The County of Santa Clara

Fiscal/Budget Item

Consider recommendations relating to the Fiscal Year (FY) 2015-2016 Mid-Year Budget Review. (Office of the County Executive)


Department:Office of the County ExecutiveSponsors:
Category:Appropriation Modification (4/5 Roll Call Vote)

Multiple Recommendations

Possible action:
a. Approve Request for Appropriation Modification No. 146 - $69,497,111 increasing and adjusting revenues and expenditures in various departments and funds to address needs and to better align the FY 2015-16 budget with current experience. (4/5 Roll Call Vote)
b. Receive report relating to the status of General Fund revenues and expenditures for FY 2015-2016, including an initial projection of the FY 2015-16 fund balance, and the projected status of the FY 2016-17 General Fund Budget.
c. Approve First Amendment to Agreement with Telecare Corporation relating to providing Pay For Success project work, increasing the maximum contract amount by $245,000 from $0 to $245,000, with no change to the term of the Agreement, that has been reviewed and approved by County Counsel as to form and legality.
d. Approve establishment of a capital improvement project for Main Jail North and Elmwood Campus Video Surveillance System, Project No. 263-CP16021.



Approval of the Request for Appropriation Modification will result in a one-time increase in the General Fund Contingency Reserve of $19,962,235. Additional detail is provided in the Mid-Year Budget Review report attached to this legislative file.


Refer to Mid-Year Budget Review report.



Meeting History

Feb 9, 2016 9:00 AM Video Board of Supervisors Regular Meeting

At the request of Supervisor Chavez, the Board directed the Clerk of the Board to work with the Office of the Board President to schedule a priority setting session for the Board, prior to the Office of the County Executive release of the FY 2016-17 Recommended Budget, to discuss issues such as: identification of fund allocations for ongoing capital needs and consideration of County purachse versus County lease of land; the number of positions approved and source of funds for said positions; budget policies for Board consideration relating to priority setting; the process by which Board Offices receive and review departmental requests submitted to the Office of the County Executive; and, availability of resources to shift from current activities towards new activities such as the shifting of resources to mental health jail diversion services.

MOVER:Ken Yeager, Supervisor
SECONDER:Cindy Chavez, Supervisor
AYES:Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian


Feb 9, 2016 9:00 AMBoard of SupervisorsRegular Meeting


1:16 PMVotes being cast. That carries 5:0.
Thank you again. that is a big milestone. Item 21,the midyear budget.
We are bringing to you today the midyear budget review for the fiscal year of 2015-2016. Next page. Our intention during this budget development is to make this midyear significantly different than last year's midyear. You will remember that last year there were quite a few new projects and new expenditures and that was almost a mini budget in the middle of the year. We do not like that in the sense that- that really is not the intent of the midyear. The midyear is to modify the current budget in order to deal with new information and new requirements from the board. We sent out the clear message this year that we were going to focus really on more technical and emergency issues. So, what you will see as we go forward is that we have recommendations for adjustments of reserves, from response to board referrals, we have a few very urgent additions we will also give you a new estimate of our year end status and our minor production of what we think that next year will be like and then we will move on to a schedule for the next year budget process. Next page.
1:18 PM> separate from this particular item on this agenda are 3 other item which are midyear's in particular departments, and facilities, isd, and roads and airports have been separated out. Those are not included in this particular item.
> what we did include in this item as I said was emergency resource needs, particular recommendations from the board, technical cleanups and that gave us ongoing impacts that are listed on the following page 5 of the handout. They are really quite small. There are some ad deletes to the controller and treasurers office and there is a request to add to the county council in order to deal with their extreme need at this point on more positions in administration which the board is aware of as a problem area with staffing and an analyst for human resources which is also a problem area. The sheriff's office has requested an internal affairs sergeant which we thought was reasonable in the midyear. From technology for rod changing the revenue asked admin and deals for seniors and the fireworks project and some category all revenue was recognized asongoing changes.
1:20 PM> some one-time changes we are recognizing are the recognition of excess e wrath for time to for the public to approve this. The state is required to sign a school district a particular percentage of their general fund. When the funding patterns change in local jurisdictions sometimes, that funding is higher and that is when we have to say that creates an excess in a particular fund is set aside. Because of the dissolution of redevelopment our county has now called this excess you wrath and this goes back into the pot and this money goes back into the other jurisdiction. This is not an ongoing source of revenue this is dependent upon the economy and the particular situations in the schools May need to change deciding what is access can be changed by the state and we have asked that this be recognized as one revenue--
1:22 PMExcuse me mr.- access funds will be brought through this.
A back work network system for the da because the system is falling apart. A budget for the blue ribbon commission, summary appropriations for one-time projects. The readjustment of transient occupancy tax which the board has submitted to dedicate to silicon valley create and some changes relating to contracts mostly and the ceos. Next page.
1:23 PM> there are some recommendations for changes that don't have any net impact on the general fund either because they have offsetting revenues or expenses or because there are-- they are in a department that are funded by the general fund. So, we are recognizing some donations, we are doing some technical readjustments we are recognizing some changes in the child support system, we are transferring funds between various projects, we are recognizing adjustments with revenue and managers for the ceos and we are updating hoq reimbursement for the hospital and we're adding a risk-management director which should offset alternate sources of revenue and having a director of emergency. And we are leading this emergency of preparedness to make up with our contract to help with what we asked. I will now turn it over to craig to give us some details of the general fund balance. Craig.
1:24 PMGood afternoon pres. and members of the board. This was adopted at the board of supervisors in June with a general balance of 299. 5 million. This was audited in the fall and the actual balance included a regular fund balance estimated with the midyear adjustments were realigned with this. Further, the recommended actions would be the general fund contingencies to align with the board of supervisors policy for a continuous e of 5% revenue. Further, it allocates $27 million of assigned fund balances in the building projects and it is recognizing and transferring proceeds from the rva retirement projects for retiree help obligations. And it also has 4 point and it also has $4. 8 million set aside for capital projects. Further, the report contains administration follow-ups from the board of supervisors including $800,000 set aside to offset one time service for capital and technology needs to community-based organizations. It deletes several chronically based positions after an extensive review with the harvey rhodes associates and the government operations committee. It also addresses training, over time, and related staffing costs to the operations and they are being closely monitored and there is no budget adjustment needed at this time however the board supports at the end of the fiscal year furring appropriations and we will come back to the board to do that. Further, there is also a response to budget adjustments that are needed to adjust costs needed adjustments identified by the harvey rd. , associates the summer, the controller and the treasurer this fall.
1:27 PM> also, with the midyear review we need an extension of all the revenue and the expense activity for this fiscal year and from that we are able to establish a trend of the balance of the fiscal year and help us keep on track to have approximately $54 million of operational savings for this fiscal year to be available for the revenue source for the next year's budget. And also, in addition to the savings we have a contingency that the county does not want to spend anymore the contingency is for this fiscal year as well.
