Receive the 2022-23 3rd Quarter Monitoring Report, adopt a budget resolution amending the 2022-23 revenues and appropriations, and approve the fiscal year 2023-24 Recommended Budget. (General fund impact $112,166,342) (Pinedo/Rinde)

I. 2022-23 3rd Quarter Budget Monitoring
Each department has developed year-end projections based on actual revenue and expenditure data through March 31. 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 also 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 $385,000, primarily due to salary savings and increased intergovernmental revenues. The department has had two long-standing vacancies, which contributed to personnel savings of about $125,000, as well as less of a need in extra help. Additionally, due to higher-than-expected unclaimed gas tax revenues and mill payments, an additional $200,000 is expected in State revenues. This, however, is offset by an expected $100,000 decrease in charges for services due to decreased fieldwalking fees as a result of the drought and fewer international inspections due to the conflict in Ukraine, ceasing certain exports. The department is expecting to end the year with $200,000 in additional revenues and $185,000 in unspent expenditure budget.   

Assessor/Clerk-Recorder/Elections: Assessor/Clerk-Recorder/Elections is projecting to end the year with a positive net variance of $1,386,256.

The Assessor’s Division is projecting to end the year with a net positive variance of $611,984.  These savings are attributed to property tax administrative fee revenue being approximately $445,000 higher than originally budgeted.  Additionally, the unit had savings due to some short- and long-term vacancies: 2 Auditor Appraiser, a Senior Cadastral Mapper, and 3 Assessor Clerk Recorder Specialists ($81,054).  These vacancies, along with SCAAP grant funds not being expended, are contributing to the overall surplus in the unit.

The Clerk-Recorder division is projecting to end the year with a positive variance of approximately $400,000.  Revenues are projected to be lower than budgeted as Recording Fee revenues are trending to end the year in a $242,000 deficit due to current economic conditions and a cooling housing market.  This anticipated revenue loss is being offset by lower than budgeted personnel expenses due to retirements and delays in filling those positions.  Additional savings exist in the Clerk Recorder’s Upgrade Fund.  Specifically, services and supplies are projected to end the year with savings of $459,000 due to the division’s imaging project not being fully expended as originally budgeted in FY 2022-23.

The Elections division is also projected to end the year with a positive variance of $353,703.  Revenues in the division increased as state revenues related to the Voter’s Choice Act came in $52,000 higher than budgeted, and additional revenues from the City of Davis May special election ($225,000) that allows for 100% of the cost to be recouped by the division that were not originally planned.  Offsetting these increased revenues is an increase in salaries and benefits of $146,000 as additional extra help staff was needed to assist in administering the City of Davis Election.  

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 Transportation and Travel expenses, anticipated salary savings will be used to keep the department budget in balance. Post-COVID, in-person meetings are now largely required, Zoom is no longer an option for many meetings; and therefore, travel to some meetings and conferences is necessary.

Regional Child Support Agency: The Regional Child Support Agency (RCSA) is projecting to end the fiscal year with a positive net variance of approximately $141,000, primarily due to salary savings of $593,000 from unanticipated vacancies and delays in the hiring process. The savings in salaries and benefits will offset a deficit in services and supplies of $452,000 due to additional expenses, including external vendor trainings, various outreach campaigns, office furniture for the Yuba office, building repairs due to vandalism, website refresh project, and sending additional staff to conferences.  

Community Services: The Community Services department is projecting to end the fiscal year with an overall positive net variance of $11.6 million, primarily due to multiple project delays in the Roads division and contract savings in the Integrated Waste Management division.

The Integrated Waste Management (IWM) division is projecting an overall $4.3 million positive net variance primarily due to the delay of Appliance Collection and Processing Area Improvements ($1 million project) to FY2023-24. The department also has salary savings of $633,000 due to multiple vacancies, such as the IWM Director, Senior Civil Engineer, and high turnover for several Waste Facility Workers and Solid Waste Attendants. Services and supplies are projecting a savings of $2.6 million largely due to overestimating contracts that are based on volume, purchase orders, and maintenance-building improvements this fiscal year. Offsetting the savings is the slightly lower landfill commercial revenue anticipated to be received at $167,000.

The Roads fund is projecting a positive net variance of $4.5 million primarily due to $4.8 million in savings related to incomplete road and bridge capital projects throughout the County. Road and bridge projects are budgeted by each phase they are in, and each phase can take up to 1-3 years, typically causing a surplus each year. Offsetting the savings is the reduction of $4.6 million from state and federal revenue as projects are not completed this fiscal year and extended to next year. There is a surplus of $2.3 million in services and supplies due to professional services-architect and construction maintenance, which are related to the ongoing capital projects. In addition, there are savings in Right of Way (easements) of $1 million, which are required by some of the capital projects; however, no purchases to date have been made. Salary and benefits have a savings of $284,000 due to vacant positions during part of the year, such as the Public Works Director and five road maintenance workers.

Climate Sustainability is projecting to end the fiscal year with a positive net variance of $342,000, primarily due to $308,000 savings in services and supplies related to the Climate Action and Adaptation Plan (CAAP) contract. The department is requesting a budget adjustment to decrease Other Financing Sources and Services and Supplies by $100,000 since Federal funds (ARP) cannot be used for the additional services related to CAAP. Furthermore, the Community Services Analyst position was fully funded at Adopted Budget but was not filled until mid-February, along with some savings from Extra help positions, resulting in a surplus of $139,000 in salary and benefits.

Fleet is projecting to end the fiscal year with a net positive variance of $148,000, primarily due to a reduction of equipment maintenance, lower fuel prices as well as savings in capital assets due to project completion in FY2023-24. Offsetting some of the savings is the reduction of lower reimbursements from departments based on lower expenditures.

The Building division is projecting to end the fiscal year with a net positive variance of $169,000, primarily related to Salary and Benefit savings of $120,000 due to several Permit Counter Tech positions that have been vacant, as well as the Plan Check Engineer position. Licenses and permits are trending higher than originally anticipated projecting an increase of $36,000.

Cannabis is projecting to end the fiscal year with a positive net variance of $1.2 million, primarily due to the modular building project being delayed to next year, resulting in $1.1 million in savings. In addition, the division experienced savings in Services and Supplies due to less Sheriff time needed for the Cannabis Task Force.

Planning division is projecting to end the fiscal year with a positive net variance of $24,000 primarily due to salary savings due to the vacant Code Enforcement Officer. The California Environment Quality Act (CEQA) on-call services for Planning projects have gone down due to less need for consultants. License and permit revenue is trending downward as fewer applications have been received.   

Environmental health division is projecting to end the fiscal year with a positive net variance of $63,000 primarily due to unanticipated CUPA fines that were received that will be put into the CUPA restricted fund at the end of the fiscal year.

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 negative net variance of $106,000, which can be covered by adjusting the use of fund balance.

Of the larger variances, Snowball CSA is projecting a positive net variance of $118,000 largely due to a budgeting error in double counting the expense of a Department of Water Resources grant in both services and supplies as well as capital assets resulting in the surplus; however, some of that amount will be offset by increased expenditures in regular operations.

North Davis Meadows Water is projecting a deficit of $185,000 due to the delay of the water consolidation project approval from the State Water Board fiscal division. As soon as the financial agreement is completed, the construction to consolidate the water system to the City of Davis will commence and has been budgeted for FY2023-24. The deficit will be offset by a reduction in the contribution to fund balance at year-end.

Wild Wings Golf Course is projecting a negative net variance of $32,150 largely due to miscellaneous revenue that was anticipated to be received but was not. This is due to the heavy rain the County has received this spring, resulting in less attendance at the golf course. To rebalance the unit, the department is requesting to increase the use of fund balance by $32,120 to cover for the reduced revenue. The Golf Course also had a change of management to a new company in January 2023. The department is requesting to increase Intrafund Transfers and Other Financing Sources by $297,550 in order to pay off outstanding invoices discovered in the transition.

