Receive the 2023-24 3rd Quarter Monitoring Report, adopt a budget resolution amending the 2023-24 revenues and appropriations and approve the 2024-25 Recommended Budget. (General fund impact $123,056,896) (Pinedo/Liddicoet)

I. 2023-24 3rd Quarter Budget Monitoring
Year-end projections have been developed by each department based on actual revenue and expenditure data through March 31, 2024. The sections below highlight areas where significant variances from budgeted amounts are projected, or where budget adjustments or other actions are recommended.  A summary of the 3rd Quarter projections for each department is provided in Attachment A. For those budget units where staff recommends a budget adjustment, it is noted in this narrative and included in the budget resolution provided in Attachment B.

Agriculture: Agriculture is projecting to end the fiscal year with a positive net variance of approximately $312,000 primarily due to salary savings. The department has had two long-standing vacancies which contributed to personnel savings as well as a decrease in extra help used for fieldwalking services, resulting in $240,000 of savings. Additionally, the department is anticipating increased revenues of about $40,000 due to increased Phyto-certificate issuance and increased state revenue from the Dog Team contract.  

Assessor/Clerk Recorder/Elections: The Assessor/Clerk Recorder/Elections Department is projecting to end the year with a positive net variance of $1,606,783. 

The Assessor’s division is projecting to end the year with a positive net variance of $643,532.  Expenditure savings in the unit total $745,000 and are attributed to multiple vacancies ($443,000), a reduction in GIS expenses ($122,000), and a reduction in State Supplementation for County Assessors’ Program (SSCAP) grant related expenses.  Partially offsetting the $745,000 in expenditure savings is a reduction in State Revenue of $100,000 due to less than anticipated SCAAP grant revenues due to finding a less expensive solution.

The Elections division is also projecting a positive net variance of $233,000.  Revenues are projected to end the year with a surplus of $363,000 due to the addition of two Help America Vote Act grants and excess revenue from local elections that were not expected at the time of budgeting.  These revenues are offset by additional salaries and benefit costs ($43,000) needed to hire extra help staff to carry out these elections, in addition to additional services and supplies costs ($55,000) for local elections and the March Presidential primary election. 

The Clerk-Recorder division is projecting to end the year with a positive variance of $730,000.  Revenues in the unit are projected to end the year with a surplus of approximately $268,000 primarily due to higher than budgeted recording fee revenues.   Additional savings exist in salaries and benefits of $130,000 are due to vacancies that include 2 Vital Statistics Technicians, a Vital Records Director, and an Assessor Clerk Recorder Specialists.  The remaining expenditure surplus is due to savings in services and supplies of $349,000 due to the US imaging project being budgeted for completion and now having an expected completion date in FY 2024-25.

Staff recommends adopting the budget resolution in Attachment B.

Board of Supervisors: The Board of Supervisors (BOS) is projecting to end the year within budgeted amounts.  Though it is projecting a negative net variance in Services and Supplies due to additional incidental expenses such as Building Maintenance for various Board district offices, anticipated salary savings will be used to keep the department budget in balance.

Regional Child Support Agency: The Regional Child Support Agency (RCSA) is projecting to end the fiscal year with a positive net variance of approximately $250,000 due to vacancy savings and increases in state and federal funding. The department will be able to carry forward the funding for reappropriation in a future fiscal year. Increases in maintenance, training, travel, and IT services did utilize some of the vacancy savings realized.

Community Services: The Community Services department is projecting to end the fiscal year with an overall positive net variance of $3.9 million, primarily due to delays in capital projects and vacancy savings across multiple budget units.

The Integrated Waste Management (IWM) division is projecting an overall $2.2 million positive net variance primarily due to the delay of the groundwater pumping/piping system project into next fiscal year, as well as some other delays in capital projects. Additionally, there is approximately $600,000 of vacancy savings expected in the unit due to vacancies throughout the fiscal year. Offsetting some of these savings is a decrease in charges for service accounts, which occurs when staff time is not allocable to charge out for services performed.

The Roads fund is projecting a positive net variance of $980,000 primarily due to vacancy savings and a decrease in road maintenance activities. Overall, the unit is about $8.5 million under budget because multiple capital projects are mid-implementation. Road and bridge projects are budgeted by each phase they are in, and each phase can take up to 1 to 3 years, causing a surplus each year. Almost all the funding for these projects is reimbursement based, so revenues decrease accordingly.

Climate Sustainability is projecting to end the fiscal year with a positive net variance of $9,000, largely spending on track with budget. The department is requesting a budget adjustment to increase State Revenues and Service & Supplies by $100,000 to account for two newly accepted state grants. These grants will be allocated over multiple fiscal years, with the expectation that $100,000 will be needed in the current fiscal year to initiate the projects.

Natural Resources program is projecting to end the fiscal year with a negative net variance of about $600,000. This is largely due to an accounting error where revenues for gravel fees were posted in the prior fiscal year. Because of this, the unit is not meeting its expected revenue receipts for the current fiscal year. However, they have an equal excess in prior years. Therefore, fund balance will be available to cover this year’s expenditures.

Cannabis is projecting to the end the fiscal year with a positive net variance of $380,000 primarily due to vacancy savings incurred throughout the fiscal year. Also, the department has received an additional $220,000 in revenue due to an unexpected investment adjustment. Those additional revenues are offset by a decrease of $85,000 in license fee revenue as two cultivators dropped from the program this fiscal year.  

Animal Control Services has been transferred to Community Services from the Sheriff’s Office and projects a positive variance of about $50,000. Overall, revenues are about $200,000 under budget due to some accounts being overbudgeted and several state grants not expected to be fully utilized this fiscal year. Overall, expenditures are projected to be underspent by approximately $250,000, in the Service & Supply budget category. Personnel is projected to be $250,000 over budget, as additional positions and extra help costs have been incurred that were not budgeted. Due to the transition, backlog of bills, and evolving capital projects, this unit is more volatile and will be closely monitored by fiscal staff.    

The Building division is anticipating a $200,000 positive variance due mostly to vacancy savings, which is projecting $400,000 under budget. This is offset by a $280,000 decrease in licenses & permits, as construction permits are trending much lower than historical actuals. The division is requesting to convert a vacant Plan Check Engineer position to Assistant Chief Building Official to better align with workloads and minimize the use of more expensive consultants. The change would cost about $70,000 annually but will be recouped through the comprehensive fee study expected to come to the Board of Supervisors mid-Fiscal Year 2024-25.  

Staff recommends adopting the budget resolution in Attachment B.

County Service Areas: The County Service Areas (CSAs) and Assessment Districts are projecting to end the fiscal year with an overall positive net variance of $320,000. This includes large positive variances in Wild Wings Sewer & Water, and negative variances in Snowball, North Davis Meadows Water, and Wild Wings Golf Course, discussed below.

Snowball CSA is projecting to end the year with a negative variance of about $110,000. Additional flood maintenance and engineering services have been needed over budget, but fund balance is available to cover the expenses if necessary. Additionally, about $100,000 of revenue associated with the FMAP grant approved mid-year will not be realized this fiscal year and moved into future years. The department is not requesting an additional appropriation at this time, as some services are still outstanding or unknown and fund balance will cover any overages.

North Davis Meadows Water is projecting to end the year with a negative variance of about $45,000. Overall, about $8.2 million of both revenue and expenditure budget are not expected to be utilized as they are related to grant funding for the water project which has not yet been put out to bid, so will not likely be expended this fiscal year. However, there have been additional expenses over budget in the amount of $100,000 for professional engineering services and related services that have the potential to be funded by the grant. The department has available fund balance to cover the expenditures but is requesting to pause on the appropriation of fund balance until it is determined if the grant will support the additional expenses.

Wild Wings Golf Course is projecting to end the year with a negative variance of about $75,000 due to additional salary and benefit expenditures incurred as needed to hire county staff to manage the Golf Course. This is offset partially by decreased operational spending, but increases in legal services, maintenance, and building and grounds contracts have minimized these savings. The department will be bringing forward a use of general fund contingency request to the Board outside of this monitoring process, which should eliminate the negative variance. Additionally, there is the possibility to delay a loan payment into the next fiscal year to solve this one-time issue.

County Administrator’s Office: The County Administrator’s Office (CAO) is projecting to conclude the fiscal year with a positive net variance of $124,000. This surplus is largely related to ongoing vacancies in both the primary CAO unit ($167,000) and in the Diversity, Equity, and Inclusion Manager ($77,000) position.   The entirety of these savings are not being realized due to anticipated revenue reductions in Charges for Services ($120,000) due to inability to provide external services to partners due to these ongoing vacancies.

The remaining units overseen by the County Administrator’s Office are projected to finish the fiscal year within budgeted amounts.

County Counsel: County Counsel is projecting to end the fiscal year with a positive net variance of approximately $150,000 primarily due to savings of about $100,000 in their primary operating unit due to vacancy savings. Other minor savings are seen in Indigent Defense and Small Claims.

Countywide: While most budget units within the Countywide budget are projected to end the year within budgeted amounts or with a positive net variance, the Countywide Public Safety Maintenance of Effort (MOE) for Sheriff and the District Attorney is anticipating a year-end deficit of $286,000 due to unanticipated increases in the amount of maintenance at various locations provided for under the MOE.

Countywide general-purpose revenues are projected to end the year $130,000 in excess of budgeted amounts due to higher than anticipated interest earnings ($400,000), Sales Tax earnings ($92,000).  The entirety of this excess revenue is not being realized due to anticipated reductions in some Property Tax accounts ($477,000). The County also received a one-time payment in the amount of $90,000 for sale of fixed assets.

The Local Innovation Subaccount is projected to exceed budgeted revenue due to receipt of unbudgeted revenues of $196,000.  Any year-end surplus will fall to fund balance for reappropriation in future years.

District Attorney: The District Attorney’s Office is projecting to end the year with a positive net variance of $6.9 million. However, those programs receiving General Fund dollars are projecting a year-end surplus of $852,000. The Criminal Prosecution unit is projected to conclude the fiscal year with a net positive variance of $837,000, of which $768,000 is a savings to the Public Safety fund. The majority of the savings to the Public Safety fund is related to ongoing vacancies throughout the unit ($692,000).  The department reports it has had at least three attorney positions vacant for the entire fiscal year, leading to salary savings in excess of their budgeted amount.  Additionally, costs associated with expert witnesses in Racial Justice Act cases are currently under budget ($215,000) though the department does expect to see those costs increase, as cases begin to ramp up in the summer months. The entirety of these savings are not being realized due to lower than anticipated Federal and State revenues ($185,000) in several grants within the division.  Delays in filling several positions have caused an inability to bill for full amounts of available funding.

