REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  February  28, 2023
CATEGORY:  Regular - General Government-10.

SUBJECT:

Take the following actions: (1) Receive an update on the status of the Fiscal Year (FY) 2022-23 Shasta County Budget; (2) direct departments to make spending adjustments to stay within approved net county cost contained in the FY 2022-23 Adopted Budget, as adjusted; (3) approve the budget principles recommended for the FY 2023-24 Proposed Budget; (4) in accordance with Government Code section 29064(c), approve the Budget Adoption Schedule recommended for the FY 2023-24 Proposed Budget and direct the publication of a recommended budget pursuant to the Budget Adoption Schedule; and (5) approve mid-year budget amendments to better align projected budgets as follows: (a) increase appropriations in the amount of $410,038 and revenues in the amount of $439,200 in the Agricultural Commissioner/Sealer of Weights and Measures budget; (b) decrease appropriations by $510,764 and decrease revenue by $292,043 in the Child Support Services budget; (c) increase appropriations by $1,000,000 and increase revenues by $2,009,444 in the Risk Management budget; (d) increase appropriations and revenues in the amount of $3,650,000 in the Miscellaneous Budget; (e) increase appropriations in the amount of $738,591 and increase revenues in the amount of $228,770 in the Sheriff’s Budget, offset partially by use of $38,000 in SAFE Restricted Funds; (f) reduce appropriations in the amount of $1,000 in the Boating Safety budget; (g) reduce appropriations in the amount of $74,652 in the Sheriff Civil Unit budget; (h) increase appropriations in the amount of $12 in the Detention Annex/Work Facility budget; (i) increase appropriations in the amount of $259,267 and revenue in the amount of $468,963 in the Jail budget; (j) reduce appropriations in the amount of $126,502 and revenue in the amount of $32,117 in the Burney Substation budget; (k) reduce appropriations in the amount of $24,760 and increase revenue in the amount of $29,708 in the Coroner budget; (l) reduce appropriations in the amount of $38,063 in the Dispatch budget; (m) increase appropriations and revenue in the amount of $1,375 in the Animal Control budget; (n) increase appropriations in the amount of $4,000 in the Economic Development budget, offset by use of Contingency funds; (o) increase appropriations in the CalHome Admin Budget in the amount of $50,000, offset by use of CalHome Restricted Fund Balance; (p) reduce appropriations in the amount of $531,160 and revenue in the amount of $500,000 in the Mental Health budget; (q) decrease appropriations in the amount of $2,500,000 and decrease revenue in the amount of $2,412,660 in the Public Health budget; (r) increase appropriations and revenue in the amount of $550,000 in the Alcohol and Drug budget; (s) increase appropriations in the amount of $45,950 and revenue in the amount of $70,427 in the Perinatal Substance Abuse budget; (t) decrease appropriations in the amount of $5,000,000 in the Social Services budget; (u) increase appropriations and revenue by $2,650,000 in the Social Services Assistance budget; and (v) increase appropriations in the amount of $25,593 in the Reserves for Contingencies budget.

