Presentation on theme: "Fiscal Year 2013-14 County of Monterey | County Administrative Office | June 5, 2013 County of Monterey Recommended Budget."— Presentation transcript:
Fiscal Year 2013-14 County of Monterey | County Administrative Office | June 5, 2013 County of Monterey Recommended Budget
Historical Perspective 2 In the February 2009 Forecast, Monterey County staff forecasted a general fund structural deficit of $65.4 million to emerge by 2011-12. In response, the Board adopted reductions totaling $25.7 million and 209 positions as part of its 2009-10 adopted budget. Over the next four years, the County chipped away at its structural deficit, cutting another 123 positions and reducing General Fund Contributions (GFC) by another $11.7 million, for a four year total reduction of 332 positions and $37.4 million in GFC. Monterey County’s employees helped minimize impacts of these reductions; miscellaneous employees now contribute 3.5% of salary towards their retirement, while safety employees pay an additional 4.5%.
County of Monterey: Achieving Structural Balance 8
Purpose of the Recommended Budget 9 The Recommended Budget provides the residents of Monterey County, the Board of Supervisors (Board), and others a broad understanding of the County’s fiscal condition and recommended spending plan for the next fiscal year. County departments prepare their recommended budgets with the goal of aligning their operating plans with strategic initiatives and objectives adopted by the Board. Department managers and the County Administrative Office analyze financial results throughout the year to ensure the Board’s adopted spending plan is carried out successfully.
Budget at a Glance – All Funds 11 Recommended financing uses for all funds totals just over $1 billion and 4,676 positions. Increases countywide appropriations by $96.6 million (primarily accounting changes related to the state- county realignment). Increases countywide staffing by 161 positions (154.5 general fund positions). Included in the recommended position augmentations are 92 positions for Health & Social Services to implement ACA. ACA-related positions are self-funded. County of Monterey | County Administrative Office | June 5, 2013 Dollars in millions: detail may not add to totals due to rounding.
2013-14 Recommended Appropriations by Fund/Fund Type 12 County of Monterey | County Administrative Office | June 5, 2013 The general fund is the County’s largest fund, with recommended appropriations totaling $526.6 million (51% of total). Other significant financing uses include Natividad Medical Center and the behavioral health fund). Special District and Other Revenue Funds, totaling $107.8 million, include services financed by revenue sources legally restricted to specified purposes, such as County Service Areas, sanitation districts, Local Revenue Fund (AB 109 Realignment), In-Home Supportive Services (IHSS), Office of Employment Training (OET), economic development programs, and special districts.
2013-14 Estimated Revenue by Source (All Funds) 13 County of Monterey | County Administrative Office | June 5, 2013 Top 3 Financing Sources: Federal and State Aid. The County expects to receive $373.8 million (38% of total) of its revenue from the federal and state government, mostly to administer health, welfare, and public safety programs. Charges for Services. This revenue is generated from various fees charged by the County for its services, such as fees charged by the County’s hospital and health clinics, park admission fees, and recording fees. Estimated financing from this revenue source totals $254.2 million, or about a quarter of total County revenue. Taxes. This category includes secured and unsecured property taxes, supplemental assessments, and special district fund taxes. Tax revenues estimated for 2013-14 total $162.0 million (16% of total).
General Fund Adopted Budget Including Behavioral Health Fund (Part of General Fund Prior to 2012-13) 14 County of Monterey | County Administrative Office | June 5, 2013 The general fund supports most County services including public safety, health, public assistance, land use, recreation, environment, administration and finance. Recommended 2013-14 general fund appropriations total $526.6 million. Effective in 2012-13, funding for behavioral health programs was transferred from the general fund into the new behavioral health fund. Had this transfer not taken place, the general fund would have totaled $597.3 million. Growth over prior years is centered around the responsibilities resulting from the state-county realignment & ACA Implementation.
General Fund Strategic Reserve 15 County of Monterey | County Administrative Office | June 5, 2013 County policy provides for a strategic reserve equal to 10% of general fund revenues for the following purposes: To build the County’s capacity for funding settlement of legal judgments that exceed reserves normally designated for litigation; and To offset short-term revenue reductions due to economic downturns, and natural disasters as determined by the County Administrative Officer or the Board. The 2013-14 recommended budget maintains the general fund strategic reserve at the 2012-13 amount, totaling $52.3 million.
