Hold a public hearing and adopt the County of Yolo budget for fiscal year 2024-25; hold a public hearing as the In-Home Support Services (IHSS) Public Authority Board and approve the IHSS Public Authority budget for fiscal year 2024-25; and approve the 2024-25 budgets for board-controlled Fire Districts. (General fund impact $123,184,119) (Pinedo/Liddicoet) (Est. Time: 20 min)

State law requires that the Board adopt the annual budget by October 2 of each year. The attached budget resolution (Attachment B and Exhibit 1) is based on the FY2024-25 Recommended Budget as approved by the Board of Supervisors on June 11 and revised by the recommendations in this report. These recommendations have been reviewed with the Chair and Vice Chair in accordance with the Board's Governance Manual.

The County Budget Act (Gov. Code Section 29000-29144) establishes levels of authority for approval and modification of the County's budget. Prior to approval of the Adopted Budget, the Board of Supervisors may make changes to the Recommended Budget with a majority vote. Once the Adopted Budget is approved, and upon conclusion of the public hearing, most budgetary changes require a four-fifths vote of the Board. Such changes include transfers between funds, appropriation of any fund balances or unanticipated revenues, transfers from contingency appropriations, and appropriation of reserve balances. If overall appropriations are not increased, transfers between budget units within a fund only require a majority vote. If overall appropriations are not increased, staff may perform transfers or changes within a budget unit administratively.

The Preliminary Fund Balance Report is a general accounting of the fund balances for all County funds as of June 30, 2024 which is normally provided as an attachment to the Adopted Budget. Due to a lengthy year-end close process for the 2023-24 fiscal year, staff will be providing this report as part of either the year-end variance or Midyear analysis process.

FY2024-25 Adopted Budget

On June 11, 2024, the Board approved the FY2024-25 Recommended Budget, which provided appropriation authority until the Adopted Budget is approved. The proposed FY2024-25 Adopted Budget incorporates changes to the Recommended Budget based on revised revenue projections, available fund balances, changes resulting from the State budget, additional department requests and Board priorities.

Since the approval of the Recommended Budget, the broader economy continues to display signs of slowing as consumers continue to experience the impacts of inflation. While concerns of a recession have subsided, inflation is headed downward, and the Federal Reserve has indicated upcoming interest rate reductions, the County continues to experience cost pressures that are greater than the gains in forecasted revenues. Updated projections reflect an increase in FY2024-25 general purpose revenues of approximately $365,000. These additional dollars are largely due to increases in investment earnings and Williamson Act earnings that were not included in the Recommended Budget, as discussed further below. With regard to General Fund unassigned fund balance, the County ended the prior year (FY2023-24) with an estimated $13.6 million in General Fund unassigned fund balance, which is $2.4 million less than what was appropriated in the Recommended Budget. This reduction in anticipated unassigned fund balance further complicates the County's financial situation and requires implementation of several additional one-time solutions to balance the Adopted Budget.

The Adopted Budget also includes a sizable reduction to the General Fund contingency appropriated during the Recommended Budget process. Of the $2,316,978 appropriated with the Recommended Budget, only $613,551 remains available. Staff have reappropriated a majority of these funds ($1,669,405) to fund the general fund portions of required equity adjustments to keep employee salaries at 100% of market, and Health benefit package increases. While these equity increases were known and identified during the Recommended process, they had yet to be formalized with various bargaining units. While the budget makes an assumption regarding the increases for Health benefit packages, increases are provided to the County by CalPERS in July. Actual increases exceeded our estimates, requiring an additional set aside of funding should departments be unable to absorb this increase. General fund contingency was further reduced by approximately $34,000 as a budget balancing solution.

Economic Outlook

At Recommended Budget, it was noted that the rapid economic recovery experienced following the COVID-19 pandemic had concluded, and that US economic growth was slowing. While current forecasts do not anticipate a near-term recession, the County's cost pressures are greater than the gains in forecasted revenues. These cost pressures come from a variety of sources, but primarily from increasing salary and benefit costs as the County works to absorb the effects of regular equity adjustments in our various bargaining units that are needed to keep pace with market averages. 

The Recommended Budget, in both staff report and presentation, placed heavy emphasis on the County's continued reliance on fund balance to cover ongoing costs, and its concerning use of budgeted salary savings to balance the budget. The following table provides context on the increased use of salary savings to balance the Recommended budget: 

The budget for salary savings has increased only slightly in the Adopted Budget ($96,000), but as stated in the staff report for the Recommended Budget, in recent years, balancing the budget has been achieved largely through a combination of salary savings and unassigned fund balance. The FY2024-25 Recommended Budget required new strategies to balance the budget, including pausing the County's supplemental pension charge, use of one-time American Rescue Plan Act interest earnings, Chula Vista revenues, and strategic reductions of specific Service and Supply accounts.  

General Fund

The General Fund ended FY2023-24 with a preliminary estimated available fund balance of approximately $13.6 million. This is approximately $2.4 million less than the $16 million in General Fund unassigned fund balance estimated in the Recommended Budget. While staff projections during the Recommended Budget process indicated a strong likelihood of achieving $16 million in General Fund unassigned fund balance, a tightening job market, in tandem with cost inflation, and the County's increasing use of budgeted salary savings as a budget balancing solution has reduced the amount of available fund balance. General Fund unassigned fund balance has been high and generally increasing for several years; however, as both the FY2023-24 Adopted and FY2024-25 Recommended Budget staff reports indicated, staff believe that fund balances reached a peak at the end of the 2021-22 fiscal year. Historical levels of unassigned fund balance cannot be relied on as a budget balancing solution in future fiscal years.

Though staff have implemented several one-time solutions to overcome this lower than anticipated amount of unassigned fund balance, the preliminary fund balance for the 2024-25 fiscal year continues to indicate that available fund balance is declining and will likely continue to do so given the increased use of salary savings as a budget balancing solution.

