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HomeMy WebLinkAboutMINUTES - 05131997 - D2 TO: . BOARD OF SUPERVISORS Contra CostaFROM: . J Phil Batchelor, County Administrator DATE: 4° County May 13, 1997 SUBJECT: THIRD QUARTER BUDGET REPORT SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: 1. ACCEPT this report and DIRECT the County Administrator to continue to monitor, the budget and implement corrective plans, where necessary. BACKGROUND: Since 1984, the County Administrator's Office has prepared quarterly reports which analyze the status of the budget and highlight the budget units which deviate from the budget plan in terms of expenditures and revenues. Actions which are necessary to ensure a healthy budget by the end of the year are recommended as part of the quarterly reporting process. Other items which have major fiscal impacts are also reviewed as_part of this period report. The Administrator's Office review of budgets over this nine month. period indicated that the overall County budget is in a positive position. The Administrator's Office is working with Departments to bring all Departments in compliance with their budget authorizations. What follows is a discussion of key budgets for the third quarter. General County Revenue At the three-quarter year point, it appears that General County revenues, amounting to $156 million spread over 55 accounts, will slightly exceed the budget target. Property tax revenue should be slightly above targeted levels, after adjusting for city redevelopment agencies, no and low city revenue losses, state mandated transfers to school districts, Board directed distributions to Crockett and Rodeo, and the estimated impact of property tax refunds. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): 'AC I TION OF BOARD ON 13, 1996 APPROVED AS RECOMMENDED X OTHER i VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE 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 Counsel ATTESTED May 13, 1997 Auditor-Controller PHIL BATCHELOR,CLERK OF THE BOARD OF Sheriff SUPERVISO S AND COUNTY ADMINISTRATOR Probation Public Defender Health Services- M382 �Mr.@ al Services BY Y DEPUTY Community Services Page 2 The other major revenue sources are showing mixed results at this point in time. Motor Vehicle license and business license fees, sales and transient occupancy taxes are projected to be above targeted levels. On the other hand, interest earnings, supplemental property tax revenues, and fees are estimated to be below targeted levels at this time. All estimates are adjusted for seasonal variations. Sheriff The Sheriff-Coroner Agency is well within acceptable expenditure levels for the third quarter of fiscal year 1996-97. In Patrol and Operations gross expenditures were 72% and Custody Services' were 71%. Figures for the Custody Services' division include bailiff costs, which are expected to be over-spent by approximately $600,000 at year end. Bailiffs are budgeted in the Sheriff and the deficit will be covered by the Sheriff's department this year. As a trial court eligible cost, however, over-expenditure in this area is also a matter of court concern. It is recommended that the Sheriff discuss this issue with the Coordinated Courts and agree on a level of service consistent with the appropriated amount. The Coroner Division has managed to stay within 69% in net expenditures for the reporting period and have significantly exceeded budgeted revenue for the year. Actual revenues received through the third quarter of fiscal year 1996-97 were $21,256,352 in Patrol and Operations and $13,970,649 in Custody Services, 56% and 70% of budget respectively. Sales Tax Public Protection revenue was budgeted Countywide in the amount of $41,591,509 and is expected to be realized by year-end. The Sheriff- Coroner Agency receives 82.6% of this revenue and the District.Attorney receives the balance. Contract City revenues, which historically lag, generate 26% of the Sheriffs $38,105,120 budgeted for Patrol and Operations. These revenues, which are currently at 64% of budget, will be received by year end. The Department has once again maintained aggressive control of expenditures and will achieve a balanced year-end budget. Although the budget appears to be balanced for this fiscal year, continuing increases in costs such as salaries will continue to provide budgetary challenges in fiscal year 1997-98. Probation Probation Department expenditures are at anticipated levels for the third quarter of fiscal year 1996-97. Actual revenues, however, appear low due to the customary lag time in the receipt of state and federal revenues. For example, several grant revenues are received late because of the need to submit ad-hoc reimbursement claims. However, all of these revenues are anticipated to be received before the end of the fiscal year. With continued prudent fiscal management, the Department is expected to end the year with a small fund balance. Juvenile Hall. The Juvenile Hall population is on the rise and is expected to be a budget issue in fiscal year 1997-98. Despite the Probation Department's efforts to control Juvenile Hall population, the average daily population has been hovering in the mid-170s throughout April. The current budgeted capacity of the Hall is 160. To assist the Department in managing the Hall population, the County Administrator authorized to appointment of two temporary employees to enable the Department to add capacity for 20 electronic monitoring units. The Department currently has 34 youths on electronic monitoring and another 65 youths on home supervision, but are finding that these measures are not allowing them