Receive the 2024-25 3rd Quarter Budget Monitoring Report, adopt a budget resolution amending the 2024-25 revenues and appropriations, approve amendments to the 2024-25 Authorized Equipment List, and approve the Recommended Budget for fiscal year 2025-26. (General fund impact $131,246,877) (Webb/Haynes/Liddicoet) (30 minutes)

I. 2025-25 3rd Quarter Budget Monitoring
Year-end projections have been developed by each department based on actual revenue and expenditure data through March 31, 2025. The sections below highlight areas where significant variances from budgeted amounts are projected, or where budget adjustments or other actions are recommended.  A summary of the 3rd Quarter projections for each department is provided in Attachment A. For those budget units where staff recommends a budget adjustment, it is noted in this narrative and included in the budget resolution provided in Attachment B.

Agriculture: Agriculture is projecting to end the fiscal year with a positive net variance of approximately $273,000 primarily due to additional revenue receipts over expected. Notably, state revenues are expected to be $160,000 over budget due to increases in unclaimed gas tax and mill reimbursements. Additionally, there have been increases in phytosanitary certificate fees and general Weights and Measures fees due to recent Board increases as part of the Master Fee process. The department has also seen salary savings from multiple vacancies throughout the year.

Assessor/Clerk-Recorder/Elections: The Assessor/Clerk-Recorder/Elections department is projecting to end the year with a positive net variance of $1,138,175.

The Assessor’s division is projecting to end the year with a positive net variance of $135,002.  Expenditure savings in the unit of $175,000 can be attributed to multiple vacancies that were filled with internal promotions resulting in additional vacancies and cost savings.  Offsetting these projected savings are additional GIS related expenses as staff vacancies resulted in an outside vendor completing the work resulting in increased costs for the unit.  Staff recommends approval of ACE’s request to transfer $31,208 in Salary and Benefit savings to Services and Supplies to cover the projected GIS contracted services overage.

The Elections division is also projected to end the year with a positive net variance of $312,204.  Revenues in the unit are anticipated to end the year with a surplus of $77,703.  This is primarily due to unanticipated revenues associated with two Help America Vote Act grants. These revenue increases are offset in part by reductions to Elections charges for services revenues as certain election measures and candidate's contests did not go to ballot as originally anticipated. Expenditure savings of $234,500 are also projected in the division due to anticipated savings related to postage, printing and staffing of the Voter Assistance Centers.  A portion of these projected expenditure savings are being offset by an overage of $118,000 in Salary and Benefit costs due to equity adjustments, increased retirement costs, merits, cost of living adjustments and increased overtime costs related to the November 2024 election.

The Clerk Recorder division is projecting a year end surplus of approximately $691,000.  These savings exist within the services and supplies and capital assets and are due to project delays that include the Clerk Recorder’s lobby security construction project, the project for map restoration, and the final stage of the records and indexing project which will carry over into next fiscal year.  

Staff recommends adopting the budget resolution in Attachment B.

Regional Child Support Agency: The Regional Child Support Agency (RCSA) is projecting to end the fiscal year with a positive net variance of approximately $440,000 due to vacancy savings and increases in state and federal funding. The department will be able to carry forward the funding for reappropriation in a future fiscal year. Increases in maintenance, training, travel, and IT services are requested, using some of the realized vacancy savings.

Community Services: The Department of Community Services is projecting to end the fiscal year with an overall positive net variance of $9.3 million, mostly due to large variances in non-general funded units  like Roads, Cache Creek Area Plan, and Integrated Waste Management. No budget changes are requested at this time.

The Integrated Waste Management (IWM) division is projecting an overall $1 million positive net variance primarily due to increased earnings over expected earned from investments. Additionally, there are some savings in capital projects as well due to projects not moving forward as anticipated. Historically, these savings have been utilized to contribute to the division’s closure/post-closure costs, but that is being investigated currently by DFS and Landfill staff.  Prior year closure/post-closure costs have not been budgeted or projected, and has resulted in contributions to fund balance not being received as anticipated.

The Roads fund is projecting a positive net variance of almost $5 million primarily due vacancy savings and projects being fully budgeted but requiring multiple fiscal years to fully complete. The division budgets the full cost of all projects in their first year of funding and carries forward unused budget until the projects are completed. About $670,000 of the $5 million variance is due to positions not being filled throughout the year and is a true positive variance. Any excess revenues will be held in the fund for future road and bridge projects.

Climate Sustainability is projecting to end the fiscal year with a positive net variance of $50,000, largely spending on track with budget. There will be savings associated with not fully expending funds earmarked for Climate Sustainability projects in this fiscal year as well as revenues derived from the Out-Of-County Tipping Fee. The department has confirmed the $50,000 of variance will likely be able to be kept in the County’s General Fund.

Natural Resources is projecting to end the fiscal year with a positive net variance of about $1.5 million. This is largely due to an accounting methodology change in how revenues are transferred through different funds within the unit. This change accounts for about $1 million of the variance. The additional variance is due to increased investment earnings and savings in overall operations.

Cannabis is projecting to the end the fiscal year with a positive net variance of $5,000. This is due to a significant decline in collected licensing fees as the number of cultivators has decreased by almost 40%. Despite this, there are significant vacancy savings and increased investment earnings which make up the difference. In future fiscal years, the fiscal team will continue monitoring license fee collection and potentially suggest remedies to sustainably fund the unit.

Animal Control Services has a net positive variance of approximately $20,000. This is due to some minor salary savings and lapses in hiring new positions approved in this budget cycle. The unit is expecting to utilize all other funding and may require some of the salary savings to cover increased electricity charges. Renovations are also likely to utilize all of the funding appropriated for that use but not exceed.

The Building division is anticipating a $250,000 positive variance related to vacancy savings. Permits and licenses are currently projecting to meet budget and operational spending is roughly on pace with budget, with minor savings expected. This unit will expect to contribute any positive variance to fund balance which is currently needed as it has been depleted in recent years.

County Service Areas: The County Service Areas (CSAs) and Assessment Districts are projecting to end the fiscal year with a negative net variance of $145,000. The majority of districts have small net positive variances, but there are significant negative variances in Wild Wings Sewer, Wild Wings Water, and El Macero Water which account for the overall negative variance.

Wild Wings Sewer is currently projecting a negative variance of $360,000 due to unforeseen expenses in sewer operation resulting from clogged filters. Specialty work was required to clear lines and incurred additional costs that will need to be covered through available fund balance. Additionally, electric charges were higher than expected as well. The appropriation of fund balance is included in the recommended actions and will have no county impact.

