HomeMy WebLinkAboutMINUTES - 06061986 - 2.1 TO: BOARD OF SUPERVISORS M.-'S
Contra
FROM: Phil Batchelor, County Administrator
Costa
County
DATE: June 13 , 1989
SUBJECT: 1989-90 PROPOSED BUDGET
SPECIFIC REOUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
Approve the enclosed recommended 1989-90 Budget and establish hearing
dates on the Final Budget.
BACKGROUND:
Each year before June 30, the Board is required to adopt a proposed
budget. The enclosed document accomplishes that legal requirement.
I
The ,,letter accompanying the budget summarizes the issues.
CONTINUED OWATTACHMENT: X YES SIGNATURE: 1,4ft.
V V
-RECOMMENDATION OF COUNTY ADMINISTRATOR -RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON June 6, 1989 APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
X UNANIMOUS(ABSENT AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
CC: County Administrator ATTESTED 4Q�n� /a, /9?(?
Auditor-Controller PML BATCHELOR,CLERK OF THE BOARD OF
SUPERVISORS AND COUNTY ADMINISTRATOR
M382 (10/88) BY DEPUTY
County Administrator Contra Board of Supervisors
Tom Powers
County Administration Building Costa -st District
651 Pine Street. 11th Floor Nancy C. Fanden
Martinez,California 94553 21d District
(415)646-4080 County Robert 1. Schroder
Phil Batchelor 3rd District
County Administrator Sunne Wright McPeak
4ih District
Tom Torlakson
5th District
2.
June 6, 1989
Board of Supervisors
Contra Costa County
Administration Building
Martinez, CA 94553
1989-90 BUDGET MESSAGE
As Contra Costa County enters the last decade of the 20th Century, it is
confronted with an unparalleled challenge. During the last 11 years the
County has made tremendous gains in productivity and as a result now
produces more output and is more effective at delivering services to the
public than at any time in history. Nevertheless, the County faces a unique
problem of continually striving to handle increased demands for services
without accompanying revenue allocations from the State or Federal
Governments.
The County must rely on revenue from Sacramento or Washington to
continue the programs that the State Legislature and Congress have
deemed should be provided to the public by the County. During the past
decade there has been a continual effort made to obtain financial relief in
order to continue to fund underfunded or unfunded mandates. But now the
County finds itself facing a unique problem as it enters the 1989-90 Fiscal
Year. Neither the State of California nor the Federal Government are in a
position to help. It appears that it is no longer even a question of whether
or not they are willing to help counties. The fact is they no longer have as
much flexibility or the discretion to help even if they wanted to. Congress
is continuing to struggle to balance the Federal budget and eliminate the
deficit. The State, due to the passage of Propositions 4 (spending limit) and
98 (the school funding initiative), finds itself in the precarious position of
having little more flexibility than counties have had in the past.
With little likelihood of assistance coming from the State or Federal
Governments, the County finds itself in a very austere position as it enters
the 1989-90 Fiscal Year. The 1989-90 Proposed Budget contains
$128,715,621 in additional requests that have not been recommended for
funding. The reason that the majority of these requests cannot be
recommended is not based on a lack of merit, for most can be justified based
on workload increases. These requests cannot be recommended to the
Board because there are insufficient funds which would allow the Board to
seriously consider their inclusion in the Final Budget.
This request for additional resources includes justification for 155 new
positions. It should be pointed out that this figure is abnormally low due to
the fact that many departments recognize the reality of the current financial
situation and therefore do not go through the process of asking for badly
needed new positions that they know cannot be funded. Only three new
positions are recommended for funding in the budget, and each of these is
able to';offset its costs by revenues that they generate as a result of their
activities. These additions are offset by a recommended deletion of eight
.existing positions in the Community Services and Private Industry Council
Departments. This results in a net overall reduction of five positions in the
1989-90 Proposed Budget.
As conservative as the Proposed Budget is, it does not contain funding for
some of the more pressing problems that will be facing the County in the
next fiscal year. The following is a list of some of the more critical issues
which will have to be addressed at the Budget Committee hearings and final
budget hearings in July, 1989.
❖ The West County Justice Center is due to be completed in the spring
of 1990. In order to make the new facility operational, it is estimated
that $9.8 million in additional resources will be required. These
resources have not been included in this budget due to the uncertainty
of what impact the State budget measures will have on the County.