to keep pace with the Court's need to detain youths in a secure environment. Bookings into the Hall were high during April at 211, while releases nearly corresponded at 202. There are currently 48 youths in the Hall awaiting placement at the Orrin Allen Youth Rehabilitation Facility (OAYRF) and 28 youths awaiting private placement. Juvenile Placement. The number of juveniles in private placement appears to be leveling off as compared to the second quarter. Placements need to be maintained at an average Page 3 of 100 to adhere to budget constraints, yet the level of juveniles in placement in March was 116. Higher than budgeted placement costs experienced during the second quarter are anticipated to cause a budget overrun for placements of approximately $450,000. This cost overrun is not expected to cause a deficit in the Probation Department's budget because offsetting savings are projected in other expenditure accounts. The Department has limited discretion over placement decisions but maintains a steady dialogue with the Juvenile Court effort to ensure placement decisions are necessary and appropriate. Despite the Departments efforts, however, the Court occasionally orders that a juvenile be placed against the recommendation of the probation officer. The Department and the County Administrator will continue to monitor this situation. California Youth Authority (CYA) Fees. Beginning January 1, 1997, the California Youth Authority began assessing board and care fees for youths placed at the CYA. The basic monthly fee for youths classified as Level 1 through 4 was increased from $25 to $150 per month per placement. However, youths classified as lower risk levels 5, 6 or 7 will result in higher fees based upon a sliding scale. It is too early to know the impact of the CYA fees on the Probation Department budget. Thus far, the Department has received only two invoices from the CYA with only one youth classified as a 5, 6 or 7. The CYA, however, has 90 days to finalize the classifications, making cost estimating based upon these early invoices prone to error. Based upon the historical number of Contra Costa County youths placed at CYA of 180, we can estimate that the lowest possible annual cost the County might incur is $324,000 (180 youths @ $150/mo.). At the time the sliding scale fees were being deliberated in the legislature, we estimated that the potential impact of the fees, based upon a one-day snapshot of County youths at CYA, was $1.1 million. Although we are unable to precisely identify the impact of the CYA fees at this point, we can anticipate that the fees may cause a budget problem for FY 1997-98 requiring offsetting cost reductions. Juvenile Challenge Grant. Although the Probation Department was granted $48,300 in funds from the planning phase of the Juvenile Crime Enforcement and Accountability Challenge Grant Program (SB 1760), the Department was not recommended for funding by the Board of Corrections Executive Steering Committee in the demonstration phase. The Probation Department prepared and submitted a grant proposal requesting approximately $1.2 million per year for three years to establish collaborative teams called "School Challenge Teams" in each of four target areas throughout the County. The teams were to include staff from the Probation Department, the Office of Education, local school districts and police agencies. It was proposed that these teams target services at a cross- section of juvenile offenders and at-risk youths, based first upon sanctions appropriate for public safety and second on individualized treatment needs. As you are aware, we added three probation officer positions to the Probation Department this year to begin a pilot program based on this program model. A total of 16 proposals were categorized as Tier 1 counties and were recommended for funding in the amount of $45.7 million. Contra Costa County ranked second of nine proposals categorized as Tier 2A, which were recommended for funding totaling $18.9 million should additional funds become available. Tier 2B, 2C and 3 proposals totaling approximately $65.1 million were identified as requiring modification. There is still a possibility that the County may secure Challenge Grant funding. Senator Lockyer recently introduced SB 1108 as an urgency measure that would appropriate an additional$50 million to augment the Challenge Grant Program to allow additional counties to participate. The bill is scheduled to be heard by the Senate Committee on Public Safety on May 5, 1997. Title IV-A Revenue. A hearing was held on March 11 in the Federal Appeals Court on the earlier decision by a Federal District Court to uphold the change in interpretation of Page 4 "emergency assistance" which excluded probation services and resulted in the loss of millions of dollars to California counties in Title IV-A Emergency Assistance funds. The three-judge panel has taken the matter under submission and has up to one year to render a decision. If the appeal is successful, county probation departments may be able to recover Title IV-A revenues from January through April 1996 which could translate into a $400,000 one-time recovery for the Contra Costa County Probation Department. Discussions surrounding Title IV-A replacement funds for probation departments are not optimistic. The replacement funds are tentatively included in the Governor's budget as part of the Welfare Block Grant, with the probation portion amounting to $140 million statewide. The Contra Costa County Probation Department stands to gain about $4 million if the restoration comes to pass. However, recent proposals to return those funds