1:28 PM> as far as the fiscal years base budget the 2015 2016 base budget the expenditures are increasing each year for about $107 million that is selling benefit and services in general fund revenues will increase by approximately $6. 1 million this next fiscal year in the general fund that's why we are anticipating a maintenance budget with a modest adjustability in the budget process.
1:29 PM> for the general fund and most county funds service reductions do not appear necessary but new initiatives and expansions will be explored with caution but one going revenue will continue. We will conclude the presentation with a reminder of our budget highlight of the establishment of the next fiscal year's budget.
> we are expecting the county departments to submit proposalsnd the recommended budget from the county executives will be exterminated onmay 1 and this will be held during the week of June 13.
I should jump in on this and give you a general idea for next year's budget. We are at this point as great pointed out, nervous that we will be pretty tight so we will ask critically to go over departmental proposals and obviously looking critically for revenue from outside sources. In particular the hospital. We expect to give you a level budget but we are nervous that revenues might not meet those expenditures so we will keep you up-to-date on a regular basis. That is all we have.
1:30 PMMembers of the board, supervisor chavez.
1:31 PMThank you. I wanted to start with a very broad requesting comment. One is that we have not yet set our priorities in session with the board and I know that that is something that we voted on some months ago and my request of my colleagues is that we do that before the budget-- well before the budget, and frankly I think we should do it before Dr. Smith puts forth his budget and in part because I believe there is a series of broad policy discussions that we need to have. Policy 1 is an example and that is that we have a reserve policy that I think is relatively new, but one of the things that i've heard raised by I think by supervisors watcher men in samiti and is how we find ongoing capital needs and whether or not this is from a safety perspective that would make sense. I know i've had discussions with all of you about whether or not we should be purchasing land versus leasing it. In my mind, having a discussion about this will help us to do a better job to focus on the point that Dr. Smith has raised and Mr. Gray's has raised and we intend will not spending a dime I can see his face is raised. We can schedule that and is part of whatever action that we take today I recommend we do that.
1:32 PMAgain, I think that is a board agenda, so for my part, as part of our agenda process I know that the clerk is listening, we should be more aggressive abou setting that up.
1:33 PMAlong with that I have requested that and a lot of you have in your packets that the number of staff that we've hired and the source of funds for that and we should have that discussion as well because I think there are some areas from a business perspective that we have examined from the hospital and we will have to do that and we will need state money to expand and we will help people sign up for the affordable care act. Those are business decisions that the organization has made but for me, this has made it very hard to understand what pressure does or does not put on the organization overall. So I think the information here was helpful but I think it would help us to understand better and we should bring these recommendations forward and hold each other accountable for what we bring forward and I think that would be helpful. The format is a little difficult to absorb.
1:34 PMRight, we are working on that we agree that is very important. We have a considerable number of positions over the last 5 or 6 years because we were trying to rebuild much of the infrastructure and we are trying to do it in a judicious way so that when the inevitable does happen we can deal with that. If I can just speak for gary, the reason that he twitches every time you add something, is because we are very afraid that we May be in the battle days that we were at a decade ago where we are in a negative financial position and our goal is to control that.
1:35 PMI understand that but the reason that i'm raising that is this relates to the parties and there are policies that you address. For example, craig raised the last time that he came forward a potential new budget strategy. So, I think, again as part of a modified session that we should get together and look at the 2 following departments I don't know what they are but that would give the organization to move in that direction and that would be very important. I am really interested now that you've been here for a while what you are thinking about one that and how you would like the board to approach it. Again, I think that would give us an opportunity to review that. Or to think about that and make some decisions about it. I just want to add 2 more areas that I think are really important. I want to make sure that there is a process by which when the staff makes a request, that there is an easy way for the board to see them without messing up the process. Part of the reason that is important for us is because we are looking at people all the time and telling us what their priorities are. If someone puts in writing to you but does not write to us I want to know that. I want to know how that department or that institution is looking at that. I think that would be very very helpful and that would make sense. Pardon me colleagues, i'm just going to look at my notes one more time.
1:37 PM> one other view that you raised in this was the blue ribbon commission. It made me reflect a little bit on the fact that we are going to continue to work on mental health issues as well. And, as we-- and I know gary you will be part of that in terms of how we work but I know in terms of how we work with mental health in jails it has led me to believe at some point we need to understand better under what terms her condition does beginning a new activity allow us to abate or take some action relative to the current activity where money can and cannot be shifted. The reason that I say that is because everybody that comes before us says do this and then you will have to pay here. I've ever seen evidence of that maybe it's because it's too complicated and we don't see a reason for that but I would like to really understand that. For example, I have had a discussion with one department that says I don't think that we should do this activity but instead we should do this activity but I don't know that's because we still have funds from one activity or if that would affect that. Do you think that is a party fitting session if someone says does will be saving money how do we know if that's even close to accurate. If we don't have shared understanding of how you look at that process then how are we to be accountable to one another. Gary, do you have any thoughts about that?
1:39 PMI think the common problem is that people believe that if dollars are saved or if something is done that can generate a deficiency that is what we like to describe is a cashable savings. For instance, with property 6 years ago we were able to reduce the number of individuals who were sentenced for certain drug crimes, yes it reduce our population but it didn't allow us to close that part of the jails we weren't able to generate any real cashable savings. What it did was allow us to align some real cashable savings. So what I would like us to do is realize what we can do to make some real cashable savings. We want to make sure that everybody is talking the same language. Are you talking about our ability to generate a cash savings that can be utilized at the discretion of the board?
1:40 PMThank you.
Thank you I have a couple of comments and I would like to make a comment about the last comment you made about the money being utilized and Dr. Smith you made a comment about it being a decade ago with the recession-- I got on this board in December 2010 5 years ago and it was 5 months later we were doing setback cuts. So from my perspective it was 5 years ago. Not as far back as we might want it to be but being the fiscal guy, I really appreciate that you guys are looking all the time for those dollars to come and find out where we can have those dollars retained there. In my opinion in 18 months the economy is basically flat and there is a way that we need to measure that. I do not see the boom continuing there. What I do see on the horizon,recession, boomer whatever is that we do need a new jail , and the costs involved with operating our existing one and operating a new one I think we have hundreds of millions of dollars of items that we know about coming. We do not know the cost of them and we do not know when we will need them but we do know that we need to set those extra dollars a side.
1:42 PMThank you. maybe just a few general comments at a high level related to that administratively we realized that these activities cannot continue forever. It looks like from the stock market perspective and the general economical predictors that it has leveled out. We, in the county, are more reliant on property taxes in this region and the property market has not really flattened or--our state funding comes much from capital gains taxand this is currently from the stock market in great part. The board has also been preparing for this eventuality with a couple of other strategies with a couple that probably weren't noticed that much. For example, the dissolution re-envelopment has so far brought $109,000 into the county and significantly more to the county in the near future. So that is potential cash against the downturn.
1:43 PM> in addition we have improved efficiency, and the movement into that capital care act has helped the hospital to generate funding and is helped us to use the general fund for the enterprise fund for the hospital so that is a positive. We are also looking at other efficiencies in other parts of the system and this was mentioned by supervisor chavez, the way that we have been able to implement even services realignment and social services have helped us to improve that alignment they are. We are trying to prepare for events in the future but that being said, we would like the board to never have to go through the flood line that occurred about a decade ago.
1:44 PMThank you i'm sure we could talk about this all day but when I talked about the jail money or I talked about the $4 million homeless number coming out of the task force, or 64 million there are hundred million there are or a master plan or creating the city hall plan-- there are all kinds of things and we could come forward with a wish list and I just want to make sure Mr. Gray that with your position as an operating officer that you have our support and from everyone on this board, and I think we have 2 or 3000 employees since I came here 5 years ago. We have funded 15 or 16,000 I believe we have 18,000 now.
1:45 PMYes we have added more than a yes we have added more than $1 billion to the bottom line.
1:46 PMI don't want to waste time or point fingers at people we all know the ups and downs of the economy and we know when the opportunity presents that we should stick money aside because we could probably come up with half $1 billion of expenses that we know are coming. Thank you.
Anyone else on the report? Supervisor chavez?
Do we have any other folks besides the city of san jose that we owe a lot of money? We have a box of what 80 or 90 million?
I think that they are the only ones that I am aware of. I think from a contractual perspective or from that perspective they are the major ones. I cannot think of any other.
1:47 PMIn my right about the approximate amount?
Yes, james do you know more? I don't know off the top of my head. I'm not sure.
San jose owes the county around $80 million in taxes. There are some other significant amounts that are still under litigation such as sunnyvale and san jose retirement levee. There are still some talks about that. The majority of these litigations are about resolution and the majority of this is for the county.
Any other questions on the recommended actions here with your review? When I look at the screen I don't believe we had any speakers on the other. Is there a motion to pursue this recommendation? Or is there any other motions that the board would like to see?
1:48 PMThere is a motion and a 2nd. We will conclude the meeting then.