Budget Reduction Efforts in FY2010/11

The FY2010/11 budget was adopted with the expectation that the Board would have to revisit its reduction efforts throughout the year to address impacts of State budget cuts and the economic downturn as well as reduce the identified structural deficit in the General Fund by $6 million. The following are highlights of the milestones and do not begin to encapsulate a complete narrative of the budget reduction efforts conducted throughout the year.

June 29, 2010

The Board adopted a resolution stating its intention to implement lower retirement tier formulas for future County employees upon the completion of the appropriate negotiation process with represented employee organizations. The proposal would reduce the formula for future non-safety employees from 2.7% at age 55 to 2% at age 60. For the two public safety employee groups, the formula would be reduced from 3% at age 50 to 3% at age 55 for future deputy sheriffs and from 2% at age 50 to 2% at age 55 for future correctional officers and designated Probation Department employees.

July 27, 2010

The Board adopted a clarified County Hiring Freeze Policy to help contain costs as departments continue to adjust programs and services to reflect the expected long-term lower revenue streams, including reduced property taxes, sales taxes and funding from the State and Federal government. The policy provides guidelines for departments to fill vacancies, which included evaluating the community impact of not filling the position and identifying a dedicated and assured revenue source.

August 3, 2010

The Auditor-Controller informed the Board that after the close of the final books after June 30 the final numbers for FY2009/10 were better than projected, reflecting a concerted effort by departments to reduce expenditures and wring out an additional $6.2 million in savings. This year-end savings is one-time in nature and was placed in General Fund Reserves for potential use in FY2011/12 to address projected deficits.

August 24, 2010

The Board approved contract changes with two employee groups that will save $383,590 in FY2010/11. The first action ratified a memorandum of understanding with the 25 members of Correctional Supervisors Unit 14. The second action adopted the terms of the Last, Best, and Final Offer made to Correctional Officers Unit 13 covering 190 Correctional Officers after over a year of negotiations failed to produce a contract. Both unit MOUs have key short- and long-term fiscal impacts.

August 31, 2010

During Budget Workshop No. 1, programs and service levels for several departments were examined in light of the County’s mandated obligations by outside agencies, such as the State, or from community priorities. Discussion focused primarily on programs where the County has discretion in how it delivers the service or whether to deliver the service at all, as well as the impact of reducing or eliminating the service.

While significant attention was made on reducing the County’s $18 million General Fund structural deficit by $6 million this fiscal year, the review also considered potential changes for programs in other funds facing financial difficulty in the current economy.

Budget Overview

Overview of SB90 and Mandated Programs
Treasurer-Tax Collector-County Clerk

Veterans Services

UC Cooperative Extension

Public Defender/Conflict Defender

Child Support Services

Library

September 14, 2010

A total of 11 eligible employees participated in an Early Retirement Incentive (ERI) Program designed to reduce the County workforce through means other than layoff. The eligible employees received two years of additional CalPERS service credit, and the County saved $2.57 million in salary and benefits through FY2012/13. The total General Fund savings for the period is $1.34 million. The Board also took action to delete the positions from the allocation list of employee positions.

September 21, 2010

During Budget Workshop No. 2, the remaining programs and service levels were examined in light of the County’s mandated obligations by outside agencies, such as the State, or from community priorities. Discussions focused primarily on programs where the County has discretion in how it delivers the service or whether to deliver the service at all, as well as the impacts of reducing or eliminating the service.

Budget Overview

Overview of A-87 Cost Allocation Plan

Department of Information Technology

Health and Social Services

October 5, 2010

Actuarial Review of Retirement Liabilities - The Board reviewed the actuarial results that illustrated, absent changes to the existing retirement plans, the County’s retirement costs would increase from $23.6 million in FY2010/11 to $44 million by FY2015/16. The Board had previously declared its intention to eliminate over time the Employer Paid Member Contribution (EPMC) toward retirement costs. By negotiating to end the payment of EPMC, the County can reduce future retirement costs by $109 million over the next 10 years.

Reducing County Contribution for Cafeteria Plan - The Board adopted a decrease in the County’s contribution toward the cafeteria plan of unrepresented managers, including legislative, executive, senior and mid-management-confidential, from 80% to 75% of the CalPERS Bay Area Region Kaiser family rate beginning with the January 2011 renewals. This represents an annual savings of $66,395 for this group.

October 26, 2010

During Budget Workshop No. 3, the Board took action to eliminate a net 23.7 vacant positions and directed staff to return on Dec. 7 with additional information regarding the remaining vacant positions and the rest of the reduction plan presented by the County Administrator. In addition, the Board asked for an analysis of the impacts of a $1 million reduction in General Fund contribution to the Health and Social Services Department and the amount of leveraged dollars coming to Solano County as a result of contracts with community partners.

Board Adopted Goals and Resource Reduction Strategy

Vacancy Report and Analysis as of October

Proposed Position Addition/Deletion Summary

Detail of FY2010/11 Budget Reduction Strategy Recommendations for County Programs

County Administrator's Presentation

November 23, 2010

The Board approved contract changes with the Deputy Sheriff’s Association that will save $1.6 million over the life of the three-year MOU, with General Fund savings estimated at $962,646.