2013-14 Estimated General Fund Revenues by Category 16 County of Monterey | County Administrative Office | June 5, 2013 Estimated general fund revenues total $521.4 million for 2013-14. The largest source of general fund revenue is aid from the federal and state government. These funds are generally restricted to health and social programs and, to a lesser extent, public safety functions. The second largest category is Taxes, which provides the bulk of the County’s discretionary revenue. These revenues are primarily used to enhance public safety resources and to support general government functions.
General Fund State & Federal Aid Including New Behavioral Health Fund (Part of General Fund Prior to 2012-13) 17 County of Monterey | County Administrative Office | June 5, 2013 Historically state & federal aid provided over half of general fund revenue. However, state & federal revenues for behavioral health programs, previously part of the general fund, now reside in the new behavioral health fund. The decline over the last two fiscal years reflects the loss of federal stimulus monies and state budget reductions.
Program vs. Non-Program Revenue 18 County of Monterey | County Administrative Office | June 5, 2013 Approximately two-thirds of the County’s general fund revenues is legally restricted to specific activities. Examples include federal & state aid for health & social services programs, charges supporting planning & building programs, and entrance fees for support of parks operations & maintenance. Non-program revenues comprise the other one-third of general fund revenue and are the County’s only true source of discretionary funds. Primary sources of non-program revenue include property taxes, TOT, & sales and use tax. The Board appropriates these revenues as general fund contributions (GFC) to supplement departments’ program revenues.
General Fund Non-Program Revenue 19 County of Monterey | County Administrative Office | June 5, 2013 Discretionary revenues fell sharply during and after the recession, declining by $18.0 million (9.7%) from 2007-08 to 2011-12. During this time, property taxes fell from $127.6 million to $116.1 million, for a loss of $11.5 million. The budget includes estimated non-program revenue of $172.8 million, an increase of $7.5 million (4.5%) over the estimate in the current year budget. Although non-program revenue remains well below pre-recession levels, the County is beginning to see mixed, but overall positive, improvement in its discretionary revenues.
General Fund Non-Program Revenue Sources 20 County of Monterey | County Administrative Office | June 5, 2013 Major sources of non- program revenue include: Property tax revenue comprises the bulk of non- program revenue, totaling an estimated $120.7 million (70%) in 2013-14. Transient occupancy tax, often referred to as a hotel or room tax, is estimated at $18.2 million. Vehicle license fees are estimated at $9.2 million. Other significant sources of non-program revenue include sales and use tax, tobacco settlement monies, and franchise fees.
Property Tax Revenue 21 County of Monterey | County Administrative Office | June 5, 2013 Transient Occupancy Tax Revenue Largest Sources of General Fund Non-Program Revenues
22 County of Monterey | County Administrative Office | June 5, 2013 General Fund Appropriations Recommended general fund appropriations total $526.6 million. Almost four-fifths of recommended appropriations provide for three key functional areas: public safety/criminal justice, health, and social services. Public safety and criminal justice programs, with $170.5 million in recommended expenditures, comprise about one-third of total general fund appropriations. Recommended appropriations for Social Services, totaling $166.6 million, represent another one- third of the general fund budget. Health Department general fund appropriations total $70.4 million (13.4% of total), but this does not include the $70.7 million that now resides in the behavioral health fund.
23 County of Monterey | County Administrative Office | June 5, 2013 General Fund Appropriations for 5 Largest Functional Areas 1. Includes $41.4 million in countywide (non-departmental) costs such as funding for trial courts, grand jury, contingencies, short- term borrowing, and contributions to other agencies (e.g., Proposition 172 allocations to fire agencies). 2. Excludes $70.7 million in the behavioral health fund (previously part of the general fund).
24 County of Monterey | County Administrative Office | June 5, 2013 General Fund Appropriations by Expenditure Category
25 County of Monterey | County Administrative Office | June 5, 2013 General Fund Appropriations – Salary & Benefits
26 County of Monterey | County Administrative Office | June 5, 2013 General Fund Contributions General Fund Contributions (GFC) represent discretionary funding appropriated by the Board to supplement department’s program revenues. The Board allocates almost half of available GFC to support the public safety function and has taken significant steps to protect this function to the extent possible during the last four years of budget reductions. As a percent of the countywide total, GFC for the public safety function has grown from 40.6% in the 2008-09 adopted budget, before budget reductions took place, to 48.7% in the 2013-14 recommended budget. During the same time period, most other functional areas have seen significant declines due to the County’s loss of non-program revenues.
27 County of Monterey | County Administrative Office | June 5, 2013 General Fund Contributions Note: 2013-14 GFC for the Sheriff's Office includes a $3.0 million transfer of health realignment monies for inmate medical services. Not shown in the table are amounts for Child Support Services, which is supported by federal & state funding and has a negative (surplus) GFC of $0.4 million.