The DA’s special revenue funds are projected to have a positive net variance of $6.1 million due primarily to unanticipated revenues in the Consumer Fraud/Environmental Protection Fund.  Two unanticipated settlements were received in the first half of the current fiscal year, exceeding budgeted penalties revenues by $4.8 million. The fund also received unanticipated state revenue ($300,000) to offset growing costs for document storage, along with higher than anticipated interest earnings due to receipt of these unanticipated revenues.   The program has also experienced vacancies, leading to additional savings. Any surplus in this fund will fall to fund balance to be appropriated in future fiscal years.

Staff recommends adopting the budget resolution in Attachment B.

Financial Services: The Department of Financial Services (DFS) is projecting to end the year with a positive net variance of $235,000 which is primarily related to salary savings as the department has experienced several vacancies throughout the fiscal year. Offsetting these savings is the reduction of about $128,000 in revenue due mostly to not receiving full reimbursement for position costs due to numerous vacancies.

General Services: The majority of divisions within General Services are projecting to end the year with a positive net variance or within budgeted amounts.  The Facilities and Parks divisions are projecting a positive variance of $617,000 and $99,000 respectively.
 
The Facilities division is anticipating ending the fiscal year with a positive variance of $616,711.  These savings can be attributed to positions such as the Projects Division Manager, Senior Accounting Technician, Project Coordinator and Fiscal Administrative Officer being vacant for portions of the year, resulting in salary and benefit savings of $272,000.  Additionally, the unit is projecting savings in Services and Supplies of $380,000 due to lower than budgeted maintenance costs that results in standing purchase orders that are not being fully utilized. Also, capital expenses are trending lower than expected as projects will not be finished this fiscal year, which include the Internal Audit move and the Monroe Well project ($195,000).  Offsetting the expenditure savings in the unit are lower than anticipated revenues due to the delays in these projects, resulting in $195,000 in reduced revenues.
 
The Parks division is expecting to end the year with a positive variance of approximately $99,000.  This is due to salary and benefits savings of $154,000 due to two Parks and Facilities Workers being vacant throughout the year.  Capital expenses in the unit are expected to exceed the budgeted amount in the unit by $49,000.  Staff are requesting to move salary and benefit savings of $50,000 to capital expenses to cover the increased costs associated with the Grasslands dog and trail parking lot.

Staff recommends adopting the budget resolution in Attachment B.

Health and Human Services Agency: 
The Health & Human Services Agency (HHSA) is projecting to end the fiscal year with a neutral net variance, due to the conversion to their new accounting structure where all operations are held within a major operating fund. Overall, actuals are expected to be approximately $6 million over the originally Adopted Budget, but this is mostly due to variances in how the department is accounting for expenses in their new structure. A resolution is attached to this agenda item to transform the current Adopted Budget into the new structure, which does not change overall net county costs from the original Adopted Budget.

Adult & Aging is projecting to end the fiscal year with a neutral net variance. There have been overall decreases in expenditures due to delays in implementing the Housing and Homeless Incentive Program grant. The department originally budgeted $4.3 million in direct support payments but is only projecting to utilize approximately $2.4 million. Corresponding revenues have decreased this year but will be available in future years to continue the program.  A shift of $450,000 of general fund is directed to this unit from other branches, resulting in a net $0 increase of county funding.

Administration is projecting a neutral net variance but is projecting increased expenditures and revenues of about $17 million from the originally Adopted Budget. This is due to an accounting adjustment made mid-year which more accurately reflects the transfer of expenditures within the Administrative unit to other branches within HHSA. The amounts now projected represent the full cost of Administration that is reimbursed by programs in the other branches, whereas previously this was not clearly reported.

Client Aid is projecting a neutral net variance with a decrease of about $1 million in both revenues and expenditures from the currently Adopted Budget. This is due to a significant drop in both Foster Care ($1.5 million) and CalWorks ($1.2 million) payments. This is offset by increases in Adoption ($1.2 million) and other small increases. Because less assistance payments are projected, there is an offsetting decrease in Realignment revenues needed in the branch.

Child, Youth, & Family is projecting a neutral net variance with a decrease of about $2.6 million from the originally Adopted Budget. The majority of this variance is due to expenditures not materializing for professional services in School Based Mental Health division, as well as some other contracts which have not been fully utilized. This leads to less reimbursements through state and federal sources as well as a decrease in needed realignment to fund programs.

Service Centers is projecting a neutral net variance with an increase of about $1.4 million in revenues and expenditures. This is due to an increased need in the Welfare to Work program, which is completely offset by increased funding from the State and Federal governments.

Staff recommends adopting the budget resolution in Attachment B.

Human Resources: Human Resources is projecting to end the year with a positive net variance of $108,240.  These savings exist primarily in the main Human Resources operating accounting account where expenditure savings total $101,000 due to vacancies in the department.  These vacancies consist of the Assistant Human Resources Director and a Senior Personnel Analyst that were vacant for a portion of the fiscal year.

Additionally, Human Resources is requesting to move $130,000 in salary and benefit savings to services in supplies to account for YCPARMIA invoices in the Risk Division that were not previously budgeted for.

Staff recommends adopting the budget resolution in Attachment B.

Innovation and Technology Services: The Innovation and Technology Services (ITS) department is projecting to end the fiscal year with a positive net variance of $1,480,691.  The department experienced vacancies throughout the fiscal year which include a Database Administrator, Internet Systems Specialist, Technical Support Specialist, Network Systems Specialist III, Programmer Analyst IV, (2) ERP Analysts II, and a System Software Specialist III resulting in savings of $952,000.  Additional savings of $418,000 exist in services and supplies due to savings with the division’s training costs of $69,000, savings in professional services due to a position being filled by a contractor for half the year and savings related to NDMA, Crowdstrike and Citrix agreements.  Lastly, Intrafund expenses are projected to be higher due to Direct Bill collections ($481,000). These expenditure savings are offset by what appears to be a reduction in revenues due to the reallocation of expenses as described above ($506,482).

Additionally, Telecom is anticipating having an overall surplus of $38,830.  The majority of these savings exist in salaries and benefits due to a larger percentage of the IT Managers' time being allocated out of the unit than originally budgeted, resulting in savings of $42,404.  The Telecom division is requesting a portion of these savings in salary and benefits ($20,000) and intrafund transfers ($30,000) be transferred to services and supplies to cover unexpected expenses that appeared during the fiscal year related to maintenance with Norcal Communications.

Staff recommends adopting the budget resolution in Attachment B.

Library: The Library is projecting to end the fiscal year with a positive net variance of approximately of $556,000. The majority of this variance exists in County Library Services as revenues are expected to come in approximately $257,000 over budget.  These revenues are due to additional property tax and RDA revenues of $177,200 along with additional State Revenues from the California State Library totaling $42,000.  Expenditures in the unit are also projected to have a surplus of $51,485.  These expenditure savings are due to vacancies and recruitment delays resulting in salary savings of $151,485.  These savings are partially offset by additional services and supplies expenses of $100,000 due to PG&E costs being higher than anticipated. 

The Davis Library Special Tax Fund is also expecting increased revenues of $248,000 due to investment earnings being higher than originally budgeted.

The Library is requesting to move $100,000 from Salaries and Benefits to Services and Supplies to cover the additional PG&E costs described above.

Staff recommends adopting the budget resolution in Attachment B.

Probation: Probation is projecting to end the year with a positive net variance of $1,415,606.  This is primarily due to savings in Juvenile Detention, Juvenile Probation Services, Care of Court Wards, and the Community Correction unit.   Of these savings, approximately $313,000 will be returned to the Public Safety Fund.

Juvenile Detention is projected to end the year with a positive variance of approximately $208,000.  Much of the savings exist in salaries and benefits as the division had vacancies that include (2) Detention Officer II resulting in savings of $387,000.  Additional expenditure savings include $62,000 in services and supplies as training and vehicle fuel and maintenance expenses are trending lower than originally anticipated.  These savings are partially offset by reduced work program billings of $199,000 and lower than budgeted child nutrition billings ($199,303).

Placement is also projected to end the fiscal year with a surplus of $99,000. This majority of this surplus is in salaries and benefits as one of the two positions in the unit has been vacant ($118,000) throughout the fiscal year.  Offsetting these savings in the unit is a reduction in Federal CalWorks and Foster Care revenues, reducing the expected revenues in the unit by $19,000.

Staff vacancies in Juvenile Probation Services Youth Offender Block Grant ($194,276), Juvenile Justice Crime Prevention Act ($175,526), AB109 ($322,291) and Juvenile Probation ($101,681) are contributing significantly to the projected surplus in each of their respective units.

Public Defender: The Public Defender is projecting to end the year with a negative net variance of $36,000. The Public Defender anticipates $161,000 in salary savings due to vacancy in several positions throughout the fiscal year, along with incidental savings in several accounts in Services and Supplies ($35,000).  The department also anticipates receiving additional revenues related to supporting a Prop 47 grant in the Health and Human Services Agency ($13,000), along with various interest earnings in its Community Corrections Partnership Unit ($20,000).

The entirety of these savings and additional earnings are not being realized due to anticipated loss of revenue $287,000 for the third and final year of the Public Defender Pilot Program Grant. This grant, originally enacted in the California State Budget Act of 2021, provides funds that must be utilized by indigent defense to provide indigent defense in criminal matters has been omitted from the Governor’s FY 2024-25 budget.  Because the grant spans two fiscal years, a portion of the 2024-25 revenue would be received in the current year.  Public Defense advocates continue their work to restore this funding in the state budget.

Sheriff: The Sheriff’s Office is projecting a positive net variance of $2.9 million.  Approximately $782,000 of the variance is due to the Sheriff’s special revenue funds.  Public Safety Fund units, which are supported by the General Fund, are projected to end the year with a $2.1 million positive variance. 

The Detention division is projected to end the fiscal year with a $1.9 million positive net variance due largely to approximately 20 ongoing Correctional Officer vacancies ($1.2 million).  The Detention unit is also experiencing expenditure savings due to the low population ($100,000), and due to unbudgeted MOU and grant revenues being received for the Jail Based Competency Treatment program ($515,000).   