December 7, 2010

During Budget Workshop No. 4, the Board approved a series of cost-reduction proposals recommended by the County Administrator’s Office to address nearly $1.7 million of the County’s $18 million General Fund structural deficit this fiscal year. The actions included the deletion of three vacant and 11.65 filled positions and the addition of one position as a result of reductions in the level of service to several programs as well as the reorganizations of the Library and the Assessor-Recorder’s Office.

As part of the workshop, the Board reviewed and tentatively concurred with a proposal that will reduce an additional $5.3 million in expenditures in FY2011/12. About $1.7 million of the proposed reductions affected funding of contributions to local non-profits. The Board asked that the nonprofits participate in a workshop in early 2011 to examine alternative funding options.

The Board also approved an outline of proposed actions by Health and Social Services to reduce $1 million in General Fund expenditures in FY2010/11, and directed staff to return with options to reduce an additional $3 million in General Fund support to H&SS as part of the Midyear Financial Report.

Budget Workshop No. 4 Overview Presentation

Recommendation on Vacant Positions

Budget Workshop Proposed Position Deletions

H&SS Preliminary Proposal to Reduce County General Fund by $1 million

Summary of Approved Board Actions from Budget Workshop No. 3

H&SS Leveraged Funds Report

Summary of Pending Recommendations from Budget Workshop No. 3

As part of this workshop discussion, the Library and the Assessor-Recorder presented changes to their organizational structures. The Library plan to "flatten" its organization realigned its operating costs to help address a structural deficit caused by significantly fewer sales tax dollars as a result of sluggish local retail sales. Changes in the Assessor-Recorder’s Office reflected changes in the level of service due to a changing workload - a reduced demand in mapping services and an increased demand in the property section.

In addition, the Board approved a $285,000 investment in software to further automate the valuation of residential property transfers and assessments performed by the Assessor-Recorder’s Office.

December 14, 2010

The Board received a presentation regarding Health and Social Services and the variety of health and safety net programs it delivers, mostly funded with State and Federal dollars. Local General Fund dollars support these programs too. The Board approved a proposal that reduced the General Fund contribution to the department by $1 million annually. Based on the implementation of this H&SS reorganization, the Board adopted a resolution that adjusted the Position Allocation List to reduce the workforce by a net 11.9 positions. The resolution reflected actions taken by the Board on Dec. 7 as well.

The Board adopted an ordinance that implemented the establishment of a second retirement tier for new deputy sheriffs with the retirement formula of 3% at age 55.

January 11, 2011

The Board established the Public Agency Retirement System Supplemental Retirement Program (PARS-SRP) to offer eligible employees an incentive to retire early. Unlike two previous early retirement incentives offered through the Public Employees Retirement System, the PARS-SRP gave the County greater flexibility in targeting its reduction efforts. The program was set with the flexibility of considering up to 25% of the positions for replacement, if the business operations justified the position. The overall salary savings would pay for the retirement incentive in five years. Eligible employees had to be at least age 50 and have at least five years of service in Solano County as of April 30, 2011. They had to resign by April 29 and retire by April 30. The incentive was equivalent to 6% of their final pay.

January 25, 2011

A temporary 3% reduction in Employer Paid Member Contribution for the Attorneys bargaining unit ended on Jan. 9, 2011, in accordance with the Memorandum of Understanding with the Attorneys in December 2009. The County began negotiating with the Attorneys in Nov. 1, 2010, but had not yet reached an agreement on a successor MOU. The fiscal impact was an increase of $141,610 in FY2010/11. The County Administrator’s Office recommended the effected departments – District Attorney and Public Defender – as part of their Midyear projections to anticipate and reduce the labor costs to address the effect of these increased labor costs.

February 8, 2011

The Board of Supervisors adopted a proposed reduction plan from Health and Social Services to reduce the use of County General Fund dollars by $3 million in the coming fiscal year. The department plan increased some revenue opportunities and reduced a variety of programs, with a bulk of the reductions in the mental health area. The department proposed a number of changes that would restructure the organization to adjust the way it delivers services and the type of services it delivers to reflect the reality that funding levels will continue to remain reduced for many years to come.

The Board received its Midyear Financial Report for FY2010/11, which showed a net savings in the Public Safety Fund of $279,000, net shortfall in the Health and Social Services Fund of $3.9 million primarily driven by the state suspension of AB3632 funding for mental health services provided at school sites and increased In-Home Supportive Services provider costs, and net improvement of $6.4 million in the General Fund. The structural deficit in the General Fund had been reduced from $18 million to $14.9 million for FY2010/11, slightly over half the targeted $6 million reduction for the fiscal year.

The outlook for preparing the FY2011/12 budget reflected the continued impact of the housing market collapse and increasing service needs. The structural deficit in the General Fund was expected to grow to $20.2 million as a result of increased labor costs, reduced revenues (primarily from property taxes), and increased demand on and for assistance programs. The assumptions for the next fiscal year did not include impacts from the Governor’s budget proposal.