The Recommended Budget included anticipated property tax growth of 5 percent. The growth in property assessments reported by the County Assessor following approval of the Recommended Budget was 5 percent, meaning staff projections were accurate with no additional property tax revenue to add during the Adopted Budget process. The projected FY2024-25 general purpose ongoing revenues have been revised to reflect an increase of approximately $365,000. Revenue projections reflect increases in interest earnings by $250,000, Williamson Act earnings by $325,000, and Justice Collections of $7,000. Offsetting these increases is an anticipated reduction in Document Transfer Tax revenues of approximately $218,000 given the decline in home sales.

The table below provides a summary of the recommended additional General Fund funding sources and uses. Following the table, information regarding the series of one-time funding solutions has been provided. Attachment C provides a detailed fund listing of the recommended funding uses, while Attachment D further describes department requests that are not recommended for funding. 

FY2024-25 Adopted Budget General Fund Summary

American Rescue Plan Act Interest Earnings
In the time since the County received approximately $42.8 million in American Rescue Plan Act funding after its approval in early 2021, the funds have been accruing interest earnings as part of the County's investments. As of June 30, 2024, these interest earnings total $1,898,335. During the Recommended Budget process, $1,350,000 of these earnings were appropriated to assist in balancing the budget. At this time, staff recommends utilizing the remaining balance of earnings, $548,335, as additional one-time general-purpose revenues to assist in balancing the budget. 

COVID-19 FEMA Reimbursement
The Federal government has given the County notification that approximately $1.6 million in reimbursement related to the County's original response to the COVID-19 pandemic has been scheduled to be received or received. Given the unpredictable timing of these reimbursements, which staff anticipates arriving throughout the 2024-25 fiscal year, staff recommends utilizing these one-time revenues to fund contingencies.

Chula Vista Fund
The Chula Vista fund was established in 2021 to accumulate additional property tax revenues as a result of changes in the way residual tax increment revenues are distributed to taxing agencies in the wake of the Chula Vista v. Sandoval court case. Per Board resolution, the Chula Vista fund is to be used only for:

· Reserve accumulation,
· Reduction in long-term liabilities to best position the County to weather the future revenue reductions from the wind-down of redevelopment agencies, or
· Protect the County's essential services from potential unanticipated events and circumstances not occurring in the normal course of operations.

 
Staff recommend the use of $1,483,261 in available Chula Vista funds to make a contribution to the General Reserve. A contribution of this amount will maintain the Reserve at 8.5% of General and Public Safety fund expenditures. As of June 30, 2024 the Chula Vista fund had a balance of approximately $3.9 million. 

It is important to note that the three aforementioned solutions are one-time in nature. While they are being used to balance the Adopted budget and maintain the General Reserve percentage, they should not be considered ongoing and cannot consistently be relied on to balance future budgets. 

Position Adjustments
While the Adopted Budget does include a total of 9.5 new positions, no positions are funded by the General Fund. All 9.5 positions are fully funded by a variety of other non-General Fund sources. Eleven positions are recommended for elimination, for a net reduction of 1.5 positions.

The table below summarizes position changes that are recommended in the Adopted Budget. Attachment G provides a comprehensive overview of all position changes and requested positions that are not recommended at this time.

Given the prevalence of one-time strategies used to balance the FY2024-25 budget and considering the challenges the County may face in future fiscal years, the Adopted Budget takes a status quo approach, ensuring our commitments are met, while adding very few new obligations. Recognizing the likelihood of difficulties balancing future budgets, our investment in maintaining the General Reserve at 8.5% is extremely important. Further discussion of recommended increases to reserves and contingencies is included below. Overall, the Adopted Budget addresses the County's immediate fiscal obligations while ensuring the stability of the County's financial safety net.

County Departments

The following sections provide an overview of the County department budgets. The narrative includes discussion about adjustments to balance the FY2024-25 Adopted Budget, a summary of major programs as well as highlights of significant budget changes. Items recommended to be funded with non-general funds are included in Attachment E.

Agriculture
The Adopted Budget for Agriculture, Weights & Measures includes decreases in insurance ($13,000) due to adjustments in internal charges calculated after Recommended Budget. The department has requested a total of approximately $72,000 for projected internal promotions, which are not recommended for funding at this time as departments have generally been required to find allowances within current budgets for promotions.

Assessor/Clerk-Recorder/Elections
The Assessor's division is anticipating a reduction in revenues of approximately $34,000. This reduction can be attributed to reduced property tax administration fee revenues of approximately $149,000 and a reduction in assessment and tax collection fees of $7,000. These reductions are offset by an increase to the supplemental roll administration fee of $122,000 due to the original estimate during Recommended Budget being lower than anticipated. Additional updates in the unit include a net reduction in workers' compensation and general liability charges of $3,200. 

One augmentation request was included in the Assessor's Adopted Budget submission of $30,000 for the construction of new offices for the Assessor's management team. Staff is currently not recommending funding for this request.

The Elections division is projecting revenues to increase by $215,000 due to the addition of Help America Vote Act (HAVA) grant that is intended for election technology and security ($55,000) as well funding for the Voting System replacement grant ($60,000) to replace outdated voting equipment. Currently, staff is not recommending approval of the Voting System replacement augmentation. Additionally, revenue of $100,000 is expected related to Election services due to a large number of ballot measures and contests being from local jurisdictions. Also included in the Election's budget is the addition of $9,640 for the hiring of a consultant to update the elections billing document that calculates the costs that can be billed to local jurisdictions for their elections.

Augmentation requests in the Elections unit include $78,250 in additional printing and extra help expenses related to the Presidential Election as well as an additional $110,000 to cover the re-wrapping of ballot drop boxes ($10,000), the additional costs associated with inserting and addressing services from ProVote ($30,000) and increase the amount used for the hiring of poll workers through staffing agencies ($70,000). Additional augmentation requests include increasing budgeted expenses for the voting system replacement grant and a request for $200,000 for construction in the Elections offices to create a more secure and functional space. Staff are currently only recommending the approval of the $78,250 for additional printing and extra help costs related to the Presidential Election.

The Clerk Recorder's unit is projecting revenues to increase approximately $179,000. This increase is due to an increase in recording fee revenue projections to better align with prior year actuals, along with increasing the use of fund balance in the unit's special revenue funds. Staff recommends approval of a self-funded augmentation request in the amount of $300,000 for updates to Clerk Recorder's lobby security that will be funded with the units Clerk-Recorder Update special fund.