Both the Management and Patrol divisions are projected to end the fiscal year with positive net variances due to ongoing vacancies.  Similarly, the Sheriff’s Community Corrections Partnership unit is projecting to end the fiscal year with a positive net variance of $440,000 due to ongoing vacancies.  The only unit overseen by the Sheriff which includes a General Fund contribution which does not have a projected positive variance is Court Security.

Court Security is projecting a sizable net negative variance of $833,000 due to higher than anticipated use of overtime ($80,000), unbudgeted Extra Help expenses ($41,000) and an unbudgeted leave payout ($56,747). This unit does receive general fund support, and staff recommend utilizing anticipated savings in other general fund units to balance this unit at year-end. This program carried a large salary savings factor during the current fiscal year, which does not appear to be sustainable going forward.

The Small and Rural fund is showing a positive net variance of $343,000 due to lower than anticipated overtime being utilized within the unit.  The division has also paused on implementation of their planned RMS/JMS system and will be planning to restart that implementation in the coming fiscal year.  Any unspent balance in this fund will fall to fund balance for reappropriation in a future fiscal year.

Contingency Appropriations: The table below reflects the balance of all contingency appropriations as of June 4, 2024.

It is recommended that all contingency balances remain unallocated at this time to provide a safeguard against unanticipated events that may occur throughout the remainder of the fiscal year.  Any amounts that remain unspent at year end will carry forward to be appropriated as part of the general fund, fund balance in the FY24-25 Adopted Budget. 

II.  FY24-25 Recommended Budget
This County Administrator's FY2024-25 Recommended Budget staff report provides additional information to assist the Board of Supervisors in considering the budget. The Recommended Budget (Attachment C) includes a department-by-department review of anticipated revenue and expenditures and information regarding the funded programs. The purpose of the June 11 Budget Hearing is for the County Administrator to present an overview of the Recommended Budget and for the Board to make any adjustments deemed appropriate before approving it as the initial spending plan for FY2024-25.

State law requires the Board of Supervisors to adopt a resolution setting the County's budget each year and prescribes the required format for such action. The FY2024-25 Recommended Budget resolution (Attachment D) adopts and implements the initial budget for the upcoming fiscal year, as considered and amended by the Board of Supervisors during the budget hearings. This budget will provide appropriation authority until the FY2024-25 Adopted Budget is approved in September. The Board may modify this budget at any time between now and the Adopted Budget hearing by a 3/5 vote. Following approval of the Adopted Budget, a 4/5 vote is required for most budget modifications.

Before approving the FY2024-25 Recommended Budget, the Board may revise the recommended appropriations, revenues, and staffing allocations. Exhibit 1 to the Budget Resolution summarizes appropriations and revenues by fund, department, and budget unit at the account group level. Within Exhibit 1, the FY2024-25 Capital Improvement Program budget is summarized separately from the operating budget. Inter-fund transfers are subtracted from the total consolidated County budget to eliminate double counting.

Approval of the Recommended Budget allows the County to begin the fiscal year with a balanced financial plan. As discussed further below, the Recommended Budget does not include a number of departmental budget requests which staff recommend be deferred to the Adopted Budget in September. For the Board's consideration, the sections below highlight the changes, challenges and risks presented in the FY2024-25 Recommended Budget.

Budget Development
The Department of Financial Services (DFS) and County Administrator first updated the Board at the January 23, 2024, Board meeting, where the Board received a preliminary assessment of the FY2024-25 Budget and adopted the Budget Principles and Budget Development Calendar. The Board conducted budget workshops on March 11 and March 12, 2024. The budget workshops gave the Board of Supervisors the opportunity to review FY2024-25 departmental financial information, hear key issues facing each department, accomplishments from the current year, long-range goals, and FY2024-25 objectives. The workshop also allowed the Board to provide feedback that would guide the development of the 2024-25 Recommended Budget. 

At the Budget workshop, the Department of Financial Services shared that following a rapid recovery from the COVID-19 pandemic, US economic growth is slowing as consumers begin to truly experience the impacts of inflation and interest rate increases.  While concerns of a recession have subsided, and inflation is headed downwards, the County continues to experience cost pressures that 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 we work to absorb the effects of regular equity adjustments in our various bargaining units that are needed to keep pace with market averages. Thus, the challenge for the budget process in the current year and likely future years is to contain costs within available revenue growth while continuing to make progress on Strategic Plan goals and other key initiatives.

As part of the budget development process, departments submitted their budget requests through the Sherpa budget system in February. Initial base budget requests, or the amounts needed to maintain status quo operations, exceeded revenue projections by approximately $31 million, while submitted general fund augmentations totaled $11.9 million, for a total initial gap of almost $43 million. The Department of Financial Services and the County Administrator's Office held budget review meetings with individual departments in March and April and discussed options to find potential savings to close the budgetary gap.   Strategies included implementing a salary savings factor for those departments with a historical trend of vacancies, use of fund balance, base expenditure reductions in services and supplies, use of non-general fund resources where available and the deferral of almost all general fund augmentation requests for consideration during the Adopted Budget hearing.  

In past years, when the County used salary savings as a budget balancing strategy, it has been done on a limited basis, and the resulting unbudgeted savings from vacant positions would provide a funding source in the form of fund balance for one-time expenditures and balancing subsequent budgets. However, as was done to balance the Recommended Budget in the 2023-24 fiscal year, a high amount of budgeted salary savings is being utilized to balance the 2024-25 Recommended Budget. As the County continues to use higher salary savings factors in the budgeting process, less unrestricted fund balance will likely be available in future years to help bridge budgetary gaps.  The following table provides context on the increased use of salary savings to balance the Recommended budget:
 

Recommended Budget Salary Savings
2020-21	2021-22	2022-23	2023-24	2024-25
$7,800,000	$9,552,592	$13,700,000	$21,762,445	$19,459,069

The Recommended Budget assumes a carryforward General Fund unassigned fund balance of approximately $16 million, which is an increase of $2 million from the $14 million amount assumed in the FY2023-24 Recommended Budget. A portion of this carryforward balance, about $2.5 million, is used to fund one-time appropriations such as contingencies, while the remaining amount is recommended to be used to fund the remaining budgetary gap. While the projected availability of this fund balance will allow the 2024-25 Recommended Budget to be balanced without significant service impacts, there is a concern that a significant number of ongoing expenditures are being funded with one-time resources. While it can be expected that some amount of fund balance will be available each year, staff believe that fund balances have likely peaked and will start declining in future years as the labor market cools off and employee turnover slows. Further, as previously discussed, increased reliance on salary savings to balance the budget will further reduce available fund balances in future years.
 

Recommended Budget Use of Fund Balance
2020-21	2021-22	2022-23	2023-24	2024-25
$6,400,000	$12,000,000	$10,100,000	$14,000,000	$16,000,000

In recent years, balancing the budget has been successfully achieved through a combination of salary savings, use of unassigned fund balance, and base expenditure reductions in service and supplies.  When considering balancing the FY2024-25 Recommended budget, given the size and unprecedented nature of the budget gap, staff were required to seek and analyze newer strategies to balance the budget.  Staff have utilized the following strategies to balance the FY2024-25 Recommended Budget.

Supplemental Pension Charge Pause
The County’s Pension Funding policy, approved in May 2018, established a Section 115 Trust to accumulate assets for pension obligations and provided for a supplemental charge on payroll expenditures for building the Trust balance to a minimum target level.  Since that time, an additional percentage charge has been included as part of departmental salary and benefit costs to allow for accumulating assets in the Section 115 Pension trust.  In the current fiscal year, the supplemental charge is 2%.  In the 2024-25 fiscal year, the percentage was slated to increase to 2.25%.  Anticipating the likelihood of trouble balancing the budget, DFS proactively maintained the percentage at 2% going into budget development. However, at this time, staff is recommending a complete pause on the supplemental charge, which will save the General Fund approximately $1.5 million in the FY 2024-25 Recommended Budget. While the County will continue to make all required pension contributions to CalPERS, the pause on the supplemental pension charge will delay the accumulation of discretionary assets available to proactively address the unfunded pension liability. Over the next year, staff plan to revisit the Pension Funding policy and bring options to the Board for further consideration.  

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.  Staff anticipate that as of June 30, 2024, interest earnings on these funds should be approximately $1,350,000. Staff recommend use of this amount as additional one-time general-purpose revenues to assist in balancing the budget. 

Chula Vista Earnings
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 use of $1,059,935 in available Chula Vista funds to assist in balancing the FY 2024-25 Recommended budget in order to avoid reductions in essential County services.

Training/Transportation & Travel Reduction
Following standard evaluation and analysis of departmental budget submissions to ensure alignment with historical actuals and understanding of requested increases, staff identified discretionary accounts where additional reductions could be made to assist in balancing the budget.  Departmental Training and Transportation & Travel accounts were reduced 50% in all General Fund departments.  These reductions still allow for the staff to attend trainings. However, departments will need to exercise discretion and prioritize in identifying those trainings that staff attend. Further, those departments with special revenues or access to external funding sources are encouraged to utilize those sources to address training and travel needs.

Budget Overview
The FY2024-25 Recommended Budget is balanced, meets State appropriation requirements, and aligns with the Board of Supervisors adopted financial policies. The County's net operating budget for FY2024-25 is $722.3 million, with a capital improvement budget of $37.6 million. The budget is comprised of multiple departments that are funded by numerous funds, including the General Fund, Public Safety Fund, Enterprise funds, and other Special Revenue funds, among others. The table below provides a summary of the FY2024-25 Recommended Budget.   The amounts exclude Intrafund transfers.

 

	2022-23	2023-24	2024-25
	Actual	Adopted	Recommended
Net Operating Budget	$549,676,160	$725,647,035	$722,281,914
Capital Improvement Budget	$22,808,528	$32,286,116	$37,655,360
Total County Budget	$572,484,688	$757,933,151	$759,937,274
Fund Highlights
General Fund Departments	$58,234,755	$77,267,471	$75,381,714
Road/Transportation Fund	$23,153,703	$43,126,203	$47,734,842
Public Safety Departments	$84,536,874	$91,670,127	$88,169,507
Health & Human Services	$222,158,744	$266,860,463	$281,495,957*

*Note: HHSA Budget shows an increase of approximately $20 million. However, this is due to how HHSA Administrative costs are budgeted in the accounting system.  These costs will be fully offset when charged to other HHSA branches that have also included the cost in those budgets.  The actual cost of HHSA for FY2024-25 is $261,500,098 which is a decrease of $5.4 million from the FY2023-24 Adopted Budget.