Staff recommends adopting the budget resolution in Attachment B.

County Administrator’s Office: The County Administrator’s Office (CAO) is projecting to conclude the fiscal year with a positive net variance of $145,000. This surplus is related to the receipt of unanticipated revenue collected from the Westlands Water District for the County’s participation in the Lower Yolo Restoration Project. The projected surplus is intended to offset potential adverse effects on agricultural land and/or the agricultural economy of the County.  The funds will fall to restricted fund balance for use in future fiscal years. 

The Office of Emergency Services (OES) is projecting a deficit of approximately $78,000, related to unanticipated increases in salary and benefit expenses; anticipated savings in the primary CAO division will be requested at year-end monitoring to offset any remaining OES variance.  

County Counsel: County Counsel is projecting to end the fiscal year with a positive net variance of approximately $27,000 primarily due to savings of $88,000 in the Indigent Defense professional services since there was a lower usage of external attorneys. Offsetting this surplus comes primarily from a reduction of billable time to other departments resulting in less legal services revenue received.

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 Grand Jury is anticipating a year-end deficit of $11,000 due to unanticipated increases in the amount of maintenance, the purchase of audio-visual equipment and other miscellaneous increases.  Staff recommend the use of General Fund Contingency to fund the projected variance. Should savings be realized, any unused funding would return to the General Fund at year-end.

Countywide general-purpose revenues are projected to end the year $636,000 in excess of budgeted amounts due to higher than anticipated revenues from both the Williamson Act, Sales Tax, and Interest Earnings.  The County also received a one-time payment in the amount of $170,000 for the sale of fixed assets. The entirety of these additional revenues is being offset by lower than anticipated revenues in Vehicle Code Fines.

Public Safety MOE is projected to end the year with a positive $350,000 variance due to lower than budgeted maintenance costs for the Detention Center and the District Attorney.  Any surplus at the end of the year will fall back to the general fund. 
 
Countywide Community Corrections Partnership fund will exceed budgeted revenue due to a higher than anticipated growth allocation and lower than anticipated expenses. Any year-end surplus will fall to the CCP fund balance for re-allocation in future years by the CCP committee.

Development Impact Fee revenues are projected to complete the year with a positive net variance of $2.6 million, however, it is important to note that there were not any anticipated revenues budgeted in FY2022-23. These fees are collected as a portion of a development project for the purpose of offsetting the cost of public facilities in the area of the development. 

Staff recommends adopting the budget resolution in Attachment B.

Debt: Debt is projected to end the year with an overall negative net variance of $161,000, primarily due to the Trane Energy Savings Project partial prepayment of excess proceeds towards the financing. The excess proceeds cannot be applied to other projects per the financing documents. The total amount charged is approximately $222,000. The department is requesting to increase Use of Fund Balance by $220,394 to counter the deficit. The entirety of the department’s deficit is offset by unanticipated investment earnings in other Debt funds.

Staff recommends adopting the budget resolution in Attachment B.

District Attorney: The District Attorney’s Office is projecting to end the year with a positive net variance of $200,000, however, those programs receiving General Fund dollars are projecting a year-end deficit of $196,000. The projected deficit in the Criminal Prosecution unit ($52,000) is related to lower than anticipated revenues in the re-sentencing pilot program.  Work on this program is completed by extra help attorneys, but the department has struggled to find individuals for the positions.  While this challenge to fill positions has generated a small amount of anticipated salary savings in Criminal Prosecution, the resulting inability to complete work has reduced anticipated revenues.  The remainder of the deficit in Criminal Prosecution is related to the Real Estate Fraud unit ($93,000) and will be resolved by a lower than anticipated contribution to fund balance in order to balance the unit. Neighborhood Court is also projecting a deficit ($49,000) due to the inability to charge salaries to the JAG Grant during the two-month period between grants.

The DA’s special revenue funds are projected to have a positive net variance of $395,000 due primarily to lower than anticipated expenses and higher than anticipated revenues in all units, with the exception of the Consumer Fraud unit, which is projecting a deficit of $515,000. The Consumer Fraud unit has available fund balance to address this deficit.

Financial Services: The Department of Financial Services (DFS) is projecting to end the year with a positive net variance of $468,000 which is primarily related to salary savings as the department has experienced several vacancies throughout the fiscal year, including Chief Budget Official, Senior Financial Services Analyst, several Accountants, along with various other positions. Offsetting these savings is the reduction of $121,000 due to not receiving Cannabis reimbursement from Community Services for the Administrative Services Analyst since the position has not been filled yet.

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 positive variances of $206,640 and $455,491, respectively, while the Airport is projecting a surplus of $4,300.  

While the Facilities Division is projected to end the year with a surplus, revenues are lower than anticipated due to EV Charging revenues being lower than budgeted due to no additional site locations being identified to date and projects such as the Justice Campus well, Isolation Valves, and Roofing projects not being completed this fiscal year ($1,512,500).  These reductions in revenues are offset by salary savings due to vacancy savings in the Project Manager, Building Craftsmechanic, Senior Accounting Technician, and Fiscal Administrative Officer positions ($357,129). 

Parks division is projecting to end the year with a surplus of $455,491.  This is primarily due to salary savings of $296,000 and services and supplies savings of $160,705 due to no longer selling firewood at the campground, fuel savings, as well as savings with utilities and fleet internal charges. 

Health and Human Services Agency: 
The Health & Human Services Agency (HHSA) is projecting to end the fiscal year with a positive net variance of $17 million primarily due to expenditure reductions related to vacancy savings and the postponement of the Crisis Now program into FY 23-24. Additionally, some realignment and IGT revenues are projected to be higher than budgeted. Of the $17 million variance, approximately $5.7 million are in MHSA funds, $9 million are in Realignment funds, and $1.5 million are in IGT funds.

Public Health is projecting to end the fiscal year with a positive net variance of $2 million primarily due to increased vacancy savings over expected amounts and the early termination of some programs funded with Covid-19 relief dollars. The Adopted Budget projected the use of $2.1 million in fund balance from 1991 Realignment to fund this unit, which will be decreased to $600,000 due to decreases in expenditures. The Maddy Fund is also projecting expenditure reductions due to lower contractual costs than expected. This, combined with the interest apportioned, results in a positive net variance of about $370K in that unit. The Jail Medical budget unit is projecting to end the year $350,000 over the original budget due to increases in Jail Based Competency Treatment Program expenses which are grant-funded. An appropriation of additional grant funds is included in the attached to cover these expenses.

Social Services is projecting an overall positive net variance of approximately $8 million primarily due to additional revenue received in the amount of $6.4 million for 1991 Realignment. Additionally, due to vacancy savings in Public Aid Administration, less realignment funding is required to transfer into the unit. This results in net savings of approximately $800,000 in 2011 Realignment. Approximately $1 million of realignment fund balance was budgeted for use with the Adopted Budget, resulting in a true net savings of about $6.2 million of total realignment funding in this unit. Public Assistance is projecting higher expenses overall, particularly in CalWorks payments. The State increased the maximum aid payment by 12% for recipients, resulting in higher expenditures. Additional intergovernmental and realignment funds are available to cover this $2.7 million increase. Foster Care has decreased by $800,000, while Adoption, Refugee, and other assistance payments have grown by about $1 million combined.

Intergovernmental Transfers (IGT) projects increased revenues of $2.4 million due to higher Voluntary Rate Range program payments than expected. Some of this increase, about $1.2 million, is requested to transfer to the Mental Health unit for overages discussed below. This unit was budgeted to use $850,000 of fund balance, therefore, the true net variance in this unit with the approved transfer to Mental Health would be about $250,000.