28 County of Monterey | County Administrative Office | June 5, 2013 Sources of Financing for Appropriations, by Function
29 County of Monterey | County Administrative Office | June 5, 2013 Requested vs. Recommended Augmentations - Appropriations
30 County of Monterey | County Administrative Office | June 5, 2013 Requested vs. Recommended Increases to General Fund Contributions
31 County of Monterey | County Administrative Office | June 5, 2013 Requested vs. Recommended Position Augmentations (General Fund)
32 County of Monterey | County Administrative Office | June 5, 2013 Self-Funded vs. GFC-Funded Position Augmentations (General Fund)
33 County of Monterey | County Administrative Office | June 5, 2013 Augmentation Highlights – Health & Social Services Adds 92 positions within the health and social services function to implement the Affordable Care Act (ACA), including: 51 positions for Social Services for eligibility determinations and other activities associated with ACA implementation; and 41 positions for the Health Department to increase capacity for clinic services under the ACA. The ACA will bring 27,000 additional people into Medi-Cal as of January 1, 2014, and an additional 27,000 people will be eligible to purchase health insurance through the State Health Insurance Exchange Program. The cost of these positions would be fully supported by federal and state funding. Adds three employment & training workers, requiring no GFC, to better comply with the SB 1041 mandates for providing employment services to CalWORKs families.
34 County of Monterey | County Administrative Office | June 5, 2013 Augmentation Highlights – Public Safety Provides an increase of $2.2 million in GFC and 14 positions for the Sheriff’s Office to improve the safety and security of staff, the community, and inmates housed in the County Jail, including: Adds 12 custody and control positions to staff the jail’s control towers, which will allow the Sheriff’s Office to redeploy deputies to other critical functions appropriate for their level of skill and training. Provides funding to cover the full cost of mandated medical services to inmates; Re-establishes the Corrections Emergency Response Team (CERT) team and associated training and equipment; Adds two positions to oversee development, improvement, and implementation of various programs in the jail aimed at helping inmates become successful members of society and reducing recidivism; and Provides funding for technology upgrades and improvements, including video surveillance in the jail.
Provides additional funding for the District Attorney and Public Defender, including: $403,521 and 11 positions for the District Attorney to combat real estate fraud, investigate gang activity, support efforts related to forensics, and provide victim and witness assistance. Of the 11 positions, 7.5 are funded by new revenue while the remaining 3.5 are supported with GFC; and $464,389 to the Public Defender to restore four positions at risk due to departmental cost pressures. 35 County of Monterey | County Administrative Office | June 5, 2013 Augmentation Highlights – Public Safety (Continued) Provides $489,618 for Probation to restore 2.0 Silver Star Gang Prevention and Intervention probation officers, retain an Adult Placement Program position, and to cover Next Generation Radio (NGEN)operations costs; and Adds 5.0 dispatch positions in Emergency Communications at a GFC of $43,313 to reduce employee overtime and improve service levels.
36 County of Monterey | County Administrative Office | June 5, 2013 Augmentation Highlights – Public Safety (Continued) The Board has made considerable effort to protect public safety functions, including the District Attorney & Public Defender budgets, from the impacts of the recession. Since 2007-08, total GFC for support of departments has fallen $28.7 million (13.9%). During this same period, GFC for the DA & PD each increased by $1.8 million. The recommended budget provides $9.1 million in GFC for the DA & $9.2 million for the PD. Although caseloads have declined since the pre- recession years, overall staffing levels for both offices have increased as part to the Board’s commitment to public safety. Criminal Caseloads Source: CJIS data provided by the Monterey County District Attorney’s Office
37 County of Monterey | County Administrative Office | June 5, 2013 Augmentation Highlights – Finance & Administration Restores two positions, requiring a GFC of $138,891, for the Assessor-County Clerk-Recorder to meet increased workload needed to ensure accurate assessment of property values. Restores two Economic Opportunity positions, including a Redevelopment Analyst III and a Housing Manager, requiring a GFC of $276,987. Adds four positions and a GFC of $507,512 to the County Administrative Office for support of a gang task force coordinator, emergency planner, and two administrative secretaries. Adds an additional $411,816 and two positions, including an assistant director and a principal employee relations specialist, and funding for employee relations consulting work.