Once the extent to which the County budget will be impacted is
understood and the areas which will be affected are known, then more
rational decisions can be made as to what can be done to begin to
finance the opening of the new facility. It is anticipated that as of the
writing of this document Trial Court Funding will be continuing in the
1989-90 State budget and that it will be able to provide some funding
.to assist in opening the new jail.
-ii-
❖ One of the most difficult problems that the County is facing is how it
can best deal with the homeless situation. The Federal Government's
reduction from $33 billion down to $11 billion in the amount of money
available for subsidizing housing has resulted in thousands of people
across the country finding they cannot afford to provide housing for
themselves or their families. As a result, these individuals have come
to the County for relief. The considerable effort the County made in
1988-89 to assist in alleviating this problem placed considerable
burdens on the Social Services Department and in particular the
General Assistance budget unit. Additional funds requested to assist
in this area in the future have not been included in the 1989-90 budget.
No General Fund supplement is recommended to help maintain the
County's 748 miles of roads which are in the unincorporated part of
the County.
Examples of some of the major reductions currently being considered by
the State at the time of preparation of this document include the following:
•:� The Governor has proposed severe cuts in the County Justice System
Subvention Program. If these reductions are realized, the County
could lose a substantial portion of the funds that currently are funding
juvenile facilities in our County as well as assisting in the financing of
community organizations such as Battered Women's Alternatives,
Friends Outside, etc.
Substantial reductions in the health care field could result in the
Medically Indigent Adults (MIA) Program being cut back. This is a
likely occurrence if the legal or legislative challenges are successful
which are attempting to redirect tobacco tax revenues which are
currently proposed as backfill to replace the funds that have been
taken from the MIA Program. Locally this could mean a reduction of
$750,000 in out-patient services and clinical programs and could
result in extending waiting periods for both in-patient and out-patient
programs.
-iii-
The Governor has also proposed as a potential alternate reduction of
another $200 million in the area of mental health. If these reductions
were to be made, it is uncertain as to how the cutbacks would be
distributed on a county-by-county basis. However, based on latest
available information, Contra Costa could suffer as much as a $7.9
million reduction. But regardless of which formula is used to eliminate
the reductions, the County would suffer by having to eliminate out-
patient services in mental health clinics and would have to make
significant reductions in the area of alcohol and drug abuse prevention
treatment programs.
The latest available information from the State on the day this document
goes to the printer is that the State has revised their estimates to indicate
that potentially as much as $2 billion plus over two fiscal years has been
identified as unanticipated revenues which have been realized as a result of
the State income tax returns. It is not possible to determine the impact these
funds will have on the above-mentioned target area, but a supplement to
update the Board of Supervisors on the State's position will be prepared
prior to the beginning of Final Budget hearings.
As was the case in 1988-89, the 1989-90 Proposed Budget does not contain
sufficient funding to keep pace with the increasing demand for services and
workload increases. However, it does represent a balanced budgeting plan
that can be sustained in the next fiscal year.
Although the budget is balanced, it should be noted that both revenue and
fund balance projections are still preliminary and will likely be changed
before the Budget Committee begins its deliberations. During the period
between the adoption of the Proposed Budget and the Board Committee
hearings, the most recent data will be reviewed and analyzed and a report
will be presented to the Board with the most accurate estimates available.
Based on these revised estimates, some changes in the budget expenditure
plan will be recommended.
CONTINUING BUDGET CHALLENGES
Besides the items of concern mentioned above, the County continues to
deal with the day-to-day challenges which increase the difficulty of trying
to balance expenditure requests with available revenues. Included below is
a brief discussion of some of these issues:
❖ Detention
The Detention Program profoundly affects all the other programs in
the Criminal Justice area. The average daily detention facility
projected population for 1989 is about what was expected. However,
as the following chart depicts, the increase in population experienced
in the County's detention facilities since 1981 is alarming when one
considers that Contra Costa County has the lowest incarceration rate
per capita of any major County in the State.
Detention Inmate Population
2,200
11800 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
I 1,294 1,410
19400 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,101
Daily Inmates
900 920
110OO . . . . . . 680- - - 760- - - -760- - -
530 ?-0
600 - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
200
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -200
1981 1982 1983 1984 1985 1986 1987 1988 1989
Year Projected
Social Services
County costs for mandated Social Services Programs have
skyrocketed in recent years as the following chart indicates. These
are programs that the County is required to fund without regard to the
availability of local revenues to assist in serving this population. In
other words, the County must provide aid or assistance to every
individual who meets State or Federal program criteria without regard
to whether or not it can afford to.
