Regular-General Government # 25.
Board of Supervisors
Financial Services
- Meeting Date:
- 04/28/2026
- Brief Title
- FY2026-27 Budget Development Update
From:
Tom Haynes, Chief Financial Officer, Department of Financial Services
Staff Contact:
Laura Liddicoet, Chief Budget Official, Department of Financial Services, x8825
Supervisorial District Impact:
Countywide
Subject
Receive Fiscal Year 2026-27 Budget Development Update and provide direction to staff on 2026-27 budget development process and reduction options to address the County's structural budget deficits. (No general fund impact) (Haynes/Liddicoet) (Est. Staff Presentation: 20 min)
Recommended Action
- Receive Fiscal Year 2026-27 Budget Development Update; and
- Provide direction to staff on 2026-27 budget development process and reduction options to address the County's structural budget deficits.
Strategic Plan Goal(s)
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Operational Excellence |
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In Support of All Goals (Internal Departments Only) |
Reason for Recommended Action/Background
At the January 27, 2026 Board meeting, the Board approved a plan of action to address the County’s General Fund structural budget deficit.
The plan included the following key provisions based on staff recommendations:
- Implementation of 3 years of General Fund reductions to address the County’s structural deficit, including an initial reduction target of $15 million in 2026-27
- Setting initial reduction targets with the assumption of no new revenues, but to continue to develop strategies and timelines for revenue enhancement
- Adjust reduction targets in future years should new revenues materialize.
The table reflected as Attachment C., Staff Recommendation - Scenario B, was presented at the January 27, 2026 meeting to illustrate one possible scenario to address the County’s structural deficit over the next several fiscal years.
Following the January 27, 2026 Board meeting, staff released the 2026-27 Budget Instructions to County departments, which included Departmental Budget Reduction Guidelines. This document provided directions to departments on developing budget reduction options equivalent to 15% of their 2025-26 Adopted Budget Net County Cost (i.e. General Fund allocation). As discussed during the Board presentation, these departmental reduction targets exceeded the $15 million reduction target approved by the Board in order to provide the Board flexibility in evaluating different reduction scenarios. The departmental reduction options were submitted to DFS along with regular departmental FY2026-27 budget requests on February 28.
Following the January 27, 2026 Board meeting, staff released the 2026-27 Budget Instructions to County departments, which included Departmental Budget Reduction Guidelines. This document provided directions to departments on developing budget reduction options equivalent to 15% of their 2025-26 Adopted Budget Net County Cost (i.e. General Fund allocation). As discussed during the Board presentation, these departmental reduction targets exceeded the $15 million reduction target approved by the Board in order to provide the Board flexibility in evaluating different reduction scenarios. The departmental reduction options were submitted to DFS along with regular departmental FY2026-27 budget requests on February 28.
Following submission of departmental budget requests, the Department of Financial Services and the County Administrator’s Office met with each department to discuss their budget submission, including the substance and impact of the submitted reduction options. These discussions focused on the impact to operations and service levels, unanticipated impacts on other departments or agencies, and the feasibility of implementation.
FY2026-27 General Fund Base Budget Gap
At the March 24 Board meeting, staff presented a General Fund Base Budget Gap of $35.2 million. This gap was derived from an assumption of $114.7 million in General Purpose Revenues and $7.0 million in prior year Fund Balance. Submitted initial base budget requests were $145.3 million. This gap included an unanticipated request for additional General Fund support for HHSA of roughly $11.7 million.
Despite proposing use of its remaining available fund balances in several funds, including 1991 Public and Mental Health Realignment, 2011 Behavioral Health Realignment and Intergovernmental Transfer Funds, HHSA would require this additional General Fund support to maintain status quo service levels within the department. Anticipating additional future reductions in external funding, and with awareness of the County’s General Fund situation, HHSA proposed an additional $9,037,800 in non-General Fund reductions to offset the impact of the additional funding need. The difference in the requested additional funding of $11.7 million, and the proposed reductions of approximately $9 million includes an assumption of General Fund support to maintain CalFresh services at their existing levels, as the Board has been previously briefed on, and to provide additional General Fund support to Child Welfare services in light of state and federal reductions.