Behavioral Health is projecting to end the fiscal year with a positive net variance of approximately $5.6 million, primarily due to not utilizing MHSA funding to the extent anticipated. Overall, expenditures from MHSA are projected to decrease by $10.8 million. This is largely due to vacancy increases in multiple units, resulting in less transfer of salary costs and overhead. Additionally, the delay of the Crisis Now program has reduced expenditures in the current year. MHSA revenues are based on personal income tax receipts, which have come in lower than expected. This results in a net revenue decrease of about $5 million, partially offsetting the reduced expenditures. The Alcohol and Drug unit is projecting increased revenue & expenditures of about $1 million due to additional staff time being allocated to the program. Operational expenditures are projected conservatively and are expected to reduce to meet budget with currently available revenues. The core Mental Health Services fund is expected to increase by about $450,000 and requires an additional revenue transfer from IGT to fund expenditures as well as reduced state and federal funding. Expenditure increases are due to projected increases in specialized mental health service facilities fees and the SCO approved CCAP plan mandating $973,000 in additional expenses over the Adopted Budget due to cost allocation methodology changes not known at budget adoption.

Veterans Services is projecting to end the year with a negative net variance of approximately $16,000 due to increased compensation for employees approved by the Board of Supervisors mid-year. While savings in operational costs are not currently projected to make up the increase in personnel, there is the likelihood that unit savings in other areas may cover increased salary costs.

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 $131,000.  This is primarily due to salary savings for the Risk Manager vacancy of approximately $75,000 and higher than anticipated investment earnings of approximately $69,000. 

Innovation and Technology Services: The Innovation and Technology Services (ITS) department is projecting to end the fiscal year with a positive net variance of $946,000, primarily due to vacancy savings in the ITS division. The department experienced vacancies throughout the fiscal year for the following classifications: ERP Analyst, Systems Software Specialist, Internet Systems Specialist, Technical Support Specialists (2), Systems Software Specialist, and a GIS Analyst, resulting in savings of approximately $795,000.  The department also experienced savings within Services and Supplies due to lower-than-expected ERP charges, Office 365 consultation savings of $75,000, and a reduction in training expenses of $52,000.  The costs to departments for these services will be adjusted to reflect the surplus during the year-end true-up process for IT charges.

Additionally, Telecom is anticipating having an overall surplus of $106,000.  Services and supplies savings of $120,000 is expected, due to a reduction in support for the Maverick phone system and savings in inventory purchases from Anixter, Platt, and Graybar. Offsetting these savings is a reduction in revenue from telecom charges to departments, which are coming in $172,000 lower than budgeted.  Lastly, within the telecom budget were budgeted expenses for an Administrative Analyst position, however, this position should fall under ITS not Telecom ($135,055). The costs to departments for these services will be adjusted to reflect the surplus during the year-end true-up process for Telecom.

Library: Library is projecting to end the fiscal year with a positive net variance of approximately $847,000 primarily due to higher than anticipated revenue and salary savings. State revenue is showing a surplus of $243,000, largely due to revenue received for the Bookmobile grant that was awarded in FY2022 but received in FY2023 as associated expenditures were incurred. Miscellaneous revenue is projecting a surplus of $157,000 based on actual receipts of residual redevelopment agency (RDA) revenue received. The Measure A fund has savings of $232,000 in transfers out due to a reduced funding need by the Davis branch. Measure A fund provides support solely to the Davis branch, which is the largest and busiest branch.

Probation: Probation is projecting to end the year with a positive net variance of approximately $2.8 million.  This is primarily due to savings within the Adult Probation Services Unit, Juvenile Detention, Care of Court Wards, and Juvenile Probation Services.

In the Adult unit, a surplus of $255,000 is projected.   Vacancies within the unit ($768,956) and lower than budgeted expenses related to the Community Infrastructure Grants ($951,799) resulted in savings of approximately $1.7 million.  Offsetting these expenses is a reduction in revenue ($1,347,000) due to Board’s direction to not pursue the Community Infrastructure Grant.
 
Juvenile Detention is projecting to end the year with a surplus of $749,000.  This can be attributed to higher than budgeted state revenues being received ($626,403) for building and structure improvements to the Juvenile Hall and salary savings due to vacancies in the unit ($535,000).  It is important to note that the additional state revenues ($626,403) are restricted and have to be used for future improvement to the Juvenile Detention Facility and cannot be used to offset any other deficits. Offsetting these savings are lower revenues for the Probation Work program as storms have impacted the availability of the work program ($189,000) and reductions in the Juvenile Detention Facility (JDF) programming revenues due to a low population in the Juvenile Detention Facility ($221,000).

Placement is also projected to end the fiscal year with a surplus of $591,000.  Ongoing vacancies ($140,763) and a substantial reduction in youth placements are the main factors driving this surplus ($574,627).  These savings are partially offset by a reduction in Federal Foster Care revenues of approximately $69,000.  The positive net balance does not have a general impact as this balance will be maintained in Health and Human Services 1991 Social Services Realignment fund.

Staff vacancies in Juvenile Probation Services Youth Offender Block Grant ($428,538) and Juvenile Justice Crime Prevention Act ($411,037) are contributing to the projected surplus in each of the respective units.  Additionally, a reduction in transfers to the Juvenile Detention Facility is reducing expenses and resulting in savings of $670,000 in YOBG and JJCPA of $411,000.

Public Defender: The Public Defender is projecting to end the year with a negative net variance of $2,250. The Public Defender anticipates savings in Professional Services of approximately $80,000 due to Medical, Dental, and Lab expenses being lower than anticipated.  Offsetting these savings is a deficit in Salaries and Benefits of $134,000.  This deficit is due largely to the move to 100% of market for salaries and attorney equity increases of 5%, which had a total fiscal impact on salaries of about $257,000.  

Sheriff: The Sheriff’s Office is projecting a positive net variance of $2.6 million.  Approximately $576,000 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 $2.0 million positive variance. 

While the Sheriff’s primary Patrol division is projecting to conclude the year with a negative net variance, savings in other Patrol units is leading to an anticipated overall $500,000 surplus. This is largely due to ongoing vacancies within the Patrol Division.  The Detention division is projected to end the fiscal year with a $1.0 million positive net variance despite continued overtime expenses in both the jail and transportation units. As discussed in the mid-year monitor, mandated minimum staffing levels and the closure of the California Department of Corrections facility in Tracy have contributed to the increase in overtime in the Transportation unit.  With the closure of the Tracy CDC facility, Yolo County must now transport inmates to the CDC facility in Kern County, significantly increasing travel time. These expenses are being offset by approximately 20 vacant Correctional Officer positions.

The Small and Rural fund is showing a positive net variance of $312,000 due to the delay in implementing the RMS/JMS software system.  The funds have been encumbered and will carry-forward into FY23-24 as necessary.

In FY22-23, Court Security was balanced using $428,000 in salary savings and $231,000 in general fund. Despite an $84,000 savings in Services and Supplies, Court Security is projected to end the fiscal year with a small ($33,000) deficit, due largely to the County’s move to 5% of market effective January 1.  Anticipated savings in other Sheriff divisions can be utilized to offset this deficit, should it materialize.

Contingency Appropriations: The table below reflects the balance of all contingency appropriations as of May 23, 2023.

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 FY23-24 Adopted Budget. 

II.  FY23-24 Recommended Budget
This County Administrator's FY2023-24 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 13 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 FY2023-24.

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 FY2023-24 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 FY2023-24 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 FY2023-24 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 FY2023-24 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 FY2023-24 Recommended Budget.

Budget Development
The Department of Financial Services (DFS) and County Administrator first updated the Board at the January 24, 2023, Board meeting, where the Board received a preliminary assessment of the FY2023-24 Budget and adopted the Budget Principles and Budget Development Calendar. The Board conducted budget workshops on March 13 and March 14, 2023. The budget workshops gave the Board of Supervisors the opportunity to review FY 2022-23 departmental financial information, hear key issues facing each department, accomplishments from the current year, long-range goals, and FY2023-24 objectives. The workshop also allowed the Board to provide feedback that would guide the development of the 2023-24 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, and concerns regarding the likelihood of a recession in the near term remain. While inflation is headed downward, 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 adjust to the new Countywide compensation philosophy. Thus, the challenge for the budget process in the current year and likely future years is to contain costs within available revenue growth while making 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 $26.1 million. Submitted general fund augmentations totaled $17.4 million, for a total initial gap of almost $43.5 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. 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:

Budget Overview
The FY2023-24 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 FY2023-24 is $694.9 million, with a capital improvement budget of $17.2 million. The budget consists 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 FY2023-24 Recommended Budget. The amounts exclude intrafund transfers.

