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HomeMy WebLinkAboutMINUTES - 04231985 - 2.7 TO: BOARD OF SUPERVISORS Phil Batchelor Contra FROM: County Administrator Costa DATE: April 23 , 1985 County SUBJECT: 1984-85 THIRD QUARTER BUDGET STATUS REPORT � �• SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION: RECEIVE this report; DIRECT County Administrator to continue to monitor budgets and implement appropriate plans for corrective action. FINANCIAL IMPACT: Continual review and monitoring of the budgets and immediate implementation of corrective action plans where merited will ,enable the County to finish the fiscal year on a more firm financial basis than in prior years. Without this level of review and activity, the County could well end the fiscal year in a very poor financial position. This would impact funding and services in 1985-86 and thereafter. REASONS FOR RECOMMENDATION: 1. To continue the recovery of the County' s financial health, it is necessary to carefully monitor the budgets and quickly take action to resolve problem areas that may be identified. 2. It is important that the Board and departments be continually updated on the latest financial information so that the County' s subsequent activities can be reflective of the appropriate outlook. 3. To ensure a healthy fund balance, which is used to partially finance the next year' s operations, a regular reporting process is essential. BACKGROUND: On January 24, 1985, the Board was presented with the Mid-year Budget Status Report. The mid-year report discussed the precarious position of the County' s finances and emphasized that the current year financing does not contain the large one-time funding that was available in the previous year, yet programs remained at essentially prior year levels. This situation was a major element in the conclusion that a cautious approach to spending is essential for the foreseeable future. CONTINUED ON ATTACHMENT: z YES SIGNATURE. RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) ACTION OF BOARD ON Pr 23 , 1965 APPROVED AS RECOMMENDED x OTHER VOTE OF SUPERVISORS X UNANIMOUS (ABSENT --- ) I HEREBY CERTIFY THAT THIS IS A TRUE AYES: NOES: AND CORRECT COPY OF AN ACTION TAKEN ABSENT: ABSTAIN: AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. CC: County Departments via ATTESTED April 23 , 1985 County Administrator PHIL BATCHELOR, CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR M382/7-83 BY DEPUTY L Several significant problems were identified as part of the Mid-year Budget Status Report. Those items were: *Financial problems in the Health Services Department brought about by a misunderstanding of some budget charges and over- expenditure in some categories; *Animal Services revenue deficit brought about by the absence of revenue producing contracts for services with the cities; *Revenue receipts for general county revenues that were far below amounts budgeted, caused by a variety of factors, including lack of activity to generate revenues in some areas and misinformation provided by the State in others. *Lag time in the receipt of revenue reimbursements for State and Federal programs, brought about by reimbursement practices at the State and Federal levels and some delay in requesting reimburse- ment at the County level. By accepting the recommendations in the Mid-year Budget Status Report, the Board of Supervisors solved the immediate funding problems for the Health Services and Animal Services Departments. In addition, the Board directed the County Administrator to continue to monitor the budget and implement plans for necessary corrective action. As a result of the Board' s directive, the following actions were taken by my office: *A "freeze" was placed on budgets for which there were major expenditure or revenue concerns; *Further information was obtained and more follow-up was done on specific large revenue accounts which had experienced lower than anticipated receipts; *Further indepth monitoring of the Health Services Department' s budgets was accomplished; *Increased efforts were made to reduce lag time in reimbursements including contacting the State to solicit their assistance; *More careful review of appropriation transfers was initiated and only those transfers with significant benefits or which could not be postponed were recommended. Freeze on Certain Budgets Effective February 11, 1985, several budgets which had expenditure or revenue experience indicating a projected year end net County cost overrun were placed on a "freeze list" . The impact of the freeze was that requests to fill vacant positions or purchase large services and supply items or fixed assets required approval by the Administrator' s Office. Twelve budget units, representing seven departments, were placed on the freeze list. The result of the third quarter freeze is anticipated savings in each of the affected budgets. General County Revenues Revenues were identified as a concern in the Mid-Year Budget Status report. Follow-up was done on major accounts and several of these have shown marked improvement in receipts during the third quarter as a result. Although considerable progress towards meeting the budget goal has been made during the third quarter, the expectation is that many of these accounts will still end the year at levels significantly under the budgeted amount. These continue to be a major concern, and will be carefully watched during the remainder of the fourth quarter. -2- Health Services Department ' s Activities The Administrator's Office and Health Services Department carefully monitored the third quarter expenditures and revenues for the Health Services Department. In March, it became apparent that expenditures were above expectations, and that corrective actions would be necessary. The Health Services Director, after consulting with our office, implemented several actions which resulted in significant savings of service and supply expenses. In addition, eleven vacant positions were identified for elimination. In early April, the Board cancelled those positions. The net result of these actions is the expectation that the Health Services Department should end the year with a positive fund balance. A note of caution is needed, however. Unforeseen fluctuations in either revenues or expenditures could put the Health Services Department in a negative position very quickly. For this reason, continual