County Cost social service Programs
(in millions)
$20 -
$16 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
County
:.`: C?or;dv:}�: .<:.:;<2:Vii::<:i2::} ,i,}•�G2
Costs
;
�:: ` '?'L.
..
;y> :.
'l:?F?ij'.:v'..: '��\': ti:J::: .y\.i:.R,:?n.\'}:
1,??ti{if>: :n•Y.:iiy:: a�SZ\\
8
$
y
•::.:i :i.}:iii:".
ii
?R ii
:
I
O
$
1984-85 1985-86 1986-87 1987-88 1988-89 1989-90
Fiscal Year (est.) (prof.)
If an individual does not meet the criteria to qualify for Federal or State
Social Services Programs, then under State law they become the
responsibility of the County. People who are assisted in this way are
General Assistance recipients. General Assistance Programs are
funded 100% by local revenues. Once again, the County has no
discretion as to whether or not it will serve General Assistance
recipients. Over the last several years the General Assistance budget
has more than doubled due in large part to the number of homeless
individuals the County is now required to serve.
The General Assistance Program in California is unique as it is the only
one in a state of over a million population which requires its counties
to pay 100% of the cost of the General Assistance Program. The
following chart illustrates that in the last few years the County costs
for General Assistance have increased from just over $4 million to
over $9.5 million.
cost County Costs for General Assistance
$1 (in millions)
$14 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10- - - - - - - - - - -
M
v\
$8
i-
7 \.
$ \ �:
6
5 ,
4
\-:
,
\,
$2 *:
1984-85 1985-86 1986-87 1987-88 1988-89 1989-90
Est. Proj.
Fiscal Year
-Vii-
❖ Health Services
As the County enters the 1989-90 fiscal year, alcohol and drug abuse
problems are at an all time high. Ironically, as was mentioned
previously, the Governor is considering an alternate budget proposal
which could substantially reduce mental health funding which would
provide badly needed funds for treating the problems associated with
addiction. This would be on top of the devastating cutbacks in mental
health which have previously occurred when State legislation reduced
State hospital beds from over 36,000 to less than 5,000.
Another area of challenge that is currently facing the Health
Department is in the area of treating medically indigent adults. In
1982 the State turned over to the counties administration of a
program to provide medical services for the indigent. They
guaranteed that if the counties would administer the program, the
State would fully fund it. However, as the following chart shows, State
funding has continued to decrease as a percentage of the total
financial requirements of running the program in each of the last five
years. It is estimated that in 1988-89 the counties will be funding over
55 percent of the cost of the MIA Program.
County Costs for State Mandated
Medically Indigent Adult Program - Statewide
100 -
o
.,
80
k
V
V
Vim.
\
60
iJC
Percentage 40 - - -
20 - - -
0
020 \
County Share 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89
State ShareEst. Proj.
Fiscal Year
-viii-
❖ Erosion of Property Tax Base
The property tax is the largest source of locally generated revenues
that support the County's budget. Two significant factors have
influenced the County's receipt of property taxes negatively. These
factors have a dramatic effect on the County's overall finances. First,
the County receives only 25% of the total property taxes collected,
compared to a statewide average of 33%. This puts Contra Costa
County in 54th place out of 58 counties in its share of the property tax
dollar it receives. The following pie charts depict this situation:
PROPERTY TAX DISTRIBUTIONS
Statewide Averages Contra Costa Averages
Cities,Schools,Special Districts Cities,Schools,Special Districts
67% 75%
\ a.♦♦\::�;z \,12R::.i+t rhe
1
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\W:.�:n...... +
t44Yi':
moi\
4:j!iv
A
♦ ::y::... ..,.
33%
Counties Contra
Costa
County
-ix-
The second factor is the loss of millions of dollars to city
redevelopment agencies in recent years. It is estimated that this loss
will increase to approximately $8.8 million in 1989-90, or about 6.5%
of the County's total estimated property tax revenues.
County Property Tax Loss to City Redevelopment Agencies
(In mllllons)
$12
$10 - - - - - - - - - - - - - - - - - - - - - - • - - - - - - - - - - - - - - - - - - - - - - - - -
8.8
....................
....................
:...................