Supervisorial District No. :  All

DEPARTMENT CONTACT:  Erin Bertain, Deputy County Executive Officer

STAFF REPORT APPROVED BY:  Erin Bertain

RECOMMENDATION

Take the following actions: (1) Receive an update on the status of the Fiscal Year (FY) 2022-23 Shasta County Budget; (2) direct departments to make spending adjustments to stay within approved net county cost contained in the FY 2022-23 Adopted Budget, as adjusted; (3) approve the budget principles recommended for the FY 2023-24 Proposed Budget; (4) in accordance with Government Code section 29064(c), approve the Budget Adoption Schedule recommended for the FY 2023-24 Proposed Budget and direct the publication of a recommended budget pursuant to the Budget Adoption Schedule; and (5) approve mid-year budget amendments to better align projected budgets as follows: (a) increase appropriations in the amount of $410,038 and revenues in the amount of $439,200 in the Agricultural Commissioner/Sealer of Weights and Measures budget; (b) decrease appropriations by $510,764 and decrease revenue by $292,043 in the Child Support Services budget; (c) increase appropriations by $1,000,000 and increase revenues by $2,009,444 in the Risk Management budget; (d) increase appropriations and revenues in the amount of $3,650,000 in the Miscellaneous Budget; (e) increase appropriations in the amount of $738,591 and increase revenues in the amount of $228,770 in the Sheriff’s Budget, offset partially by use of $38,000 in SAFE Restricted Funds; (f) reduce appropriations in the amount of $1,000 in the Boating Safety budget; (g) reduce appropriations in the amount of $74,652 in the Sheriff Civil Unit budget; (h) increase appropriations in the amount of $12 in the Detention Annex/Work Facility budget; (i) increase appropriations in the amount of $259,267 and revenue in the amount of $468,963 in the Jail budget; (j) reduce appropriations in the amount of $126,502 and revenue in the amount $32,117 in the Burney Substation budget; (k) reduce appropriations in the amount of $24,760 and increase revenue in the amount of $29,708 in the Coroner budget; (l) reduce appropriations in the amount of $38,063 in the Dispatch budget; (m) increase appropriations and revenue in the amount of $1,375 in the Animal Control budget; (n) increase appropriations in the amount of $4,000 in the Economic Development budget, offset by use of Contingency funds; (o) increase appropriations in the CalHome Admin Budget in the amount of $50,000, offset by use of CalHome Restricted Fund Balance; (p) reduce appropriations in the amount of $531,160 and revenue in the amount of $500,000 in the Mental Health budget; (q) decrease appropriations in the amount of $2,500,000 and decrease revenue in the amount of $2,412,660 in the Public Health budget; (r) increase appropriations and revenue in the amount of $550,000 in the Alcohol and Drug budget; (s) increase appropriations in the amount of $45,950 and revenue in the amount of $70,427 in the Perinatal Substance Abuse budget; (t) decrease appropriations in the amount of $5,000,000 in the Social Services budget; (u) increase appropriations and revenue by $2,650,000 in the Social Services Assistance budget; and (v) increase appropriations in the amount of $25,593 in the Reserves for Contingencies budget.

DISCUSSION

The Mid-Year Report is an analysis of the County’s fiscal condition as it relates to the adopted spending plan for the year. Information for this analysis is provided by staff of each County department following a review of actual and projected expenditures and revenues at mid-year of the budget cycle. The mid-year review is the precursor to the County’s budget planning for the coming fiscal year. Adopting budget principles have proven to be an effective means of managing the County’s spending. At mid-year, we take the opportunity to direct departments to stay within approved net-county-cost contained in the FY 2022-23 Budget, as adjusted.

In accordance with Government Code section 29064(c), a budget adoption schedule is proposed that complies with the following requirements:

1.  On or before May 30, the recommended budget is made available to the public.

2.  On or before May 30, a notice is published stating that the recommended budget is available to members of the public, and that the Board will conduct a public hearing on the on the recommended budget, including the time and place of the hearing.

3.  On or before June 20, but no fewer than 10 days after the recommended budget is made available to the public, the Board shall conduct the public hearing on the recommended budget.

4.  After the conclusion of the hearing on the recommended budget, and no later than June 30,  the Board shall adopt the budget by resolution.

The Deputy County Executive Officer (CEO) requested that departments conduct a thorough review of their budgets. Departments were directed to identify any material variances from budgeted revenues and expenditures. Consistent with past budgets many deviations from budget are driven from significant unknown events. Following the mid-year review, the Auditor-Controller advises departments to submit budget amendments as necessary to better align the budget with actual expenditures and revenues. The following adjustments are requested:

The Agricultural Commissioner/Sealer of Weights and Measures will be administering a grant for Shasta and neighboring counties for State Pesticide Enforcement. In addition, the department is providing services for Modoc County because their Agricultural Commissioner position is currently vacant. The budget amendment to accommodate both of these will increase revenues in the amount of $439,200 and Expenditures in the amount of 410,038 resulting in a reduction to the use of General Fund in the amount of $29,162.

The Child Support Services Department has realized a significant number of vacancies during this year, similar to many departments. In addition, several accounts in services and supplies are realizing savings. The proposed budget amendment reduces overall appropriations by $510,764. The department has also received final allocation information which resulted in a decrease to revenue of $292,043. Overall, the budget amendment will result in a contribution to the Department’s fund balance.

The Risk Management budget unit has realized a significant increase to legal fees. In addition, charges for General Liability, Medical Malpractice, and Workers Compensation to County Departments have to be increased to offset the underfunded Risk Management Capital Reserves. Both the changes are a result of an unprecedented increase to claims filed and settled with the County. The budget amendment includes an increase in appropriations in the amount of $1,000,000 and an increase to revenues in the amount of $2,000,444 resulting in an increase to the Risk Management Capital Reserves in the amount of $1,009,444.

The Miscellaneous Budget is being adjusted to increase revenue and appropriations in the amount of $3,650,000 to accommodate the ARPA Projects approved by the Board for the Water and Fire Districts.

