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HomeMy WebLinkAboutMINUTES - 10242006 - D.2 2• e Contra TO: BOARD OF SUPERVISORS FROM: JOHN CULLEN o`I Costa County Administra or A�a County DATE: October 24, 2006 SUBJECT: Preliminary Year-End Report FY 2005-06 D . oZ SPECIFIC REQUEST(S)OR RECOMMENDATiON(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: ACCEPT report of preliminary close-out figures for fiscal year 2005-06. FINANCIAL IMPACT: This report is for informational purposes only and has no fiscal impact. BACKGROUND On May 2, 2006 the Board of Supervisors adopted the FY 2006/07 Recommended Budget, which balanced annual estimated expenditures with estimated revenues to dose the General Fund and Hospital Enterprise Fund structural deficit of$42.4 million. A significant turning point in the County's fiscal health,the adopted budget cuts went into effect almost two full months before the end of the 2005/06 fiscal year. Therefore, the Board's adoption of the FY 2006/07 General Fund budget not only balanced annual expenses and revenues but also began rebuilding General Fund Reserves. Budget expenditures had been growing an average of 5.5%a year for the past four years,while revenues had grown an average of 4%per year. This"structural"deficit had been filled through the spending of general fund reserves. In December 2005, Moody's Investors Service downgraded the County's Credit Rating. The Rating Update indicated: "The downgrade reflects the Countys significant and continuing budgetary imbalance and the resultant erosion of its reserves and operating flexibility. [The]outlook on ratings remains negative, reflecting the County's failure to implement concrete measures to reverse this three-year downward trend." Accordingly,the Board of Supervisors adopted a General Fund Reserve policy establishing specific goals regarding the County's total and Unreserved General Fund balance. The Unreserved General Fund goal is 5%of each year's projected revenue—approximately$61 million for FY 2006/07. if the County realizes reserves above the minimum levels defined in the policy, the first use shall be to annually deposit the funds into an account designated for capital projects and other one-time uses. In furtherance of this goal,the Board of Supervisors directed the County Administrator to begin rebuilding the County s General Fund Reserve. CONTINUED ON ATTACHMENT: X YES SIGNATURE ` RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMME DATION OF ARD COMMI E APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON 0 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 Lisa Driscoll 335-1023 Cc: County Administration ATTESTED e� Auditor-Controller JOHN CULLEN,CLERK OFTHE BOARD OFSUPERVISORS BY: / DEPUTY Board of Supervisors October 24, 2006 Page Two The chart below' shows the change in the General Fund revenue and expenditure lines achieved through the combination of a hiring freeze, higher than anticipated property tax revenue and other general purpose revenue, transfer of VLF securitization reserves into the General Fund, and the impact of two months worth of FY 2006/07 cuts achieved in the 2005/06 fiscal year. We've also projected the trajectory of our expenditures and revenues as assumed in our 2006/07 Fiscal Budget.2 Change in General Fund Actual Status 1,250- 1,200 - 1,150 - 1,100 - 1,050 - 1,000 - 2001-02 ,2501,2001,1501,1001,0501,0002001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Actual Actual Actual Actual Actual Projected —♦—Total Expenditures —M--Gross Revenue The following chart reflects the change in Unreserved General Fund Balance, as a percentage of total revenue. This chart graphically depicts the County's success at achieving the Board's directive of a 5% minimum Unreserved General Fund balance. We have also projected the Unreserved General Fund Balance for FY 2006/07 at this 2005/06 improved level, given that our 2006/07 Final Budget assumes no encroachment on Fund Balance.2 Unreserved Fund Balance June 30, 200x 14% 12% 10% 8% 6% 4% - 2% 0% 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Actual Actual Actual Actual Actual Projected In conclusion, the County Administrator's Office is pleased with our short term progress and is cautiously optimistic for the longer term. The changes we are managing in expenditures and revenues suggest that in FY 2007/08 the County will be in a position to fund the increased annual cost of services without relying heavily on service reductions. This possibility has been significantly enhanced by reaching agreement with our Labor Unions on compensation changes that are cognizant of our need to restore our fiscal health in order to improve future service delivery. These trends notwithstanding, the County will continue to face fiscal challenges, the largest of which is the rising cost of retire health care. The County has retained an investment bank and an actuarial firm to work with the Other Post Employment Benefits (OPEB)Task Force to evaluate options for dealing with this liability. The next OPEB report is scheduled for the Board in February 2007; at which time recommendations will be presented. ' Figures in these charts for FY 2005/06 reflect unaudited data. All other figures are taken from the County's Comprehensive Annual Financial Report. 