The Administration unit in ACE has also included an additional request of $10,000 in overtime funding to support the Elections Division that staff do not currently recommend for approval.

Board of Supervisors
The Adopted Budget for the Board of Supervisors includes a reduction of $13,000 related to decreased costs for Workers Compensation and General Liability coverage. The department did not submit any Augmentation requests.

Regional Child Support Agency
The Regional Child Support Agency's Adopted Budget includes adjustments to state and federal revenues, which have decreased by about $240,000 from the Recommended Budget. To offset these decreases in revenues, the department has eliminated a Senior Child Support Specialist position and adjusted internal charges from original projections. There is still no general fund support for this department.

Community Services
The Adopted Budget for the Department of Community Services includes an overall increase of about $4 million in expenditures, of which only about $7,000 is funded through the General Fund. The General Fund increase is due solely to compensation increases for the Climate Sustainability Manager approved by the Board earlier this fiscal year.
 
The Animal Services Division has an increase of approximately $750,000 from Recommended to Adopted Budget. This increase is sourced from $150,000 of Accumulated Capital Outlay funds and the remainder from fund balance to continue renovations of the modular space & deferred maintenance projects previously approved by the Board. There is an overall decrease in operating budget, as indirect costs were much lower than anticipated. Additionally, some grant funds were spent in the prior year that had been budgeted with Recommended, so those funds have also been removed from the Adopted Budget.
 
There are minimal changes to internal charges in the Planning Division, resulting in about a $2,000 decrease in General Fund usage. An additional $12,000 of grant funds have been added to the Adopted Budget as they were not used fully in the prior year as expected. The department has also requested $500,000 in General Fund to begin saving up for the anticipated general plan revision, but staff does not recommend this at this time due to insufficient funding. 
 
The Climate Sustainability Division includes approximately $500,000 in additional revenues approved by the Board after the Recommended Budget, including an additional $100,000 from the out-of-county tipping fee and the remainder from ARPA funds. Additionally, the division has requested funding for two Associate Administrative Services Analyst positions, Climate Action and Adaptation Plan (CAAP) implementation funding, and additional funds for specialty grant writing, with all totaling approximately $400,000. Staff does not recommend approval of requests at this time.

Within the Building Division, staff recommend approval of the conversion of a vacant Plan Check Engineer position to an Assistant Chief Building Official position, which results an overall increase of about $50,000 to the Building division budget. This will be offset with increased revenue from construction permits, as the Assistant Chief Building Official's time will be charged at a higher rate. Environmental Health requests $17,064 in General Fund for a comprehensive Fee Study which staff recommend for approval as it will likely generate additional revenue long-term.
 
The Water Resources Division Adopted Budget includes $800,000 in additional ARPA funds already approved by the Board, as well as a decrease of $200,000 associated with the Natural Resources Planner position that was transferred to the County Administrator's Office. This results in a net general fund decrease of about $2,000, as the majority of the position was funded with state funding that has moved to the CAO budget with the position.
 
The Roads Division includes about $2 million in new fund balance appropriations meant to carry forward ongoing projects that were in flux at the time of the Recommended Budget. Fund balance is also used to cover some minor internal charge adjustments. There is an update to reclassify an Accounting Technician position to Accountant I, which has already occurred. Finally, there is an overall revenue decrease of about $300,000 in transportation taxes due to decreases in allocations from the Yolo Bus Transportation District.  
 
The Integrated Waste Management Division includes an increase of about $25,000 overall, funded completely through fund balance. Increases in the division's budget include the upgrade of a Waste Facility Worker II to Senior Waste Facility Worker, increases in overtime due to projected vacancies, and several other necessary increases in operational spending not originally forecasted with the Recommended Budget. There is also about $200,000 in additional equipment that was not able to be purchased in the prior year. There are corresponding decreases, most notably about $700,000 in professional services due to contracted projections dropping after the Recommended Budget.

County Administrator's Office
The Adopted Budget for the County Administrator's Office includes a reduction of $4,200 related to workers' compensation insurance, general liability and Cal-Card Administration charges that were unknown during the Recommended Budget process. The Adopted Budget also includes the addition of two additional positions, a Natural Resources Planner from the Department of Community Services, and a Personnel Analyst from Human Resources. The incumbent formerly in the Natural Resources Planner position has been reclassified to a Senior Management Analyst; however, the cost for this reclassification is minimal, as the position comes with an annual $200,000 reimbursement from the State Department of Water Resources. General fund will be transferred between Human Resources and the County Administrator for funding of the Personnel Analyst.    

Additionally, the Diversity, Equity and Inclusion Manager is being transferred to the Human Resources Department, resulting in a $213,000 General Fund savings to the County Administrator's Office. Staff recommends approval of these adjustments, along with a series of adjustments to the Rural Initiatives and Yolo Electric budgets that do not have a General Fund impact.

Following approval of the Recommended Budget, the Memorandum of Understanding that oversees the Office of Emergency Services with local Cities, Tribes and Housing Authorities was renegotiated. These negotiations resulted in the determination that the current work OES provides is part of the County's statutory duty and is not above and beyond, requiring additional payment. This has caused an additional funding deficit of $145,000 in the program. While the department has taken proactive steps to mitigate this deficit by holding vacant an Emergency Planner position, staff recommend funding OES an additional $62,000 in General Fund to balance the program budget.

The department did not request any augmentations.

County Counsel
The Adopted Budget for County Counsel includes minor changes as a result of internal charge, such as workers' compensation and insurance adjustments, which decrease their General Fund usage by approximately $4,000. The department submitted an augmentation to its Indigent Defense Panel budget unit of $60,000 for additional help in habeas petitions that are increasingly being filed under the Racial Justice Act. These petitions are not covered by the existing panel attorney agreements and represent an uncompensated change in the scope of services that, absent a contract amendment, could be addressed by Court orders directing the County to pay fees. The augmentation is not recommended at this time due to funding challenges but the Office of the County Counsel expects to work with the Department of Financial Services and County Administrator's Office on a proposal for the mid-year budget item.