38 County of Monterey | County Administrative Office | June 5, 2013 Staffing Trends – All Funds The Recommended Budget includes 4,676 positions, increasing by 161 positions (3.7%) since adoption of the 2012-13 budget. Many of the recommended position augmentations support areas that leverage federal and state funding, particularly in the health and social services function which is preparing to implement ACA. However, overall staffing levels remain below pre- recession levels while, at the same time, the County has been required to take on additional responsibilities from the State under “realignment” and ACA. 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2008-092009-102010-112011-122012-132013-14 4,847.5 4,639.1 4,630.4 4,306.8 4,515.2 4,675.9
39 County of Monterey | County Administrative Office | June 5, 2013 Staffing Trends – Overtime (All General Fund Departments) Staffing Trends – Overtime (Public Safety/Criminal Justice)
40 County of Monterey | County Administrative Office | June 5, 2013 Employee Retirement Costs Over the past decade, PERS retirement costs doubled, rising from $19.8 million in 2003-04 to $40.9 million by 2009-10. Since that time, salaries have flattened in the absence of pay raises and through staffing reductions achieved through attrition. In addition, employees now contribute towards their retirement. The combination of these factors reduced general fund PERS payments to $32.7 million in 2012-13. For 2013-14, expenditures increase due to higher PERS contribution rates and increases in staffing related to the filling of vacancies and position augmentations.
41 County of Monterey | County Administrative Office | June 5, 2013 PERS Retirement Unfunded Liabilities
42 County of Monterey | County Administrative Office | June 5, 2013 PERS Policy Changes additional $3.0 million impact in 2015-16, growing to a $5.8 million increase after a five year phase in period. Increase the life expectancy assumptions used for actuarial valuations. This change would increase expenditures by another $2.5 million in 2015-16, with a $5.2 million impact by the end of the five year phasing-in period. In April 2013, CalPERS adopted changes to its rate smoothing & amortization policies. The new policies will accelerate rate growth to pay down unfunded liabilities at a faster pace. The effect will be an increase in general fund expenditures of $2.8 million in 2015-16, ramping up to a $14.3 million annual increase over the following four years before leveling off. CalPERS is also studying two additional changes that will increase rates beyond the higher amount described above, including: Lowering its discount rate from 7.5% to 7.25%, effective in 2015-16. The effect would be an
43 County of Monterey | County Administrative Office | June 5, 2013 Forecasted PERS Expenditures In total, PERS expenditures will grow between $2.8 million and $8.3 million in 2015-16, ramping up to an annual increase of $14.3 million to $25.3 million over the five-year phase-in. This level of rate growth could consume the potential growth in the County’s discretionary revenue over the next five years. The estimated impacts are modeled on 2012 actual salaries. Actual impacts will be higher to the extent payrolls grow.
44 County of Monterey | County Administrative Office | June 5, 2013 County-Paid Employee Health Insurance Costs Expenditures for employee health insurance are budgeted to increase $3.9 million in 2013-14 due to a 16% increase in premiums as of 1/1/2013. Assuming premiums continue growing at a more conservative annual rate of 5.6% (the 2000-2010 average), the County’s health insurance costs would rise by another $2.3 million in 2014-15 and an additional $2.5 million in 2015-16. These increases will add significant pressure to operating budgets. $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 2007-082008-092009-102010-112011-122012-132013-14 $30.5 $32.7 $32.1 $32.9 $34.3 $34.9 $38.8 Millions ------------------------------------------Actuals------------------------------------------------- Estimate
45 County of Monterey | County Administrative Office | June 5, 2013 Other Funds
46 County of Monterey | County Administrative Office | June 5, 2013 Natividad Medical Center NMC is a 172-bed acute care hospital owned and operated by Monterey County. NMC is designated as a safety-net hospital, with an emphasis on care for women, children, and families. NMC provides inpatient, outpatient, emergency, diagnostic, and specialty medical care, and is the only teaching hospital on the central coast. NMC expects to use $13.3 million in fund balance in 2012-13 (including capital expenditures) and $17.2 million in 2013-14, for a combined consumption of $30.5 million in operating and capital expenditures that operations are unable to fund.
47 County of Monterey | County Administrative Office | June 5, 2013 Road Fund The road fund is a special revenue fund to account for revenues dedicated to County road and bridge construction & related maintenance. The road fund is primarily funded by state and local fuel taxes & grants. The general fund provides funding to support the Pavement Management Program, as well as the County’s Storm Water Management Program. The recommended budget for the road fund shows erosion of fund balance due to projected road fund contributions towards construction projects in the current year and in 2013-14.
