervening factors—e.g., revenue curtailments or program shifts by the State—that could affect current year costs and revenues, or that could substantially impact in a negative way our outlook for the ensuing fiscal year. DISCUSSION This report provides an overview of the status of the County's FY 2002-03 Budget as of December 31, 2002. Included in this report is a table that summarizes the County's mid-year fiscal condition by type of fund, by categories of expenses and revenues in the General Fund, and by General Fund department(Attachment 1). The County's implementation of its Board-approved FY 2002-03 spending plan is proceeding as anticipated. As of December 31, 2002, with 50% of the fiscal year having passed, actual expenditures for all County funds totaled 40.5% of planned spending, while actual revenues totaled 44.9% of amounts anticipated for the year. These figures compare favorably to 41.8% and 43.6% respectively for the same period last year. For the General Fund alone, actual;expenditures totaled 43.3% of planned spending, and actual revenues totaled 40.0% of amounts anticipated for the year. Again, these figures are in line with those experienced for the same period last year, 42.6% and 39.6% respectively. The specific dollar amounts were as follows: ALL FUNDS Second Quarter Summary (FY 02.03) Budget Actual Percent Expenditures $ 1,789,924,877 $ 725,375,533 40.5% Revenues $ 1,561,381,530 $ 701,572,113 44.9% GENERAL FUND Second Quarter Summary (FY 02-03) Budget Actual Percent Expenditures $ 1,163,870,409 $ 503,727,948 43.3010 Revenues $ 1,020,510,245 $ 407,735,095 40.0% GENERALFUND Second Quarter Expenditure Summary (FY 02-03)' Budget Actual Percent Wages &Benefits $ 521,255,424 $ 246,963,620 47.4% Services &Supplies $ 409,963,112 $ 177,694,462 43.3% Other Charges $ 252,837,197 $ 117,829,889 46.6% Fixed Assets $ 108,782,836 $ 20,380,883 18.7% Inter-departmental Charges $ (139,217,303) $ (59,140,6591) 42.5% Provisions for Contingencies $ 10,249,144 $ (215) 0.0% Total Expenses $ 1,163,870,409 $ 503,727,948 43.301 GENERAL FUND Second Quarter Revenue Summary (FY 02-03) Budget Actual Percent Taxes $ 139,506,000 $ 125,031,774 89.6% Licenses, Permits, Franchises $ 12,540,063 $ 2,218,891 17.7% Fines, Forfeitures, Penalties $ 13,346,204 $ 3,054,196 22.9% Use of Money&Property $ 9,541,496 $ 2,998,033 31.4% Federal/State Assistance $ 578,085,478 $ 178,102,948 30.8% Charges for Current Services $ 164,650,349 $ 78,790,790 47.9% Other Revenue $ 102,840,655 $ 17,538,464 17.1% Total Revenues $1,020,510,245 $ 407,735,095 40.0% . As noted above, County expenditures and revenues at mid-year were within acceptable parameters. Although significant variances in anticipated expenses and revenue receipts are noted at mid-year, these variances are normal and recurring, as noted below. Page 3 of 4 Revenues 0 Revenues from State and federal sources are typically late in being realized because much of it is based on expenditure claims paid in arrears. Therefore, departments that rely on State and federal revenue will experience a two-to three-month lag in revenues. Expenditures 0 Salary costs are generally understated at mid-year because salary appropriations in the budget. include cost-of-living adjustments, and COLA's were not effective until the beginning of the second quarter, October 1, 2002. Unanticipated vacant positions also lessen salary costs, though vacancy savings are running behind prior years. Some reduction in salary costs is anticipated in the second half of the fiscal year due to higher than normal retirements. CSS Employee benefit costs are understated at mid-year because the budget includes appropriations for health insurance cost increases that did not become effective until the beginning of the third quarter, January 1, 2003. In addition, the Retirement Board subsidized the retirement rates charged to the County for the first two quarters of the fiscal year, but this subsidy ended December 31, 2002. Actual expenses will increase the second half of the year. Q Services and supplies costs are generally understated throughout most of the fiscal year because of the time required to process payments to vendors and contractors. This payment cycle averages about one month in arrears. General County Revenue General County Revenue amounts to $234 million spread over 60 accounts. It consists primarily of $119 million in property tax, $61.9 million in vehicle license fee and $11.7 million in sales tax. Based on six months of experience, it appears that General County Revenues will exceed budget targets. Property tax revenue should exceed budget levels by 1% after adjusting for city redevelopment agencies, "no and low"city revenue losses, state mandated transfers to schooldistricts, Board directed distributions to Crockett and Rodeo, and estimated revenue losses due to property tax refunds. Most other major revenue sources should also achieve their revenue targets. New car sales have pushed VLF revenues to record highs this fiscal year. Sales tax revenue is expected to slightly exceed the budgeted target. Several major revenue sources will fall short of projections. Interest earnings will be short of target because interest rates have remained at record lows over the last six months, yielding less interest income. Transient occupancy tax revenue continues to grow slowly, reflecting the decrease in business travel. Office of the Sheriff. The Sheriffs fiscal year 2002-20303 budget was based on the assumption that he would have a certain number of persistent vacancies that would result in salary savings of$4.3 million (vacancy factor). During negotiations that led to the development of the current budget the Sheriff was advised that his budget would be adjusted if he was successful in filling these vacancies. Due to excellent recruiting and the Sheriff's Academy, the Department was able to fill virtually all of its vacancies. Therefore, the Sheriff anticipates exceeding his authorized spending level by$4.3 million for the year, notwithstanding significant spending reductions recently imposed including: reassigning the School Resource Officers at Monte Vista and John Swett High Schools, Resident deputies in North Richmond, Rodeo, EI Sobrante, Discovery Bay/Byrom, Bethel Island, and the Contra Costa Centre, and the DARE Deputies. The County Administrator's Office budget staff will continue to work with the Department to ensure that net County costs at year end do not exceed the amounts budgeted by more