El Dorado County

1
El Dorado County Budget Basics
Fiscal Year 2008-09
Based on the Final Budget as adopted in
September, 2008
2
How big is the Countys budget?

• Total County Budget
• 530,385,051

Which includes

• General Fund Budget of
• 219,722,288

3
What is the General Fund?

• The General Fund is the slice of the budget
  primarily funded with discretionary dollars

4
General Fund Non-General FundsWhats the
Difference?

• Not all funds are created equal
• Most of the Countys budget consists of
  non-General Fund money (59)

• Non-General Fund spending is determined by
  state law or other special conditions

5
General Fund Non-General Funds Whats the
Difference?
The General Fund is primarily funded with
discretionary dollars
Non-General Fund spending is determined by state
law or other special conditions
6
Where does all the money come from?
(Traffic Impact Developer Fees, Vehicle License
Fees)
(revenue sources across all funds)
7
What does that pay for?
Salaries Benefits People Services to the
Public
8
Where does the General Fund money come from?
General Fund (219,722,288)
9
How are General Fund dollars spent?

• Citizens expect and rely on services such as
• Road maintenance
• Law enforcement
• Libraries
• Land use

10
How else are General Fund dollars spent?

• In addition, small contributions from the General
  Fund also assist in the delivery of programs such
  as
• Public Guardian
• Animal Services
• Veterans Affairs

11
How else are General Fund dollars spent?

• There are also internal costs to provide public
  services such as
• Financial Controls
• Accounts payable/receivable, payroll
• Budget development and monitoring
• Information Technology
• Website/Communications
• Computer support
• Human Resources
• Recruitment/retention
• Legal Services

12
Does El Dorado County have a balanced budget?

• Yes, the county is required by law to adopt a
  balanced budget
• Projected Revenue Projected Appropriations

Revenue (Income)
Appropriations (Spending)
13
Whats the problem with the budget?

• The operating budget is balanced each year
• Past budgets have utilized one time savings or
  fund balance to fund ongoing operations
• Savings available have steadily declined with no
  future savings anticipated
• Spending is growing at a faster rate than revenue
• Over the last 10 years
• Revenue has increased 88
• Spending has increased 96
• This is a Structural Budget problem

14
Structural Budget Gap
10-year increase
Problem!
15
Structural Budget Gap
Past budgets have utilized one time savings or
fund balance to fund ongoing operations
16
What has happened to fund balance?

• As budgets get tighter, there is less and less
  operational savings
• Therefore, sufficient fund balance is not
  available to fill the funding gap
• (THE PROBLEM)
• A structural budget
• gap makes the
• organization
• unsustainable!!!!!

17
How can we achieve sustainability?

• We must permanently bring spending in line with
  revenues
• This fixes THE PROBLEM!!!!

Sustainable Organization
18
How do we bring spending in line with revenue?

• Revenue must increase
• AND/OR
• Spending must decrease

19
What does the future look like?

• Revenue has fallen and will remain flat or
  further decrease due to economic conditions
• Growth in property tax revenue rate has declined
• Sales tax revenue has declined
• Even conservative revenue estimates used to build
  the current budget were too optimistic
• Failing to reduce spending will result in
  massive, ongoing deficits

(Deficits projected as of November, 2008)
20
Shortfall as of 3/30/09
21
Dont we have Rainy Day reserves?

• Yes
• 9.6 million for economic uncertainties (5 of
  Adjusted General Fund Appropriations)
• 5.8 million for contingency (3 of Adjusted
  General Fund Appropriations)
• 3.77 million designated reserve for capital
  projects

22
Isnt this a rainy day?

• Reserves are more appropriately used for
• Natural or Man-made Disasters
• Forest Fires
• Landslides
• Communicable Disease Outbreak
• Large capital projects
• Unanticipated costs

23
Can we solve the problem by using these reserves?

• Use of reserves does not permanently bring
  spending in line with revenue
• Use of reserves does not fix the structural
  budget gap
• This would be a one time band aid for an
  ongoing problem
• Once reserves are exhausted, permanent reductions
  will still be necessary

24
Where has spending growth occurred?
Salaries Benefits represent the largest
increase in spending over the last 10 years
25
Salaries Benefits Perspective

• Purchase price of benefits has increased
• Employees share in cost of health benefits
• Last compensation study completed in 2004
• 3 _at_ 50 for Safety added in FY 2003-04
• Pre-funding retiree health added in FY 2003-04
• Net 12 increase in FTEs over 10 years
• 19 increase in county population over 10 years
  (1998-2008)

Salaries Benefits People Services to the
Public
26
How can we reduce spending?

• We have to reduce each departments
• Net County Cost

27
What is Net County Cost?

• Departments get money from different sources
• For example grants, state federal agencies,
  and charges for service
• When that doesnt cover all of the departments
  costs, the difference is made up with other
  General Fund discretionary dollars
• These other discretionary dollars are a
  departments Net County Cost
• Departments are required to live within their
  Net County Cost to ensure that no additional
  General Fund support is required

28
Why focus on Net County Cost reductions?
Money from grants, state federal agencies,
charges for service
Discretionary General Fund Revenue
Due to their impact on General Fund
discretionary dollars, departments with a large
Net County Cost become the focus of spending
reductions
Cutting departments that have little or no Net
County Cost does not result in significant
savings to the General Fund
Department Budget
29
Distribution of Net County Cost by Program Area
FY 1998-99
30
Distribution of Net County Cost by Program Area
FY 2008-09
31
What about departments with little or no Net
County Cost?

• The State of California provides the county money
  to carry out certain activities
• For example, some Health Services (Public Health
  Mental Health) and Human Services programs
• State funding for these programs has recently
  declined
• The County cannot afford
• to spend more on these
• programs than the State
• provides
• This has resulted in recent
• position reductions in the
• Health Services and Human
• Services Departments

32
Reducing CostsAction to Date

• 200.91 FTE reductions to date in FY 2008-09
• Hiring freeze
• Reduction in use of Extra Help
• Reduced Fixed Asset purchases
• Reductions in services supplies especially
  employee training travel
• Reduction in contract services
• Voluntary furlough program
• Mandatory furloughs of 3-10 days for a number of
  departments

33
Reducing CostsAction to Date (continued)

• Elimination of 7 Sheriff stipend
• Closure of satellite offices consolidation
  within current county facilities
• Rate holiday for retiree health pre-funding
• Utilization of tobacco settlement annual revenue
  as ongoing funding stream for current operations
• Established department Net County Cost targets
  for 2009-10

34
Whats next?

• Continue to monitor county revenue
• Department budgets due to CAO April 3
• CAO to bring proposed FY 2009-10 in June
• More strategies likely needed to bring spending
  in line with revenue
• Identification of Board priorities for budget
  workshop discussions