48 County of Monterey | County Administrative Office | June 5, 2013 Monterey County Library The Monterey County Free Libraries (MCFL) provide a network of information centers that serve the diverse communities of Monterey County. The fund’s operations are primarily financed through its share of property tax. The fund has worked to stabilize expenditures, while seeking to shore up other revenue to offset the decline in property tax revenues since the recession. However, expenditures continue to exceed available revenue, resulting in continued use of fund balance. The MCFL has implemented its “Financial Plan” with the future goal of maintaining a positive fund balance, reserves and contingency.
49 County of Monterey | County Administrative Office | June 5, 2013 Behavioral Health Fund The Behavioral Health Fund is a special revenue fund effective July 1, 2012. Behavioral Health provides a range of mental health services, such as inpatient, social rehabilitation, supportive housing, & outpatient services. Behavioral Health also provides various alcohol & drug programs, including residential, transitional housing, perinatal residential, outpatient, prevention, early intervention, narcotic replacement, drinking driver programs, drug court, and drug diversion. Revenues & expenditures for the fund continue to increase due to implementation of the Affordable Care Act (ACA).
50 County of Monterey | County Administrative Office | June 5, 2013 Water Resources Agency The Monterey County Water Resources Agency (WRA) is responsible for management of groundwater resources and flood control protection for the County. The WRA budget includes a total of 25 funds. The table to the left summarizes the 12 major funds, including WRA Administration, Pajaro River Levee, Nacimiento & San Antonio water programs, Castroville Seawater Intrusion Project (CSIP), Reclamation Ditch Operation and Maintenance, Salinas River Diversion Facility, and the Salinas Valley Reclamation Project. The WRA expects to use $0.6 million in fund balance in 2013-14 and is working towards the goal of a structurally balanced budget.
51 County of Monterey | County Administrative Office | June 5, 2013 Current & Future Challenges - ACA Operational Challenges - ACA Fiscal Challenges - Governor’s May Revision Proposal to Redirect 1991 Health Realignment Funding from Counties to the State - Audits & Settlements/Lawsuits - Lower-than-budgeted COWCAP Recoveries - Expiring Labor Contracts - PERS Retirement Increases - Health Insurance Premium Increases
52 County of Monterey | County Administrative Office | June 5, 2013 Current & Future Challenges – Capital Needs $145.0 million total capital improvement plan need over next 5 years.
53 County of Monterey | County Administrative Office | June 5, 2013 Recommendations It is recommended that the Board of Supervisors: 1.Hold a Public Hearing on June 5, 2013 at 9:00 a.m. to adopt the Fiscal Year (FY) 2013-14 Appropriation Limits pursuant to Article XIIIB of the California State Constitution. 2.Commence Budget Hearings with the County Administrative Office summary presentation of the FY 2013-14 Recommended Budget on June 5, 2013 at 9:00 a.m. and continue Budget Hearings on June 6 & 7, 2013 beginning at 9:00 a.m. if necessary. 3.Authorize the County Administrative Office and Auditor-Controller to prepare the FY 2013-14 Adopted Budget Resolution reflecting changes made by the Board during budget hearings, to make any changes in budget units to reflect any position and/or account adjustments approved by the Board during or prior to budget hearings.
54 County of Monterey | County Administrative Office | June 5, 2013 Recommendations (Continued) 4.Authorize the County Administrative Office and Auditor-Controller, in the event that any unbudgeted fund balance is available as determined through the final audited year-end FY 2012-13, to allocate such fund balance in the following order of priority: a)Increase the Public Safety Sales Tax assignment by $376,910 which totals the amount of FY 2012-13 Public Safety Sales Tax contributions delayed due to agreements with County fire districts. b)Increase Strategic Reserve, to equal established Board policy of 10% of estimated FY 2013-14 General Fund revenue. c)Increase Accrued Leave Assignment not to exceed 30% of FY 2012-13 reported Compensated Absences liability to provide gap funding for retirements and payroll buyouts that exceed the ability of General Fund departments to cover within current operations. d)Capital Assignment for all remaining unbudgeted fund balance.
55 County of Monterey | County Administrative Office | June 5, 2013 Recommendations (Continued) 5.Authorize the County Administrative Office to adjust the FY 2013-14 Adopted Budgets for the Other Funds under the authority of the Board of Supervisors to reflect the FY 2012-13 year-end final Available Fund Balance. 6.Direct the County Administrative Office, after adoption of the FY 2013-14 State Budget, to return to the Board of Supervisors, if necessary, with a modified County Budget that takes into account the impacts of the State Budget and realignment of State responsibilities to counties.