Title
Receive the Fiscal Year 2022-23 Board of Supervisors’ Budget Workshop Presentation.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
a. Receive an update on budget development as part of the Board of Supervisors’ Fiscal Year 2022-23 Budget Workshop;
b. Receive an update on the County’s General Financial Policies; and
c. Provide direction to staff.
SUMMARY/DISCUSSION:
On March 8, 2022, the County Administrative Office (CAO) presented the countywide financial forecast to the Board of Supervisors (Board). The forecast indicates continued growth in discretionary revenues. However, revenue growth is not sufficient to keep up with increased costs of doing business. Rising pension contributions, increased salaries, increased employee health insurance costs, higher workers’ compensation and general liability program expenditures, and formulaic increases in general fund subsidies lead to an estimated funding gap of $18.2 million next fiscal year, growing to $26.4 million by FY 2024-25.
Since the forecast, departments have submitted their requested budgets for next fiscal year, including initial “baseline” plans of operations if increased County contributions are not available. Staff in the County Administrative Office are analyzing the baseline budgets to better understand each department’s operational needs and implications to services. These preliminary baseline budgets identify staffing-related funding gaps for continuing 77.68 positions, including 26.88 filled positions and 50.8 vacancies.
Departments submitted augmentation requests totaling $36.2 million to address funding gaps and, in some cases, to add new staff or enhance programs. The augmentations include:
• $3.9 million to keep filled positions,
• $7.1 million to preserve vacancies,
• $7.1 million to support current non-personnel operating costs (trial expenses, building maintenance, etc.),
• $5.7 million for expansion of services,
• $4.5 million for 38 new positions,
• $3.6 million for capital spending, and
• $4.2 million for contributions to other funds ($1.8 million from the General Fund, $2.4 million from the Pajaro Sanitation District).
As indicated during the March 8, 2022, Board meeting, all ongoing discretionary revenue has been allocated to departments so there is no ongoing revenue to fund these requests. During the April 5, 2022, Board budget workshop, the Board will receive information and perspectives on the developing budget for next fiscal year, including presentations from Department Heads. Direction provided in the workshop will be incorporated into the Recommended Budget scheduled to be presented for consideration during the annual budget hearings commencing on June 1, 2022.
Update to the General Financial Policies
The Government Finance Officers Association (GFOA) recommends as a best practice that governing bodies maintain financial policies for annual budget development and financial oversight. This year’s update to the financial policies includes minor revisions throughout to make the document more consistent.
OTHER AGENCY INVOLVEMENT:
Development of the Recommended Budget is a collaborative effort between the County Administrative Office and all County departments, with overall direction provided by the Board of Supervisors. This workshop was preceded by a budget workshop with Department Heads on March 25, 2022. The Budget Committee received the financial policies update on March 30, 2022.
FINANCING:
Receipt of this report do not specifically impact the budget. However, feedback received in the workshop will help shape the overall approach in developing the budget for next fiscal year.
BOARD OF SUPERVISORS STRATEGIC INITIATIVES:
The budget workshop supports the Board’s strategic initiative to promote an organization that practices efficient and effective resource management and is recognized for responsiveness, strong customer orientation, accountability and transparency. An important objective of this strategic initiative is achieving a balanced budget that sustains core services and efficiently allocates resources. The annual budget workshop helps fulfill this objective.
__Economic Development
X Administration
__Health & Human Services
__Infrastructure
__Public Safety
Prepared by: Ezequiel Vega, County Budget Director, ext. 3078
Approved by: Dewayne Woods, Assistant County Administrative Officer, ext. 5309
Attachments: Attachment A: FY 2022-23 General Financial Policies; Attachment B: Budget Workshop Presentation