General purpose revenues are projected to increase approximately 4.0% over FY2023-24 Adopted Budget and approximately 10.4% over FY22-23 actual revenues. This was calculated after forecasting of local revenues utilizing HdL as the County’s consultant on General Sales Tax and Proposition 172 revenues, after consulting information in the Governor’s budget on Realignment, and reviewing Assessor data on Property Tax Revenues. Projected growth in property tax revenues, sales tax, and document transfer taxes may be adjusted at adopted budget and underlying data and trends are being carefully monitored month-to-month. Below is a table showing the key sources including general purpose revenue, Prop 172, and Realignment comparison:

 

	2022-23  Actuals	2023-24   Adopted	2024-25  Recommended
General Purpose Revenue	$94,783,414	$100,569,146	$104,646,961
Prop 172 Public Safety	$28,235,819	$28,781,310	$27,788,057
Realignment 2011 Public Safety	$22,385,745	$21,523,870	$21,947,666
Realignment 2011 HHSA	$24,337,074	$21,794,289	$23,405,619
Realignment 1991 HHSA	$42,895,517	$36,824,979	$39,362,622

Given the small amount of growth in general purpose revenues and the county’s adjustment to its change in compensation philosophy, it is prudent to defer most requested general fund positions to adopted budget.  At this time, only two general fund positions are being recommended for funding.

In total, 14.8 full-time equivalent (FTE) positions are being recommended to be added and 56.5 positions are recommended to be eliminated. Of the 14.8 new positions, 12.8 are funded by non-general fund sources and two (2) positions are funded with general fund.  Of the 56.5 positions being recommended for elimination, 47.5 are from the Health and Human Services Agency, 35 of which were limited-term positions added in response to the COVID-19 pandemic, while two of the positions, from the County Administrators Office, have been funded by the General Fund. 

The table in Attachment G reflects the details for position changes that are included in the FY2024-25 Recommended Budget. Below is a summary table. 
 

The FY2024-25 Recommended Budget also includes funding for a number of non-general fund equipment and vehicles. These items are summarized in the FY2024-25 Authorized Equipment List presented in Attachment I.  All vehicle replacements are recommended by the Fleet Manager. 

Strategic Plan

On May 7, 2024, the Board approved the 2024-2028 Strategic Plan and established six (6) pillars for the organization. The FY2024-25 budget includes resources designed to further advance County goals established under each pillar. The following table highlights a few of these goals.   

Goals Targeted in FY2024-25 Recommended Budget
 

Pillar	County Goals
Thriving Residents	Expand community outreach roadshow events in 2024-25 to bridge transportation gaps for Yolo County residents in partnership with other county departments. Reduce flood risk to rural communities by collaborating, conducting studies, and advocating for conjunctive use projects that reduce flood risk to infrastructure and ensure groundwater recharge. Update current Animal Service facility and grounds to provide specific improvement... create a welcoming and safe space for community to come for redemptions, adoptions or surrender services.
Collaborative Communities	Assist persons with mental health and substance use disorders to get the help they need. Expand community engagement successes. Assist with the transition of Animal Services to Community Services Department and work with the JPA to explore a potential shared governance model to provide excellent services.
Sustainable Environment	Ensure the effective sustainable management of water resources. Implement the county’s Climate Action and Adaptation Plan through strategic improvements of county infrastructure.
Flourishing Agriculture	Preserve agricultural sustainability on lands subject to conversion to habitat, flood protection and other uses that serve regional or statewide objectives. Collaborate and coordinate with surrounding counties to support pest prevention activities.
Robust Economy	Distribute American Rescue Program funds to provide direct financial relief, enhance economic development, and boost equitable economic recovery for Yolo County residents. Monitor grants, funding streams, and allocations including those within the Infrastructure and Investments and Jobs Act, and the Inflation Reduction Act, and proactively applying to such grant opportunities to best ensure the County receives a fair share of funding to address critical infrastructure and public service needs, particularly in disadvantaged communities. Enhance the County’s financial sustainability.
Operational Excellence	Reinvigorate a spirit of internal operational excellence through inquiry and interdepartmental collaboration. Review project adoption procedures for the Capital Improvement Plan and collaborate with the Board, the CCI and CIC to outline and improved CIP management process. Provide effective legal advocacy in litigation and other contested proceedings.

Below is an overview of the FY2024-25 Recommended Budget for County departments. The narrative includes discussion about the adjustments included to balance the budget, augmentations, new grants, and programs, as well as highlights of significant budget changes. 

Health and Human Services
 
Health and Human Services: Net County Cost $17,000,000
The FY2024-25 Recommended Budget for the Health and Human Services Agency (HHSA) increases the department's net county cost by 3.7%, or $632,645. The Recommended Budget includes no additional positions or position conversions which have a net county cost. However, there are some position deletions, additions, and reclassifications included which are funded through other sources. Increases are in mandated programs to continue providing adequate services to constituencies. Also, the FY2024-25 Recommended Budget is the first budget presented in the updated accounting structure which aligns the budget with the main operating branches and has been a significant undertaking.

The Recommended Budget for Child, Youth & Family totals $46.4 million with $100,000 of net county cost. The remainder of the budget is funded primarily through Realignment ($16 million) and other intergovernmental revenues ($19 million). Expenditures are focused on personnel, which totals about $20.6 million, including a 9% vacancy savings rate or $1.8 million. Operational spending consists mostly of payments to contractors to provide medical services for outpatient mental health ($5.3 million) and for intensive community-based services ($1.6 million), as well as contractors to oversee School Based Mental Health services ($3.3 million) and ongoing Child Welfare Services ($2.4 million). County funding is being utilized to support the contract in managing Child Abuse Prevention services (Total $550,000, $100,000 of County Cost). Other operational expenses for office expenses, insurance, cost plan charges, rents, etc. amount to $2.4 million. Additionally, about $3.5 million of expenses are transferred into this branch from other branches, such as Administration.

Public Health’s Recommended Budget includes a total expenditure of $25.5 million with approximately $6.4 million of net county costs. Revenues are sources from Realignment ($6 million), intergovernmental revenues ($10 million), and county costs ($6.4 million). The most significant expense in the operating branch is the Jail Medical Contract, which is budgeted at $5.7 million and funded almost in full by the County. Personnel in the branch total $12.4 million and includes a 10.6% vacancy savings rate, approximately $1.3 million, factored in. About $2.2 million of costs are also transferred to this branch from other HHSA branches, such as Administration.

The Recommended Budget for the Service Centers branch includes a total budget of $55.9 million with a net county cost of approximately $2.7 million. The majority of revenue in this branch is derived from state and federal program reimbursements, totaling about $51.8 million. The largest expenditures are salary and benefits for staff, consisting of $30.8 million with an included 8.1% vacancy savings factor built in  (approximately $2.5 million). Other notable expenditures included in the Recommended Budget are $6.8 million for direct support payments to clients, $2.2 million for contractors assisting with the CalWORKS employment programs, $1.2 in minor equipment and about $7.5 million which gets transferred into this branch from other HHSA branches, such as Administration.

Client Aid’s Recommended Budget includes total expenditures of $55 million with a net county cost of approximately $2.2 million. Revenues in this branch are sourced mostly from Realignment ($30 million) and State & Federal Reimbursements ($22 million). Expenditures are almost solely for public assistance payments by program, with the largest programs being Adoption ($17.3 million), CalWorks ($14.9 million), and Foster Care ($11.2 million). $1.7 million of County funds are required to meet the IHSS MOE payment, with additional funds being required in this division because increased need is not fully covered by Realignment or intergovernmental sources. About $570,000 of costs are transferred to this branch from other HHSA branches, such as Administration.

Adult & Aging’s Recommended Budget includes total expenditures of $78.6 million with a net county cost of approximately $5.5 million. The majority of revenues in Adult & Aging are sourced from Realignment ($14 million), State & Federal Reimbursements ($32 million), and Medi-Cal Charge for Services ($19 million). Salary and Benefit expenditures total about $27 million with an included vacancy savings factor of 5.6% built in (approximately $800,000). The majority of operational expenditures are contract services to provide medical services, with $5.8 million for inpatient mental health, $3 million for outpatient mental health, $9.4 million for adult residential, and $5.4 million for substance use treatment services. An additional $2.5 million is provided in direct support to clients as well as about $8 million through other contracted services. Also, approximately $7 million is transferred to this branch from other HHSA branches, such as Administration.

The Recommended Budget for Administration includes a total budget of $20.2 million with no net county costs. The Administration budget is transferred out to all other branches where reimbursements are possible, accounting for all the revenues in the branch. Expenditures are mostly salary and benefit related, totaling $13.3 million with a vacancy savings factor of 4% included, approximately $500,000. Other large expenses include approximately $2.3 million in IT-related charges, mostly related to direct billing for IT staff who are dedicated to HHSA, $1.2 million in cost plan overhead, and $785,000 in maintenance and building improvements.

Community Services

Community Services: Net County Cost $4,152,218
The Community Services FY2024-25 Recommended Budget includes total expenditures of almost $119 million with the majority in Road Maintenance & Construction and Integrated Waste Management. Net County Cost is $4.2 million, an additional $430,000 over FY2023-24 Adopted. This increase is due to the addition of Animal Control Services to the Community Services budget, which had previously been housed in the Sheriff's Office.

Integrated Waste Management (IWM):
The FY2024-25 Recommended Budget for IWM increases by $8.8 million from the FY2023-24 Adopted Budget to a total of $39.7 million. The majority of this increase comes from Franchise Fees and supports ongoing Landfill operations and future capital projects. Additionally, charges for services are expected to increase by about $2.5 million in FY2024-25.  Operational expenditures increase most significantly in contracts used to dispose of waste by almost $3 million. Staff also recommends approval of $3.5 million for various capital expenditures such as Building Improvements (further detailed in Attachment K) and Waste Equipment, along with $4 million to replenish fund balance which has been used in recent years to complete one-time projects.

Roads:
The Roads and Public Works Fund has a Recommended Budget of $49.7 million, approximately a $3 million increase over the FY2023-24 Adopted Budget. This division houses capital road projects that are one-time in nature but planned over several years, meaning not all funding will be expended in a given fiscal year and will likely be carried forward until the project is completed. Because of this, State revenues are significantly decreased from the prior year ($11.5 million) while the use of fund balance has increased by about $17 million. This is solely to account for revenue already received for projects underway.