than $4.3 million. Heaith Services Department Budget on Target. The Health Services Department in recent years has experienced rising cost pressures and reduced revenues. This has caused the department to initiate various measures aimed at reducing costs and maximizing revenues. Due to these efforts in prior years, actual revenues and expenditures in the department are on target. Actual net County costs are 46.5% of budget for the first half of the fiscal year. The Health Services Department has fully implemented its budget balancing program for the 20102-03 fiscal year and is projecting a year end operating surplus in the amount of$550,000. The State of California recently received approval, after over a year of negotiations with the federal government,for continuation of the Selective Provider Contracting waiver programs (SPCP). The State uses some of its SPCP savings to provide additional supplemental funding for hospitals Page 4 of 4 through the SB-1255 program. The additional funding is provided to hospitals that meet specific criteria established by the State. The waiver approval also favorably addressed the issue of the Upper Payment Limit. The Contra Costa Regional Medical Center budgeted $6 million in supplemental payments in anticipation of these waives, which is now secure and will be received by year end. Last year the Health Services Department drafted and proposed legislation to the State Department of Health Services for an intergovernmental Transfer Program for Safety Net Hospitals that contract with local managed care plans. Because of the SPCP waiver negotiations the State could not support the proposal at that time. The State has since evaluated the concept, received federal approval without the need for legislation, and is moving forward to implement the program on a statewide basis. While the full details of the plan implementation are not known at this time, it is anticipated that the net benefit to the Regional Medical Center will be in the $243 million range annually or approximately$1.341.9 in the current budget year. If the State enacts this program as anticipated, the net proceeds of this action will be additive to the current projected operating surplus. Final details of the State plan should be known by March 30, 2001 The Board approved six months funding in the amount of$1.1 million for expanded 24-hour medical care coverage for inmates at the West County Detention Center. Due to extreme recruitment difficulties, the Board authorized the Department to issue a Request for Proposal for an outside agency to perform the services. Bids have been received from three vendors and are currently being reviewed. The earliest a firm can be selected, the contract approved and the contractor onsite is likely May or.lune of this year. Due to the late start up the majority of the $1.1 million will be saved. Employment and Human Service Department. The Employment and Human Services Department(EHSD)anticipates remaining within budgeted appropriations for the year, notwithstanding significant fluctuations in anticipated revenue and higher than anticipated salary costs. 0 In the second quarter, EHSD received approximately$4.2 million in new unanticipated revenue from State and federal sources. The Beard of Supervisors approved appropriation adjustments for this new revenue in January 2003. These adjustments are reflected in the data in the tables above. 0 Additional State and federal revenue is anticipated to be received within the next several weeks. It is expected that between $5 and $5.5 million will be received from a variety of sources. The County Administrator's Office budget staff will continue to work with the departments to ensure that net County costs at year end do not exceed the amounts budgeted (except as noted, regarding the Sheriff). Local Issues Impact Budget In Current and Budget Years As outlined at the Board of Supervisors Retreat held on February 14, the County is faced with a baseline budget shortfall in the coming fiscal year of approximately$50 million net County cost. This shortfall does not include program reductions that may be required as a result of the State's budget crisis, which is expected to be resolved during the summer. We have implemented a two-pronged approach to dealing with the $50 million budget gap: (1)an across-the-board ten percent reduction in net County cost affecting all County departments, and(2) the pursuit of mitigation efforts to close the remaining $24 million shortfall. Failure to achieve sought after mitigations will compel reductions in current year spending. Some time after the Board adopts its FY 2003-04 spending plan, the State will enact its budget. That budget will no doubt require significant additional reductions in the County's adopted budget. State Budget Reductions In the Current Year The Governor has proposed cuts to local government for the current year totaling $2.87 billion. At this time both the Assembly and Senate Budget Subcommittees have largely rejected these proposals. An in-depth report was provided at the February 4, 2003 Board of Supervisors meeting. ADDENDUM TO ITEM SDA February 25, 2003 On this day, the Board of Supervisors considered a report from the County Administrator on the second quarter status of the County budget. John Sweeten reported that his report was based on expenditures and revenuedata as of December 31, 2002. He indicated that the County was in good shape overall.' The Chair invited the public to speak. The following individuals spore: Mickie Marchetti, Reach Project, .Alcohol and.Other Drugs Advisory Board, 1915"D" Street, Antioch, CA 94509 in regards to budget considerations for the Alcohol and Other Drugs Division, Joan Bateson, Contra Costa Crises Center, P.O. Box 3364, Walnut Creek, CA' 94598 in regards to the Crisis Center contract cut; Arlette Merritt,.Early Childhood Mental Health Program, 4101 MacDonald Avenue, Richmond, 94805 or residence at 3401 Fleetwood Drive, Richmond, CA 94803 in regards to communications regarding budget cuts. After some discussion, the Board of Supervisors took the following action by unanimous decision: ACCEPTED the report from the County Administrator regarding the mid-year status of the County budget; ACKNOWLEDGED the impact of possible adjustments to the State's FY 200 - 03 .Budget to current year County programs, and RECOGNIZED that the County's FY 2003-04 Budget is at risk due to an anticipated $36 billion State shortfall in the coming fiscal year.