Wild Wings Water is projecting a negative variance of $50,000 due to projected increases in utility spending. The unit originally anticipated contributing $250,000 to fund balance this year, so will decrease that funding as needed to support increased operational costs. There are also ongoing negotiations with the Department of Water Resources (DWR) to support ongoing construction projects, the unit is projecting the grants will fully support these projects.

El Macero Water is projecting a negative variance of $30,000, but the majority of spending in this unit occurs at the end of the year when total water usage is known. Given that, the projection may change with the year end monitor. If not, fund balance does exist to support additional expenditures.

Wild Wings Golf Course is projecting a positive variance of $30,000 despite undergoing significant change with golf course management. The fund was in danger of being non-viable at the beginning of the fiscal year, but revenues are trending positively, and expenditures are projected to be fully covered within the fund. This includes loan payments which were potentially going to be delayed in order to meet spending goals. The year end monitor will ensure projections are met.

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 negative net variance of $387,000.  This variance is the result of an unbudgeted depreciation expense in Yolo Electric which can be funded with fund balance.  The unit has also requested adjustments to recognized anticipated higher revenues and expenses due to ongoing lack of operation of various solar installations.  Staff recommend a series of adjustments to that unit, outlined in Attachment B, to rebalance the unit as both the Justice Campus and Grasslands solar arrays are anticipated to be offline through at least June 30.

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

Staff recommends adopting the budget resolution in Attachment B.

County Counsel: County Counsel is projecting to end the fiscal year with a positive net variance of approximately $52,000 primarily due to salary savings.

Countywide:  While most budget units within the Countywide budget are projected to end the year within budgeted amounts or with a positive net variance, the Countywide Public Safety Maintenance of Effort (MOE) for both the Sheriff and District Attorney is anticipating a year end deficit of $503,000 due to ongoing non-operation of the solar array that provides reduced cost electricity to the Justice Campus. Staff recommend the use of a combination of General Fund and Public Safety contingency funds to bridge this gap.

Countywide general-purpose revenues are projected to end the year $2.8 million in excess of budgeted amounts due to higher than anticipated interest earnings ($1.2 million) and Over Head Cost Reimbursements ($1.6 million).  

Ongoing high interest rates are benefiting several special revenue funds in Countywide, generating unanticipated interest earnings where they were not budgeted for. These funds include the Accumulated Capital Outlay and Local Innovation Sub Account funds among others.  These funds will remain available for appropriation in future fiscal years.

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 $743,000. Public Safety Fund units, which are supported by the General Fund, are projected to end the year with a surplus of $266,000. The Criminal Prosecution unit is projected to conclude the fiscal year with a net positive variance of $292,000, of which $195,000 is a savings to the Public Safety fund. The majority of the savings to the Public Safety fund is related to projected savings in Services and Supplies, specifically with respect to savings for Expert Witnesses related to the Racial Justice Act ($281,000). The department has many pending cases related to the Racial Justice Act and expects to request to carry-forward this funding into the next fiscal year.   A portion of this savings is being offset by lower than anticipated revenues in several of the State and Federal programs operated by the District Attorney’s office.

The DA’s special revenue funds are projected to have a positive net variance of $490,000 due primarily to savings in the Consumer Fraud/Environmental Protection Fund ($185,000) and Multi-Disciplinary Interview Center ($134,000).  Both programs experienced vacancies throughout the year which contributed to the majority of these projected variances, though it should be noted that Consumer Fraud/Environmental Protection is also expecting a sizable savings in Services and Supplies ($335,000) due to budgeting for an anticipated expensive cost that concluded sooner than anticipated. A portion of this savings is being offset by lower than anticipated revenues. 

Financial Services: The Department of Financial Services (DFS) is projecting to end the year with a positive net variance of $27,000. This is primarily related to salary savings of $466,000 due to the department holding a position vacant through the majority of the fiscal year and the Deputy Chief of Financial Officer assisting HHSA for several months. Additionally, there are projected savings in professional services across multiple units. Offsetting these savings is the treasury pool reimbursement coming in lower than projected due to the aforementioned salary savings.

General Services: The General Services department is projecting to end the year with a positive variance of $493,363.  The majority of the positive variance exists in Facilities, Procurement and Graphics.

The Facilities division is expecting to end the fiscal year with a positive variance of $378,425.  The increased revenues in the division are attributed to an accounting adjustment where revenues are now being recorded as interfund charges instead of expense transfer reimbursements.  This has resulted in increased revenues of $813,248.  These additional revenues are partially offset by a reduction in EV Charging grant revenues of $182,000 due to reimbursements being lower than originally budgeted.  Other revenue reductions include lower than anticipated project management fee revenue and project timeline changes that resulted in revenues not being received this year. 

Expenditures in the Facilities division are expected to be approximately $85,000 over budget. These increased expenses again can be attributed to the reclassification of revenues from as described above.  Offsetting this this accounting adjustment is anticipated expenditure savings in Facilities, which includes Salary and Benefits savings of $266,000 due to vacancies that include a Projects Division Manager, Project Coordinator and Building Craftsmechanic.  Additional savings can be found in Capital Assets as the Monroe Shower Pans project expenses were lower than estimated, the Beam Roof Consultant was underutilized when compared to the original projections and the Internal Audits move not being completed this year as originally planned.

The Procurement division is projecting to end the fiscal year with a positive variance of $61,310.  These savings exist primarily in the unit’s Salaries and Benefits due to vacancies throughout the year including a Procurement and Contracts Services Officer, Procurement and Contracts Services Specialist, and an Associate Procurement and Contracts Services Specialist.

The Graphics division is projected to end the fiscal year with a positive variance of $60,697.  Revenues in the division are approximately $19,000 higher than budgeted as the graphics services provided to external departments has seen an increase.  Additionally, Intrafund Transfers are projected higher than anticipated to reimbursement for graphics services to internal departments, unbudgeted reimbursement from ACE for shared extra help staff and unbudgeted courier fees totaling $18,000. 

The Parks division is anticipated to end the year with a positive variance of $52,839.  These savings exist due to project delays with the Esparto Park Playground project and vacancies in the unit that include a Park Supervisor and two Parks Facilities workers.  Offsetting a portion of these anticipated savings are reductions in revenue due to Cache Canyon River Trip sales being lower than expected, the boat launch sites being closed due to high water levels and Cache Creek Campground not yet opening for the season due to a lack of a camp host.

The Tuli Mem Park and Pool is anticipated to end the year in a deficit of approximately $76,800.  This deficit is primarily due to legal fees that have come up to due to litigation related to the sports fields at Tuli Mem.  The department is requesting $76,800 to cover the unforeseen legal fees, however, at this time, staff recommend deferring any adjustments to the year-end monitoring process, while acknowledging that adjustments in the interim may be required.