General purpose revenues are projected to increase approximately 4.5% over FY2022-23 Adopted Budget and approximately 9% over FY21-22 actual revenues. This was calculated after forecasting local revenues utilizing the 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:

The Recommended Budget assumes a carryforward General Fund unassigned fund balance of approximately $14 million, which is an increase of $3.9 million from the $10.1 million amount assumed in the FY2022-23 Recommended Budget. A portion of this carryforward balance, about $3.2 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. Over time the County hopes to minimize the use of fund balance as a balancing solution as could potentially pair a one-time resource with an ongoing obligation. The continued dependence on greater fund balance over time presents a budget risk and represents a higher dependency on one-time resources in order to maintain budget balance. The following table provides context on the increased use of fund balance to balance the Recommended budget:

To assist in balancing the Recommended Budget, only position requests that are supported by non-general fund funding sources are being recommended. Said another way, the recommended budget does not propose adding additional general fund positions at this time. 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 requested general fund positions to adopted budget.

In total, 11 full-time equivalent (FTE) positions are being recommended to be added, and 18 positions are recommended to be eliminated. Of the 18 positions, 12 are funded with non-general fund sources and 6 positions are funded with general fund. The budget assumes a salary savings of $21.8 million, with $14 million from the HHSA department. The utilization of salary savings allows the budget to take advantage of historical vacancies while providing departments the flexibility to hire essential positions when qualified candidates are available.

The table in Attachment G reflects the details for position changes that are included in the FY2023-24 Recommended Budget. Below is a summary table. 

The FY2023-24 Recommended Budget also includes funding for a number of non-general fund equipment and vehicles. These items are summarized in the FY2023-24 Authorized Equipment List presented in Attachment I. All vehicle replacements are recommended by the Fleet Manager. 

Strategic Plan

In December 2020, the Board approved the 2020-2025 Strategic Plan and Priority Focus Areas. In this second full year of the plan, the FY2023-24 budget includes resources designed to further advance the Priority Focus Area objectives. The following table highlights a few of these initiatives.  Due to the COVID-19 pandemic, the Board adjusted the end date of the strategic plan from 2024 to 2025, recognizing additional time needed to achieve plan objectives.

Strategic Plan Initiatives Targeted in FY2023-24 Recommended Budget

Below is an overview of the 2023-24 Recommended Budget for County departments. The narrative includes a 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 $13,972,619
The FY2023-24 Recommended Budget for the Health and Human Services Agency (HHSA) increases the department's net county cost by 19.9%, or $2,319,062. The Recommended Budget includes 9 new FTE, the conversion of 4 limited-term positions to regular, and several reclassifications for more efficient operational needs funded by State & Federal funding. Base salary and benefit increases are mostly offset with non-general funds and the use of salary savings.

In the FY2023-24 Recommended Budget, the 2011 Realignment Protective Services fund is planned to support many social service programs. Two of the largest programs benefiting from the funding are Foster Care and Adoptions. HHSA also utilized the allowed flexibility in 1991 Realignment to transfer to programs like Foster Care. The use of realignment funds has been necessary to fully fund these programs and meet required service levels.
 
Intergovernmental Transfers consist of unused Medicaid federal reimbursement at the State level available to be drawn down by Yolo County. In the FY 2023-24 Recommended Budget, these funds are used to fill gaps in mandatory state programs that would otherwise require County funding. This includes local shares of In-Home Support Services ($285,000), CalFRESH ($1,670,000), and Core Mental Health Services ($1,300,000). Additionally, $500,000 of fund balance is being appropriated to fund Project Refresh Phase 2, which renovates administrative staffing areas.
 
In the Social Services Division, the Recommended Budget for FY 2023-24 includes dramatic increases in the costs of several state-mandated public assistance programs. Most notably, CalWORKS is expected to increase by $5.5 million dollars due to significant maximum aid payment increases mandated by the State. Additionally, due to an increase in non-federally eligible foster care cases, the County will be contributing an additional $1.2 million to Foster Care. An additional $2 million increase is seen in Adoption, Refugee, and other assistance programs. All increases will be funded by intergovernmental revenues as well as a $3 million increase in the use of realignment funds. Salary & Benefits in this Division are expected to increase by $1.2 million, due to Board-approved compensation adjustments and 4 new positions in In-Home Supportive Services, which are funded by State & Federal sources. Personnel costs are offset by state & federal reimbursements and an overall vacancy savings of $7,734,205 or about 13%.
 
In the Public Guardian unit, the Recommended budget includes an increase of $200,000. This comes from a $110,000 increase in legal service fees as well as an increase of $80,000 in expenditure transfer reimbursements from other budget units. About $20,000 of this increase is offset by additional revenue, resulting in a net county cost increase of about $180,000. 
 
The Homeless Services unit includes an overall increase of $1.8 million, coming mostly from additional state grants. Salary & benefits in this unit are increasing dramatically by about $850,000 or 57% due to the additional time needed to support homeless programs. Salaries from other units are transferred into Homeless Services based on staff time spent on Homeless Services programs. Additionally, there is a $1.6 million increase in support and care of persons, related to the new grants received from the State. Grants offset most of the staff time, but this unit still requires about $700,000 of county general fund support, an increase of $250,000 from the prior year.
 
The Public Health unit shows an overall decrease of about $1.4 million due to the cessation of several COVID-funded programs. Most of this decrease is seen in Salary & Benefits, as there is a $2.5 million decrease in expenditures in this category due to decreasing extra help, un-funding benefits previously associated with part-time positions, and increasing vacancy savings. There is an increase in the use of realignment revenues of about $1 million which will offset increased overhead costs attributed to this unit. There is a decrease in net county costs of about $40,000.
 
The Mental Health division, which includes Mental Health Services Act (MHSA), reflects a relatively flat expenditure budget from the prior year, with a nominal increase of $700K. However, due to diminishing state & federal funding, the Recommended Budget increases net county contribution by about $1.7 million. There is a significant use of the MHSA fund balance, approximately $11 million, to meet Mental Health needs in the County.
 
The Recommended Budget for Core Mental Health decreased by $1.6 million, mostly due to the cessation of the SAMHSA Extended Hope program and a significant decrease in salaries transferred into the unit. State & Federal funding is also significantly diminishing, with a $1.2 million decrease in intergovernmental revenues budgeted in the Recommended Budget. Realignment funds are also budgeted to be $3.8 million under prior year. There are revenue increases in Medi-Cal charges for services of about $1.7 million. Increased salary & benefit costs related to moving to 100% of market are offset by transferring salary to other units. Service and Supply funds are decreased by $750K as well.
 
Mental Health Services Act (MHSA) budget contains a $3 million increase in expenditures within the Mental Health division, with all increases being funded through additional revenues or the use of fund balance.   The increased use of fund balance is part of the spend-down plan of available MHSA balances.  Expenditure increases are due to increases in medical service contracts and additional salaries being transferred into this unit where reimbursement is allowed. Only one MHSA funding category is expecting to not utilize current year revenues and contribute earnings to fund balance, which is the MHSA Innovation Fund which totals $930K.  
 
The final budget unit within the Mental Health division is Substance Use Disorder, which decreased the total budget by $70K, but increased net county costs by about $250K. This is primarily due to decreases in realignment funding and the Substance Abuse Prevention and Treatment Block grant from the federal government. The Recommended Budget has a decrease of about $600K in service & supply funding to offset this decrease. However, salary and benefit increases of $550K, due partially to compensation adjustments, require County funding.