The Sheriff’s Department’s budget amendment includes increased appropriations and revenues in several budgets under their control. Overall, appropriations are increased in the amount of $734,268 and are mostly offset by revenues in the amount of $696,699. The Sexual Assault Felony Enforcement (SAFE) fund balance will be used in the amount of $38,000 which will result in a decrease to use of General Fund in the amount of $431. The appropriation adjustments are in the following budgets: Sheriff ($738,591 increase), Boating Safety ($1,000 reduction), Sheriff Civil Unit ($74,652 reduction), Detention Annex/Work Facility ($12 increase), Jail ($259,267 increase), Burney Substation ($126,502 reduction), Coroner ($24,760 reduction), Dispatch ($38,063 reduction), and Animal Control ($1,375 increase). The revenue adjustments are in the following budgets: Sheriff ($228,770 increase), Jail ($468,963 increase), Burney Substation ($32,117 decrease), Coroner ($29,708 increase), Animal Control ($1,375 increase).

The Economic Development Budget is being adjusted to increase appropriations in Services and Supplies by $4,000 to account for the required Shasta County match for the Superior California Economic Development District. The Superior California Economic Development District calculates the match annually and invoices the County accordingly. In FY 22/23, the increase was substantial from prior years and during budget preparation was anticipated to be lower.

The CalHome Administration budget is being adjusted to increase appropriations in services and supplies in the amount of $50,000, which will be offset by use of their restricted fund balance. This adjustment will better align their budget with expected expenditures.

The Mental Health budget amendment includes an increase to the Transfer Out by $766,160 to Public Health to match the Transfer In for Public Health, an increase to the Transfer Out to Alcohol and Drug by $200,000 to match the Transfer In to Alcohol and Drug, and an increase to the Transfer Out to Perinatal by $35,000 to match the Transfer In to Perinatal. These changes to the Transfer Out accounts results in a net decrease in Mental Health of appropriations $531,160. The budget amendment reduces revenue in the amount of $500,000 due Intergovernmental Revenue not coming in as anticipated. Overall, this budget amendment will decrease the fund balance draw by $31,160.

The Public Health budget amendment includes a reduction to salaries and benefits in the amount of $2.5 million dollars to more closely align with projected spending. Also included is a decrease to the Transfer In by $766,160 to match the Transfer Out from Mental Health. The budget amendment reduces revenue by $1,646,500 to more closely align with what the department is anticipating on receiving from funding sources. Overall, this amendment will reduce the Public Health fund balance draw by $87,340.

The Alcohol and Drug budget amendment includes an increase to services and supplies in the amount of $550,000 to account for the increased costs due to the Drug Medi-cal/Organized Delivery System (DM/ODS) and an increase to a Transfer In by $200,000 to match the Transfer Out from Mental Health. The budget amendment also increase revenue for Medi-Cal and Contract Services by $350,000 resulting in a net zero budget amendment.

The Perinatal Substance Abuse Program budget amendment includes an increase to Support and Care in the amount of $45,950 based on current trends for client residential care and an increase to a Transfer In by $35,000 to match the Transfer Out from Mental Health. The budget amendment also increases revenue for Federal Perinatal grant by $35,427. Overall, this budget amendment will decrease the fund balance draw by $24,477.

The Social Services budget amendment includes a reduction to salaries and benefits in the amount of $5,000,000 to more closely align with projected spending. This reduction in appropriations will reduce the fund balance draw by a commensurate amount.

The Social Services Assistance budget amendment includes an increase other charges by $2,650,000 to allow for a statutory increase in aid payments due to the maximum aid payment increase at the state level. The budget amendment also increases revenue by a commensurate amount resulting in a net zero budget amendment.

Cumulatively, the above budget amendments reduce the overall cost to the General Fund in the amount of $25,593. In instances where the use of the General Fund is changed, the Reserve for Contingencies budget should be adjusted as we are able. Since the adjustment is a reduction to the cost for the general fund, the increase to the Reserve for Contingencies will offset the reduction and adjust the use of the general fund to net zero.

ALTERNATIVES

There are several budget principles included in this Mid-Year Report for consideration. The Board may choose to approve none, any, or all of those presented. The Board may also choose to provide staff additional direction.

The various budget amendments adjust the budget to reflect actual expenditures and revenues. The Board of Supervisors could direct the CEO to not approve one or more of the items above, but that is not recommended as this mid-year adjustment brings budgets in line with actual projections.

OTHER AGENCY INVOLVEMENT

Every County department head submitted a mid-year status report to the CEO. The Auditor-Controller’s Office has reviewed this item.

FISCAL IMPACT

The County balances its annual spending plan by estimating expenditures and revenues based on assumptions. This method has worked well and generally results in a positive fund balance carry-over each fiscal year.

The County has taken prudent steps to stay within approved appropriations. Spending has been reduced and revenues have been maximized where possible. Our multi-phased approach balances the needs of the community and our County family within available resources.

There is General Fund impact associated with this item.