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HomeMy WebLinkAboutMINUTES - 01272004 - SD4 .......................................... ............... ....... ......... ..... TO: BOARD OF SUPERVISORS ...... Contra .' .. Costa FROM: John Sweeten County Administrator °srA- - County DATE: January 27, 2004 61% 4 SUBJECT: 2003-04 FY MID-YEAR BUDGET STATUS REPORT SPECIFIC REQUESTS)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. ACCEPT this report from the County Administrator regarding the mid-year status of the County Budget. 2. ACKNOWLEDGE the Current year budget risk posed by the Governor's proposed $2.6 billion in budget cuts currently under review by the legislature. 3. RECOGNIZE, that the County's FY 2004-05 Budget is at risk due to an anticipated $14 billion State shortfall in the coming fiscal year. BACKGROUND: The Administrator's Office annually reports the status of the County Budget at mid-year 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. Mid- year 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. rt CONTINUED ON ATTACHMENT: X YES SIGNATURE:' IN 24 e�_4 RECOMMENDATION OF COUNTY ADMINISTRATOR RSCQXAMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON january 27, 2004 APPROVED AS RECOMMENDED X OTHER SPEkXM: Rollie Katz, Public &ployees Union Local One, P.O. Box 222, Martinez VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF THE BOARD OF X UNANIMOUS(ABSENT None SUPERVISORS ON THE DATE SHOWN. AYES: NOES: ABSENT: ABSTAIN: Contact: Tony Enea,5-1094 Cc: CAO ATTESTED j2p�m 27, 2004 HS JOHN, SWEETEN,CLERK OF THE BOARD OF EHS SUPERVISORS AND COUNTY ADMINISTRATOR Auditor A Phillip Garvey BY: In DEPUTY U ............ ................... .............................................................................................................................- .......................................................... 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 2003-2004 Budget as of December 31, 2003. Included in this report are tables that summarize 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 (Attachmentl). The County's implementation of its Board-approved FY 2003-04 spending plan is proceeding as anticipated. As of December 31, 2003, with 50% of the fiscal year having passed, actual expenditures for all County funds totaled 41.2% of planned spending, while actual revenues totaled 43.7% of amounts anticipated for the year. These figures compare to 40.5% and 44.9% respectively for the same period last year, indicating the budget is tighter than in the past and will have less year-end fund balance. For the General Fund alone I, actual expenditures totaled 44.3% of planned spending, and actual revenues totaled 39.4% of amounts anticipated for the year. Again, these figures compare unfavorably to our experience for the same period last year, 43.3% and 40.0% respectively. The specific dollar amounts were as follows: ALL FUNDS Second Quarter Summary Budget Actual Percent Expenditures $ 1,843,544,892 $ 760,034,085 41.2% Revenues $ 1,631,470,959 $ 712,946,850 43.7% GENERALFUND Second Quarter Summary Budget Actual Percent Expenditures $ 1,173,529,865 $ 519,990,024 44.3% Revenues $ 1,059,337,099 $ 417,227,440 39.4% GENERAL FUND Second Quarter Expenditure Summary Budget Actual Percent Wages & Benefits 562,216,143 266,545,684 47.4% Services & Supplies 397,616,269 174,480,115 43.9% Other Charges 271,381,272 126,980,970 46.8% Fixed Assets 78,520,375 14,258,858 18.2% inter-depart rental Charges (146,204,194) (62,275,603) 42.6% Provisions for Contingencies 10,000,000 0 0.0% Total Expenses $ 1,173,529,865 $ 519,990,024 44.3% GENERAL FUND Second Quarter Revenue Summary Budget Actual Percent Taxes $ 155,940,000 $ 132,718,607 85.1% Licenses, Permits, Franchises $ 15,273,832 $ 2,471,193 16.2% Fines, Forfeitures, Penalties $ 14,943,514 $ 2,735,019 18.3% Use of Money & Property $ 6,070,986 $ 1,905,746 31.4% Federal/State Assistance $ 562,827,300 $ 163,877,649 29.1% Charges for Current Services $ 186,699,985 $ 88,174,633 47.2% Other Revenue $ 117,581,482 $ 25,344,593 = 21.6% Total Revenues $ 1,059,337,099 $ 417,227,440 39.4% I........................................................................I................................ ........I.................... ..................................................... As noted above, County expenditures and revenues at mid-year were withinacceptable parameters. Although significant variances in anticipated expenses and revenue receipts are noted at the mid-year, these variances are normal and recurring, as noted 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, departments that rely on State and Federal revenue will experience a two-to three-month lag in revenues. Expenditures ❑ 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, 2003. 