would require enhanced service levels and new costs, whereas Probation Departments were instead hoping for restoration of the funding which supported baseline probation services. Moreover, there is increased competition from other State programs for these funds. Probation departments continue to lobby the State on the premise that probation emergency assistance services contributed to the base for the block grant and that those funds should be returned to probation departments. Coordinated Trial Courts of Contra Costa County With the February 1997 passage of SB 21, which provided for the distribution of all of the $302 million in fines and forfeitures needed by counties to finance the courts, part of the political impasse on trial court funding was resolved for fiscal year 1996-97. Cash flow problems that plagued counties during the first and second quarters of the fiscal year were eliminated as a result of fines and forfeitures distributions from the State. Still remaining is the future disposition of several bills in both the Assembly and the Senate which are updated versions of Phil Isenberg's AB 2553, which would have restructured trial court funding from the current bifurcated county-state system to a consolidated state funding system. Of particular note are AB 233 and AB 1438 (Escutia), which are similar to AB 2553 except with respect to collective bargaining issues. Escutia's bills passed the Appropriations Committee with bipartisan support. Although counties are eager to see a quick resolution to trial court funding restructuring, the bills have a long journey ahead. Although fiscal insolvency related to the delay in trial court funding distributions is no longer a looming threat, the State's continual failure to provide adequate funding for the trial courts still leaves the County with a significant funding gap. In recognition of this problem, the Courts have attempted to hold expenditures down to prior-year levels, but with limited success. Indeed, the courts are projected to spend approximately $1.3 million more than last year. This projected cost overrun may be partially mitigated by higher court revenues and possibly about $0.5 million in additional trial court funding subvention. However, the remaining funding gap is still significant at an estimated $2.8 million, which is a refinement of our projected shortfall in the range of $2.5 to $5 million reported in prior quarterly reports. The County Administrator continues to work with the Courts to identify new funding to close the gap. In lieu of new funding, the County Administrator is working with the Courts to prepare contingency cost reduction plans to enable the Courts and the County to act expeditiously to balance the courts' budget. Public Defender The Public Defender in 1991 started the Alternate Defender Office program to handle cases that otherwise would be referred to the Bar Association's Conflict Defense Program. At that time, the Bar Association had a caseload of over 2,600 cases for an annual expenditure of$3.6 million. Over the years, the cost of conflict defense services has been reduced to below $1.5 million and conflict referrals have dropped to between 50 and 60 cases per month. Savings from this approach over the past 5'h years have more than paid Page 5 for the increased cost of alternate defense. We are working to close the remaining gap of approximately $600,000 in the Public Defender's budget for this fiscal year. Without the leadership and cooperation of the Public Defender in previously instituting a new method of providing mandated defense services through an alternate defender approach, this gap would be significantly greater. Health Services The Health Services Department projects a balanced budget for the department by year- end. The projection is based upon anticipated augmented revenue from the SB 1255 program. The $345 million fiscal year 1996-97 adopted budget required the Health Services Department to absorb a $5.8 million overall revenue shortfall. The revenue shortfall was primarily due to loss of one-time revenue including a non-recurring fund balance. It also did not take into account any changes relating to managed care, employee COLA's or for other benefits negotiated with the employee organizations. As of the first quarter report, the department had made substantial progress in addressing the initial shortfall which at that time was estimated at $1.5 million. The third quarter assessment of the budget includes $3.5 million for negotiated salary and benefit adjustments (for all employees except M.D.'s) and a $400,000 COLA increase for community based organization contracts. Offsetting these expenditures is the $1.3 million mid-year increase in the county subsidy for COLA's as well as $300,000 of internal cost savings. Without additional revenues the current projected year-end shortfall would be $3.8 million. SB 1255 is anticipated to provide sufficient revenues to achieve a balanced budget for the department by year-end. The California Medical Assistance Commission has announced the acceptance of voluntary transfers from governmental entities under Round 10 of the SB 1255 program. Merrithew Memorial Hospital is eligible for reimbursement under this program as a disproportionate share provider. The county has been participating in the voluntary"donation" rounds for the last six years and has always received a substantial net benefit from participation. Other issues that could have major fiscal impact on the department over the 1997-98 year include: ♦ Local Initiative - The Contra Costa Health Plan became operational as the Local Initiative effective February 1, 