Staff recommends approval of the following appropriation requests submitted by the department:

Other requested adjustments that were not approved that staff recommends monitoring through year end include adjustment to the Knights Landing Park, Tuli Mem Park and Pool, and Leinberger budgets. 

Staff recommends adopting the budget resolution in Attachment B.

Health and Human Services Agency: 
The Health and Human Services Agency (HHSA) is projecting to end the fiscal year with a neutral net variance, due to the conversion to their new accounting structure where all operations are held within a major operating fund. Overall, actual expenditures are expected to be approximately $9.5 million over the currently Adopted Budget, but additional state and federal revenues as well as fund balance in some funds are available to offset all of the overage. The overage is mostly due to the department projecting Salary and Benefits erroneously during the mid-year process.

Adult and Aging is projecting to end the fiscal year approximately $4.3 million under budget. This is due to significant savings in the Crisis Now program as that is not moving forward as originally anticipated. There are also various budgets across Services and Supplies and other non-personnel categories that are not materializing as expected. Despite this, the unit is not anticipating the level of salary savings expected and will need an additional $2 million for personnel expenses, using some of the savings. The unit is not projecting to have additional revenues.

Administration is projecting to end the fiscal year about $120,000 under budget in expenditures and revenues. This is due mostly to adjustments in how certain expenditures are calculated and transferred amongst other operating units. There are also overall savings in Services and supplies due to terminating any anticipated construction projects.

Client Aid is projecting to end the fiscal year about $630,000 under budget in expenditures and revenues. This is due to anticipated reductions in assistance payments across a few programs, most notably Extended Foster Care.

Child, Youth, and Family is projecting to end this fiscal year over budget by about $3.3 million in both expenditures and revenues. This is due to the division under-estimating their personnel costs by over $5 million during the mid-year monitor. There are more minor savings of about $1.5 million available where other categories are not being spent as projected, but a $3.5 million appropriation of additional state and federal revenues will be required to meet personnel costs this fiscal year.

Public Health is projecting to end the year exceeding their budget by about $2.5 million in both expenditures and revenues. This is due to missing two contracts during the budget process that utilize Maddy funding, which replenishes each year and is held in the Emergency Services Medical Fund. The department is requesting a $2.5 million appropriation from the Emergency Services Medical Fund to correct this error.

Service Centers is projecting to exceed their budget in both revenues and expenditures by about $8.7 million. This is due mostly to exceeding personnel costs by over $5 million. Additionally, support payments were also under-projected resulting in an overage of $3 million. There are $9 million more available in state and federal revenues to offset these increases. The department is requesting appropriation of these revenue sources to balance their budget.

Staff recommends adopting the budget resolution in Attachment B.

Human Resources: The Human Resources department is projected to end the year with a positive variance of $818,000, of which $266,000 is related to the General Fund.  The remainder of the surplus exists in the Unemployment and Dental Internal Service Funds, and will fall to fund balance within those funds.

The HR Main operating unit is projecting to end the fiscal year with a positive variance of approximately $515,000.  Revenues in the unit are projected to be approximately $371,000 more than budgeted.  These increased revenues are due to payroll charges that were not originally budgeted being received as well as a refund from the County’s Flexible Spending Account administrator that was not anticipated.  Expenses in the HR unit are also projected to end the year with a savings.  These savings are due to position vacancies throughout the year that include Human Resources Director, Personnel Analysts, and an HR manager position.

The Risk Management division is projected to end the fiscal year in a deficit of $249,000.  This is due to an unanticipated expense of approximately $282,000 for the California Joint Powers Risk Management Authority that was not budgeted for fiscal year 2024-25.  A portion of these expenses are being offset by anticipated savings in Satellite Finance costs.

Innovation and Technology Services: The Innovation and Technology services department is projected to end the fiscal year with a positive net variance of $321,132. 

Innovation and Technology Services main operating unit is projected to end the year with a positive variance of approximately $279,000.  This positive variance is attributed to various position vacancies in the division, which include but are not limited to: GIS analyst, Technical Support Specialist, Database Administrator and ERP analyst, resulting in savings of $846,000.   Additionally, Services and Supplies are projected to have savings of $469,000 due to savings in training and Professional Service agreements.   These savings are slightly offset by a reduction in intrafund transfers due to less expenditures being available for transfer.

The Telecom division is projecting to end the year within budgeted amounts.  Savings are anticipated in Salaries and Benefits as the unit experienced a retirement, promotions, and a change in the salary allocation percentage for the IT manager resulting in savings of $179,000. Additional savings exist in Services and Supplies as training, inventory purchases and the Maverick annual support agreement were less than originally budgeted.  These savings are offset by a reduction in telecom charge revenues offsetting the increased expenses.  

Library: The Library is projecting to end the fiscal year with a positive net variance of approximately $246,000. The majority of this variance came from Library Operations unit as revenues are anticipated to come approximately $186,000 higher than budget. Property tax revenues, State revenue related to small grants for ZIP Books and Lunch at the Library, as well as grants from Save the Children all contributed to the increase in revenues. In the Davis Library Special Tax Fund – Measure A, revenues are projected at $60,000 due to an increase in special tax revenue fund as well as investment earnings being higher than originally budgeted.

The department is requesting a budget adjustment to transfer $500 from Services and Supplies to Other Charge to cover additional Mello Roos expenses. Additionally, in the South Davis Capital Project Fund, the department is requesting $7,000 from Services and Supplies to Other Charges for staff time charged to the project/grant. Staff recommends approval of these adjustments to have sufficient coverage of the department’s needs. 

Staff recommends adopting the budget resolution in Attachment B.

Probation: Probation is projecting to end the year with a positive net variance of approximately $1.6 million.   This is primarily due to savings in Juvenile Detention, Juvenile Probation Services, and Probation Community Corrections Partnership (CCP).  

Juvenile Detention is projecting to end the year with a positive variance of approximately $513,000 largely due to savings in Salary and Benefits of $526,000 due to the division experiencing multiple vacancies throughout the fiscal year and a long-term medical leave without pay. These savings are partially offset by reduced work program billings of $138,000.

Juvenile Probation Services is projecting to end the year with an overall positive variance of $437,000 primarily due to salary savings that includes: vacancies, retirement from a Deputy Probation Officer II and a long-term medical leave for one Supervising Probation Officer. Furthermore, there’s savings of $290,000 in the El Dorado County contract for the Secure Youth Treatment Facility (SYTF) due to having only one youth in their custody and not more as was initially anticipated.  

Probation CCP is projecting to end the year with a positive variance of $199,000 largely due to contract savings from Sacramento County Office of Education (SCOE) and Young Adult Court (YAC). YAC will not start this fiscal year due to difficulties partnering up with a Community Based Organization and not having enough caseload, resulting in full savings of $197,000. In addition, one Deputy Probation Officer II was held vacant, saving $191,000.

Public Defender: The Public Defender is projecting to end the year with a positive net variance of $152,000. The Public Defender anticipates $124,000 in salary savings due to several employees being on unpaid leave throughout the fiscal year.   The department also anticipates receiving additional revenues related to interest earnings in both its primary operation fund ($6,500) and its Community Corrections Partnership (CCP) fund ($21,000).

Of this projected savings, $120,000 is expected to be incurred in the General Fund. The remainder will fall to fund balance in the Public Defenders CCP fund and can be appropriated in future fiscal years.

Sheriff: The Sheriff’s Office is projecting a positive net variance of $2.9 million.  Approximately $1.1 million 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 $1.7 million positive variance. 

The Detention division is projected to end the fiscal year with a $1.5 million positive net variance due largely to approximately 26 ongoing Correctional Officer vacancies ($1.24 million).  The Detention unit is also experiencing expenditure savings due to the low population ($10,000), and due to unbudgeted MOU and grant revenues being received for the Jail Based Competency Treatment program ($270,000).   Similarly, the Patrol division is anticipating concluding the fiscal year with an $871,000 positive net variance.  Savings in this unit is principally related to an average of 4-5 vacancies throughout the year.

Both the Sheriff’s Community Corrections Partnership and Court Security units are projecting to end the fiscal year with negative net variances of $434,000 and $213,000 respectively.  

The Small and Rural fund is showing a positive net variance of $764,000 due to lower than anticipated overtime being utilized within the unit.  The division has also paused implementation of their planned RMS/JMS system and will be planning to restart that implementation in the coming fiscal year.  Any unspent balance in this fund will fall to fund balance for reappropriation in a future fiscal year.

The department has requested use of projected General Fund savings to purchase the following pieces of equipment:

Staff recommend approval of replacement of both the 27 Toughpads and 6 radios, given their necessity for front-line operations.  Staff also requests an adjustment to the equipment list to reflect a change in direction regarding the previously approved Inmate Transportation Bus.  After reconsideration, the department would prefer to utilize these funds to purchase two Inmate Transportation vans, to allow for more staff to be able to drive, and for a van to always be available for use, should long-distance transportations be required.

The department has also requested use of $56,000 in Restricted funding related to Capay Patrol operations to fund replacement of eight (8) Toughpads to be utilized by Deputies patrolling the Capay Valley.  Staff recommend approval of these purchases.

Given the County’s current financial situation, no additional requests are recommended for funding at this time.

Staff recommends adopting the budget resolution in Attachment B and to the 2024-25 Authorized Equipment List (Attachment C). 

Contingency Appropriations: The table below reflects the balance of all contingency appropriations as of June 3, 2025.
 

Staff recommend the use of the remaining balance of Public Safety Contingency and $155,000 in General Fund Contingency.  Any amounts that remain unspent at year end will carry forward to be available for appropriation as part of the FY25-26 Budget. 

II. FY25-26 Recommended Budget
This County Administrator's FY2025-26 Recommended Budget staff report provides additional information to assist the Board of Supervisors in considering the budget. The Recommended Budget (Attachment D) includes a department-by-department review of anticipated revenues and expenditures and information regarding the funded programs. The purpose of the June 10th 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 FY2025-26.

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 FY2025-26 Recommended Budget resolution (Attachment E) adopts and implements the initial budget for the upcoming fiscal year, as considered and amended by the Board of Supervisors during the budget hearing. This budget will provide appropriation authority until the FY2025-26 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 FY2025-26 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 FY2025-26 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 FY2025-26 Recommended Budget.

Budget Development
The Department of Financial Services (DFS) and County Administrator first updated the Board at the January 14, 2025, Board meeting, where the Board received an update on the budget outlook for the 2025-26 fiscal year and reviewed the Five-Year Financial Forecast. At that meeting, staff updated the Board on the increasing budgetary strain experienced by the County over the past several years, highlighting the dramatic increase of the initial base budget gap and the way it has steadily increased year over year. Staff also illustrated the County’s increasing reliance on salary savings as a budget balancing tool. While use of this tool has been made possible by the County’s abnormally high vacancy rate since the COVID-19 pandemic, the practice of balancing the budget on such high salary savings is not sustainable. Further, there has been an increasing reliance on fund balance to balance the Recommended budget in recent years. This is significant because the recommended budget does not include many one-time expenditures, which means that ongoing operating costs have been increasingly funded with abnormally high fund balances. This presents a particular challenge because fund balances have peaked and are projected to decline in coming years. In FY2024-25 actual fund balances fell short of the projection included in the recommended budget, so additional balancing actions were necessary in the adopted budget.

At the January 14 meeting, staff also presented an updated Five-Year Forecast for the General Fund which based on a series of assumptions, and absent corrective action, projected a general fund deficit of between $8-15 million in fiscal year 2025-26, with increasing deficits in future years. This projected deficit was consistent with prior versions of the Five-Year Forecast; however, high vacancy rates and the influx of COVID-19 emergency response funding in recent years delayed the impact for several years longer than original forecast. Staff noted that the projected deficits are not the result of an anticipated economic recession or temporary decline in general purpose revenues. Much of it is due to increases in salary and benefit costs, including pension, OPEB and employee salaries to remain competitive with the employment market. Other factors, such as insurance, utility costs, and general inflationary costs, have also contributed.  This has resulted in what is known as a structural budget deficit, where expenditures are fundamentally on a higher trajectory than available revenues. As staff expressed to the Board, addressing this deficit requires long-term, structural solutions.

These solutions include, but are not limited to:

· Organizational commitment to achieving a structurally balanced budget
· Immediate implementation of a hiring freeze or review
· Continue to identify one-time solutions to minimize program reductions and service impacts
· Evaluation of options for long-term cost savings
· Evaluation of options for ongoing revenue enhancements.

Staff returned to the subsequent Board meeting on January 28th to provide a further preliminary assessment of the FY2025-26 Budget and to request adoption of the Budget Principles and Budget Development Calendar. The County’s Budget Principles were updated to substantively reflect several of the solutions to the County’s structural deficit as identified above.

On March 11th, staff again returned to the Board to present a comprehensive Budget Development Update. During this update, DFS shared that while the economy remains resilient, concerns of a recession are rising, and 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 continue to be driven by increasing salary and benefit costs as we adapt to the effects of regular equity adjustments in our various bargaining units that are needed to keep pace with market averages. The effects of inflation, increased costs for goods, the continued threat of trade wars and the uncertainty of Federal funding further complicate a myriad of projects, programs and services provided by the County. Thus, the challenge for the budget process in the current year and likely future years is to contain costs within available revenue growth while continuing to make progress on Strategic Plan goals and other key initiatives.

As part of the budget development process, departments submitted their budget requests in February. Initial base budget requests, or the amounts needed to maintain status quo operations, exceeded revenue projections by approximately $39.6 million, while submitted general fund augmentations totaled $16.6 million, for a total initial gap of $56.2 million.

Given the County’s structural deficit, at the March 11th meeting staff acknowledged that it was unlikely the County would be able to fund any of the requested augmentations and focused instead on addressing the $39.6 million base budget gap. The Board was presented with a potential budget scenario that utilized a variety of one-time funding sources, elimination of vacant positions and departmental reductions which reduced the base budget gap to approximately $9 million dollars.

The Department of Financial Services and the County Administrator's Office subsequently held budget review meetings with individual departments in March and April and discussed options to find potential savings to close the budgetary gap. Through these meetings, and the identification of several other one-time funding sources, staff returned to the Board on April 29th to provide an additional Budget Development Update.  At that meeting, staff from DFS and the CAO’s Office shared proposed solutions to balance the County’s budget and discussed a two-pronged approach to addressing the County's structural deficit. This two-pronged approach splits focus on the immediate requirement to adopt balanced Recommended Budget, and a longer-term focus to address the structural deficit.  The presentation also elicited feedback on the proposed budget balancing scenario, with detailed information on balancing strategies provided.

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 proposed use of the HHSA and CIP reserves, along with a portion of the Audit Disallowance Reserve. Despite use of these strategies, staff shared that a budget gap still remained that may require the use of additional reserves to bridge. The Recommended Budget remains largely unchanged from balancing scenario presented to the Board of Supervisors on April 29th, utilizing a combination of fund balance, salary savings, one-time funding sources, departmental reductions, and reserves to balance.

In past years, when the County used salary savings as a budget balancing strategy it has been done on a limited basis, and the resulting unbudgeted savings from vacant positions would provide a funding source in the form of fund balance for one-time expenditures and balancing subsequent budgets. However, as was done to balance the Recommended Budget in the 2024-25 fiscal year, a high amount of budgeted salary savings is being utilized to balance the 2025-26 Recommended Budget. As the County continues to use higher salary savings factors in the budgeting process, less unrestricted fund balance will likely be available in future years to help bridge budgetary gaps. The following tables provide historical information on the use of salary savings to balance the Recommended budget:
 

 

While the overall Salary Savings amount for the County has increased, when it is examined independently of the Health and Human Services Agency, the rate appears to have reached a high point in FY2024-25. Staff note the reduction of approximately $731,000 to be the result of unfunding and potentially eliminating a series of vacant positions throughout numerous departments. Reliance on salary savings is still high; however, this reduction signifies an important first step in addressing the County’s overreliance on this balancing solution.

The Recommended Budget assumes a carryforward General Fund unassigned fund balance of approximately $9 million, which is a decrease of $7 million from the $16 million assumed in the FY2024-25 Recommended Budget. A portion of this carryforward balance, about $2.5 million, is used to fund one-time appropriations such as contingencies, while the remaining amount is recommended to be used to fund the remaining budgetary gap. As staff noted earlier in this report and in various Board presentations leading up to the Recommended Budget, there is significant concern that a considerable amount of ongoing expenditures are being funded with one-time resources. While it can be expected that some amount of fund balance will be available each year, staff believes that fund balances have peaked and will continue declining in future years. Further, as previously discussed, the increased reliance on salary savings to balance the budget will further reduce available fund balances in future years.  As reflected in the tables below, beginning in the 2024-25 fiscal year, the use of fund balance budgeted in the Recommended Budget was not attained in the close of 2023-24.  As staff has stated previously, prior year fund balance has likely peaked and will begin declining in future fiscal years.
 

 

In recent years, balancing the budget has been successfully achieved through a combination of salary savings, use of unassigned fund balance, and base expenditure reductions in service and supplies. When considering balancing the FY2025-26 Recommended budget, given the size and unprecedented nature of budget gap, staff were required to seek and analyze newer strategies to balance the budget. Staff have utilized the following strategies to balance the FY2025-26 Recommended Budget.

Departmental Reductions
Upon completion of the Five Year-Forecast, departments were asked to participate in a Departmental Reduction Exercise. While acknowledging that the County’s structural budget deficit would not be resolved in a single fiscal year, this exercise asked departments to identify options to reduce their net county cost by 7%. This reduction amount was not chosen to be reflective of the reduction amount needed to balance the FY2025-26 budget, but was instead chosen to have departments begin to consider ways in which they could reduce costs and evaluate the impact of reduced General Fund support. At the time the exercise was conducted, the size of the true structural deficit was unknown, as staff was still preparing Salary and Benefit projections for the FY2025-26 budget. The goal of the exercise was to receive $8.9 million in viable reduction options. Upon CAO and DFS review of the submitted options, $5.7 million in reductions, revenue enhancements, and salary savings options were deemed viable. Almost all of these options are included in the Recommended Budget; however, additional balancing solutions, including additional reductions, revenue enhancements, and salary savings were required from departments in order to balance the budget.

Supplemental Pension Charge Pause
The County’s Pension Funding policy, approved in May 2018, established a Section 115 Trust to accumulate assets for pension obligations and provided for a supplemental charge on payroll expenditures for building the Trust balance to a minimum target level. Since that time, an additional percentage charge has been included as part of departmental salary and benefit costs to allow for accumulating assets in the Section 115 Pension trust. In accordance with the policy, the charge for the current fiscal year was scheduled to be 2.25%; however, as part of the budget balancing solutions for the current fiscal year, the Board opted to pause the Supplemental Pension charge. During budget development for the 2025-26 fiscal year, staff initially reinstated the Supplemental Pension charge at the 2024-25 fiscal year rate of 2.25%. However, given the fiscal situation facing the County, staff are recommending once again pausing the charge which will save the General Fund approximately $1.75 million in the FY 2025-26 Recommended Budget. While the County will continue to make all required pension contributions to CalPERS, the pause on the supplemental pension charge will delay the accumulation of discretionary assets available to proactively address the unfunded pension liability. Over the next year staff plan to revisit the Pension Funding policy and bring options to the Board for further consideration.

Chula Vista Earnings
The Chula Vista fund was established in 2021 to accumulate additional property tax revenues as a result of changes in the way residual tax increment revenues are distributed to taxing agencies in the wake of the Chula Vista v. Sandoval court case. Per Board resolution, the Chula Vista fund is to be used only for:
· Reserve accumulation
· Reduction in long-term liabilities to best position the County to weather the future revenue reductions from the wind-down of redevelopment agencies, or
· Protect the County’s essential services from potential unanticipated events and circumstances not occurring in the normal course of operations.

Staff recommend use of $2,012,000 in available Chula Vista funds to assist in balancing the FY 2025-26 Recommended budget in order to avoid further reductions in essential County services.

Use of Reserves
In a clear sign of the County’s fiscal challenges, staff are recommending the use of three smaller reserves in order to assist in balancing the FY2025-26 Recommended Budget:
 

The use of reserves to assist in balancing the Recommended Budget is a significant action that underscores the depth of the structural deficit the County is facing. Utilization of these funds should be taken extremely seriously and signifies the need for significant restructuring of the organization in the coming fiscal years in order to align ongoing revenues and expenditures.

Other One-Time Solutions
In order to balance the budget, additional one-time solutions were required in order to avoid more severe impacts to programs and services. The additional one-time solutions include the following:

Additionally, $2 million in funding previously allocated to Crisis Now was reallocated to assist in balancing the County Budget at the April 29th Board of Supervisors Meeting.

Budget Overview

The FY2025-26 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 FY2025-26 is $723.3 million, with a capital improvement budget of $34.9 million. The budget is comprised of multiple departments that are funded by numerous funds, including the General Fund, Public Safety Fund, Enterprise funds, and Special Revenue funds, among others. The table below provides a summary of the FY2025-26 Recommended Budget. The amounts exclude Intrafund transfers.
 

General purpose revenues are projected to increase approximately 4.65% over FY2024-25 Adopted Budget and approximately 4.9% over FY23-24 actual revenues.  Revenues are projected using a variety of sources, including data from HdL, the County’s consultant on General Sales Tax and Proposition 172 revenues, careful review of the Governor’s budget on Realignment, and collaboration with the Assessor’s Office regarding Property Tax Revenues. Projected growth in property tax revenues, sales tax, and document transfer taxes may be adjusted at adopted budget as 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:
 

Given the small amount of growth in general purpose revenues and the county’s structural deficit, staff recommend that all requested general fund positions be deferred to the adopted budget.

In total, the 2025-26 Recommended Budget includes a net reduction of 55.0 full-time equivalent (FTE) positions. Two new positions are recommended to be added, while 57 vacant positions are recommended to be unfunded or eliminated. The two new positions include a Child Support Specialist for the Regional Child Support Agency and a Clinician I/II in the Health and Human Services Agency (HHSA). Both of these positions are funded with non-general fund revenue sources.

Of the 57 positions recommended for reduction, 47 are recommended to be unfunded and 10 are recommended to be eliminated.  The 10 positions recommended for elimination are in HHSA as part of the initial efforts to bring the department’s budget into structural balance. Additional details regarding HHSA’s plan for staffing review are provided in the HHSA department summary below. The remaining 45 positions recommended for unfunding were largely identified through the department reduction exercise and budget development process based on positions that are currently vacant. However, in keeping with the two-pronged approach to addressing the County’s structural deficit, these positions are only recommended for unfunding at this time until a more thorough and strategic evaluation process can be completed. It is anticipated that staff will be recommending additional positions for elimination once that process is complete.

The table in the Attachment H reflects the details for position changes that are included in the FY2025-26 Recommended Budget, below is a summary table.
 

The FY2025-26 Recommended Budget also includes funding for a number of non-general fund equipment and vehicles. These items are summarized in the FY2025-26 Authorized Equipment List presented in Attachment J. All vehicle replacements are recommended by the Fleet Manager.

Strategic Plan

On May 7, 2024, the Board approved the 2024-2028 Strategic Plan and established six (6) pillars for the organization. The FY2025-26 budget includes resources designed to further advance County goals established under each pillar. The following table highlights a few of these goals.

Goals Targeted in FY2025-26 Recommended Budget
 

Below is an overview of the FY2025-26 Recommended Budget for County departments. The narrative includes discussion about the adjustments included to balance the Budget, requested augmentations, new grants, and programs, as well as highlights of significant budget changes.

Health and Human Services
 
Health and Human Services: Net County Cost $17,069,165
The FY2025-26 Recommended Budget for the Health and Human Services Agency (HHSA), includes a decrease of the department's net county cost by $176,422 from the 2024-25 Adopted Budget. This is due to several cost-cutting strategies, including elevated use of salary savings, position deletions or conversions, and overall operational cuts detailed by division below. While there is an increase of $1.35 million in county costs related to negotiations with the (In Home Supportive Services) IHSS providers, various spending reductions throughout the department effectively negated this increase.

The Recommended Budget for Child, Youth & Family totals $48 million with no net county cost. The budget is mostly funded through 1991 and 2011 Realignment ($16.9 million), intergovernmental revenues ($25.8 million) and Medi-Cal reimbursements ($3.7 million). Notably, Medi-Cal reimbursements are projected to decrease by over $1.5 million from the FY24-25 Adopted Budget due to payment reforms, which has a significant impact on the long-term funding of the division. To patch the gap, the department is using Mental Health Services Act (MHSA) funding, which is also declining and will not be available in future years. The department traditionally holds a high vacancy rate in this division and will be looking at potential staffing and other budget changes with the Adopted Budget process to ensure viability of the division long-term.
 
Public Health’s Recommended Budget includes a total expenditure of $24.8 million with approximately $6.4 million of net county costs. Most of this total is used to support the Jail Medical Contract, budgeted at $5.7 million. Other revenue sources consist of Realignment ($8.2 million) and intergovernmental revenues ($8 million). Intergovernmental revenues have decreased by about $2 million due to the loss of COVID-era grants, which supported new positions. The department has requested the deletion of several positions to offset some of this decrease but has kept most staff originally funded under federal grants. As the department moves forward, it will assess the long-term viability of keeping positions given diminishing General and Realignment funds and the end of COVID-era federal support.
 
The Recommended Budget for the Service Centers branch includes a total budget of $52.9 million with a Net County Cost of approximately $1.8 million, which mostly supports staffing costs in CalFresh Eligibility and CalWORKs Eligibility, as well as General Assistance. The majority of revenue in this branch is derived from state and federal program reimbursements, totaling about $35.4 million. To balance the division within current funding levels, the Recommended Budget includes vacancy savings exceeding 20% in many of the division’s programs. This has not been realized historically and will require the department to actively monitor hiring and develop a staffing plan, which is expected to be included in the Adopted Budget submission. Additionally, the Recommended Budget for this division includes elimination of the CalWORKS Overmatch, effectively saving $600,000 of General Funds. The CalWORKS Overmatch is utilized when County expenses exceed the allocation provided by the state for services, and general funds are required to supplement the program. These funds are utilized for staff, overhead and direct to client support, further emphasizing the need to reexamine the size and structure of HHSA’s Administrative Branch.
 
Adult & Aging’s Recommended Budget includes total expenditures of $90 million with a net county cost of approximately $6.7 million. Most of the county cost is to support the Public Guardian program ($2 million), IHSS costs ($1.4 million), and Adult Mental Health and Residential ($1.8 million combined). Other minor amounts support Adult Protective Services, Homeless Services, Public Authority, Substance Use Treatment, and Veterans Services. Other revenues in Adult & Aging are sourced from Realignment ($16 million), State & Federal Reimbursements ($48.5 million), and Medi-Cal Charge for Services ($16.4 million). The majority of these revenues offset overall staffing ($32 million, 171 FTE) and professional service contracts, usually for medical provisions of service ($43 million). Several positions were requested in this division which are not recommended for funding, detailed below. Additionally, to help balance the budget, about $100,000 of operational cuts and revenue adjustments have been included in the Public Guardian and Veterans Service units, which are general fund dependent.
 
The Recommended Budget for Administration includes a total budget of $72.3 million with no net county costs. This division consists of administration staff as well as all Realignment funding, which is transferred to other divisions as needed for operations. Expenditures are mostly personnel related, with a total of 69 FTE. Additionally, the Board of Supervisors recently approved the transfer of 4 employees from HHSA to Human Resources, which will be updated at the Adopted Budget when an allocation methodology has been determined.
 
Overall, HHSA’s FY25-26 Recommended Budget includes 737.5 positions, almost 40% of the overall county workforce. As presented to the Board at the Budget Development Update on April 29th, and reiterated during its June 3rd updated on MHSA’s transition to BHSA, HHSA is in a structural deficit where Realignment and other funding sources are growing slower than expenditures. As such, the department has recommended the unfunding of several vacant positions to begin the process of restructuring the department to meet future funding availability. Additionally, there are recommendations to fund very limited new positions that have specific funding streams available for long-term support and convert three limited-term positions to permanent. The table below summarizes these requests.

 

 

Community Services
 
Community Services: Net County Cost $3,324,622
The Community Services FY2025-26 Recommended Budget includes total expenditures of over $123 million with the majority in Road Maintenance & Construction and Integrated Waste Management. Net County Cost is $3.3 million, a reduction of over $1 million from the 2024-25 Adopted. This decrease is due to additional vacancy savings, position conversions, revenue enhancements, and various other cost-saving strategies detailed by division below.
 
Integrated Waste Management (IWM):
The FY2025-26 Recommended Budget for IWM increased by $5.2 million from the FY2024-25 Adopted Budget to a total of $44.8 million. The majority of this increase is sourced from Commercial Fees and supports ongoing Landfill operations and future capital projects. Additionally, the department is receiving an additional $4.25 million of State Clean Water Funds for capital projects. This is included in the total $7.3 million for various capital expenditures (further detailed in Attachment L) and Waste Equipment, along with $3.7 million to replenish fund balance and will be set aside for future capital projects.
 
Roads:
The Roads and Public Works Fund has a Recommended Budget of $51.2 million, approximately level with the FY2024-25 Adopted Budget. This division houses capital road projects that are one-time in nature but planned over several years, meaning not all funding will be expended in a given fiscal year and will likely be carried forward until the project is completed. Further updates are expected in this division with the FY2025-26 Adopted Budget when spending on current projects has been recorded.
 
Planning:
The Planning Division's Recommended budget totals $3.3 million, a reduction of $170,000 from prior year Adopted, with a decreased net county cost of about $323,000. Reductions are due to the shift of a filled position to Climate Sustainability mid FY2024-25 and elimination of several fungible accounts like leave buyout and overtime. Additionally, there are overall fee increases projected, resulting in less General Fund support. This will require updates to the Master Fee Schedule throughout the fiscal year.
 
Environmental Health (EH):
Environmental Health's Recommended Budget has net county cost of $43,000, a decrease of approximately $150,000 from the FY2024-25 Adopted Budget. Revenues are projected to increase as a result of recent Board action to update fee schedules during the Master Fee process. Additionally, there are reductions in overtime, increased vacancy savings, and small operational reductions to further limit net county costs for this division.

Cannabis:
The Recommended Budget for the Cannabis Program has decreased by approximately $184,000 from the FY2024-25 Adopted Budget primarily due to reductions in Capital Assets and minor reductions in Salary and Benefits related to an increase in Salary Savings and a reduction in anticipated salary allocations.   The department requested an appropriation from fund balance in order to initiate a new fee study. This is recommended for approval as it requires no county costs and will assist the department in ensuring their fee structure is up to date. This creates net county benefit in the long term.  

Climate Sustainability:
The total budget for Climate sustainability has decreased by approximately $600,000 to $1.3 million in the FY25-26 Recommended Budget. This is a result of decreased ARPA transfers into the unit for approved projects, as well as the elimination of extra help and other minor expenditure cuts. While the total cost of the department has decreased significantly, the net county cost for the unit is increasing by approximately $130,000 due to the shift of a Planner to Climate Sustainability implemented mid-FY25. The Climate Sustainability program and its assigned staff are also anticipated to be transferred to the County Administrator’s Office. This transition will further strengthen the Sustainability Program’s countywide perspective and enhance collaborative efforts to further the County’s progress towards the goal of being carbon negative by 2030. Staff currently assigned to this program include:
· 1.0 FTE Sustainability Manager
· 1.0 FTE Administrative Services Analyst
· 1.0 FTE Associate Administrative Services Analyst
This transfer would be effective July 1, with possible further budget adjustments being incorporated into the Adopted Budget.

Animal Control Services:
The total budget for Animal Control Services has decreased by approximately $475,000 to $5.3 million in Recommended FY2025-26, with a reduced net county cost of $900,000. The decrease in net county costs is due to recently approved positions and some administrative expenses shifting, as planned, from 100% County funded to marginally funded by partner agencies. Additionally, the department is instituting higher vacancy savings, lower overtime, deleted buyout, and other smaller reductions across accounts to limit funding impacts on all partner agencies funding the unit. The department also completed a fee study in FY 2024-25 and will use those findings to initiate fee revisions with the next Master Fee update, which are necessary to achieve projected revenues.
 