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 retirements, which tend to occur in March. ❑ 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, 2004. Actual expenses for employee health insurance will increase the second half of the year. ❑ Service 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$247 million spread over 60 accounts. It consists primarily of$132 million in property tax, $53 million in non-realignment vehicle license fees and $12 million in sales tax. Based on six months of experience, it appears that General County Revenues will be on budget target. This contrasts with prior years when revenues exceeded the.budget levels. There are several reasons for this revenue situation. First, revenues were budgeted aggressively this fiscal year, which means that target levels were raised higher than in normal years. Thus, even though most revenue sources are meeting or exceeding their targets, the amount in excess of target is smaller than in prior years. The second reason for the relatively tight revenue situation is that interest earnings have dropped significantly from the budgeted level. The revenue drop is attributable to the continuing record low investment returns and to a drop in General Fund cash balances available to invest. Given the projected revenue position at mid-year, General County Revenues will be intensely monitored over the remainder of the fiscal year. The CAO staff will work with the staffs of the Auditor and Treasurer Offices to monitor interest earnings. CAO staff will also continue to monitor the vehicle license fee revenue, which has experienced major changes in fee levels resulting in major accounting challenges on the State and local levels. 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. The actual net costs are 51% and actual revenue is approximately 30% of budget for the first half of the fiscal year. This would indicate that the department is on a path to exceed their budget authority. However,; please remember that 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, there is at least a two to three month lag in revenue receipts. In addition, approximately $6.6 million in revenue is expected ..................................................................................................................................... ......................................................... ......................... to be received in the next several weeks from various sources. Appropriation adjustments have not yet been submitted to the Board of Supervisors for this new revenue, but will be in the near future. After accounting for these revenues, the EHSD should end the fiscal year within their budget appropriation. 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. Health Services Department Over the past several years the Health Services Department has experienced rising cost pressures coupled with modest revenue increases. This experience is continuing in the current year. Various measures aimed at reducing costs and maximizing revenues were undertaken during the 2002-2003 fiscal year and are continuing in 2003-2004. Most significant of these actions was the total restructuring of the Ambulatory Care appointment system and the financial counseling screening process. This restructuring effort moved the financial screening process from the "point of service" to a "pre" appointment method. This action resulted in excess of$5 million in additional revenue, and increased clinic capacity for those individuals most in need of service. The Department was awarded top honors by the California Association of Public Health Systems for this innovative system change. Due to these continuing efforts, actual revenues and expenditures in this $600 million department are on target. Actual net costs are 47% of budget for the first half of the fiscal year. The Department is projecting a net County cost fund balance of approximately $500,000 at year-end. Pending Current Year State Budget Cuts Governor Schwarzenegger submitted a spending reduction plan to the legislature of$2.6 billion effective this fiscal year. These cuts were proposed to support the backfilling of vehicle license fee revenue to local government. County programs slated for cuts include CALWORKS, In-Home Supportive Services, Medi—Cal, Food Stamps and Child Welfare Services. No hearings have yet been scheduled by the legislature, although leaders of the Democrat majority have indicated serious concerns with most of the cuts and clear opposition to others. If these budget reductions are enacted, County programs will require adjustments. It these budget reductions are not enacted, the budget impact on the County is uncertain. __. _. . _........ ......... ......... ......... ......... ......... ......... ......... ......_.... __ __ ........ ......... ....._....._ ._......_.._._..............._..... ......._. ......... ......... ......... ......... ......... � � � G? 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