County Service Areas (CSAs)
Staff recommend adjustments to several County Service Area budgets to re-align expenditures with anticipated revenues. The most significant of these changes is an increase of $96,960 in the El Macero Streets Fund in anticipation of the El Macero Street Calming Project, funded by use of fund balance. There is also an increase of $200,000 in the Wild Wings Water Grant Fund to account for additional grant monies not spent in the prior fiscal year. Other adjustments are minor and due to special assessment revenues increasing. Additionally, the Wild Wings CSA budget does not include additional revenue from the failed Proposition 218 process which may have future impacts.

District Attorney
Staff recommend adjustments to the District Attorney's Adopted Budget resulting from reductions to Workers Compensation, Public Liability and Cal-Card Administration fees ($12,500) that were unknown at during the Recommended Budget process. Additionally, the District Attorney's Adopted Budget includes an increase in anticipated Prop 172 revenues ($13,000) and other state revenues.

Staff also recommend approval of $25,000 in Asset Forfeiture/Seized Funds Special revenue funds to assist in funding a ten-county study on the effects of Zero Bail. The District Attorney's Seized Funds are proceeds from seized assets for compensation for innocent purchasers and are to be used to fund programs to combat drug use, divert gang activity and for prosecutor and law enforcement training.

During the Recommended Budget process, funding for several promotions ($152,000) was requested, along with conversion of a vacant Deputy District Attorney (DDA) I to DDA IV ($91,000), and conversion of a limited term Paralegal to Regular to the Adopted Budget process. The District Attorney's Office also requested $80,000 in vehicle replacement for its Criminal Prosecution division, $10,500 in food for the departments snack pantry, $139,000 in vacation buyback funding, along with a $285,000 increase to the departments Extra Help budget. 

Due to the limited availability of both ongoing and one-time funding, these requests are not recommended for approval.

Financial Services
The Department of Financial Services (DFS) Adopted Budget includes an overall decrease in the use of General Fund of about $90,000. This is a result of additional revenues from property tax administration fees as well as interfund accounting fees due to implementing figures from the updated Cost Plan. This new revenue offsets the reclassification of an Admin Services Analyst to an Accounting Manager position overseeing Accounts Payable and Property Tax that the Board approved on April 9, 2024. The department also requested additional training expenses and office expenses which are not recommended at this time due to lack of funding availability.

General Services
The Graphics Division of the General Services Department requested funding to purchase a new envelope press for $22,680. Additionally, an augmentation request was submitted for an additional $3,878 in extra help funding for coverage while a key employee in the unit is on vacation. Currently, staff do not recommend approval of these requests.

The Adopted Budget for the Tuli Mem Park and Pool includes an increase of $15,000 for utility-related expenses. In addition, an augmentation request of $400,000 to conduct repairs on the soccer field was submitted, but is not recommended at this time.

Included in the Airport's Adopted budget is a decrease in cost plan charges of $8,100; however, those savings are offset by increases to anticipated airport utility expenses and known increases in the cost of the Extra Help Airport Manager, due to a merit increase.

The Procurement division's Adopted Budget submission includes increases in expenses due to increases in membership fees to the National Procurement Institute and the National Contract Management Association ($1,700). Additionally, the renewal fee for the Quality Bidders Software was not previously included in the staff request and is necessary for efficient management and tracking of vendors who comply with the state's requirements. Augmentation requests in the unit include a request for $20,000 in leave buyout for a potential retirement and $50,000 to bring in contracted staff to assist with Procurement operations as the division has been understaffed due to vacancies. Given the lack of both ongoing and one-time funding, these augmentations are not recommended for approval.

The Parks division is anticipating increased expenses in the unit due to increases in the Park's portable toilet pumping contracts ($18,200), increased expenses in vehicle fuel and maintenance ($43,800), and additional fees related to Waste Management services at Cache Creek Campground ($39,190). Additional augmentation requests, as reflected in the table below, are not recommended at this time due to limited funding.

The Facilities Division's Adopted Budget includes the rebudgeting of projects that were carried forward for completion into the 2024-25 fiscal year from prior years. These projects are outlined in the table below. Additionally, an increase in the county's contract for pumping services is anticipated after a change in vendor occurred ($14,300), which is partially offset by reductions to the division's internal charges ($11,075).

Additional requests in the Facilities Division include items and project funding that were originally requested during the Recommended Budget process. With the current economic outlook and limited available funding, many of these items are not being recommended for funding. These items appear in the table below:

Staff are currently only recommending approval of the staff time spent on the Monroe Shower Pans ($21,923), the anticipated expense for the Security Consultant ($52,090), and the rebudgeting of the EV charging grant.

Human Resources
The Human Resources Adopted Budget includes a net decrease in general liability and workers' compensation charges of approximately $14,220. Offsetting this reduction are increases, including funding for Psychiatric Evaluations for Public Safety employees who are requesting early retirements and an additional $12,000 for Work Force Development costs and HR training expenses. Additional changes in the HR unit include the reclassification of a vacant Assistant Director position and Diversity Equity and Inclusion manager (DEI) to Human Resources Managers due to a departmental reorganization (Attachment G), and Satellite Finance costs for the department ($75,000).

The department also submitted augmentation requests totaling $222,800. These requests included funding for HR internal investigation ($40,000), the Human Resources payroll audit ($52,800), funding to conduct class and compensation studies through Sloan, Sakai and Yeung ($10,000), an agreement for dual language testing ($40,000), and a request for additional staff cell phones ($5,000). Staff are currently not recommending funding of these requests.

The Risk Management budget includes an increase of $169,325 related to increases in the County's Fidelity and Boiler/Property premiums, as the premiums came in higher than was originally estimated.

Finally, the new Human Resources Director is currently evaluating departmental staffing and operational needs, and may return to the Board at a later time to request additional resources to improve departmental operations and enhance efficiencies, which include conducting in-house investigations with professional level support, maintaining and documenting confidential investivative materials, implementing data tracking systems to improve and expedite timelines and overall departmental responsiveness resulting in improved vacancy fill rates and decreased County liability. 