Overall, operating expenditures for the Roads division has decreased by about $750,000 in necessary road construction supplies, as projections have trended downward based on the number of projects the division can feasibly complete within a fiscal year. Approximately $15 million is budgeted to be contributed to fund balance which will be used in future years for additional projects and replenish needed reserves which have been utilized in prior years. $520,000 of available fund balance will be used to purchase additional vehicles needed for continued operations. A line item in the amount of $10,000 has been included as well for road safety improvements, which includes evaluations for traffic safety, traffic-calming, new stop sign(s), and other similar requests. These requests are funded with Highway User Tax Account (HUTA) Funds and if unutilized by fiscal by year-end, these funds will stay with Public Works.

The department requested a $750,000 increase of net county costs in order to fund a Pothole Crew which would focus on repairing various potholes across the County. The total cost of the crew is approximately $1.4 million, with State funds available to cover the salary & benefits for the crew but county costs being necessary to purchase the supplies and equipment. This request was deferred to the Adopted Budget process.

Planning:
The Planning Division's Recommended budget totals $3.5 million, which is relatively flat, with a net county cost of about $1.5 million. While the overall budget is flat, there is a decrease in zoning permits of about $550,000 due to revenue not being received as expected. This has a direct offsetting expenditure reduction in professional service contracts used to perform the service. Salaries and Benefits have increased as administrative staff in the division have been hired and allocate more of their time to the unit, which requires some increase in net county costs. To help balance the budget, a salary savings of $50,000 or 2.5% is applied.

Water Resources:
The Water Resources unit (a sub-unit of Natural Resources) has a recommended budget of $1.15 million, which is an increase of about $400,000 from the FY2023-24 Adopted Budget. The net county cost for the unit remains flat at approximately $550,000. The additional budget is related to state grants which will be used to fund new contracts, leaving the unit in budget balance. The majority of General Fund is used to fund employee time spent on Water Resources tasks.

Environmental Health (EH):
Environmental Health's Recommended Budget has a net county cost of $135,000, a decrease of approximately $30,000 from the FY2023-24 Adopted Budget. Revenues are projected to increase in various  Environmental Health Fees levied by about $200,000. This additional revenue offsets increased Salary & Benefits, increasing by about $270,000 due to approved compensation and benefit adjustments. Also, $100,000 of fund balance is being used on one-time projects to balance the unit along with a $50,000 vacancy savings.

The department requested two augmentations which have been deferred to the Adopted Budget process. This includes $10,000 in extra help to assist staff whenever turnover occurs in key positions, which would be a net county cost. Additionally, the department requested $35,000 of net county costs to perform a comprehensive fee study which would be funded half by the County and half through use of fund balance.
 
Animal Control Services:
Animal Control Services was shifted from the Sheriff’s Office to Community Services mid-FY2023-24. The total budget for Animal Control Services has increased by approximately $500,000 to $4.8 million in Recommended FY2024-25, with a net county cost of $1.3 million. Two (2) new positions are recommended in this unit, a Veterinarian and Vet Tech, which will be initially funded by the general fund but may eventually be funded through the locality partnership. Department fiscal staff have identified additional revenues in grants and fees for this service, which helps offset some of the additional costs on the County.  Adding these positions at this time will immediately reduce outsourcing costs incurred by Animal Control Services and will allow the program to meet broader community needs for addressing animal overpopulation.  The division also hopes it will allow for low-cost community spay and neuter clinics, with an estimated revenue potential at $200,000 annually.

Climate Sustainability:
The Climate Sustainability division is requesting a total net county cost of $600,000, a decrease of about $150,000 from FY2023-24. However, the total budget is increasing by about $600,000. This is due to additional grants the department has received and the use of American Rescue Plan Act funding. The majority of those funds are being used to fund contracts with consultants to further implement the Climate Adaptation Action Plan (CAAP). Additionally, about $100,000 of additional staff time is budgeted to be transferred into the unit as more Community Services staff spends time on Climate Sustainability tasks.

The department requested several augmentations which have been deferred to the Adopted Budget process, as they include increases in net county costs. This includes two additional Associate Administrative Service Analyst positions to help initiate the CAAP, which cost approximately $250,000, $100,000 to initiate outreach partnerships and programs as outlined in the CAAP, $50,000 to hire a grant writing service with expertise in the Climate field, and $5,000 for additional staff overtime.

County Service Areas:
The FY2024-25 Recommended Budget for County Service Areas (CSA) is balanced without net county cost. Overall expenditures and revenues are decreased by about $300,000 to $15.7 million. This is due to the cessation of some one-time projects, specifically the Wild Wings CSA Water Project and N. Davis Meadows CSA Water Project which are mid-implementation with some funding already spent.

Other notable changes include an additional $120,000 in the Snowball CSA budget for a state grant which will fund the purchase of additional equipment to fight floods and engineering and flood maintenance contract increases. Also, the Wild Wings Golf unit has a transfer of $100,000 from services and supplies to salary and benefits to compensate temporary help to manage the golf course in lieu of a long-term management option.

General Government

Agriculture: Net County Cost $1,629,008
The FY2024-25 Recommended Budget for Agriculture reflects a decrease in Net County Cost of approximately $12,000. This is due to revenue growth in state programs, most notably increases related to the dog team contract as a result of Yolo County bringing the pest inspection program in-house. While the department is expecting lower charges for service revenues due to less fieldwalking than in prior years, this is offset with decreases in Extra Help used to perform those services. A salary savings of 5% or $170,000 is also budgeted to balance the unit.

Assessor/Clerk Recorder/Elections (ACE): Total Net County Cost $7,005,984
The Assessor’s FY2024-25 Recommended budget includes revenue increases of approximately $250,000. This is primarily due to an increase in property tax administration fees and supplemental roll administration fees in the unit totaling $278,000 and are partially offset by a small decrease in state revenue related to the State Supplementation for County Assessor’s (SSCAP) grant of $55,000.  Additionally, expenditures in the unit are projected to decrease $124,000. This is due to decreases in IT departmental charges ($83,218) and the removal of capital asset expenses ($167,500) related to the Tyler Technologies project.   Offsetting these savings are increases to salaries and benefits due to merits, cost of living adjustments and the addition of Just Appraised Suite and Civic Plus contracts.

The Elections division is projecting an increase in revenues of $396,000 due to an increase in anticipated in election services leading up to the 2024 Presidential Election.  There is currently the potential for 34 candidate contests plus additional local measures that can be billed out to other jurisdictions, resulting in additional revenues of $390,000.  Additionally, the Elections office is anticipating an increase of $6,000 in Youth Empowerment donations from outside organizations.  Expenditures in the election division are also anticipated to increase by $68,000. This increase is attributed to increases in salaries and benefit costs that include merits, COLAs, and increased retirement costs.  Additional increases include $45,000 for additional mailers related to the election, increases in Professional IT Services ($17,000) which include charges related to elections software such as Hart (voting machines), Runbeck (ballot sorter), Tenex (Vote center equipment), Democracy Live (election result online support), and the management of other election systems.  These increases in expenses are partially offset by reductions in postage expense ($21,000), services for ballot scanning, testing, shredding, and security. Additionally, one-time capital assets were removed from the Elections division, resulting in a decrease of $135,000 in building and improvements.

Revenues in the Clerk Recorder division are anticipated to increase approximately $830,641 primarily due to an increase in the use of restricted fund balance ($619,000) and an increase in recording fee revenues of $207,000 due to improved economic conditions.  These additional revenues are partially offset by an increase in expenses of approximately $62,000 which include increases to General Liability insurance costs ($3,538), increases in IT internal charges, and increases in Professional Services of $134,000 due to agreements with vendors to preserve historical vital documents and maps.

To reduce the net county cost for ACE, a salary savings factor of 6% or $404,000 has been included in the FY2024-25 Recommended Budget.  Other changes to ACE’s budget include capturing additional property tax and recording fee revenues totaling $245,599, deferral of overtime and extra help increases and deferral of construction projects to the Adopted Budget.

Board of Supervisors: Net County Cost: $3,117,006
The FY2024-25 Recommended Budget for the Board of Supervisors includes an increase of $89,000 in anticipated service and supply expenditures, largely related to General Liability costs. The budget also includes continuation of the Community Benefit Fund, which was added during the FY2022-23 Adopted Budget.  This fund provides each Supervisor with $15,000 annually to provide funding for incidental costs related to constituent engagement, community outreach and district operations.  The FY2024-25 Recommended Budget also restructures the BOS budget into individual budgets for each Board District for ease of tracking expenses within each district.

County Administrator’s Office: Net County Cost $4,777,873
The FY2024-25 Recommended Budget for the County Administrator’s Office includes standard increases to salaries and benefits and base increases for various internal charges such as IT and insurance. The budget does not include any new positions or augmentation requests but does include the re-budgeting and continuation of previously approved grants and projects.  Staff recommends elimination of four positions, which include a Management Analyst and Principal Management Analyst funded by the General Fund, and a Branch Director and Executive Director previously funded by a series of agreements with community-based organizations that have concluded.

Both the Cooperative Extension and Housing Assistance programs, overseen by the County Administrator, are seeing increases in their net county costs.  Staff recommends an increase of $30,000 to the Cooperative Extension to fund the County’s share of the UC Davis Partnership, and an increase of $40,000 to fund the new vendor to oversee the Housing Assistance Program. The department is mitigating these increases and decreasing the requested net county cost by budgeting a salary savings amount of approximately 7.86 % or $364,000.

County Counsel: Net County Cost $2,786,188
The FY2024-25 Recommended Budget for County Counsel has a net county cost of approximately $1.9 million, an increase of $100,000 from the FY2023-24 Adopted Budget. The department is expecting no revenue changes, as the majority are based on charges for service fees that have not changed. Overall, salary and benefit expenditures have decreased relative to FY 2023-24 due to new staff with lower compensation rates. Additionally, a 2.5% vacancy savings factor of $40,000 has been projected for the department. There are some increases in Professional Service contracts to maintain the current level of service necessary for the department to effectively handle existing, complex matters that require outside counsel assistance.

Department of Financial Services (DFS): Net County Cost $3,762,847
The FY2024-25 Recommended Budget for DFS includes a decrease of about $100,000 from the FY2023-24 Adopted Budget in net county costs. Overall, the DFS expenditure budget increased by about $300,000. The majority of the increased expenditures are related to higher personnel costs due to mid-year adjustments, cost of living adjustments, and benefit increases. Additionally, the Internal Audit division’s budget includes a new Auditor II position which will be responsible for addressing the backlog of HHSA-related audits and paid through state and federal sources available through HHSA. Another notable increase is in the projected contract for investment services. The county’s investment pool has grown significantly since the last contract was signed, so managing the additional funds is expected to be significantly more costly.