This additional context from HHSA and reexamination of the County’s base budget gap fundamentally altered the landscape of the challenge in balancing the County’s 2026-27 Recommended Budget. It should be noted that the General Fund Five-Year Forecast that was presented to the Board in January did not assume any General Fund backfill to HHSA as a result of federal policy changes or other funding shortfalls. As such, the HHSA funding gaps reflect a new fiscal challenge for the County beyond what was anticipated in the January presentations on the 2026-27 budget outlook.
Since the March 24 budget update, a number of additional changes to the budget balancing scenario have been incorporated. General Purpose revenues have been updated to reflect increases in several accounts based upon updated information, while adjustments to an anticipated deficit in the Department of Community Services Building Enterprise fund have been addressed through additional proposed reductions in that department. Staff have also included a $1m placeholder within the base budget to account for funding for both the Public Defender and Defense Conflict Panel with regards to indigent defense as it relates to the Oakdale incident. It should be noted that the District Attorney received approximately $964,000 in the 2025-26 budget to support their investigation. Staff believe that there will be some residual funding available from the current year that can support ongoing District Attorney costs related to the Oakdale incident in 2026-27.
With all this additional information taken into account, the base budget gap has been updated and is reflected as such:
| FY 2026-27 General Fund Base Budget Gap | |
| General Purpose Revenues | $117,517,243 |
| Fund Balance | $7,000,000 |
| Base Budget Requests | ($147,524,055) |
| HHSA General Fund Backfill | ($11,726,686) |
| Oakdale Defense Expenditures | ($1,000,000) |
| Revised Base Budget Gap | ($35,733,498) |
General Fund Reductions
On March 24, staff shared that $21.8 million in reduction options had been submitted by departments. Since that time, continued refinement of those options has led to a final submitted total of $20.9 million.
Of that amount, staff have determined that $7.1 million require further analysis and should not be considered for implementation in 2026-27. In some instances, these reduction options may not result in net savings to the County due to infeasibility or the likelihood of offsetting cost increases elsewhere. In other instances, these options may require a broader policy discussion at the Board level. A listing of the reduction options that require further analysis is reflected in Attachment A.
The remaining $13.8 million in General Fund reduction options, as reflected in Attachment B, have been determined to be technically and legally viable for Board consideration for implementation in 2026-27.It should be noted that while $13.7 million in potential reductions is substantial, it falls approximately $1.2 million short of the $15 million initial goal set forth by the Board of Supervisors on January 27. However, the $13.7 million in reductions for consideration reflect a sizeable reduction and a good faith effort by departments to begin addressing the County’s structural deficit.
In summary, the reduction options recommended for consideration include the following:
| Considered for Reduction Category |
Considered for Reduction Savings |
| Workforce Reduction of Vacant Positions |
$9,023,743 |
| Workforce Reduction of Filled Positions |
$1,058,979 |
| Reduction/Elimination of Contracts |
$945,368 |
| Reduction of Extra Help Budgets |
$854,470 |
| Salary Allocations (to Non-General Fund Sources) |
$662,146 |
| Revenue Enhancements |
$636,850 |
| Reductions in Service and Supply Expenditures |
$578,425 |
| Total | $13,759,981 |
At this time, 51 vacant, or soon to be vacant, General Fund positions have been identified for potential workforce reduction. The estimated savings from these positions is $9,023,743. These positions include:
| Classification | FTE |
| Accountant III |
1.0 |
| Accounting Tech |
1.0 |