Community Services

Community Services: Net County Cost $2,402,290
The Community Services FY 2023-24 Recommended Budget includes a major decrease in both revenues and expenditures in Roads and Integrated Waste Management (IWM). The total net county cost requested is $2.4 million, an increase of $500,000 over prior year.

Integrated Waste Management (IWM):
The FY 2023-24 Recommended Budget for IWM includes $2.7 million for capital projects and $543,000 for equipment. Capital projects include Leachate Pond Aeration System, Esparto Convenience Center Drainage Improvements, Waste Management Unit H4 design, and Appliance Collection and Processing Area. The equipment requested is four trucks, a crane attachment for the telehandler, a 3-phase backup generator for the power plant and pump stations, a sweeper attachment for skid steer, replacement of a back-hoe, and a lift gate for pick up. All requests are funded with Integrated Waste Management revenue or fund balance.

The Recommended Budget for IWM also includes a large decrease in revenues of $9.4 million from Fund 5028 IWM Debt Services due to the completion of drawing out the remaining bond amount as well as a reduction of $200,000 in sanitation services as both rate and volume have decreased. Furthermore, there’s an increase in landfill commercial revenue of $2.2 million. Offsetting the revenues include completed projects such as the G Pond Reconstruction and Module 6H construction resulting in a significant decrease of $7.3 million in expenditures. 

Roads:
The Roads and Public Works Fund has a recommended budget of $43 million that includes various road and improvement projects throughout the county. There’s been a decrease in revenues of $5.5 million, largely due to related capital projects spread over several years. Overall expenditures have decreased by $764,000 due to the reduction of easement purchases and bridges and improvements. Salary and benefits baseline increased along with equipment and IT services due to WinCAMS interfaces with the new permit software and Infor CloudSuite. 

The Roads Division recommended budget includes $200,000 for the design and engineering of the Roads Building. Funding for the complete project will be reviewed with Capital Improvement Committee and included in the Adopted Budget. The Recommended Budget also includes six vehicle replacements at a cost of $638,000, funded by its Road funds.

Planning:
The Planning Division's Recommended budget includes a net county cost of $1.2 million, an increase of approximately $393,000 from the 2022-23 Adopted Budget. The division has revenue decreases of $322,000 attributed to a reduction of cannabis permits/applications along with the completion of three grants, and only the Sustainable Agricultural Lands Conservation (SALC) grant remains.

The division’s increases in expenditures of $165,000 can be attributed to an increase in baseline salary and benefits. There was a request for the promotion of an Assistant Planner to Associate Planner; however, due to insufficient funds, staff recommend it be deferred to the Adopted Budget process.

To balance the budget, a salary savings of 5.8% or $81,000 is applied to the division.

Water Resources:
The Water Resources division has a recommended budget of $759,000, which includes the salary and benefits of the two employees in the division as well as the related office expenses and contracts for professional services in order to support the division. The budget includes $200,000 in anticipated revenue from the State due to the reimbursement of the natural resource planner position per the agreement with the Department of Water Resources, lowering the net county cost of this program. Water Resources’ total net county cost requested is $560,000. 

Environmental Health (EH):
Environmental Health's Recommended Budget has a net county cost of $175,000, a decrease of approximately $153,000 from the 2022-23 Adopted Budget. Revenue increased by $221,000 in EH fees, including the public water system, liquid waste, and food establishment, due to the increase in their fees that was approved at the BOS meeting on 12/06/2022. Expenditures include a rising baseline of salary and benefit, software costs such as Onbase and Envision Connect, as well as IT internal charge services due to higher expenses countywide being allocated. The division requested funding for a comprehensive fee study; however, staff are exploring 2022-23 resources to accomplish this task; otherwise, it may be deferred to the Adopted Budget.
 
In order to reduce net county cost in this program, a 4% salary savings factor ($83,000) is recommended.

Cannabis:
The Cannabis division is budgeting a reduction in revenue of approximately $217,000. This reduction in revenue is due to fewer cultivators and a reduction in canopy fees. Expenditures include $1 million in building improvements for the new modular building to be located at the DCS Beamer campus for the Cannabis Task Force staff and professional services – IT services such as Onbase, Envision Connect, and the purchase of new software to replace Envision Connect. The division requested a new drone of $8,500 funded with its fund balance.

Climate Sustainability:
The Climate Sustainability division is requesting a total net county cost of $450,000. The recommended budget includes professional services/contracts relating to the Climate Action Plan with a one-time cost of $350,000, which is funded by fund balance.
In order to reduce net county cost in this program, staff recommends extra help to be reduced by $50,000. Funding for a new study to remove fossil fuels from County operations ($150,000) has been deferred to the Adopted Budget in order to balance the budget, and the division has been requested to explore other possible funding sources in the meantime.

County Service Areas:
The FY2023-24 Recommended Budget for County Service Areas (CSA) reflects a balanced budget. North Davis Meadows Water Project has been budgeted to connect the CSA to the City of Davis water system.  This project, estimated to cost $8.2 million, will be funded with a grant from the State Water Board.
Wild Wings CSA is in the process of constructing a new well and arsenic treatment system, which will be funded entirely by a grant. Staff recommends approval of a replacement truck for Snowball CSA, to be funded with fund balance. The department requested $48,000 in general fund to cover staff time that did not qualify as billable hours, however, this request will be deferred to the Adopted Budget to balance the budget. Other CSAs have achieved a balanced budget by using assessment revenue, grant revenue, and CSA fund balances.

General Government

Agriculture: Net County Cost $1,629,008
The FY 2023-24 Recommended Budget for Agriculture reflects an increase of $226,062 in net county costs from the prior year. Total state funding is increased due to additional gas tax allocations. However, there are offsetting revenue decreases in inspection fees due to the conflict in Ukraine decreasing the number of international exports that require inspection. Overall, operational expenditures have increased by about $175,000 and are largely a result of increased compensation approved by the Board of Supervisors. There is an increased vacancy savings of $120,000, or 4%, budgeted to offset some of this increase. No major capital projects or asset replacements have been budgeted in the FY 2023-24 Recommended Budget for Agriculture.

Assessor/Clerk-Recorder/Elections (ACE): Total Net County Cost $7,594,986
The Assessor’s Recommended budget includes revenue increases of $114,000 when compared to the FY2022-23 Adopted Budget, due to increases to the Supplemental Roll Admin Fee ($50,000), increases to the Property Tax Admin fees ($326,000), and removing State Supplementation for County Assessor’s (SSCAP) grant revenues from their budget ($262,787). Expenditures also saw an increase when compared to the FY2022-23 Adopted Budget as Salaries and Benefits increased, and an increase in internal charges of $133,000 hit the division.  Additional reductions made by staff for budget balancing include a $5,000 overtime/extra help reductions and decreases to the division’s extra help and training budgets.

The Elections division is currently projected to have a net county cost of $3,153,865.  The division’s budget currently includes a reduction in revenues of $390,000 due to no scheduled local elections or ballot measures during the FY2023-24 fiscal year.  Staff recommend reducing the division’s overtime request by $20,000 in addition to reducing the extra help budget by $3,250 in order to assist in balancing the budget.  Additionally, staff recommends deferring to the Adopted Budget the plan to perform upgrades in the Elections office until space plans have been completed ($135,000).

The Clerk-Recorder branch is expecting a significant decrease in recording fee revenues of $401,750 due to the ongoing economic conditions.  This decrease in revenues is partially offset by a reduction in services and supplies of approximately $275,000.  This is primarily due to the division’s US imaging project being paid for in FY2022-23.  The division expects this project to be completed in FY2023-24 and is funded with Clerk Recorder Trust Fund Balances.  Additionally, staff recommends deferring to the Adopted Budget the plan to perform upgrades in the Clerk Recorder’s office until space plans have been completed resulting in a reduced net county cost of $1,565,508.

To reduce ACE net county cost, a salary savings percentage of 5.5% or $403,782 has been included in the FY2023-24 Recommended Budget. 