Offsetting these increases in spending are additional revenues of about $400,000. This is due mostly to increased reimbursements for services rendered, where agencies pay for DFS services such as treasury management and accounting assistance. Specifically, the increase in the investment contract is 100% covered by this reimbursement process. Additionally, the department has a salary savings of $300,000 budgeted to balance the unit.

General Services: Net County Cost $6,036,397
The General Services Recommended budget has an anticipated net county cost of approximately $6.03 million. 

The Facilities division budget includes $4.2 million in Accumulated Capital Outlay (ACO) Funding that includes multiple projects, outlined in the table below.  Additional revenues in the unit include additional Facilities revenues, increases in revenue for Facilities Projects and increases in rent and utilities expenses. Partially offsetting these increased revenues is a reduction in the City of Davis EV charging revenues of $98,000 due to the grant ending as of Dec 2024. Expenditures in the division are also anticipated to increase by $1.15 million.  This includes increases to salaries and benefit expenses due to merit increases, cost of living adjustments, increased retirement costs and an increase of $884,000 in capital project expenses (as compared to the FY2023-24 Adopted Budget).

 

Accumulated Capital Outlay (ACO) Projects
Project	Amount
2024-25 Roof Package	$2,931,417
Ag Shop	$610,000
Internal Audit Suite D	$45,000
GSD Remodel	$125,000
Ag Office Suite D	$250,000
Historic Courthouse 3rd Floor	$100,000
Roof Consulting (Beam)	$200,000

The Airport’s FY2024-25 Recommended Budget reflects a decrease in Federal and State revenues of $325,600 primarily due to the Airport Run-up Aprons project being close to completion, resulting in a net county cost of $251,024. Though those revenues are anticipated to decrease, the department is still expecting federal and state revenues totaling $172,000 that are part of a separate grant to provide funding for the rehabilitation project that is also to be conducted on the Airport Run-up Aprons.  Expenses in the division are anticipated to decrease $310,000 as well.  This is primarily due to the reduction of $51,000 in salaries and benefits as the division’s salary allocation deceased and reductions were made to capital improvement expenses ($392,737) as the Airport Run Up aprons project nears completion.  These expenditure savings are offset by increases to building improvement expenses ($63,750) due to fire suppression at the airport and adding $50,000 to the Mead and Hunt Contract for architecture and on-call services.

The Tuli Mem Park and Pool base budget includes an increase in expenses of $67,980.  These increases exist primarily in services and supplies where costs related to maintenance ($36,000), utilities ($15,119), and the agreement with the Esparto Community Services District ($27,501) are anticipating increases.  These expenses are partially offset by additional revenues from the WYORCA endowment intended to offset operating costs ($14,000). Additionally, revenues in the unit include the transfer of $100,000 in Rural Community Investment funding from the Cannabis Tax Expenditure Plan.

The Parks and Recreation division includes revenue increases related to boat launch renewals and increases in Cache Creek Campground fees. Additionally, expenses in the Parks division are expected to decrease $73,000.  The main decrease in the unit is attributed to a reduction in costs related to tree trimming services.  The division has been able to catch up on tree maintenance and the original amount is no longer required ($100,000).  Additional expense savings exist due to reductions in capital asset expenses ($159,152) and in professional services agreements ($15,080).  These expense savings are partially offset by increases to General Liability Insurance costs ($16,737) and an increase of $160,000 in salaries and benefits due to merits, COLAs, and increased retirement costs.   

Additional cost-saving measures were included in the General Services budget submission.  This includes salary savings of $323,908 and the addition of revenues totaling $145,000 for Tuli Mem Cannabis Tax transfer and additional revenues for work orders and park fees.  Additionally, a 50% reduction to the training, travel and transportation accounts is being applied, totaling $20,955. Augmentation requests included in this budget were deferred to the Adopted Budget with the exception of the ACO funded projects that were previously mentioned, and this includes the request for 5 new positions, 3 new vehicles, multiple equipment requests and requests for extra help and leave buy out funding among others.

Human Resources: Net County Cost: $4,034,046
The Human Resources department’s total net county cost is approximately $4 million.  Included in the Human Resources Recommended budget is an increase to General Liability, Workers Compensation and Unemployment insurance departmental costs of $82,000.  Other expenditure increases include additional Salary and Benefits costs totaling $319,000 primarily due to the removal of the salary allocation for the Infor project and the addition of Satellite Finance expenses that will allow the Department of Financial Services to provide dedicated financial staffing and services to the department.

To help balance the budget, staff recommends that the department carry $50,000 in salary savings. Additionally, $118,000 in augmentation requests have been deferred to the Adopted Budget, which includes requests for internal investigations, a contract to conduct class and compensation studies, strengths coach training for staff, and funding for staff cell phones.

Innovation and Technology Services: Net County Cost: $0
The Innovation and Technology Services (ITS) Department consists of the ITS and Telecom divisions.  Both divisions recover operational costs through internal charges, referred to as IT Charges and Telecom Charges.  IT charges consist of three individual charges – Connectivity to recover device connection to the network and help desk support, Enterprise Resource Planning (ERP) for the cost of countywide systems including HR/Payroll and the Infor Financial System, and Department Systems for IT specialists dedicated to a specific department and projects requested by County departments.  In Department Systems, the dedicated staff to specific departments are 100% reimbursed.

The department saw increases in IT charges due to the addition of Department Systems staff that are anticipated to split their time between Health and Human Services and ERP. Additionally, the department saw large increases in Connectivity reimbursements due to Office 365 subscriptions increasing $120,000.  Some notable increases in expenses in the ITS budget include Salaries and Benefits increases of $558,000 due to merits, cost of living adjustments and increases to retirement costs.  Additionally, increases to workers' compensation insurance ($20,256), General Liability insurance ($29,684) and connectivity charges in the department ($46,476) resulted in an overall increase of $97,000. These increases are offset by a reduction in professional services of $442,000. The professional services expenses saw a decrease due to previously budgeted carryforward items such as CDW Virtual server replacement and Baker Tilly no longer being included ($213,199) along with removal of the contract with Staff Tech that was used for departmental support ($199,899).

The Telecom division is projecting a decrease in expenditures of approximately $62,000 in comparison to the FY2023-24 Adopted Budget.  The primary driver behind this decrease in expenses is the department’s reduction in capital lease obligations due to the Countywide phone system now being paid off ($172,778).  These increases are offset by additional salary and benefit costs ($52,427) along with an increase to the division’s indirect costs ($68,975).  Revenues are also trending lower in comparison to last year’s Adopted Budget as the department is expecting lower revenues for communication services ($59,114).

The Innovation and Technology Services Department had four augmentation requests totaling $81,500.  These requests include $25,000 for a new subscription for GIS imagery, $1,500 for a code repository, $30,000 for the purchase of a network switch and $25,000 for the purchase of a new GPS locator.  All four of these requests have been recommended for approval as the costs of these items are included in the internal IT charges to departments.

In order to balance the departmental budget, a salary savings factor of 3% or $249,224 was included. 

Library: Net County Cost $365,533
The FY2024-25 Recommended Budget includes a net county cost of $365,533, an increase of $15,000 over the prior year. 

The Recommended Budget includes additional revenues totaling $274,000.  This is due to an estimated 4% increase in property tax revenues totaling $244,000 and aligning expected supplemental property tax revenues to historical trends resulting in an increase of $20,000.  Offsetting these revenues are increases to expenditures that include salaries and benefits increases of $440,000 due to merits, cost of living adjustments and increased retirement costs.  Additional expenditure increases include increased IT connectivity, General Liability, and utility charges. Some notable decreases in expenditures in the unit have to do with a $325,000 reduction in cost plan charges as these have already been paid by Library funds.

Included in the Library’s FY2024-25 Recommended Budget submission are two augmentation requests totaling $128,038.  The first request is to hire a consultant to develop a strategic plan for the Yolo County Historical Collection, which is expected to cost about $50,000, and an additional request for a Limited Term ESL Library Associate at an expected cost of $78,038.  Staff is currently only recommending funding of the Library Associate position as this request is 100% grant funded and does not have a general fund component. 

Law and Justice

Regional Child Support Agency: Net County Cost $0
The Regional Child Support Agency (RCSA) FY2024-25 Recommended Budget includes $87,000 in additional State and Federal revenue. This revenue is being used to offset increases in insurance, cost plan charges, and utility expenses. Personnel spending overall is relatively flat as the department eliminated two (2) positions which no longer had available intergovernmental revenues for support. The elimination of two (2) positions offsets increases due to cost-of-living-adjustments, merits, and benefit changes.

District Attorney: Net County Cost $12,039,900
This FY2024-25 Budget reflects a $640,000 increase in net county cost.   Much of this increase is due to increases in salaries and benefits, due to both standard merit increases and cost-of-living adjustments.

Staff recommends approval of conversion of a Legal Process Clerk II to a Legal Process Clerk III funded by the Workers Compensation Fraud Grant.  The grant provides funding for the increase associated with this position ($4,100).  Additionally, staff recommends approval for an increase in Extra Help funding in the Neighborhood Court unit.  This increase is funded by the Association of Prosecuting Attorneys with the express intention of creating a retail theft diversion program.

The department requested $300,000 in funding for Expert Witness services related to the Racial Justice Act.  Enacted in January of 2022, the Racial Justice Act determined that the state could not "seek or obtain" a criminal conviction or impose a sentence on the basis of race, ethnicity, or national origin. If prosecuted individuals believed they had been convicted in violation of the Act, they could submit motions for resentencing. However, the original legislation did not apply to individuals whose sentencing had occurred prior to January 1, 2021.  Beginning in January of 2024, the Racial Justice Act was expanded to all individuals incarcerated who have no other avenue for resentencing. The department intends to utilize the requested funds to secure expert analysis related to effectively responding to motions related to the Act. The department received funding during the Adopted budget process these services, and while some funds have been utilized, they believe they will have adequate funds to sustain them through the summer, leading staff to recommend deferral of this request to the Adopted budget process.

In order to mitigate increased net county cost for the FY2024-25 Budget, the department was asked to absorb requested staff promotions of $152,000 in their existing salary appropriations, defer conversion of a vacant Deputy District Attorney (DDA) I to DDA IV ($91,000) and defer conversion of a limited term Paralegal to Regular to the Adopted Budget process. Asking the department to absorb net county cost promotions, conversions and new positions is consistent with other general fund departments. The department has also received a salary savings factor of 5.5% ($1,034,668), consistent with other departments of its size and net county cost.

