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HomeMy WebLinkAboutMINUTES - 03012005 - C.74 'i • Contra • BOARD OF SUPERVISORS 0 Costa FROM: FINANCE COMMITTEE John Gioia Chair ' ' � x'; T' ! • 4 Millie Greenberg, Former Member7 County DATE: January 25, 2005 SUBJECT: FOLLOW-UP ON RECOMMENDED CHANGES TO THE CURRENT BUDGET PROCESS SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: 1. CONSIDER follow-up report on recommended changes to Contra Costa County's current budget process. 2. DIRECT staff tore are a "Baseline Budget" instead of a "Maintenance Budget", as described p p on the following pages. 3. DIRECT staff to release a Baseline Budget in February/March for purposes of Board discussion and public input. 4. DIRECT staff to schedule public workshops on the Baseline Budget before preparation of the Recommended Budget. 5. DIRECT staff to release the Recommended Budget in early Spring. C. INFORMp ublic that impacts of the Governor's May Revise will not be included in the Baseline Budget or Recommended Budget. 7. DIRECT staff to prepare a Discretionary/Mandated Matrix with total expenditures and net cost by program for the Recommended Budget. 8. DIRECT staff to provide sufficient details regarding the Health Services Department budget to permit differentiation between general fund and non-general fund allocations. 9. DIRECT staff to include in the Sheriff-Coroner Department budget a break-out of contract city costs and revenue. FISCAL IMPACT: None. CONTINUED ON ATTACHMENT: X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER 000 SIGNATURES ` APPROVED AS RECOMMENDED OT ER ACTION OF B AR)ON1 VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. V/ UNANIMOUS(ABSENT ) AYES: NOES: ABSENT: ABSTAIN: Contact: Cc: Angel Wilson Auditors Office ATTESTED gVVLr JOHN SWEETEN,CLERK OF THE BOARD OFSUPERVISORS BY: ,DEPUTY BACKGROUND: During the FY 04-05 budget hearings, the Board of Supervisors requested that the Finance Committee look into the current budget process and identify areas for reform. On October 25, 2004, the Finance Committee considered an oral report from the County Administrator on the County's current budget process and recommendations for improvement. Based on feedback provided at the Finance Committee meeting, staff is making the following recommendations: Maintenance Budget In thepast, Contra Costa has used a "maintenance budget" approach that seeks to fix net County cost at prior year level, plus compensation cost growth offset by outside revenue. This approach does not automatically allocate the cost of unreimbursed compensation cost increase or growth, and therefore does not fairly present a department's true cost. The resulting budget is balanced due to the artificial elimination of compensation cost growth. Department's are required to reduce services and/or increase revenues in order to balance their maintenance budget. ❑ The advantage to this approach is that it is easy to administer from the GAO's vantage point. ❑ The disadvantage to this approach is that it is seen as arbitrary (because it is not sensitive to mandated service costs and unavoidable cost drivers such as utility costs). ❑ The approach is also problematic because it is predicated on the notion that there are no policy choices to be made by the Board with respect to the allocation of scarce resources among competing program priorities and statutory mandates. Baseline Budget An alternative to the "maintenance budget" is the "baseline budget" approach that seeks to identify the projected funding gap by determining how much resources are required to provide in the budget year the same level of service that is/was provided in the current/prior year. • The advantage to this approach is that it permits the quantification of funding adequacy based on an assumed level of services to the public, and leads management and the Board of Supervisors to the necessary questions regarding how to allocate the resources available. • The disadvantage to this approach is that it is more demanding of the Board of Supervisors and CAO staff than the "maintenance budget" approach — not because the analysis of the funding gap is any more difficult, but because more policy-based choices and recommendations must be made among competing demands. Board Hearings/Final Budget Adoption Historically, Board hearings are held to present the County Administrator's recommendations, hear departmental input/presentations, and allow for public comment. At the conclusion of the hearings the Board adopts the Recommended Budget with adjustments agreed to during the hearings. Earlier Public Input Process Concern has been expressed that the current budget process does not allow adequate time for Board or public review. The County Administrator has reviewed the budget calendar and will attempt to publish the Baseline Budget in February/March and the Recommended Budget in early rather than late spring. Between these two publications staff recommends scheduling public workshops to provide an opportunity for dialogue regarding program funding decisions. This approach will allow for early publication of budget data, along with the provision of allocation options for the Board and their consequences. Because the data will be published earlier, impacts of the Governor's May Revise will not be included as it will not have been released by publication. This approach does, however, allow additional time for Board review, community dialogue, and the consideration of options by the Board. Multi-Year Fiscal Planning Staff is developing a five-year budget projection, which will allow a broader view of the budget and a long-term approach to budget balancing options. While uncertainty with regard to mandated program costs and state revenues made such projections virtually impossible in the past, the passage of Proposition 1A provides sufficient certainty regarding costs and revenues to permit meaningful multi- year financial planning. Use of Fund Balance and One-Time Resources The County Administrator is developing a policy for Board consideration of the use of one-time resources including fund balance. The policy will address the following issues. • Avoidance of the use of one-time resources for ongoing expenses. • Allocation of a set portion to a reserve for economic uncertainty. L3 Allocation of a set portion to one-time projects/expenses. u Allocation of a set portion for capital projects. Although it will be difficult to implement such a policy during fiscal cutbacks, it is staff ss recommendation that the policy be developed in preparation for fiscal recovery.