review of these budgets ' status is essential. Efforts to Decrease Time to Receive Reimbursement for Services During the Third Quarter, the Auditor' s Office increased efforts to make contact with agencies which reimbursed the County for costs associated with services provided on behalf of those agencies and some progress was made. Arrangements were made, where possible, to receive advances for services to be rendered, rather than after-the-fact reimbursement. However, further attention is needed in this area if significant improvements are to be made. AREAS OF CONCERN IDENTIFIED DURING THIRD QUARTER BUDGET REVIEW In addition to a review of the concerns identified above, as part of the third quarter review, each budget unit was reviewed by the Adminis- trator' s budget staff. Line items as well as programs were analyzed to determine if the budget could anticipate a positive fund balance by the end of the fiscal year. Most budgets are expected to have small balances by the close of the fiscal year. Several merit further review. A detailed discussion of the budgets which did not fall within expected straight line norms for the third quarter is included on Attachment 1. The budgets which are discussed on the Attachment fell outside the parameters of expenditures from 57 to 67 percent expended by 66. 7% of the year, and revenues from 67 to 77% at 66. 7 percent of the year elapsed. A summary of those areas identified as problems is as follows: .1. Municipal Court Revenues The Municipal Courts are experiencing revenue receipts at a lower level than was anticipated. This experience, coupled with expenditures at expected levels, will yield a year end net cost which is approximately $300,000 higher than the net cost budgeted for the courts, unless the courts take action to reduce expenditure levels during the fourth quarter. Our office has been working with the courts in an effort to accomplish that end. However, the results have been less than satisfactory to date. Our office will continue to work with the courts on this problem during the fourth quarter. 2. Marshal The Marshal was required to staff a new court this fiscal year, but was not given additional staff. This made it necessary to transfer a revenue producing field deputy to the courtroom, resulting in the loss of revenue. Additionally, expenditures have been above expectations. This budget was monitored carefully during the third quarter, although no freeze was imposed on expenditures. However, it became apparent that the net budget -3- would be exceeded unless corrective actions were taken. For this reason, a freeze was placed on this budget during April. 3. Grand Jury Expenses The 1984-85, the Grand Jury was chosen from among a pool of people who had volunteered to serve, as compared to prior years when Jury was chosen by random selection from judicial nomina- tions. This method of juror selection seems to result in increased interest and activity. Increased activity translates to more meetings, studies and expense. In addition, this year' s Grand Jury has commissioned a special audit, which has had the impact of pushing expenditures beyond the amount budgeted. An appropriation adjustment was made in March to fund the special audit and expected expenditure through April. However, it is expected that another augmentation to this budget will be necessary before the end of the year, unless the Grand Jury' s activities drop off measurably in the fourth quarter. 4. Administrative Costs for The Supplemental Roll Due to the low activity level in implementing the supplemental roll program for the first five months of the year, allowable administrative charges could not be made as anticipated. Although the Assessor has increased activity significantly since December, receipts are still behind expectations for the year. Since the allowable administrative charge is based upon the total values entered onto the supplemental roll, unless the Assessor can accomplish the entire year' s expected activity during the last seven months, the administrative charge will not be received as budgeted. The Assessor has been given additional staff and data processing support in an effort to increase revenues. And, although activity remains high into April, it is unlikely that the budgeted allocation will be met. This will affect revenues for the Treasurer-Tax Collector, Auditor-Controller and Assessor. Looking Ahead - Areas of Concern for 1985-86 In addition to concerns about the fund balance which might be avail- able to help fund next year' s budget, several major fluctuations in either funding sources or funding demands may take place next fiscal year. The County should take every prudent action possible to .insulate itself from the impact of these fluctuations. Among the major items are: *Possible Loss of State and Federal Revenues for 1985-86 - Revenue sharing - loss of up to $3,700,000; - .Foster care funding - formula change which results in loss for half year of $1, 050,000; Property tax - shift of $955,000 from the County and additional funds from the fire districts and library to fund SB 1091 - Funding bill for "no property tax" cities; Possible loss of the current "hold harmless" agreement in child welfare services funding of up to $1 ,000,000. *Possible Increased Expenditure Requirements for 1985-86 - Funding for detention to relieve overcrowded conditions at the jail; - County match of 25% for a State bond grant for new jail. Total match is $9 ,000 ,000; additional staffing will also be necessary in future years; -Pick up of retirement cost of living increase. -4- Most of these items are on-going rather than one time. Additionally, the future year funding for many of them is significantly more than the 1985-86 cost because it represents a full year ' s loss rather than a portion of a year. Additionally, most County budget requests have been received and departments are asking for significantly more funding than is expected to be available next year. Many of these funding requests are critical if the County is to maintain services in those areas next year. My staff is currently reviewing and preparing recommendations on the budget requests. A more precise financial picture will be available upon completion of that process in late May. I will be making further reports to you as the fourth quarter progresses and recommending that appropriate actions be taken as the issues arise. -5-