1997. Medi-Cal patients now have the choice between the county/local initiative or Foundation Health Plan, a private for-profit provider. Effective May 1st, the AFDC population which has not yet chosen between Foundation Health Plan and CCHP will be defaulted into the Local Initiative and fee-for-service choice will be eliminated as a service option. ♦ Medical Malpractice - The medical malpractice fund was under funded by $5,282,000 as of June 30, 1996. For fiscal year 1996-97, funding to cover losses and administration is $2,852,000 at expected value and $4,470,000 at 80% confidence level. The fiscal year 1996-97 budget excluded any contribution or funding for malpractice expenses and current departmental projections do not include any contributions during this fiscal year. ♦ Cost of Living Adjustment- Neither the department's projections nor budget include any cost that might arise from a labor agreement with the physicians' union. Page 6 Social Services The Social Service Department projects a balanced budget for the department by year- end. Projected shortfalls in administration and aids are expected to be offset by reallocated state program revenue and surpluses in other budget units. The third quarter overall budget status is consistent with the assessment of the overall Social Services Department budget as of the second quarter. Contributing factors include: ♦ AFDC - The AFDC FG/U caseload continues to decline: from a first quarter average of 16,775 to a second quarter average of 16,175 and now at 15,189 (two months of the quarter). In addition the regulatory grant rollback of 4.9%, effective January 1st, for 85% of the caseload reduced the net county cost requirement by $45,600. AFDC/FC (Foster Care) has also been declining from prior year caseloads. However, there has been an increase in caseloads for the second quarter over the first quarter. An increased focus on adoptions and family preservation activities that prevent children from entering the foster care system are expected to control this upward trend. ♦ Realignment Revenues - Realignment revenues are now expected to be $100,000 less than estimated for the second quarter report. The current estimate is now $16,185,000. State changes in the sharing ratio has decreased the revenues by 2%. The slow end of the year holiday season also affected the realignment revenues. ♦ IHSS - The deficit in IHSS has grown to a total of$4,072,000 of which $1,018,000 is the County share. The deficit is a result of the minimum wage increases effective October 1, 1996 (from $4.25 to $4.75 per hour) and March 1, 1997 (from $4.75 to $5.00 per hour). In addition the department is in dispute with the California Department of Social Services over a$257,000 audit exception which was the result of poorly written state policy and implementation instructions from the state. ♦ Welfare Reform Fallout-Approximately 1,350 SSI clients will lose their eligibility in Contra Costa County. Also, legal aliens are targeted to be dropped from CAL/TAP (AFDC cash assistance). Both these groups are potential GA clients. At this time the impact of these changes on the General Assistance budget have not been realized. Caseloads have increased slightly but this budgetary impact has been offset by continued SSI eligibility reimbursement. Welfare reform fallout is probably the greatest area of financial uncertainty to the department since General Assistance is 100% net county cost. Until the state adopts its plan for welfare reform, it will be difficult to assess the cost impact on General Assistance. Community Services The Community Services Department ended last fiscal year with an $858,601 deficit for all programs, which was absorbed by the County General Fund. The budget and financial issues identified last fiscal year and this fiscal year under the CSBG and Weatherization programs are the subject of a State fiscal audit conducted by the State Department of Community Services & Development (SDCSD) for the period of 1994, 1995 and 1996. A final report of the audit findings and recommendations from the State is expected in July. A second investigation by the Federal Department of Health & Human Services Office of Inspector General (OIG) regarding United Council of Spanish Speaking Organizations is still in progress. Budget deficits in the Community Services Department for both fiscal year 1995-96 and fiscal year 1996-97 have been presented to the Board at various times, including July 25, August 13, September 24, December 10 and January 28. Oversight of the Department has been assigned to the Family and Human Services Committees. Page 7 Community Services Department budget problems continue as the Director of Community Services estimates the fiscal year 1996-97 budget deficit in the range of $300,000 to $500,000, depending on the extent of State fiscal audit findings. These estimates anticipate various audit disallowances, settlements involving personnel, unbudgeted costs for administrative leaves and program cost overruns, known at this time, for costs incurred in fiscal year 1996-97. The Department will continue to keep both the Board and County Administrator apprised of issues as they develop within the Department. ' P Request to S eak Form ( THREE (3) MINUTE LIMIT) Complete this form and place It in the box near the speakers' rostrum before addressing the Board Name; Phone; -d�--k ±:6 I am speaking for myself_or organizfion: 1 dame of owniutiM 01!5]K ONE: .-x I wish to spehak on Agenda Item #.� � Date: My comnnerrts will be: gerwW _Jor_"ains ... . 1 wish to speak on the subject of • do not wish to speak but leave these comments for the Board to consider: