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HomeMy WebLinkAboutMINUTES - 07152003 - D.2 Contra Costa TO: BOARD OF SUPERVISORS County h FROM: John Sweeten County Administrator DATE: July 15, 2003 SUBJECT: COUNTY RESPONSE TO PENDING FY 2003-04 STATE BUDGET SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION(S). RESERVE the afternoon portion of the Board's regular meeting of August 12 for a"budget workshop" at which the Board will (1)receive from the County Administrator an update on State budget matters and options for preemptive mid-year reductions in the County Budget, and(2)hear from County departments regarding program implications of reduction options. RESERVE the afternoon portion of the Board's regular meeting of September 16 for public comment and deliberation regarding implementation of mid-year reductions in the County Budget effective October 1, 2003. BACKGROUND: The scale Of the State's budget crisis makes it probable that counties will be significantly impacted. The magnitude of that impact, and the specific revenues and programs that may be affected, are unknown at this time. While it would be preferable to avoid budget reductions in the absence of specific information about the nature of State budget cuts, that option becomes less wise as time passes. At some point, the County must tape the steps necessary to"cover" its losses and reduce the impact of State cuts that eventually will be made. in:my judgment, it would be imprudent to delay the effective date of such actions beyond September 30, 2003. Departments will be requested to inform us of hour they would recommend absorbing within their current budgets an additional reduction of approximately five percent in net County cost. That information will be assembled and presented to the Board, along;;with options, at a workshop on August 12, 2403. Departments will have an opportunity to advise the Board of the programmatic consequences of these cast-cutting options. The Board will have an opportunity to make inquiries and provide further direction. It is recommended that the Board reserve the afternoon portion of its regular meeting of September 16, 2003, to consider recommendations and public testimony regarding budget reductions that would become effective October 1, 2003. During that session, the Board would be asked to conduct a Beilensen hearing should one be required, and would be asked to take actions required to implement any layoffs that:may be required effective October 1. It is possible that the State will adopt a budget during this period of time, and such action may require an adjustment of the timetable and reductions discussed above. If that occurs, appropriate changes will be recommended to your Board. COMINUED ON ATTACHMENT: YES SIGNATURE: .# S iVADMINISTRATOR " :� _ iy�✓� .' RECOI I3AT`ION OF COUNTY RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER i/ SIGNATURE(S): ACTION OF BOARD ON JULY 15 2073 APPROVED AS REC0MNffNDED_.__0THER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THdS IS A TRUE AND _X_UNANINIOUS(ABSENT U ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE NflNUTE,5 OF THE ABSENT: III ABSTAIN: BOARD OF SUPERVISORS ON THE DATE SHOWN ATTESTED:JULY 15, 2073 JOHN SWEETEN,CLERK OF THE BOARD OF CC: SUPERVISORS AND COUNTY ADMiNIS'TRATOR y BY _ t DEPUTY TO: BOARD OF SUPERVISORS CONTRA x', = COSTA ' FROM:; Jahn Sweeten COUNTY County Administrator ' DATE: July 15, 2003 SUBJECT: IMPACT ON COUNTY GASH MANAGEMENT FROM STATE BUDGET DELAY SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION Recommendation: 1. ACCEPT the report from the County Administrator on a cash management plan during the State budget crisis. 2. ACKNOWLEDGE that the County will continue to provide legally required financial support to schools during this crisis period and recover all casts associated with the delay in the enactment of the State budget. 3. ACKNOWLEDGE that a preliminary assessment of cash balances and cash needs indicates the County does not need to borrow additional money to meet cash demands. 4. ACKNOWLEDGE that the staff from the County Administrator, County Auditor- Controller and Treasurer-Tax Collector will continue to monitor the cash balances and report back to the Board if dramatic changes occur in the cash position of the County. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATUREM: ACTION OF BOARD ON JULY 151- 24Q3 APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS{ABSENT III AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. Contact:Tony Enea 591434 Cc:County Treasurer County Audltor ATTESTED JULY 15,2())_3 County Counsel John Sweeten,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR BY a tr tk. = ,DEPUTY Back-ground: Over the last month, County staff has been considering a contingency plan for cash management in the event that the State budget is not enacted by July 1. Staff from the County Administrator, Treasurer-Tax Collector, Auditor-Controller, County Counsel, Human Resources, Health Services and Employment and Human Services Departments have been involved in the planning process. County 'treasurer Investment pool State law requires that all cash resources of the County, County school districts, and certain special districts in the County be held in the County Treasury by the Treasurer. The Treasurer has authority to implement and oversee the investment of such funds in the County pool in accordance with Section 53600 et seq. of the Government Code. The Treasurer accepts funds only from agencies located within the County. The cash resources on deposit are predominantly derived from local government revenues consisting of property taxes, State and Federal funding and other fees and charges. Currently, there are 40 participants in the County pool, the largest being the County. State law requires the County pool to advance cash to schools because of "operational needs" and if no other resources are available to the school. The County Treasurer is authorized to borrow money in the event the County pool will experience cash flow problems. During the State budget crisis last year, a state budget was enacted over two months late in September 2002. The County Treasurer successfully managed the cash flow over that crisis period providing for the cash requirements for all agencies in the County pool. Cash Balance forecast Based on the information available at this time, the County pool cash balances can accommodate known cash needs over the next three months. Over $200 million in cash balances from the County pool are expected to be available to address cash needs created by State budget delays. Cash needs resulting from State budget inaction are calculated to be about $52 million over the next three months. These cash needs and balances are detailed below: Expected Cash Needs — July through September Community Colleges $24 million Vehicle License Fee 17 Backfill (including Realignment) All other State programs 11 (see attachment A for listing) $52 million Available Cash Balances, County Pool — June 2003 County General Fund $81 million Schools 97 Other County Funds/Districts 60 $238 million The County Treasurer has been working closely with the County Superintendent of Schools and the Assistant Chancellor for Finance for the Community College District to ascertain school needs over this three month period. The County Superintendent of Schools indicates that the K-12 schools will not require cash from the County pool until October. The State Controller has indicated that 75% of school financing will be provided while the remaining 25% will not be provided. However, the financing which the State will not provide supports programs which coincide with the school year which begins in September. Thus, no additional cash demands will be required until October, since the K-12 schools have cash balances of nearly $100 million to spend down first. Cash balances will begin to grow in October when property tax payments begin to flow into the County pool. Cost Recovery The County Pool has a "loan repayment" mechanism for agencies which experience negative cash balances. The "lending agencies" are rewarded with compensating interest earnings by "borrowing agencies" over time. Therefore, if the County advances cash to the Community College District, which is experiencing a negative cash balance, the District will be charged for the lost interest earnings. ATTACHMENT A Monthly Program Amount Employment and Human Services anticipates cash flow pressure at the rate of roughly $1.5 million per month as a result of the absence of a Mate budget. This pressure stems from cash assistance $1,624,004 obligations for the following programs; Adoption Assistance $400,000 Foster Care Assistance $82.0,000 Adult Protective Services $110,000 Community Care Licensing (State &Fed) $53,000 Independent Living (State & Fed) $81,000 Assistance for Immigrants $160,000 Public Works anticipates cash flaw pressure at the rate of roughly $1,320,000 $1.3 million per month due to the delay in payments from Highway Users Tax, Community Services anticipates cash flow pressure in its child $730,000 development programs due to delay in payments from the State. TOTAL CASH FLOW $3,6741000 The table above does not include any impact of cash flow to the Health Services Department, The State has a loan fund available to cover delays in Medi-Cal payments for hospital and clinics for July and August, Assuming a budget is passed within that time frame, no impact is anticipated. To the extent that the budget impasse continues after August, cash flow may be impacted. Non-Medi-Cal Mental Health payments are normally received approximately six weeks after the end of each claiming period. July receipts would normally be received in mid- September. No impact to cash flow is anticipated unless the budget impasse continues after August, a which time cash flow may be impacted by as much as $lmillion per month.