$s - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7-.7- -
6.7 «: <>
::.
Revenue
S
5.2 .t
4
4.
2 �
4 - -
$ �.
$2
1984-85 1985-86 1986-87 1987-88 1988-89 1989-90
(Est.)
Fiscal Year
PRODUCTIVITY IMPROVEMENTS
In spite of the many challenges currently facing the County, the question can
be asked, "What are you doing with the resources you already have?" In the
case of Contra Costa County, the accomplishments achieved by county
employees are considerable. A listing of just a few might include the
following:
❖ Financial Stability
Contra Costa County has obtained Moody's and Standard and Poor's
highest credit rating available to any public agency. This is directly
reflective of the Board of Supervisors' budget policies for the last five
years. The estimated savings in borrowing costs between the current
County rating and the next highest rating represents a substantial
amount of money.
-X-
Excellence in Financial Reporting
Contra Costa County is one of ten counties in California to receive the
Certificate of Achievement for Excellence in Financial Reporting.
This is the highest form of recognition in governmental finance
reporting. It means that the Auditor-Controller is preparing and the
Board of Supervisors is receiving the most accurate and up-to-date
information possible.
❖ Productivity Indicators
For the last several years, County departments have submitted
information to the Board which compares aspects of their operations
with other counties or other time periods. Preliminary data available
for 1989 shows that the number of indicators for which County
departments rated first when compared to other counties increased
from 22% to 33% of the total. In the face of funding constraints this
statistic seems even more amazing.
❖ Use of Volunteers
County departments make extensive use of volunteers. Recently, a
report was given to the Board which indicates that 2,071 volunteers
provided over 278,000 hours of service at an annual value of over$2.6
million. With the service of these generous volunteers, the
productivity of County employees is enhanced.
❖ Data Processing
The County has been on a campaign to get appropriate computing
power into each department to increase productivity. Last year
departments reported the need for an additional 52-1/2 positions was
eliminated as a result of funding from the County's Management
Information Systems Fund. A total of 575 personal computers are
now in operation in County departments and the power of the
County's mainframe has more than doubled in the last two years.
-xi-
❖ Greater Avenues to Independence (GAILY)
GAIN is a statewide welfare program that emphasizes employment
and training as the primary way to get welfare recipients off welfare.
The education and training are a condition of continued receipt of
public assistance.
Most of Contra Costa County's GAIN participants lack a high school
diploma; therefore, most of the effort is involved in providing basic
education. Approximately 50%of the participants who have achieved
their high school equivalency and vocational training through the
GAIN Program,have obtained employment. More than 1900 AFDC
parents have participated in this program since it began in Contra
Costa County in May, 1988.
Family Preservation
This program is aimed at preventing the removal of a child in-crisis
from his or her home or reducing the time a child must be kept in foster
care by providing immediate, complete, and intensive counseling and
support to the child's family. Referrals are made from three County
departments. Funding is provided by a grant from the Edna
McConnell-Clark Foundation. It is estimated that $20,000 per child
is saved for each child who is successfully kept in the home. Twenty
three families have gone through the program since its inception in
fiscal year 1988-89.
The Office of Revenue Collection
The Office of Revenue Collection, a division of the County
Administrator's Office, began operations in December 1984. Since
that time, the number of accounts for which the office is responsible
has increased from 16,000 to 110,000 while the average cost to
collect each of those accounts has gone down.
❖ Telephone System Financing
In 1987, the Board approved the purchase of a modern telephone
system and prepaid the estimated ten-year cost through a borrowing
program. By freezing telephone rates for a ten-year period, the
program will save the County more than $20 million.
-xii-
Public Facilities Corporation
In 1981, the Board created the Public Facilities Corporation, which is
a non-profit corporation existing to act as a vehicle for the County's
capital project borrowing program. The Corporation has issued over
$71 million in bonds and certificates since that time at substantially
lower interest rates than the County might enjoy on the open market.
This is because borrowing through the Public Facilities Corporation
is backed by a commitment from the County to lease the facilities
which are built.
SUMMARY OF THE PROPOSED BUDGET
The three major services which have accounted for a majority of the budget
in prior years still make up the bulk of proposed expenditures for 1989-90.
Excluding enterprise funds, three elements—public assistance, public
protection and health, comprise 74.3% of the budget. Including enterprise
funds, the same services make up 77.2% of the total budget. The following
two pie charts show how the County budget is divided up, both with
enterprise funds and without.