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.  Staff do not recommend approval of these requests at this time and would defer them to the Adopted Budget process.

Probation: Net County Cost: $2,825,507
The Probation Administrative unit is projecting a decrease in revenues of $140,000 in the division’s FY2024-25 Recommended budget.  This reduction is due to the Community Corrections Partnership (CCP) Planning allocation being reduced to zero in Governor’s January State of California FY2024-25.

Adult Probation Services is projecting a decrease in revenues due to a reduction in Prop 172 revenues ($28,940), a reduction in the annual Post Release Community Services allocation ($61,500), and the conclusion of the Mental Health Court grant ($152,814).  Additionally, the Probation Pre Trial unit is anticipating a reduction in revenues of $359,775 due to the removal of one-time funding related to Senate Bill 129 and a reduced allocation of Senate Bill 678 special revenue funds for the Community Corrections Performance Incentives Act ($369,614).  These revenue reductions are partially offset by an increase to the use of fund balance in the unit of $414,000.  Salary and benefits expenses are also projected to decrease $107,000 along with reductions to minor equipment purchases and the removal of last fiscal year’s capital expenses. 

The Detention unit is projecting a reduction in revenues of $135,000 related to Prop 172 revenues.  Offsetting these decreases is an expected transfer of JJCPA fund balance ($134,571) and an increase in work program revenues of $36,143.  Expenditures in the Detention unit are projected to increase $673,000.  The majority of these increases are due to rising salary and benefit costs ($652,779) due to merits, cost of living adjustments (COLA’s) and increased retirement costs.

The Juvenile Probation Services unit is projecting an overall revenue decrease of $16,741.  These decreases are attributed to a reduction in Prop 172 revenues, a decrease in State Realignment revenues for Vehicle License Fees ($58,039), a reduction in Federal Cal Works Revenues of $40,000 and a reduction in Youth Offender Block Grant revenues of $98,000.  Expenditures in the unit are also projected to increase approximately $1.2 million due to the increase in the budgeted contribution to fund balance related to the Juvenile Justice Realignment Block Grant of $1,161,712.  Additional increases include increases to Salaries and Benefits of $10,000 due to Merit and COLA’s increases as well as an increase of expense transfer reimbursements of $14,238.  Lastly, the Juvenile Probation Services unit has also budgeted use of fund balance in the unit of $1,045,920 to balance the unit.

The Probation Department Community Corrections Partnership (CCP) program includes funding for both the departmental operations associated with the AB109 population, along with a large portion of CCP identified programs utilizing the CCP Treatment allocation. This unit is budgeting fund balance use of $222,501, which is a reduction of $270,000 in comparison to the 2023-24 Adopted Budget.  Additionally, expenses in the unit are projected to decrease $124,000.  This reduction is due to centralizing many of the unit’s internal charges in the administration unit and an increase in expense transfer reimbursement of $897,000. These decreases are offset by an increase in Salary and Benefits of $474,322, which includes an increases salary savings amount of $108,000, and an increase to the professional services contracts for the unit of $360,000.

The Probation Care of Court Wards (Placement) currently does not have a net county cost in the unit.  This unit is projecting both a decrease in revenues and expenses of approximately $63,000 due to the low population of youth in the program. 

Additional cost savings measures were included in Probations Recommended budget, including a reduction in training, travel, and transportation expenses of 50% in addition to the use of Sierra Health Fund Balance of $18,377.

Public Defender: Net County Cost $10,059,992
The Public Defender's FY2024-25 includes standard increases in Salary and Benefit expenses, along with increases in General Liability and Information and Technology fees.  It also includes increases in both Community Corrections Partnership and Revocation funding.

The Recommended Budget also includes the unfunding of the third year of the Pilot Defense Grant, which was removed from the Governor’s budget in January.  Though not currently included in the Governor’s budget, there is a possibility funding could become available at a later date as the State budget moves through the legislative process.  Staff from both the Department of Financial Services and the Public Defender’s office continue to closely monitor this grant funding and will incorporate any necessary adjustments into the Adopted Budget.  Staff recommend unfunding a vacant Paralegal position which was added in May 2022 utilizing this funding.  Holding this position vacant until the future of the grant can be determined results in a savings of $115,090.

In order to further mitigate net county cost, the department has a salary savings factor of approximately 1% or $100,000. This factor is lower than departments of similar size but takes into account the historically low rate of turnover in the office.

The department requested multiple augmentations, including  three new Deputy Public Defenders, a new Paralegal, and a new Associate Administrative Services Analyst and a replacement vehicle for a total cost of $785,000.  Staff recommend deferral of all requests to the Adopted budget process.

Sheriff: Net County Cost $31,138,600
The Sheriff's FY2024-25 Recommended Budget includes a net county cost of $31.1 million, an increase of $2.83 million from the FY2023-24 Adopted Budget. The Sheriff's FY2024-25 base budget expenditures increased by $6 million, driven largely by increases in Salaries and Benefits, with base revenues seeing a reduction, due largely to anticipated losses in Prop 172 revenues.

In order to reduce the Sheriff's Office net county cost, $2.5 million of augmentations have been deferred to the Adopted Budget. Included in the deferral are 10 new position requests, a series of vehicle replacements, increases in building maintenance budgets for sites not covered under the Maintenance of Effort, and minor employee engagement efforts.  In order to further reduce the net county cost, salary savings in Patrol of 6.5% or $957,284 and Detention of 7% or $1,730,450 has been included to account for a number of vacant positions, and the anticipation of continued vacancies.   

Staff recommends approval of conversion of a limited-term Coroner to Regular. This position provides for a total of five (5) Deputy Coroners, allowing the office to operate a second shift and reduce overtime within the division.  This allows for a reduced case closure timeframe, allowing partner agencies to receive information more rapidly.  Staff also recommend approval of the purchase of four (4) replacement Tahoe Patrol vehicles, along with outfitting, radios and watchguards for the Capay Patrol Division. The Yocha Dehe Wintun Nation will reimburse these expenses as part of their agreement to provide dedicated patrol services within the valley.

Due to mandated staffing levels from an MOU with the Courts, and insufficient State funding to fully cover the expenses, Court Security continues to rely on general fund support. While in previous years this unit had vacancy savings, more recently as in-person Court services has resumed following the COVID-19 pandemic, savings have not materialized. As such, staff recommend alternative mitigation efforts to reduce the net county cost of this unit.  This includes reduction in over appropriated Service and Supply accounts ($45,000) and the use of an available one-time fund balance in the Court Security unit ($453,000).  This balance has been accruing for several years due to savings in this unit and will not be available again. 

The remaining divisions within the Sheriff's Office will remain status quo until the Adopted Budget when a number of deferred augmentations may be re-submitted. 

Community Corrections Partnership (CCP): 

The proposed FY2024-25 Recommended Budget for CCP is reflected in the following table:
 

Category	2023-24 Adopted	2024-25 Recommended	Change
Beginning Unassigned Fund Balance	$793,900	$-	$ (793,900)
Base Allocation	$11,823,894	$12,231,573	$407,679
Growth Allocation	$301,460	$ 639,549	$338,089
Total Revenues	$12,125,354	$12,871,122	$745,768
Total Resources	$12,919,254	$12,871,122	$(48,132)
District Attorney	$524,235	$579,200	$54,965
Public Defender	$524,235	$579,200	$54,965
Probation	$3,203,661	$3,539,559	$335,898
Sheriff	$3,203,661	$3,539,559	$335,898
Treatment	$2,912,419	$3,217,781	$305,362
Innovation	$1,048,471	$1,158,401	$109,930
Administration	$  232,994	$257,422	$24,428
Total Funding Allocation	$11,649,676	$12,871,122	$1,221,446
Ending Unassigned Fund Balance	$793,900	$ -	$ (793,900)

In the 2021-2022 fiscal year, the Community Correction Partnership (CCP) transitioned their budget model to a percentage-based budget in order to increase the percentage of funding dedicated to treatment and innovative programs to better align to the CCP Strategic Plan. The FY2024-25 budget includes a $200,000 Innovation contribution to Woodland Police Department in support of the Advance Peace program and $250,000 in funding for award to an external agency whom the agency is still in the process of selecting.

At the April 8 meeting, the CCP voted to allocate its unallocated fund balance according to the percentage-based budgeting methodology.

Capital Improvement Program (CIP)

The FY2024-25 Recommended Budget includes a Capital Improvement Program (CIP) budget of $37.6 million. This budget includes continued funding of the Knights Landing Park, Knights Landing Levee Repairs and South Davis (Walnut Park) Library Projects, along with the addition of the Knights Landing Flood Management Project. Funding for the Knights Landing Park was secured through various sources, including ARPA, Proposition 68 Per Capita funds, 2022-23 Cannabis Tax allocations, Development Impact Fees, and the Capital Improvement Reserve.   For Knights Landing Levee repairs, the County was awarded $15.9 million in grant funds from the State Department of Water Resources for a multi-year project to increase flood protection from 25 to 100-year flood levels to reduce flood risk for the Knights Landing Basin area. The local match is 10%, or approximately $1.6 million. Funding for the local match has been set aside during the FY2019-20 and the FY2020-21 Adopted Budgets from Cannabis Tax revenues and the general fund.

The Knights Landing Flood Management is a $15.8 million grant funded project for design of levee improvements along the Knights Landing Ridge Drainage District, which will also provide drainage infrastructure improvements within the town of Knights Landing, along with levee improvements along the County Services Area No. 6 (CSA-6) levee.  These improvements are aimed at reducing or preventing flooding to the population and approximately 321 structures and 3,400 acres of agricultural lands.

Funding for the Walnut Park Library has been secured through various sources including a State Library Grant, County Library Measure A funds, and use of the County Capital Improvement Reserve.  Advocacy and lobbying continue at the state level to ensure the secure delivery of grant funding given the projected state deficit.  Staff will provide alternative options as part of the Adopted Budget should cash flow on this project become an issue.

The table below provides a summary of the FY2024-25 CIP budget.