Health & Human Services Agency
The 2024-25 Adopted Budget for the Health & Human Services Agency includes no increases in General Fund and an overall decrease of about $13.5 million in expenditures. This decrease is due entirely to a methodology shift in how Administration's budget is calculated and avoids double-counting Administration expenses when they are incurred in other units. When accounting for this methodological shift, the actual budget increase from Recommended to Adopted is about $5.5 million. All increases are funded through additional Federal or State revenues and have no impact on the General Fund.
 
Significant increases to the Adopted Budget for HHSA include seven new Public Assistance Specialist positions, which will create a new unit focused on Medi-Cal redeterminations and be paid fully through State funding sources. Five of these positions are full-time regular and two positions are limited term for one year. There are also several positions unfunded with the Adopted Budget due to reductions in MHSA allocations. These are an Administrative Services Analyst and Health and Human Services Program Coordinator in Adult & Aging, an Administrative Services Analyst in Child, Youth, & Family, and an Administrative Services Analyst in Public Health.

The department also requested a new Administrative Clerk II, two Clinician II's, and a Behavioral Health Case Manager II which would be funded mostly through MHSA revenues. Those requests are not recommended at this time as MHSA revenues are declining and long-term funding availability is in question. Staff anticipates an update to the BOS regarding the state of MHSA will come in the next few months.
 
Non-personnel increases include a $1.2 million increase for the Pacifico Housing Contract for the CalWORKs Housing Support Program, entirely funded through State & Federal CalWORKs funding. Other substantial changes are noted in the division summaries below. 
 
The Child, Youth & Family division includes about a $420,000 increase over the Recommended Budget. This is due to an overall increase of about $600,000 in professional service contracts over the Recommended Budget. About $200,000 of this is due to an increase in the contractual rate for Avatar, the Electronic Health Record system for Behavioral Health, with the rest being contractors for mandated services such as Early and Periodic Screening, Diagnostic, and Treatment or Wraparound Intensive Services. All services are funded through a mix of non-county sources, including Realignment. Additionally, there is an increase of about $550,000 in Transportation and Travel due to a methodology shift where travel expenses are accounted for staff member travel, which is now tracked in the division instead of within Administration.
 
The overall budget for Public Health increased by $20,000 from the Recommended Budget but includes several shifts in funding. Due to MHSA cuts at the state level, a reduction of $350,000 in MHSA revenues is expected in the unit but is offset with increases in other state health programs and tobacco tax allocation. Notable expenditure increases include $320,000 more for indirect costs for county overhead, $100,000 in additional trainings, and about $150,000 in additional professional service contracts. The most notable expenditure reduction is a $450,000 decrease in contribution to non-county agencies due to a significant contractual reduction for Yolo County Children's Alliance Home Visiting Program.
 
Service Centers Branch has increased their overall budget by about $50,000, mostly due to the additional Public Assistance Specialist positions highlighted above. Additionally, there is an increase of about $500,000 due to the elimination of some vacancy savings and $600K due to increased indirect/overhead costs. Significant reductions are seen in building improvement expenses, reduced from $280,000 to $0, and about a $1.8 million decrease in direct client support service costs which have been redirected to the Pacifico Housing Project. There are offsetting decreases in intergovernmental & miscellaneous revenues of $350,000.
 
Client Aid has decreased by $900,000 from Recommended to Adopted. This is mostly due to a significant drop in Foster Care payments, with an overall decrease of about $800,000 due to projected caseload. Despite this decrease, there are increases in the federal reimbursement rates which contributes to some increased revenues. This means less realignment revenue is needed to fully fund the unit, with an overall decrease of about $1 million from Recommended.
 
Adult & Aging has an overall increase of about $5 million from Recommended to Adopted Budget. This is mostly due to the Pacifico Housing Project mentioned earlier. Other increases are in the Crisis Now cost center, which includes about $1 million for new buildings & improvements funded through the Byrne State Crisis Intervention Program Grant. Additionally, there is an increase of about $750,000 in Adult Outpatient Mental Health due to an increased contract with Hope Cooperative for FSP services, which are funded fully by MHSA.  The Adopted Budget includes the addition of three Public Guardian Conservatorship Officer positions, two of which were approved during the Recommended Budget hearing using contingency funds, and a third on August 27, 2024 that is being funded by reductions in administrative positions within the HHSA budget.

Innovation and Technology Services (ITS)
ITS is projecting revenue increases in their unit of $660,680 primarily due to the inclusion of the Local Agency Technical Assistance (LATA) grant intended for broadband design work and an additional $160,000 in IT charges for services revenues. Additional changes in the unit include an increase to the department's internal charges ($48,000), LATA grant expenses of $500,000, and renewal costs for Canva and Adobe licenses totaling $48,200.

The Telecom division is including an additional $23,033 in expected revenues and expenses. These increases are due to additional cost plan charges that were previously anticipated to be lower.

Augmentation requests in the department include the addition of a Technical Support Specialist position that is to be dedicated and funded by the Health and Human Services Agency that staff is recommending for approval ($121,839). Funding for this position was included in the budgets for both departments in the Recommended Budget.

Lastly, included in the ITS Adopted budget are items that were re-budgeted from FY2023-24 that include the Baker Tilly Agreement for audit services, N. Dean Meyer Consulting and Training contract, Axsium Service Support contract, and an agreement with CDW totaling $47,238.

Library
The Library's FY2024-25 Adopted Budget includes reductions to the department's general liability ($9,884) and cost plan charges ($226,515) that are offset by reductions in the department's use of fund balance. The department submitted an augmentation request for additional revenues of $10,000 in a donation from the Davis Friends of the Library that are earmarked for the purchase of a microfilm reader to used by customers at the Mary L. Stephens Davis Branch Library. Staff recommend approval of this augmentation.

Also included in the Library's Adopted Budget submission is a request for a 0.50 FTE Library Assistant at the Clarksburg Library. This position is funded through reductions in the department's extra help budget ($18,502) as well as property tax revenue that staff are recommending for approval.

Lastly, the Library is requesting to appropriate fund balance for pest abatement services and alarm upgrades at the Gibson house. This agreement was approved in FY2023-24; however, the contract was not executed prior to the end of the fiscal year.