| Administrative Services Analyst |
1.0 |
| Assessor Clerk Recorder Specialist |
1.0 |
| Assistant/Deputy County Administrator1.0 |
1.0 |
| Associate Contract and Procurement |
1.0 |
| Associate Management Analyst |
1.0 |
| Auditor III |
1.0 |
| Behavioral Health Case Manager II LT |
1.0 |
| Building Craftsmechanic |
1.0 |
| Case Prep Specialist |
1.0 |
| Clerk Recorder Program Manager |
1.0 |
| Clinician I |
1.0 |
| Correctional Officer |
15.0 |
| Deputy Branch Director Health and Human Services |
1.0 |
| Deputy District Attorney V |
1.0 |
| Deputy Probation Officer |
2.0 |
| Deputy Sheriff |
3.0 |
| District Attorney Enforcement Officer |
1.0 |
| District Attorney Investigator II |
2.0 |
| Innovation Technician |
1.0 |
| Legal Process Clerk |
1.0 |
| Office Support Specialist |
2.0 |
| Personnel Assistant |
1.0 |
| Personnel Specialist I |
1.0 |
| Psychiatric Health Specialist II |
1.0 |
| Principal Appraiser |
1.0 |
| Senior Administrative Analyst |
1.0 |
| Senior Appraiser |
1.0 |
| Sheriff Lieutenant |
1.0 |
| Sheriff Sergeant |
1.0 |
| Total | 51.0 |
Additionally, 9.5 filled General Fund positions have been identified for workforce reduction. The projected savings from these positions is $1,058,979. These positions include:
| Classification | FTE |
| Administrative Services Analyst | 1.0 |
| Assessor Clerk Recorder Assistant | 2.0 |
| Library Assistant | 0.5 |
| Office Support Specialist | 2.0 |
| Senior Administrative Services Analyst | 1.0 |
| Vital Stats Technician | 1.0 |
| Permit Technician | 2.0 |
| Total | 9.5 |
Other notable reduction options submitted by departments include the following:
- Elimination of the Nielsen Merksamer consulting contract (CAO)
- Elimination of the VITA, Eat Well Yolo and Crisis Nursery contracts (HHSA)
- Renegotiation of delta litigation cost shares (County Counsel)
- Renegotiation of CommuniCare lease agreements (GSD)
- Reduction in County Security services contract (GSD)
- Expansion of cost plan charges to external agencies (DFS)
- Increasing hourly rates billed for facility maintenance and legal services (GSD & County Counsel)
- Elimination of Environmental Health fee waiver for Temporary Food Facilities (DCS)
- Reduction in Extra Help (Ag, DA, Sheriff)
The full listing of department reduction options, including description of the operational or service impact, and discussion of relationship to mandates is provided in Attachment D.
HHSA Non-General Fund Reductions
As discussed previously, in addition to the General Fund reduction options, HHSA has proposed approximately $9 million in non-General Fund reductions in order to offset the General Fund impact from current and anticipated future reductions in state and federal funding sources. In summary, the HHSA non-General Fund reductions recommended for consideration include the following:
| Considered for Reduction Category | Considered for Reduction Savings |
| Workforce Reduction of Vacant Positions |
$4,344,303 |
| Workforce Reduction of Filled Positions |
$3,027,633 |
| Reduction/Elimination of Contracts |
$1,526,679 |
| Salary Allocation Adjustments |
$1,080,375 |
| Reduction in Overtime Budget |
$426,400 |
| Other Reductions |
$221,112 |
| Reduction of Service and Supply Budget |
$130,981 |
| Reduction of Extra Help Budgets |
$25,000 |
| Total | $10,788,364 |
| Less HHSA Admin Allocation | ($1,750,564) |
| Revised Total | $9,037,800 |
At this time, 32 vacant, or soon to be vacant, Non-General Fund positions have been identified for workforce reduction. The estimated savings from the proposed workforce reduction is $4,344,303. These positions include:
| Classification | FTE |
| Accountant II | 1.0 |
| Administrative Services Analyst | 2.0 |
| Deputy Branch Director Health and Human Services | 1.0 |
| Employment Services Specialist II | 3.0 |
| Fiscal Administrative Officer | 1.0 |
| Health and Human Services Manager II | 1.0 |
| Office Support Specialist | 2.0 |
| Public Assistance Specialist III | 3.0 |
| Senior Administrative Services Analyst | 2.0 |
| Service Centers Administrative Specialist | 2.0 |
| Social Services Assistant | 4.0 |
| Social Work Practitioner | 8.0 |