1989-90 Proposed Budget by Type of Service Provided
Excluding Enterprise Funds
(in millions)
Health and Sanitation
All Other' $140.9 75.3 13.8%
25.7
2A)).t<cf£:i5{^.:i^$':SRitt::YO?:L'>iAkqqoft•}•a
...a•y.^!#2r.'-:�;%':''::y<r?`:`3:l:``i::i::;;iii::§'i';;;5%;>?%'i':i�:�#:'::,.
.';iff_;`}: :?:: ::t:: ;.o.?:ES.'4::X9:::::�''%`::Y:i;:::(i:i.::;:S::y'_.3:i,•::.:_:;:.
sj'}isi:i.>:.j:rij.:4:;":ri�Y -•J.'••.
Public Protection :.:}::::.<,t:.:;,}}}::.:t::t:t...:::.,..
$132.4 24.2% Public Assistance
$198.2 36.3%
Total $546,775,468.
All other includes: Public Works,Library, Elections,Plant Aquisition,Financial and Personnel
Administration,Insurance, Communications,and Reserves.
-Xlii-
'1989-90 Proposed Budget by Type of Service Provided
Including Enterprise Funds
(in millions)
All Other * $148.7 Health and Sanitation
22.8/ ...............
S:.n. . _..v. : .....
171.6 26.4/
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Public Protection Public Assistance
$132.4 20.3% $198.2 30.5%
Total $650,773,217
All other includes: Public Works, Library, Elections, Plant Aquisition, Financial and Personnel
Administration, Insurance,Communications, Hospital,Airport and Reserves.
The enterprise funds consist of Merrithew Memorial Hospital, the airports
and the Contra Costa Health Plan. Those budgets add approximately $104
million to the budget figures. It should be noted that some revenues to the
hospital enterprise fund are also shown in the regular County budget. When
this duplication is eliminated, the total amount of funding for Health
Services is approximately $151 million.
Sources of Financing the Proposed Budget
As in the past, a majority of revenues which fund the budget plan are from
three sources: State revenues, Federal revenues and local property taxes.
These sources provide almost 75% of the budget, not including enterprise
funds.
-xiv-
Sources of Financing the 1989-90 Proposed Budget
Including Enterprise Fund
(in millions)
State Revenue Federal Revenue
$202 31.0% $119.8 18.4%
>3n
\,Q
`«��<;;: .,•�`< Charges for Services
'!I I,1;':`;<:,1;_<:<:;�EZ,
�
96.5 14.8%
Property Taxes
$130.8 20.1% 'f
All Other
$101.7 20.1%
Total $650,773,217
All other includes other taxes,licenses,permits,fines,forfeitures,interest earnings,fund
balance,hospital and airport fees.
Sources of Financing the 1989-90 Proposed Budget
Excluding Enterprise Funds
(in millions)
State Revenue Federal Revenue
$192.8 35.3% $86.0 15.7%
,,...,
Charges es for Services
$60.7
Property Taxes
$130.8 23.9% .; 1, „
All Other
$76.5 14.0%
Total $546,775,468
All other includes other taxes,licenses,permits,fines,forfeitures,interest earnings,
and fund balance.
-Xv-
RECOMMENDATIONS
It is recommended that the Board of Supervisors:
1. Continue the policy recommended by the County's financial advisors
of seeking to achieve a minimum contingency fund level of 5%.
2. Reaffirm the policy that if additional program augmentations are
recommended above what is in the Proposed Budget, a corresponding
reduction must be identified elsewhere in the budget, or revenues must
be identified to offset the increased cost.
3. Direct the County Administrator to review all revenue, expenditure and
fund balance estimates and to prepare a report containing
recommended revisions for consideration during budget deliberations.
4. Direct that if increased one time discretionary revenues are identified
as a result of this review, priority consideration be given to funding
critical unfunded items with preferences to one-time expenses.
5. Adopt this document as the 1989-90 Proposed Budget.
6. Order publication of the required legal notices.
7. Fix July 19, 1989 at 10:00 a.m. as the day and time for the Budget
Committee to begin deliberations on the Proposed Budget and July 27,
1989 at 10:00 a.m. for the Board of Supervisors to begin the 1989-90
Final Budget hearings.
Sincerely,
PHIL BATCHELOR
County Administrator
PB:sr(eh)
Attachment
-xvi-