Probation
The Probation Adopted Budget includes various adjustments in the Administration Unit which include an increase in revenue of $139,514. This increase is due to the Community Corrections Partnership (CCP) Planning allocation being reinstated in the state's 2024-25 budget. This allocation is separate from the larger pool of CCP funding and is available only to Probation departments to support planning and reporting activities completed by the Chair of each county CCP. Additional expenses include an increase in the unit's memberships budget of $5,000 due to increased membership costs with the Chief Probation Officers of California (CPOC) and more staff completing training modules than originally anticipated. Additional adjustments in the unit include general liability cost reductions of $18,262 in addition to an increase in the contribution to fund balance of $108,669 as historically the unit has underspent the $150,000 CCP planning allocation.

Adult Probation Services is anticipating an increase in revenue of approximately $207,000. This is due to an increase in Prop 172 revenues in addition to an increase in the unit's SB678 allocation of $286,846. These revenue increases are offset by a reduction in the use of fund balance in the unit. Additionally, positions were moved between units and shows an increase in salaries and benefits of 75,000 which includes an increase to the Adult Probation Services salary allocation of $44,000.

The Juvenile Detention Unit is anticipating an increase in revenue primarily due to additional Prop 172 revenues of $62,000 and the addition of year one of an allocation from CalAIM. The department received a two-year allocation from the state to support the implementation of the provision of targeted pre-release Medi-Cal services to individuals in state prisons, county jails, and youth correctional facilities who meet specific eligibility criteria. This is the first of two allocations with the current year's budgeted amount being $1,322,547. As part of this allocation, expenses also increased due to additional ITS expenses, equipment purchases, contracts and increased salaries and benefits at the JDF, HHSA, and ITSD all related to the CalAIM allocation ($1,322,547).   

Juvenile Probation Services is expecting a reduction in revenues of approximately $320,000. This decrease is to reflect the reduction in the Juvenile Justice Realignment Block Grant amount of $287,906, a reduction in 2011 Youthful Offender Block Grant (YOBG) revenues of $51,276 and an increase in the use of fund balance of $18,452 primarily due to the changes in anticipated YOBG revenue. Additionally, expenses were included for the agreement with El Dorado County for the Secure Youth Tracking Facility (SYTF) which include a decrease in the unit's contribution to fund balance amount that is offsetting these expenses.

The AB109 (CCP) unit includes an increase to expenses due to the Community Corrections Partnership board approving an additional $40,000 for additional treatment costs. Additionally, the unit's budgeted salary savings amount has increased by $163,000 to $709,000.

Other items in the Adopted Budget for Probation include reallocations and adjustments of overhead expenditures, salary and benefits, and services and supplies within the various divisions and programs to align staffing with the department's current needs.

The department did not submit any augmentation requests.

Public Defender
The Public Defender's Adopted Budget includes refunding of the third year of the Pilot Defense Grant which was removed from the Governor's budget and was not included in the Recommended Budget ($262,000). The budget also includes anticipated reductions in Revocation funding, along with reductions in expenses related to Public Liability and Cal-Card Admin Fees ($12,000)

The Adopted Budget also includes the addition of one Deputy Public Defender II position ($191,000), funded by a combination of state funding related to implementation of Community Assistance, Recovery and Empowerment (CARE) Court, and the Department of State Hospital Incompetent to Stand Trial funding. Both of these funding sources are anticipated to be available for the next three to five years. Staff recommend approval of this additional position.

The Public Defender's Office also requested 3 new Deputy Public Defender positions, a new Paralegal position, and a new Associate Administrative Services Analyst totaling approximately $726,550. Additionally, a replacement vehicle was requested in the investigations/mitigation units as the current vehicle has exceed approximately 100,000 miles. Due to the limited funding available during the Adopted Budget, staff are not recommending these items for approval.

Sheriff
The Sheriff's Adopted Budget reflects an increase in Prop 172 funding ($218,476), along with increases to anticipated COPS revenue ($3,600) and increases in Workers Compensation costs ($56,600).

The Public Administrators Division's Adopted Budget reflects the addition of a Deputy Public Administrator, which was added by the BOS on July 23, 2024. Funding for this position was secured through additional identified revenue ($25,000), elimination of the Public Administrators Extra Help budget ($75,000), along with additional salary savings in the Detention program ($29,000).

The Adopted Budget for Court Security includes reductions in anticipated state revenue ($70,000), along with reductions in anticipated expenses in both Workers' Compensation and Public Liability costs ($2,000).

The Sheriff's Office also requested a number of new positions as part of the Adopted Budget. These include:

Given the limited nature of available on-going funding, these requests are not recommended for approval at this time.

The department also requested $765,500 to replace multiple vehicles throughout the department. This includes Patrol, Management and Detective vehicles. Requests for equipment, including metal detectors for the visitor's area of Leinberger ($22,100), ballistic shields ($21,800), replacement radios ($73,200), replacement of a Public Administrator Memorial ($6,500), and increases to maintenance budgets ($27,000) were also submitted. Given the small amount of additional one-time funding available, these are not recommended for approval.

Contingencies
The County policy on Fund Balance and Reserves identifies appropriations for contingencies as the first line of defense against uncertainty in the annual budget. It provides that the County Administrator will recommend a specific level of appropriation for contingency, usually between 1% - 3% of total budgeted expenditures. The proposed Adopted Budget includes a reduction of $1,203,427 in appropriation for various contingencies, as outlined below. It should be noted that due to limited funding the recommended contingency appropriations are much lower than in prior years, and provide a thin backstop against uncertainty in the 2024-25 budget. The use of contingency funds will require subsequent approval by a 4/5 vote of the Board of Supervisors.

General Fund Contingency – The amount of $2,316,978 or 1.22% was approved in the FY2024-25 Recommended Budget. This amount is being reduced by $1,703,427 to fund known equity and health benefit package increases, and as a budget balancing solution. A General Fund contingency amount of $613,551 or 0.3% remains available, which is below the Board's policy target of 1% - 3% of General Fund expenditures..

Public Safety Contingency – It is recommended that 500,000 or 0.5% be added to the Public Safety Contingency, which is below the Board's policy target of 1% - 3% of Public Safety Fund expenditures. No Public Safety Contingency was included with the FY2024-25 Recommended Budget.

Reserves (Attachment J)
General Reserve – The Board Policy on Fund Balance and Reserves establishes a General Reserve target of 10% of average General Fund expenditures. Staff recommends a contribution of $1,483,261 from the Chula Vista Fund to maintain the Reserve at 8.5%.

CIP Reserves – No contribution was made during the Recommended Budget process. The remaining balance in the CIP Reserve is $1,442,115. No contribution is recommended at this time.

Audit Disallowance Reserve – Each year, the state and federal government audit a variety of programs and may disallow payments for a variety of reasons.  The Audit Disallowance Reserve protects the County against the risk of disallowances that result in a claw back of state or federal funding.  As part of the FY2023-24 Adopted Budget, the Audit Disallowance Reserve was increased to $2,600,000 in light of a recently initiated audit of the District Attorney's Child Abduction program by the State Controller's Office (SCO). Based on SCO audits of this program in other counties, there is a high risk of negative audit findings and potential return of funding to the state. Over the four-year audit period, the County has received $2.5 million in state funding for this program. As this audit is still ongoing, no changes to this reserve are recommended at this time.

Liability Reserve – The liability reserve protects against future litigation or claims against the County. County Counsel has indicated that a liability reserve of $600,000 should be sufficient to protect the County from litigation exposure. Because the County has met this threshold, no additional contributions are necessary for FY2024-25.

The tables below summarize the total reserve and contingency amounts included in the FY2024-25 Adopted Budget, inclusive of amounts that were previously approved in the Recommended Budget.  

* Includes the estimated contributions for FY2024-25.
** No planned contribution during the FY2024-25 as part of the budget balancing strategy. The Pension Trust offsets the present outstanding obligations for Pensions.

Community Corrections Partnership
The proposed Adopted Budget for the Community Corrections Partnership (CCP) reflects an anticipated decrease in both base and growth allocations, decreasing overall anticipated revenue in the fund by $835,000 over the Recommended Budget. The Adopted budget for the CCP is reflected in the table below:

The CCP moved to percentage-based budgeting in FY2021-22. Expenditures in the FY2024-25 CCP budget make investments into programs and staffing that align with the updated Strategic Plan. The CCP will return to the BOS in January to present its annual report.

Cannabis Tax Expenditure Plan
In FY2023-24, the County received approximately $505,000 in Cannabis Tax revenue and had additional interest earnings and unallocated funds from prior years for a total of $830,000 available to allocate in 2024-25. The County appropriated $480,000 as part of the 2024-25 Recommended Budget, resulting in an additional $350,000 that is available for appropriation in the Adopted Budget. 

Pursuant to the County's cannabis tax ordinance, staff drafted the updated expenditure plan for the Adopted Budget (Attachment I). The plan continues to provide funding to each of the five funding priorities identified in the Board's cannabis tax general framework (Criminal Enforcement of Illegal Cultivation, Early Childhood Intervention and Prevention, Youth Development, Rural Investment, and Financial Sustainability). At this time, staff recommends utilizing additional revenues to fund the purchase and outfitting of two Sheriff Patrol vehicles ($222,593) and to purchase a mower and other parks equipment ($102,000) for maintenance of the new Knights Landing Park, which is scheduled to open in late October 2024. Staff also recommend increasing the Cannabis Tax Plan reserve from $35,500 to $60,907. The proposed expenditure plan was presented to the Cannabis Ad-Hoc Subcommittee on September 13, 2024, and the Citizen's Oversight Committee on September 18, 2024.  The Citizen's Oversight Committee supported the proposed expenditure plan, but continued to advocate for more balance in the allocation of funds with an emphasis on Youth Development, as well as updated policy guidelines for the use of cannabis tax revenues. 

Rural Community Investment Program
The Rural Community Investment Program (formerly known as Rural Initiatives) was initiated in 2015 and serves to enhance economic development as well as health and safety for rural communities by addressing critical infrastructure needs in accordance with the strategic plan Safe Communities goal. There are several projects that are included as part of the Cannabis Tax Expenditure Plan as discussed above. In prior years, staff from the County Administrator's Office and Yolo County Housing gathered information on the interests of the rural communities to target potential County and grant funding resources. Information was gathered through conducting town meetings in some of the rural areas. Staff also reviewed the needs identified in the action plans of Capay Valley, Clarksburg, Knights Landing, and the Yolo County Agricultural Labor Study.
 
Investments recommended for FY2024-25 were driven by prior outreach efforts and internally identified funding needs. Historically, the RCIP has been funded with General Fund revenues. Due to budgetary constraints on the General Fund, staff recommends funding the $409,500 in projects identified in the table below with Cannabis Tax revenues. This proposed use of Cannabis Tax revenues is consistent with the general Cannabis Tax expenditure framework previously adopted by the Board and falls within the specific category related to investment in rural infrastructure and support. These projects are included in the FY 24-25 Cannabis Tax Expenditure Plan. More information on RCIP may be found on the County's website.

Capital and Maintenance Projects

Accumulated Capital Outlay (ACO)
The proposed Adopted Budget for Accumulated Capital Outlay (ACO) includes $52,000 in funding for the securing of a consultant to assist in development of an access control replacement bid package. The County currently utilizes the Pinnacle electronic access control system (EACS) for access to a majority of its facilities. The EACS is at the end of its useful life and experiencing an increasing number of failures. In securing a third-party consultant to assist in drafting an access control replacement budget package, the County will be able to create a package to replace the EACS controller hardware with an open platform that will allow for selection of the best access control software to meet our current and anticipated futured needs. Staff discussed the potential of in-house development of the system, but ultimately determined that designing and implementing a comprehensive building security system requires specialized knowledge and expertise that internal teams currently do not possess. This particular system straddles three major disciplines: facilities (installation design, cabling design, facility hardening), hardware (readers, network equipment, servers, connectivity), and software (programming, controllers) and the scope of work covers our most complicated and heavily visited buildings. There are a plethora of hardware and software solutions that neither GSD nor ITSD have experience with that all purport to have similar functionality. The amount of staff time required for this type of project would be significant and engaging a consultant with the necessary experience would ensure that the system is designed efficiently and integrates seamlessly with current systems, allowing staff to focus on day-to-day operations.