| Social Worker Supervisor (IHSS) | 1.0 |
| Welfare Fraud Investigator II | 1.0 |
| Total | 32.0 |
Additionally, reduction of 26 filled non-General Fund positions have been identified for workforce reduction. The projected savings from workforce reduction is $3,027,633. These positions include:
| Classification | FTE |
| Administrative Services Analyst |
3.0 |
| Associate Administrative Services Analyst |
1.0 |
| Child Welfare Worker I |
1.0 |
| Conservatorship Officer (PG) |
1.0 |
| Departmental Communications Coordinator |
1.0 |
| Employment & Social Services Program Supervisor |
2.0 |
| HHSA Fleet Attendant II |
1.0 |
| HHSA Support Services Supervisor |
2.0 |
| Intensive Case Manager I |
1.0 |
| Limited Term - Administrative Clerk II |
1.0 |
| Office Support Specialist |
5.0 |
| Senior Administrative Services Analyst |
1.0 |
| Social Worker Practitioner (APS) |
1.0 |
| Social Service Assistant CWS |
5.0 |
| Total | 26.0 |
The full listing of HHSA non-General Fund reduction options, including description of the operational and service impact, is provided in Attachment E, with additional information provided in Attachment F.
Proposed Reductions Summary
The County’s Budget Principles for Budget Reductions provided foundation for the way in which departments and staff analyzed reduction options. While the reductions for consideration before the Board today are not without very real impact on each individual department, they will not result in wholesale elimination of programs, services or mandates. Further, there are no reductions for consideration that will result in impacts to building code or code enforcement inspections.
In considering the Budget Principles for Budget Reductions, many of the reductions for considerations will put additional pressure on Support System departments, who provide core county administrative functions and cannot function effectively once staffing drops below a certain level. Ultimately, the reductions for consideration today are likely to move the County to a point of maximum reduction, beyond which we will be unable to proceed without beginning to consider a fundamental reevaluation of the services and programs we provide to constituents.
Potential Balancing Scenario
Based on current information as discussed previously in this report, staff have updated a potential balancing scenario as a basis for further discussion and feedback from the Board.
| FY 2026-27 General Fund Base Budget Gap | |
| Potential Balancing Solutions | |
| General Purpose Revenues | $117,517,243 |
| Fund Balance | $7,000,000 |
| Base Budget Requests | ($147,524,055) |
| HHSA General Fund Backfill | ($11,726,686) |
| Oakdale Defense Expenditures | ($1,000,000) |
| General Fund Base Budget Gap | ($35,733,498) |
| Proposed Solutions | |
| Departmental Reductions | |
| General Fund Departmental Reductions | $13,759,982 |
| HHSA Non-General Fund Reductions | $9,037,800 |
| Oner-Time Solutions | |
| Chula Vista Earnings | $3,376,000 |
| Use of Reserves | |
| Misc. Reserves/Other Funding Sources | $4,136,000 |
| Pension Trust/General Reserve | $4,420,000 |
| Remaining Budget (Gap)/Surplus | ($1,003,716) |
As reflected in the table above, the balancing scenario reflects a remaining budget gap of approximately $1 million. The use of one-time solutions and reserves as reflected above remain unchanged from what has been assumed in prior presentations; however, the General Fund department reductions has been reduced from the targeted $15 million to the $13.8 million that staff believe are feasible for implementation in 2026-27. It should be noted that even if all of the reduction options recommended for consideration were implemented, additional balancing solutions are still required. Should the Board determine that any of the possible reductions outlined in this report are not acceptable or viable, direction to staff accordingly will be crucial to develop the recommended budget for June. If any of the current budget reduction options are removed from consideration the remaining budget gap will increase, thus increasing the need to identify additional balancing solutions.