Board of Supervisors: Net County Cost: $2,855,277
The FY2023-24 Recommended Budget for the Board of Supervisors includes an increase of $36,000 in anticipated Service and supply expenditures, largely related to Transportation and Travel. The budget also includes the continuation of the Community Benefit Fund, which was added during the 22-23 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.

County Administrator’s Office: Net County Cost $4,662,098
The FY2023-24 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 insurances. 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 the elimination of three positions, a Financial Systems Manager and Administrative Services Analyst funded by the General Fund, and an Emergency Services Coordinator previously funded by a series of grants that have subsequently concluded.

Several grants previously held by the Office of Emergency Services have concluded or have less ability to reimburse for dedicated staff, resulting in increased costs for the program.  The department is mitigating these increases and decreasing requested net county cost by budgeting a salary savings amount of approximately 6 % or $354,119 between the CAO and OES.

The department did request augmentations related to the County’s contribution to the Yolo 211 program and Hate Free Yolo.  As CAO and HHSA staff are still working to develop the final Yolo 211 budget for 2023-24, and discussions continue regarding the timing of Hate Free Yolo implementation, staff recommend deferring these requests to the Adopted Budget process.

County Counsel: Net County Cost $2,786,188
The FY2023-24 Recommended Budget for County Counsel has a net county cost of approximately $2.7 million, an increase of $215,000 from the prior year. The department unfunded and removed a limited-term Deputy County Counsel position saving $266,000 in net county cost.  The increase in net county cost is largely due to an increase in salary and benefits due to the move to 100% of market and anticipated standard merits and COLAs. Expense transfer reimbursement has also decreased due to the reduction of a Senior Deputy County Counsel’s time spent on Cannabis, reducing revenue collections. Furthermore, there’s been an increase of $15,000 in professional services – legal services due to the 3% rate increase in the agreements with the five licensed attorneys for Conflict Indigent Defense Services.

Department of Financial Services (DFS): Net County Cost $3,791,590
The FY2023-24 Recommended Budget includes a $225,000 increase in revenue primarily due to the treasury service fees charged to the County pool, which includes the rising salary costs and expenses to maintain the Treasury operations, as well as an increase in property tax administrative fees. Significant changes in expenditures include a $539,000 increase in salary and benefits due to the move to 100% of market and anticipated merits and COLAs. IT services went up $58,000 due to the rate increase of 5% for the Megabyte system utilized by property tax and tax collector divisions.

The department’s requests for leave buyout and several promotions have been deferred to the Adopted Budget. A salary savings factor of 5%, along with a reduction of $5,400 in transportation and travel, and a reduction in overtime of $3,000, were applied to the department to balance the budget.

General Services: Net County Cost: $5,949,923
The General Services Recommended budget has an anticipated net county cost of $5.9 million.  Included in the Recommended Budget is the addition of the Procurement and Graphics divisions, which were previously within the Department of Financial Services. Staff has also included a salary savings factor of 6.5% ($300,000) based on historical trends.

The Facilities' division includes a revenue increase of about $32,000 due to work orders hourly rate increasing to $97 per hour and takes into account the 5% increase to bring positions to 100% of market for salaries.

Expenditures in the Facilities' division include increases in professional services for the Elevator Tech contract, water testing, and to conduct high-level pumping services at various parking lot sites throughout the county.  Additionally, maintenance costs are expected to increase by $61,000 due to ongoing maintenance to the Historic Courthouse and standing purchase orders. General Services and DFS worked collaboratively to identify potential funding sources for projects such as the County Roof Replacement plan and space planning for certain county buildings.  Those discussions resulted in using ACO funds for the roofing project and Development Impact Fees to assist in funding building space planning.

The Airport budget reflects an increase in maintenance costs for the airport of approximately $54,000.  These increases in costs are for light repairs on the taxiway, hangar door maintenance, striping of runway roads, and for roads and pothole repair.  These increases result in a net county cost of $412,763 for the airport and do not include the division’s request for $50,000 in architecture and engineering as this request was deferred to the Adopted Budget.

The Parks division is projecting a net county cost of $1,148,457.  Included is the division’s increase in salaries and benefits of $67,000 due to standard merits, colas, and the move to 100% of market in salaries. Additionally, an increase was made to the Parks and Recreation Fees revenues of $15,000 to match historical trends, and a $50,000 reduction to the division’s maintenance and building budgeted amounts were made by staff.

Tuli Mem Park and Pool has a projected net county cost of $190,802, which is an increase of $62,000 from the 2022-23 Adopted Budget.  Included in this budget are revenues of $100,000 from Cannabis as well as additional revenues of $14,000 from the Wyorca Endowment.  The additional revenues are offset by a $35,000 projected increase in utility expenses in the Tuli Mem base budget.  These expenses are for utilities at the Esparto Community Services District and for Yolo Power. Additionally, Tuli Mem is projecting professional services costs to decrease.  Included are the contracts for Esparto Community Services, SCI Consultants, and the YMCA. This is a reduction in expenses of approximately $15,000.

Requests deferred to the Adopted Budget are summarized in the table at the end of this staff report.  In this table are position requests that staff recommended be deferred to the Adopted budget and include requests for an Airport Manager, Building Attendant, Administrative Analyst, Parks and Facility Worker, and a Senior Administrative Analyst position. The Parks and Facilities Worker was intended for the expanded Knights Landing Park and will need to be revisited at Adopted Budget.

Human Resources: Net County Cost: $3,681,001
The Human Resources total net county cost is approximately $3.6 million.  Included in the Human Resources budget are increases to General Liability and Workers Compensation insurance premiums and a $600,000 increase in Salary and Benefit costs, which includes the department’s request to convert a Senior Personnel Analyst from Limited Term to Full time, which has an ongoing cost of $206,000.

To help balance the budget, staff recommends a 2% salary savings factor ($50,000) to be included in the department’s Recommended Budget.  Additionally, the request for $80,000 for internal investigations was deferred to the adopted budget along with the $50,000 request for Supervisor and Manager trainings.

Innovation Technology: Net County Cost $0
The Innovation and Technology Services 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. Both Connectivity and ERP are 100% reimbursed by IT charges to county departments. In Department Systems, the dedicated staff to specific departments are 100% reimbursed.   The net county cost portion of the department is for hours not charged out for projects.   

The ITS department is projecting revenues to increase by approximately $807,000 due to increases in interfund revenues for ERP and Connectivity charges.  The department saw expenses increase in Salary and Benefits of $170,000 in addition to increases in services and supplies due to INFOR annual support and maintenance increases, Microsoft Office 365 subscription price increases, and an increase in fees for Azure Cloud Storage.  These increases are offset by savings with the PC imaging project and IT Risk Assessment.

The Telecom division is expecting a revenue decrease of approximately $122,000 in Telecom charges. These changes in revenue can be attributed to an error in the Telecom Charge calculation where additional revenue was collected, and changes in the salary allocation methodology affected the allocation of Admin Time.  Additionally, a previous Administrative Analyst position was allocated to this unit but has since moved over to the IT Administration.
 
The department’s augmentation request of $80,000 for a Team Dynamix ITSDM subscription to replace the existing work order system has been deferred to the Adopted Budget process. 

In order to balance the departmental budget, a salary savings of 5% or ­­­­­$383,000 was included.  This resulted in a net county cost of $0.

Library: Net County Cost $351,151
The FY2023-24 Recommended Budget includes a net county cost of $351,000, an increase of $31,000 over the prior year, largely due to the increase of archives support and expenses to upkeep the Gibson House Museum. 

The Recommended Budget further includes an increase in property tax revenues of $200,000 and an increase in State revenue due to more funding from CA Library Services for English-as-a-Second Language (ESL) services in FY2023-24, and for the part-time, limited-term Library Associate for ESL services. Offsetting the increase in revenue is the building of the Davis Makerspace project ($100,000), which provides a space for users to utilize various technologies and IT resources. Furthermore, IT services increased by $93,000 due to higher ERP and connectivity charges. Library expenditures include the annual cost of the digital asset management system (DAMS) of $20,000, the pursuit of a special tax measure to increase revenues for a new South Davis Library ($80,000), and the professional services – SCI Consulting to assist with the current parcel tax of $16,500.