Departments were instructed to prepare their initial FY2011/12 budgets based on Midyear projections. In addition, the departments were asked to develop reduction plans that reflected a 10% reduction in labor costs, which may require eliminating programs and/or reducing levels of services.

H&SS $3 Million Reduction Plan Presentation

FY2010/11 Midyear Financial Report and FY2011/12 Budget Assumptions Presentation

March 1, 2011

The Board approved the modification of a memorandum of understanding with the nearly 73 employees of Public Employees Union Local One (Unit 6) that will save $702,670 over the remaining 18 months of the three-year contract.

Workshop No. 5: the Solano non-profit community presented to the Board of Supervisors their perceived impacts from a proposal presented to the Board on Dec. 7, 2010 to reduce contributions to the non-profits in FY2011/12 by $1.86 million, down from $2.69 million in FY2010/11. Representatives for a number of the non-profits presented the impacts and other funding options that could help them deliver the services offered by their respective programs. No actions were taken.

March 22, 2011

The Board approved a memorandum of understanding with the nearly 80 employees of Public Employees Union Local One (Unit 16) that will save $684,239 over the life of the two-year contract.

The Board received a report on the participation in the PARS-SRP and approved modifications to the plan adopted in January 2011 to more effectively apply it within the departments. The modifications allowed departments to accept only as many retirement applications as the department could operationally support. If a department had more applicants than needed in a particular job class, selection was based on seniority. A total of 836 County employees were eligible to apply for early retirement, and 168 employees expressed interest to retire by April 29, 2011 under the PARS-SRP program.

April 5, 2011

The Board adopted a resolution allowing 91 County employees to retire early under the PARS-SRP plan. The County added back 22 positions, which is slightly less than the 25% cap on position replacements. PARS estimated the County could achieve a net savings of $2.8 million by the end of year one, growing to cumulative savings of $14.4 million over the five years.

April 26, 2011

The Third Quarter Financial Update articulated a fiscal improvement of $4.8 million in the General Fund balance from Midyear projections, while underscoring continued financial concerns due to declining revenues, projected and sustained increases in assistance programs, and approved State budget actions that further reduce State reimbursements for the remainder of the fiscal year and in FY2011/12.

From a revenue perspective, the rate of decline of property taxes, a key revenue, has slowed and the result in FY2010/11 will be less of a loss in revenues than projected when the budget was built. However, as a result of the continued devaluation of the local real estate market, the overall revenues projected for FY2011/12 are anticipated to be 3% less than FY2010/11. In addition, uncertainty remained over the fiscal and operational impacts of State and Federal efforts to reduce their respective budgets.

It should be noted that there is a distorted sense of savings stemming from an abridged law enforcement capacity across the county. A reduced jail population has had a cascading effect on all of the public safety departments that has resulted in savings this fiscal year. As law enforcement shifts to fewer prevention programs and more of an emphasis on responding and containing criminal activity, the ongoing fiscal and operational impacts could increase. A similar downsizing effort in the health and social services arena may exacerbate this situation over time.

As part of the preparation for the requested budgets, departments were asked to review their operations from a long-term perspective, anticipating the impacts of program roll backs and staff reductions. The departments examined how they could adjust the service delivery of programs, including the scaling back of the amount and types of services to reduce ongoing operational costs. They factored in projected increases in employee benefit costs (retirement, medical and workers’ compensation rates) identified at Midyear and the employee concessions received from management, unrepresented employees and five of the nine employee unions. As a result of this review, departments were able to take advantage of the PARS-SRP program to adjust staffing. Still pending are successful conclusions to negotiations with the remaining four unions representing about 69% of the workforce, the bulk of which are represented by Service Employee International Union 1021.

The Third Quarter quantified cost increases attributed to factors outside the control of the County are impacting the operational costs for departments, including court decisions that raised the rates for foster care, the discontinuance of the temporary American Reinvestment and Recovery Act (ARRA) enhancement of the Federal Medical Assistance Percentage (FMAP) for In-Home Supportive Services, and the defunding by the State of AB 3632, which provides school-based mental health services.

The net result of the overall reduction efforts to date in FY2010/11, when rolled forward into FY2011/12, will help to reduce the structural deficit to be addressed in FY2011/12 to $19 million.

As part of the Third Quarter Financial Update, the Board adjusted the implementation timeframe for the second 3% EPMC give back from management and unrepresented employees. The roll back roll back on the County paid share of the contribution is set to be effective upon agreement with all represented bargaining units or Dec. 31, 2011, whichever date comes first.

In addition, the Library eliminated 7.5 vacant positions as part of its continued realignment of day-to-day operations of the eight branches to ongoing revenue realities.

Third Quarter Financial Report

Third Quarter Financial Presentation

May 3, 2011

The Board affirmed the FY2011/12 contributions for funding various nonprofit and community-based organizations to be reflected in the FY2011/12 Recommended Budget. A commitment was set at $784,000 in General Fund contributions and $117,000 in one-time revenue and other funding sources.