Next Steps
Staff recognize that the $15 million General Fund reduction goal is not currently met for the 2026-27 Recommended Budget process. However, the $13.7 million in reductions for consideration reflect a sizeable reduction and a good faith effort by departments to begin addressing the County’s structural deficit. At this point, the remaining budget gap can be bridged through a combination of additional one-time solutions and/or further reductions.
With that consideration, staff have identified three potential pathways for Board consideration:
- Consider a slight downward adjusted target for reductions in 2026-27 from $15m to $13.7m and start working on strategic options to continue addressing the remaining structural deficit in future fiscal years; or
- Direct staff to identify further reductions to meet the $15 million target for the Recommended Budget; or
- Direct staff to identify further reductions to meet the $15 million target for the Adopted Budget in September, which may require a greater use of reserves as a placeholder in the Recommended Budget for June.
Additionally, staff is seeking Board direction on any Board directed augmentations that are not currently included. Consideration of any additional augmentations will also impact the ability to achieve the reduction target options noted above.
All departments will be present at the Board meeting and available to respond to questions throughout the discussion. If the Board determines that additional time is needed to further consider this item, staff is prepared to return on May 5 to continue the dialogue prior to the Recommended Budget hearing on June 9.
Upcoming key dates in the FY 2026-27 Budget Process:
| May 5 | Budget Development Update to the Board if needed |
| June 2 | 2026-27 Recommended Budget Book and Staff Report Released |
| June 9 | 2026-27 Recommended Budget Hearing |
Staff plan to return to the Board at a later date with a comprehensive analysis of special fund balances. Staff are currently working to ensure understanding of compliance and restriction levels with County Counsel.
Collaborations (including Board advisory groups and external partner agencies)
All County departments have participated in the budget development process.
Competitive Bid Process/Vendor Performance
N/A
Fiscal Impact
No Fiscal Impact
Fiscal Impact (Expenditure)
- Total cost of recommended action:
- $ 0
- Amount budgeted for expenditure:
- $ 0
- Additional expenditure authority needed:
- $ 0
- One-time commitment:
- Yes
Source of Funds for this Expenditure
- General Fund
- $0
Further explanation as needed:
There is no fiscal impact associated with this update.
Attachments
- Att. A. Reductions for Future Analysis
- Att. B. General Fund Reductions for Consideration
- Att. C. Staff Recommendation - Scenario B
- Att. D. General Fund Departmental Budget Reduction Submissions
- Att. E. HHSA Non General Fund Reductions
- Att. F. HHSA Budget Reduction Impacts
- Att. G. 2026-27 Budget Principles
- Att. H. Presentation
- Att. I. Comments from Bob Loessberg-Zahl,
- Att. J. Comments from Jim Haney
- Att. K. Comments from Judy Wohlfrom
- Att. L. Comments from Liz Coman
- Att. M. Comments from Michael Campos
- Att. N. Comments from Ramon Urbano
- Att. O. Comments from Rebecca Knight Tobitt
- Att. P. Comments from Donna Seaver
- Att. Q. Comments from Cecilia Tsu
- Att. R. Comments from Kate Bowen
- Att. S. Comments from Michelle Trujillo
- Att. T. Comments from Samantha Garcia
- Att. U. Comments from Isabelle Minder
- Att. V. Comments from Douglas Port
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Tom Haynes | Laura Liddicoet | 01/30/2026 08:49 AM |
| Financial Services (Originator) | Laura Liddicoet | 04/23/2026 02:09 PM |
| County Counsel | Hope Welton | 04/23/2026 02:27 PM |
| Cindy Perez | Julie Dachtler | 04/23/2026 02:41 PM |
| Tom Haynes | Tom Haynes | 04/23/2026 03:25 PM |
| Cindy Perez | Cindy Perez | 04/23/2026 03:41 PM |
| Mark Bryan | Mark Bryan | 04/23/2026 05:27 PM |
- Form Started By:
- Laura Liddicoet
- Started On:
- 01/30/2026 08:45 AM
- Final Approval Date:
- 04/23/2026