Staff recommends approval to reclassify a half-time Library Assistant II to a full-time Library Associate, a half-time Library Assistant II to a full-time Library Assistant II, and a new position (1.0) full-time Library Assistant II. The position is funded with available Library funds and does not require a General Fund contribution.

Law and Justice

Regional Child Support Agency: Net County Cost $0
The Regional Child Support Agency (RCSA) FY2023-24 Recommended Budget includes $378,000 of additional State and Federal revenue that was reallocated from Sutter County and Colusa County related to the regionalization. Transfer of contracts, lease agreements, professional services, training, and other expenditures have moved to Yolo County, as it acts as the primary county of RCSA. RCSA has requested to eliminate seven vacant, un-funded positions to ensure they stay within their State allocation. Additionally, the department is requesting a leave buyout for one of the Lead Attorneys who will be retiring in October 2023.

District Attorney: Net County Cost $11,087,526
This FY2023-24 Budget reflects a $477,000 increase in net county cost.   Much of this increase is due to increases in Salaries and Benefits, due to both standard merits increases and COLAS, and promotions in non-general fund divisions.

Staff recommends approval of the conversion of a Legal Process Clerk I to a Social Service Assistant in order to comply with the application for re-award of a Judicial Assistance Grant (JAG) for the Restorative Justice Partnership.  The grant provides funding for the increase associated with this position ($8,500).  Additionally, staff recommends approval for the purchase of a replacement vehicle in the Consumer Fraud and Environmental Protection unit.  The department intends to replace a Ford Escape with a midsize hybrid sports utility vehicle (SUV). Replacement of this vehicle was identified and approved by the County Fleet division.  The department will be utilizing its own special revenue to fund this purchase.

In order to mitigate increased net county cost for the FY2023-24 Budget, the department was asked to absorb requested staff promotions of $172,000 in their existing salary appropriations and defer conversion of a limited term Crime and Intel Analyst to the Adopted Budget process. Asking the department to absorb net county cost promotions and new positions is consistent with other general fund departments. The department has also received a salary savings factor of 5% ($791,000), 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, along with a $311,000 increase to the department's Extra Help budget.  Staff do not recommend approval of these requests and would defer them to the Adopted Budget process.

Probation: Net County Cost: $1,737,344
The FY2023-24 Recommended Budget for the Probation Department eliminates a Youth Construction Crew Position in the Juvenile Probation Services Unit, resulting in savings of $92,000, and converts a Deputy Probation Officer II position to a Probation Aide in the Community Corrections unit saving $35,000.  These positions are funded with Special Revenue and State revenues and have no general fund impact.

Adult Probation Services is projecting a decrease in revenues of $820,500 compared to the FY2022-23 Adopted Budget. Though the division did see an increase in Prop 172 revenues of $106,000, this increase is offset by the end of the Swift, Certain, and Fair grant ($38,488) in addition to the discontinuation of the Community Services Infrastructure Grant program, which created and expands community alternatives to incarceration in the form of mental health treatment, substance use disorder treatment and trauma-centered services ($987,023).  Additionally, the department preemptively budgeted for salary savings in this unit ($201,000) in recognition of its ongoing vacancies.

The Juvenile Detention Facility (JDF) unit within the Probation Department is projecting an increase in Prop 172 revenues of approximately $133,000.  The increased revenues are partially offset by an increase in Salaries and Benefits costs within in the unit of approximately $77,000.  The FY2023-24 budget assumes continued operations of the JDF for the entirety of the year.  Any changes to its operational status will require budgetary adjustments that will be coordinated with DFS and approved by the Board of Supervisors as needed.  The department preemptively budgeted for salary savings in its Work Program division, acknowledging ongoing vacancies.

The Juvenile Probation Services unit is projecting an overall revenue decrease of $139,924.  The main driver behind this reduction is the conclusion of the Youth Reinvestment Grant (YRG), in FY2022-23 which is aimed at diverting youth from initial or subsequent contact with the juvenile justice system using approaches that are evidence-based, culturally relevant, trauma-informed and developmentally appropriate. Budget balancing solutions in the unit include an additional salary savings factor of $193,000. Budget balancing solutions in the Probation department include a salary savings factor of approximately $525,000 in General Fund/Prop 172 funded divisions and the deferral of the department’s request for a new vehicle and outfitting to the Adopted Budget.

Public Defender: Net County Cost $9,298,159
The Public Defender's FY2023-24 Recommended Budget includes funding for a new Behavioral Case Manager position (BCM) that is being funded by the Community Corrections Partnership ($78,659).  This position will conduct outreach, assist in the referral and acceptance into diversion or treatment programs, coordinate linkage to services, and assist with obtaining supportive services, including food, clothing, and medical care for clients.

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 in the Adopted Budget.

Additionally, to not increase net county cost, the department was asked to absorb requested staff promotions of $11,588 in their existing salary appropriations along with deferring requests for 7 new positions to the Adopted Budget.  Asking the department to absorb net county cost promotions is consistent with other general fund departments.

Lastly, to reduce net county cost, the department has been asked to implement a salary savings factor of 2.5% or $247,630.

Sheriff: Net County Cost $28,466,123
The Sheriff's FY2023-24 Recommended Budget includes a net county cost of $28.5 million, an increase of $3.0 million from the FY2022-23 Adopted Budget. The Sheriff's FY2023-24 base budget expenditures increased by $4.4 million but are partially offset by an increase in base revenue from Prop 172 of $700,000 and increased use of available Community Corrections Partnership fund balance of $475,000.

In order to reduce the Sheriff's Office net county cost, $2.9 million of augmentations have been deferred to the Adopted Budget. Included in the deferral are 7 new position requests, refunding of 7 positions held vacant in FY 2020-21 as a reaction to the COVID pandemic, a series of vehicle replacements, increases to both overtime and extra help budgets, and equipment purchases.  In order to further reduce the net county cost, salary savings in Patrol of 6.5% or $874,500 and Detention of 6.5% or $1,600,000 has been included to account for a number of vacant positions, and the anticipation of continued vacancies.   

The Sheriff's Recommended Budget continues to fund the Capay Valley Patrol division with funding from the Yocha Dehe Wintun tribal government and $100,000 in funding for the Resident Deputy program with Cannabis Measure K funds. This is a $100,000 reduction in Measure K funds from the FY 2022-23 Adopted budget.

Staff recommends approval of a $200,000 augmentation request in the Sheriff's Small and Rural special revenue fund for the implementation of a body-worn camera system.  Small and Rural has also been funding the Jail Management/Records Management (JMS/RMS) upgrade project in excess of $1 million for the past several years. The project is anticipated to be completed in FY2022-23, so no further funding has been included in the FY2023-24 Recommended Budget.   If the project should have delays, the unfinished portion will be re-budgeted or carried forward in the FY2023-24 Adopted Budget.  

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. Salary savings for vacant positions of $785,000 continues to be budgeted to help close the funding gap. While in previous years, vacancy savings have materialized, overtime has increased in order to compensate for the staffing vacancies. If salary savings do not materialize in FY2023-24, Public Safety contingency will be required to fill the gap, once determined, during the fiscal year.

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

Community Corrections Partnership (CCP) 

The proposed FY2023-24 Recommended Budget for CCP is reflected in the following table:

In the 2021-2022 fiscal year, the Community Correction Partnership (CCP) transitioned its 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 FY 23-24 budget includes a $200,000 Innovation contribution to the Woodland Police Department in support of the Advance Peace program.