Additionally, staff recommends $22,000 in ACO funding for General Services staff to complete the Monroe Showers project.

Capital Improvement Program
The Adopted Budget includes continued funding for the Yolo Bypass West Levee Outfall, Knights Landing Park, and South Davis Library Projects. No adjustments are being made to those budgets at this time.

Carryforward Appropriations

The FY2024-25 Adopted Budget includes $6.2 million in unused appropriations from FY2023-24 that will be encumbered and carried forward into FY2024-25. These appropriations are for one-time purchases that have been ordered but not yet paid for, or for specific one-time projects or initiatives that were not completed by year-end. Examples include vehicle purchases that have not yet been invoiced, or contingency funds awarded for a specific project that had not yet been completed. The purpose of carryforward appropriations is to ensure sufficient budgetary authority to meet contractual obligations and to carry out Board directives. A summary of carryforward items and amounts by department is provided in Attachment A. All carryforward appropriations have been incorporated into the FY2024-25 Adopted Budget and are included in the budget totals reflected in the budget resolution Attachment B, Exhibit 1.

Looking Ahead

Looking past the Adopted Budget, the County has several additional significant fiscal matters in various stages of being addressed that are important to highlight for the Board's awareness.

Labor Negotiations

Since the Recommended Budget was approved, the County completed labor negotiations with four bargaining units whose agreements expired on June 30, 2024. These agreements have resulted in higher labor costs for these labor units than originally anticipated in the Recommended Budget. Those labor increases are expected to be absorbed in department budgets. However, should departments determine over the course of the year that labor costs cannot be absorbed in their budget, they may request contingency funds to close the gap at regular budget monitoring intervals (e.g., Mid-year, third-quarter, year-end).

Pension Funding

The FY2024-25 Adopted Budget includes $65.3 million in employer pension contributions, an amount largely unchanged from the FY2024-25 Recommended Budget. Employer contributions for FY2024-25 were determined in the CalPERS Annual Valuation Report as of June 30, 2022. As discussed with the Board on several occasions, employer contribution rates have increased significantly over the past several years and are projected to continue rising for a few more years before stabilizing. These increases are driven primarily by changes in CalPERS demographic and investment assumptions, including a lower targeted rate of return, investment results, and amortization policy. The table below shows the projected pension rates over the next five years.

As discussed during the 2024-25 Recommended Budget, the County has temporarily suspended the supplemental pension charge of 2.25% as a budget balancing solution. Staff anticipate returning to the Board later in the year with proposed revisions to the Pension Funding Policy. 

Other Post-Employment Benefits

The FY2024-25 Adopted Budget includes $12.1 million in OPEB charges to departments, an amount that is substantively unchanged from the FY2024-25 Recommended Budget. The OPEB actuarially determined contribution rate of 7.7% of payroll which has been held constant since the FY21-22 budget has been reduced to 6.9% following the results of the June 30, 2022, valuation report.

In May 2011, the Board approved the creation of an irrevocable trust to accumulate assets to reduce the OPEB liability. The initial policy had a funding ramp-up over 15 years; however, the County achieved that ramp-up sooner than anticipated and updated the policy in November 2019 to fund the trust at the actuarially determined contribution level. The OPEB trust is expected to have a balance of approximately $40.8 million at June 30, 2024, and this is estimated to increase to $44.5 million based on contributions in FY2024-25.  

In addition to funding the OPEB trust, significant progress has been made in lowering the overall OPEB liability by implementing benefit caps for most employee units. As a result of these efforts, the overall OPEB liability declined by $16.1 million in the June 2022 valuation.

State/Federal Mandates

The County continues to monitor the State and Federal budgets for programmatic mandates that the County should prepare for. The State has added significant new requirements for counties in recent years. Of particular interest to the Board is implementation of Senate Bill 43 which will place greater service demand on the Office of the Public Guardian, as it significantly expands the definition of "grave disability" in determining eligibility for Lanterman-Petris-Short conservatorships, and Senate Bill 1338,  which establishes the Community Assistance, Recovery and Empowerment (CARE) Act, a civil court process to create a voluntary agreement or a court-ordered plan to implement services to individuals with specific mental health conditions.

Further, the Health and Human Services Agency will be conducting analysis on the impacts of the passing of Proposition 1 and how that will affect funding within the Mental Health Services Act.

Conclusion

The funding recommendations included in the Adopted Budget attempt to make strategic investments given limited ongoing resources and a sizable shortfall in expected fund balance. The budget works to strengthen the County's financial safety net by funding contingencies and maintaining the current percentage level of the General Reserve. The inability to fund nearly all departmental augmentations, both ongoing and one-time, underscores the County's current fiscal situation. As discussed during the Recommended Budget process, this budget continues to recognize that one-time resources have likely peaked, revenue growth remains modest, and fiscal prudence is paramount as we look toward the future.

The County's continued reliance on fund balance to cover ongoing operating costs, along with increases in the use of salary savings that will likely erode available fund balance in future years, is concerning. As the County continues to grapple with the increasing costs of both labor and contracted services, combined with revenues growing at a slower rate, the strategies and solutions staff have consistently used to balance the budget in recent years will no longer be sufficient. Balancing the budget in future years will require a more complex, multipronged approach, which may include the following:

· Elimination of vacant positions
· Hiring Review
· Hiring Freeze
· Department Reduction Plans
· Furlough
· Mandatory/Discretionary Program analysis
· Reduce/eliminate discretionary programs
· Use of Reserves

Staff anticipates returning to the Board in the next 1-2 months to begin a dialogue regarding the steps necessary to bring the County's budget into structural balance. 

All county departments were provided the opportunity to submit additional budget adjustments and requests. Financial Services staff worked with department heads and fiscal officers in reviewing and analyzing the requests. The proposed funding plan was reviewed with the Board Chair and Vice Chair on September 13, 2024. County Counsel reviewed the Adopted Budget resolution as to form.