'As a caution, many factors can stip impact current year projections including Federal-State Legislation, shifts in revenue, unforeseen liabilities and claims, etc. ADDENDUM TO D.2 OCTOBER 24, 2006 —2006 Recommended County and Special District Budgets On this day the Board conducted a hearing on the 2006/07 Recommended County and Special District budgets. County Administrator John Cullen presented a four slide power point presentation that showed the year end report for Fiscal Year 2005/06,noting a turning point in the County's fiscal health two months before the end of 2005/06 Fiscal Year that not only balanced annual expenses and revenues but also rebuilt General Fund Reserves. Mr. Cullen said a change in the General Fund revenue and expenditure lines was achieved through a hiring freeze,property tax revenue, general purpose revenue,transfer of Vehicle License Fee securitization reserves, cooperation of the Department Heads and the impact of Fiscal Year 2006/07 cuts achieved in 2005/06 Fiscal Year. Mr. Cullen said figures for 2006/07 reflect unaudited data and cautioned many factors could still impact current year projections including Federal-State Legislation, shifts in revenue, and unforeseen liabilities and claims. He continued saying there is approximately$100m in reserves for the end of 2006/07, which makes up 8.4% of the total General Fund Budget. He said in order to have future fiscal recovery the County would need to balance the budget for 2006/07,build reserves and update Board of Supervisors policy, refine and adopt budget policy, develop debt policy, finalize capital infrastructure plan and institute Other Post Employment Benefits (OPEB) cost containment strategies. Mr. Cullen said the County needs to stay focused on is fiscal recovery actions for this year and continue the trend to make sure the County's baseline expenditure level does not creep up and overtake revenues during the budget year. All Supervisors thanked the County Administrator and his staff, former County Administrator, Mr. John Sweeten, Local 1, and other represented employees for the recovery in the General Fund. The Chair asked the public for their opinion and the following people spoke: • Kris Hunt, 838 Escobar Street, Martinez, urging the Board to deal with the unfunded liability for Health care; • Roland Katz, Public Employees Local 1, applauded County Administrator, John Cullen for his efforts, and said there were tremendous strains on this County in terms of services and shortage of staffing with more people in the community. By a unanimous vote with none absent, the Board of Supervisors took the following action: ACCEPTED report of preliminary closeout figures for Fiscal Year 2005-06. Lisa Driscoll To: acain@mail.contra-costa.lib.ca.us, ahernandez1@ehsd.cccounty.us, 10/24/2006 11:15 AM bpoll@tax.cccoounty.us, cbalt@bi.cccounty.us, ,.y corinne_kelly/olibrary@contra-costa.lib.ca.us, dbarr@cd.cccounty.us, dcole@pd.cccounty.us, ddawson@eccfpd.org, dfabella@ehsd.co.contra-costa.ca.us, dneje@hrd.cccounty.us, emeye@ag.co.contra-costa.ca.us, Elaine Baird <EBair@cr.co.contra-costa.ca.us>, ghowe@asd.co.contra-costa.ca.us, gkram@assr.co.contra-costa.ca.us, gslus@cd.cccounty.us, Gary D Villalba/VS/CCC@CCC,jjeff@orc.cccounty.us,jmill@asd.cccounty.us, jpenn@cob.cccounty.us,jtrav@ac.cccounty.us, jvalentine@ccccsd.org, KRich@cccfpd.org, Ibritton@dcss.cccounty.us, Ichat@prob.cccounty.us, Idippel@dcss.cccounty.us, Igent@hrd.cccounty.us, mforn@so.co.contra-costa.ca.us, mgarbers@hsd.cccounty.us, mking@gsd.cccounty.us, mlango@gsd.cccounty.us, mshiu@pw.co.contra-costa.ca.us, mwamo@so.cccounty.us, MWara@pw.cccounty.us, ndmerritt@ucdavis.edu, nrush@bi.co.contra-costa.ca.us, pdaniels@contracostada.org, rhary@riskm.co.contra-costa.ca.us, rkochly@contracostada.org, rpere@assr.co.contra-costa.ca.us, rtamayo@contracostahousing.org, shoff@cao.cccounty.us, smarc@cc.co.contra-costa.ca.us, spfister@ccccsd.org, sweir@cr.co.contra-costa.ca.us, swmurdock@ucdavis.edu, sybar@ac.cccounty.us,twhit@doit.co.contra-costa.ca.us, valeriepastor@prob.cccounty.us, vwish@cccfpd.org, wrupf@so.co.contra-costa.ca.us,wwalker@hsd.cccounty.us cc: Subject: Correct Copy of PowerPoint Presentation on Year-End Close Out Lisa Driscoll, Senior Deputy County Administrator Contra Costa County Administrator's Office t P(925) 335-1023; F(925) 646-1353 Preliminary Year-End Report.ppt \\ \ 000 a �WE \ e \y \ \\ \\ \ n \\ \ y \N D -� � � �� ��\ ✓ - \����` \\y���\\Y\ \�� �\ �� fit, -� w - \ \ 3oil \\ y Y y \\\\ \\\\ \ \\ s \ y z � .�, - '�' .•�y \�\y�� � y. \\�yya ass � u a� 2 ,s rr F A. r ai wyw � t a \\ \ .y� _ 3 _ ,r. 4,r ! ti O O 0 N V Q ' co O U > N C:) � N o o L U Ln U Q) o oC o Q _ o N r U � � LL co L +-� U 4-JO Q N N xQ. 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