Capital Improvement Program (CIP)

The FY2023-24 Recommended Budget includes a Capital Improvement Program (CIP) budget of $17.2 million. This budget includes continued funding of the Knights Landing Park, Knights Landing Levee Repairs, and Infor CloudSuite. 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 Infor CloudSuite project was funded in the FY 2021-22 and 2022-23 budget, and the remaining amounts are being carried forward to complete implementation.  The table below provides a summary of the FY2023-24 CIP budget.

FY2023-24 Recommended CIP Budget

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 Supervisors' approved spending plan. Any unspent, approved appropriations from FY2022-23 will be carryforward in the FY2023-24 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.

Cannabis Tax Expenditure Plan: The 2023-24 Recommended Budget includes $510,000 in cannabis tax expenditures and re-establishes the Reserve at $110,000, complying with the General Reserve Policy. 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 2023-24, the County received approximately $400,000 in cannabis tax revenues, reflecting a sharp decline from prior years. However, staff have also re-evaluated the reserve balance, resulting in $510,000 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 2023-24 Cannabis Tax Expenditure Plan (Attachment M) includes funding for a variety of programs and activities that support the priority categories (Criminal Enforcement, Early Childhood, Youth Development, and Rural Investment) identified in the Expenditure Plan Framework. The recommendations include support for the Rural Deputy program, support for the continuation of First 5 Yolo's Road to Resilience program, support for youth scholarships for low-income individuals to participate in the Woodland Soccer Club, and a number of rural community investments. These rural investments include support for the operations of the Tuli Mem Park and Pool, improvements to Grasslands Park, restoration of the Historic Dunnigan Church, and support for the continuation of a restroom rental in Guinda. Staff will continue to consider unfunded or partially funded proposals at the adopted budget, depending on the revenues available.
 
The proposed Cannabis Tax Expenditure Plan was presented to the Cannabis Ad-Hoc Subcommittee (Supervisors Barajas and Provenza) on May 17 and subsequently to the Cannabis Tax Citizen's Oversight Committee on May 24. The Citizen’s Oversight Committee voted unanimously to support the proposed 2023-24 Cannabis Tax Expenditure Plan with certain additional requests of the Board. The Oversight Committee requested that the Board revisit the 2019 guidelines to provide additional clarity on how to prioritize one-time compared to ongoing funding requests, especially given the declining revenue environment. Further, the Citizen’s committee shared that since funds are limited, any policy guidance on whether investments should continue to be made in all priority categories, and whether plan areas should be evaluated equally or whether proposals should be evaluated higher based on their community impact or linkage to Cannabis impacts, would be helpful. Finally, the Committee requested the $17,000 unallocated be applied to the Woodland Soccer proposal. The funds were recommended by staff for Putah Creek signage but were held unallocated pending further exploration of external grant funding that might be available.

The Board's Ad-Hoc Subcommittee on Cannabis met again on June 8 to consider the feedback provided by the Cannabis Tax Citizen's Oversight Committee. The Subcommittee was supportive of the Citizen Committee's recommendations to provide additional unallocated funds to Woodland Soccer and intend to discuss that recommendation further with the full Board as part of the Budget hearing. In addition, the Subcommittee would like the Board's support to consider revision of the 2019 Framework for allocation of Cannabis Taxes for the 2024-25 budget cycle. This work would likely occur in the fall/winter of 2023 to ensure guidelines are approved by the Board in advance of the next Cannabis Plan cycle.

Fire District Sustainability
The Board of Supervisors approved a plan at the April 18, 2023, meeting to provide $1.5 million of annual support to Fire Districts. The Board directed staff to determine funding options to come back to the Board for consideration. The Recommended Budget includes the use of the General Fund fund balance to provide an initial appropriation for this expense, with the understanding that funding for Fire District Sustainability is a long-term commitment and needs to be shifted to an ongoing funding source in order to appropriately budget support on an ongoing basis.

In order to appropriately budget for Fire District Sustainability, additional adjustments to General Fund expenditures will likely be required through the Adopted Budget process. This may include reducing department net county costs if other ongoing funding sources cannot be identified. Staff prepared an analysis with funding alternatives (Attachment N) that was previously shared with the Budget Ad-hoc committee. These funding options include alternatively either utilizing American Rescue plan funds that could allow the County more time to adapt or focusing the impacts through the use of Proposition 172 on other public safety areas of the organization. The Board could consider those funding approaches as part of the recommended budget or at a later time. 

Health & Human Services Emerging Needs Contingency: In 2002, Yolo County participated in the Pooled Tobacco Securitization Program, which resulted in the 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 and 2013, funds are de-allocated annually from the Ceres endowment fund and made available for appropriation as a Health and Human Services Contingency fund 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 several of its bargaining units, including the Supervisory and Professional, Supervising Attorneys, and Deputy Sheriffs. 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 FY23-24 Recommended Budget includes $59 million in employer pension contributions, an increase of $3.5 million from the FY22-23 Adopted Budget. Employer contributions for FY23-24 were determined in the CalPERS Annual Valuation Report as of June 30, 2021. 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

In addition, the CalPERS Board of Administration completed its Asset Liability Management (ALM) process during the 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, and 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 the 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. In accordance with the policy, the FY23-24 Recommended Budget includes a 2% payroll charge, or approximately $3.2 million, for purposes of funding the Pension Trust.
 
Other Post-Employment Benefits (OPEB): The FY23-24 Recommended Budget includes $12.7 million in OPEB charges to departments, an increase of $757,000 from the FY22-23 Adopted Budget. The OPEB actuarially determined contribution rate of 7.7% of payroll was held constant with the rate included in the FY21-22 Budget.

In May 2011, the Board approved the creation of an irrevocable trust to accumulate assets for the purpose of reducing 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 $37.9 million in June 2023, and this is estimated to increase to $40.8 million based on contributions in FY23-24.  
 
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 $3.5 million in the June 2020 valuation. The table below shows the OPEB unfunded liability in each of the last three valuation reports. An updated report is currently being prepared.


OPEB Unfunded Liability

Contingency and Reserves: In accordance with the Board Policy on Fund Balances and Reserves, the FY2023-24 Recommended Budget includes the following reserve balances (Attachment O):

The Board Policy on Fund Balance and Reserves establishes a General Reserve target of 10% of average General Fund expenditures. In FY2022-23, a contribution was made to the general reserve to bring the reserve percentage to 8%. The Recommended Budget includes a contribution to the reserve to maintain 8%. This contribution is being funded with Chula Vista funds, which is an allowable use of this funding stream pursuant to the resolution approved by the Board in July 2021.  Staff will revisit the potential of increasing the reserve percentage during the Adopted Budget process.

The FY2023-24 Recommended Budget also provides appropriations for the following contingencies: 

The General Fund Contingency represents slightly less than 1% of general fund expenditures and is crucial in safeguarding against known risks and uncertainties that are identified for the FY2023-24 Recommended Budget.

The Public Safety contingency of $750,000 represents less than 1% of Public Safety Fund operating fund expenditures. These contingency levels are not within the 1%-3% required in the Board policy on fund balance and reserves. Similarly, an HHSA contingency has been included with the Recommended Budget at approximately 1%. There is also $1.5 million of assigned HHSA fund balance as a reserve for HHSA.  The Child Support contingency would provide a small amount of general funds that could be utilized if needed to maximize Child Support's State and Federal funding. 

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:

Looking Forward
The Recommended Budget for FY 2023-24 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 dramatic increases in the use of salary savings, which will likely begin to erode fund balance in future years, is concerning. The FY 2023-24 Recommended Budget includes ongoing costs such as fire district sustainability and does not grapple with the increased cost of Jail Medical Services or upcoming mandates. In tandem with slow growth in discretionary revenues, balancing future budgets may become a difficult and painful process wherein budget discipline and prioritization of limited county resources are 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.

All County departments prepared and submitted a requested budget for 2023-24.  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 24, 2023 Board meeting, where the Board received a preliminary assessment of the FY2023-24 Budget and adopted the Budget Principles.  The Board of Supervisors conducted budget workshops on March 13 and 14, 2023.  County Counsel has reviewed and approved the budget resolutions as to form. 

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