FY2024-25 Recommended CIP Budget
 

Project	FY 2024-25 Recommended
Knights Landing Park	$5,785,330
Knights Landing Levee	$5,856,311
Knights Landing Flood Management	$6,855,811
South Davis Library	$19,157,908
Total	$37,655,360

Other Budget Assumptions and Issues

American Rescue Plan (ARP) Act Funding: Congress and the President of the United States approved the American Rescue Plan in March 2021. The County of Yolo through the Coronavirus State and Local Fiscal Recovery Fund has been allocated approximately $42.8 million. The Recommended Budget includes ARP funding that reflects the execution of the Board of Supervisor's approved spending plan. Any unspent, approved appropriations from FY2023-24 will be carryforward in the FY2024-25 Adopted Budget. Staff will continue to bring the Board periodic reports and updates on the various areas of the Board approved spending plan and provide the board opportunities to amend the plan as needed. All funding must be obligated by December 31, 2024, and all spending must be completed by December 31, 2026. The U.S. Department of the Treasury has recently issued updated ARPA expenditure guidelines, which County staff are reviewing to ensure full and complete adherence. 

Cannabis Tax Expenditure Plan: The FY2024-25 Recommended Budget includes $480,000 in cannabis tax expenditures. The Cannabis Tax Expenditure Plan Framework, approved by the Board in January 2019, stipulates that cannabis tax revenues should only be programmed for expenditure once received. Through the first three quarters of fiscal year 2024-25, the County received approximately $396,000 in cannabis tax revenues. However, staff have also re-evaluated interest earnings and the reserve balance, resulting in $480,000 that is available for expenditure. Any additional revenues collected in the current year or available fund balance will be appropriated with the Adopted Budget in September.
 
The 2024-25 Cannabis Tax Expenditure Plan (Attachment M) includes funding for a variety of programs and activities that support the priority categories (Early Childhood Intervention and Prevention and Rural Investment) identified in the Expenditure Plan Framework. The recommendations include support for the continuation of First 5 Yolo's Road to Resilience program, to address a funding gap in construction of a new Crisis Nursery facility, and several rural community investments. These rural investments include support for the operations of the Tuli Mem Park and Pool, support to address the Madison Community Drinking Water Rehabilitation Project, and support for continuation of weekly service for a portable restroom in Guinda. Staff will continue to consider unfunded or partially funded proposals at the adopted budget depending on revenues available.
 
The proposed Cannabis Tax Expenditure Plan was presented to the Cannabis Ad-Hoc Subcommittee (Supervisors Barajas and Provenza) on May 15 and subsequently to the Cannabis Tax Citizen's Oversight Committee on May 24. The Citizen’s Oversight Committee generally supported the proposed expenditure plan but expressed desire for a more formalized and structured application process for cannabis tax funding.

Health & Human Services Emerging Needs Contingency: In 2002, Yolo County participated in the Pooled Tobacco Securitization Program, which resulted in creation of the Ceres endowment fund that is held by a trustee as collateral for the outstanding tobacco bonds. Under investment strategies approved by the Board in 2002, 2013, and 2018, funds are deallocated annually from the Ceres endowment fund and made available for appropriation as a Health & Human Services Emerging Needs Contingency that may be allocated by the Board throughout the fiscal year to programs and organizations that support emerging health and human service needs. An amount of $225,000 has been set aside for this purpose.

Rural Community Investments: 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. Additional Rural Communities Investment Program allocations will be considered as part of the Adopted Budget in September.

Labor Negotiations: The County is currently in negotiation with four of its bargaining units including General, Management, Probation, and Sheriff’s Management. The budget includes known increases for other bargaining units and includes an estimate for those units in bargaining. Should negotiations be complete by Adopted Budget any material differences from current assumptions will be addressed. 

Pension Funding: The FY2024-25 Recommended Budget includes $65.3 million in employer pension contributions, an increase of $6.2 million from the FY2023-24 Adopted 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 increasing for a few more years before stabilizing. These increases are driven primarily by changes in CalPERS’ demographic and investment assumptions, particularly related to assumed mortality rates and a lower targeted rate of investment return. The table below shows the projected pension rates over the next five years.

Employer Pension Contribution Rates
 

Fiscal Year	Miscellaneous	Safety
2024-25	33.60%	50.00%
2025-26	32.70%	51.20%
2026-27	33.50%	50.90%
2027-28	33.80%	51.50%
2028-29	34.00%	51.60%

In addition, CalPERS Board of Administration completed their Asset Liability Management (ALM) process during calendar year 2021. The ALM Process resulted in CalPERS lowering their discount rate to 6.80% from 7.00% which means a lower target for future investment earnings which potentially increases employer contributions in future years.
 
In May 2018, the Board approved a Pension Funding policy to establish best practices and guide the County’s effort to stabilize pension funding and address the unfunded pension liability. This action was a continuation of the effort to stabilize pension funding, following several prior actions including establishment of a pension accounting reserve, evaluation of discretionary contributions, and prepaying annual contributions. Notably, the Pension Funding policy established a Section 115 Trust to accumulate assets for pension obligations and provide for a supplemental charge on payroll expenditures for building the Trust balance to a minimum target level. As part of the budget-balancing strategy this fiscal year, the supplemental charge on payroll expenditures has been temporarily paused and will be revisited in future years in conjunction with potential revisions to the Pension Funding Policy.
 
Other Post-Employment Benefits (OPEB): The FY2024-25 Recommended Budget includes $12.1 million in OPEB charges to departments, a decrease of $587,000 from the FY23-24 Adopted Budget. The OPEB actuarially determined contribution rate of 7.7% of payroll which has been held constant since the FY2021-22 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 for the purpose of reducing 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 in November 2019 updated the policy 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 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 through the implementation of 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. The table below shows the OPEB unfunded liability in each of the last three valuation reports.


OPEB Unfunded Liability
 

Valuation Report	Unfunded Liability
June 30, 2018	$68,662,000
June 30, 2020	$65,180,000
June 30, 2022	$49,052,000

Contingency and Reserves: In accordance with the Board Policy on Fund Balances and Reserves, the FY2024-25 Recommended Budget includes the following reserve balances (Attachment N):
 

General Reserve (8.5%)	$23,950,854
Liability Reserve	$600,000
CIP Reserve	$1,442,115
Audit Disallowance Reserve	$2,600,000
OPEB Trust*	$44,538,009
Pension Trust**	$11,880,799

The Board Policy on Fund Balance and Reserves establishes a General Reserve target of 10% of average General Fund expenditures. In FY2023-24, a contribution was made to the general reserve to bring the reserve percentage to 8.5%. The Recommended Budget does not include a contribution to the reserve.  Staff will revisit the potential of maintaining and ideally increasing the reserve percentage during the Adopted Budget process.

The FY2024-25 Recommended Budget also provides appropriations for the following contingencies: 
 

General Fund Contingency	$2,562,565
Total Contingencies	$2,562,565

The General Fund Contingency represents approximately 1.1% of general fund expenditures and is crucial in safeguarding against known risks and uncertainties that are identified for the FY2024-25 Recommended Budget, including potential impacts of equity adjustments from required compensation studies and upcoming labor negotiations.

Given the difficulties in balancing the Recommended Budget, there are no other contingencies recommended at this time.  Both Public Safety and HHSA contingencies of 1%-3% of expenditures in those funds are identified in the Board policy on fund balance and reserves.  There is a $1.5 million HHSA Reserve available should it be needed prior to the Adopted budget.

Funding of all contingencies will be revisited at Adopted budget.

Additional Items for Consideration in Adopted Budget

The Recommended Budget does not allocate funds to several areas which may need to be considered with the Adopted Budget in September. There are also several other emerging needs or topics that will need to be addressed at that time:

• Insurance Increases – Projections for Workers Compensation, General Liability and Property insurances were estimated during the Recommended Budget process. There still may be an additional budget gap to resolve during the Adopted Budget.
• Reserve Contribution – As previously discussed, staff have not included a reserve contribution to maintain the current balance at 8.5%.  The County is still working toward its 10% target reserve and will revisit an additional contribution during the Adopted Budget. This reserve is important to safeguard the County against the next economic downturn.
• Additional Contingency Contributions – The General contingency represents 1.1%, and no Public Safety and HHSA contingencies were included in the Recommended budget. Budgeting for and increasing these contingencies to 1%-3% of total budgeted expenditures should be prioritized during the Adopted Budget process.
• 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 One and how that will affect funding within the Mental Health Services Act.

Looking Forward
The Recommended Budget for FY 2024-25 is balanced and addresses multiple Board priorities and departmental needs.  However, the County’s continued reliance on fund balance to cover ongoing 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

As staff worked to finalize the Recommended Budget, information regarding the Governor’s May Revise was provided to counties on May 14.  Initial reviews of this proposed revision to the states FY2024-25 budget indicated additional reductions to various programs and funding streams that will negatively affect the county’s FY2024-25 budget and will need to be considered during the Adopted Budget process.  Staff anticipate additional reductions in CalWORKs, 1991 and 2011 Realignment and various grant programs.  Staff will continue to monitor and analyze the state budget and work to incorporate any necessary adjustments into the Adopted budget process.  Given this information and the county’s current situation, staff believe balancing future budgets is likely to become a more difficult process wherein budget discipline and prioritization of limited county resources is paramount.

The table below summarizes the items that may be brought forward for consideration in the Adopted Budget. The list is not all inclusive and other items not listed may be brought forward.
 

Potential Items for Consideration	Estimated Amounts
General Reserve Contribution to maintain 8.5%*	$1,483,261
General Fund Contingency contribution to increase to 3%	$2,414,423
Public Safety Contingency increase to 3%	$2,645,084
Health & Human Services Contingency increase to 3%	$6,843,818
ACE Extra Help and Overtime	$96,500
ACE Renovation	$700,000
Agriculture Promotions	$73,179
DCS Staff and Services	$1,679,062
DA Staff and Services	$1,055,088
DFS Services and Supplies	$61,400
GSD Staffing and Equipment	$1,268,898
HHSA Staffing	$950,782
HR Services and Supplies	$118,000
Library Consulting Services	$50,000
Public Defender Staffing and Equipment	$784,873
Sheriff Staffing and Equipment	$ 2,489,620
	$22,713,988

All County departments prepared and submitted a requested budget for 2024-25. Department of Financial Services staff reviewed and analyzed budget requests and budget discussions were held between the County Administrator's Office and each department. The Department of Financial Services (DFS) and County Administrator first updated the Board of Supervisors at the January 23, 2024 Board meeting, where the Board received a preliminary assessment of the FY2024-25 Budget and adopted the Budget Principles. The Board of Supervisors conducted budget workshops on March 11 and 12, 2024. County Counsel has reviewed and approved the budget resolutions as to form.