County Service Areas:
The FY2025-26 Recommended Budget for County Service Areas (CSA) totals $12.8 million with no net county cost. This is a decrease of about $3.2 million from the current Adopted Budget. That difference is due mostly to several ongoing grant projects being underway, with only remaining costs left budgeted in the future year. Of the current cost, most is for the North Davis Meadows Water Project, an ongoing capital project estimated to cost $7 million in the FY25-26 Recommended Budget funded solely through state grants. There is no expectation county costs will be needed in this division.

General Government
 
Agriculture: Net County Cost $1,541,648
The FY2025-26 Recommended Budget for Agriculture reflects a decrease in Net County Cost of approximately $240,000 from Adopted FY2024-25. This is accomplished primarily by eliminating a vacant Administrative Clerk and a vacant Agricultural & Standards Technician. The department is also proposing to end the Organics Certification and Trapper programs which are non-mandated services, and in the case of the Organics program, can be performed in the County by other vendors.

Additionally, there are reductions in extra help, overtime, and select operational accounts.
 
The department is planning to appropriate fund balance from their Equipment Replacement Fund to replace the Weights & Measures test truck. However, due to new California Air Resources Board regulations, each purchase of a diesel vehicle must be offset with an electric vehicle of similar size. While staff recommend this purchase, it is prohibitively expensive to purchase an electric Weights & Measures test truck, therefore the department is continuing to seek options for offsetting this purchase in partnership with DFS & Fleet Management.

Assessor/Clerk Recorder/Elections (ACE):  Net County Cost $7,842,610
The Assessor/Clerk Recorder/Elections has an anticipated net county cost of $7,842,610 in FY2025-26 which is an increase of $596,797 when compared to the FY2024-25 Adopted Budget.

Assessor:
The Assessor’s FY2025-26 Recommended Budget includes revenue increases of approximately $25,000 when compared the FY2024-25 Adopted Budget. This increase in revenues is attributed to increased Property Tax Administration revenues of $23,000, an increased in State Supplementation for County Assessor’s (SSCAP) grant revenues of $27,000 and increases to the use of fund balance in the unit of $54,000. These revenue increases are partially offset by reductions in the supplemental roll administration fee revenues in the unit of $80,000.

Expenses in the Assessor’s division are also anticipated to increase $272,000. The majority of the increased expenses are primarily due to increased salaries and benefits due to cost-of-living adjustments, increased extra help, retirement, and OPEB expenses, and an increase to the administration unit transfer of approximately $56,000.

Approved augmentation requests in the unit include SSCAP grant revenue and expenditures for Extra Help expenses as well as Commercial Appraisal software license and support, which the grant will fund. Additionally, SSCAP grant dollars were utilized to enhance the Assessor’s training budget and reduce the overall net county cost for the department. Lastly, the department included a reclassification request to convert an Assessor Clerk Recorder Supervisor to Managing Deputy Clerk Recorder. Staff recommends approval of this reclassification as it is already in process in the 2024-25 fiscal year and results in an overall net county cost savings for the department when considered holistically with other flexibly staffed position adjustments the department has made.

Clerk Recorder:
The Clerk Recorder’s division is anticipating an increase in revenues for FY25-26 of $476,000. These increased revenues are due to the projected increase in recording fee revenues of $12,000 in the unit’s special revenue units and an increase in the use of fund balance of $467,000 due to ongoing projects within the unit’s special revenue funds.

Expenses in the unit are also expected to decrease by $153,000. Reductions in expenses include removal of $300,000 capital project for lobby security that was previously budgeted during FY2024-25 and a reduction in minor equipment of $50,000. Offsetting these decreases in the unit are increases of $80,000 in salary and benefits due to merits and other increases, and increased retirement costs.

Additionally, the department has budgeted for the second phase of its project to restore and preserve all maps in the Clerk Recorder’s office and the final phase of the historic records digitization and indexing project that is being completed by US imaging. These projects result in a net increase in the unit’s professional services accounts of $21,000.

Elections:
The Elections division is anticipating a revenue reduction of $516,000 in FY2025-26. This decrease in revenue is attributed to no billable measures or candidates contests currently identified in the coming fiscal year.

Expenditures in the Elections division are anticipated to decrease approximately $288,000. The majority of these decreases are due to balancing solutions including reductions to office postage and printing ($170,000) and Special Department-Expense ($125,000).

To balance the budget, reductions were made to lower the net county cost of the department. These reductions include a salary savings of $411,500 along with reduced OPEB and Pension Supplemental expenses.  Lastly, reductions were made to departmental food, overtime, employee engagement, minor equipment and professional services budgets totaling $57,600.

Board of Supervisors: Net County Cost: $3,461,946
The FY2025-26 Recommended Budget for the Board of Supervisors includes an increase of $223,000 in anticipated Service and supply expenditures, largely related to a $265,000 increase in General Liability costs. Reductions were made to several accounts in the Board of Supervisors budget, including Extra Help ($25,000) and the Community Benefit Fund ($37,500).  However, each Supervisor has broad discretion as to how the funds allocated to their individual districts are utilized, so long as they remain within their budget appropriation.   

County Administrator’s Office: Net County Cost $4,442,743
The FY2025-26 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 elimination of two vacant positions in the Office of Emergency Management, including an Emergency Preparedness Program Coordinator and a Limited Term Emergency Services Planner. The department has also voluntarily assumed a salary savings factor of $372,460, with intentions to keep the Assistant County Administrator position vacant.

Other reductive actions taken by the department include elimination of the department’s federal advocacy contract, food, employee engagement and leave buyout budgets, among other items. The department has also eliminated the extra help budget for OES and reduced extra help for CAO. The County Administrator’s Office will be transitioning responsibility for the Natural Resources and Climate Sustainability programs from the Department of Community Services during the period between the Recommended and Adopted budgets. One Management Analyst will be billing half of their time to the Natural Resources program, saving the General Fund an additional $90,000.  Longer term organizational structure options for the Natural Resources functions of the County are being actively evaluated by the CAO, with recommendations expected at the end of June 2025.  Adjustments to capture this will be accounted for in the Adopted Budget.

County Counsel: Net County Cost $3,016,278
The FY2025-26 Recommended Budget for County Counsel has a net county cost of approximately $3 million, an increase of $122,000 over prior year’s budget. Revenue enhancement of $59,000 will be achieved through adjusted billing practices to existing clients, including to recover costs for attorney time not previously charged. Expenses are showing a gradual increase due mostly to the rise in salary and benefits ($107,000) as well as additional legal services costs in Indigent Defense unit ($34,000).

Staff recommends approval of increasing the budget by $60,000 for conflict Racial Justice Act (RJA) cases that are referred to the conflict panel. The expenses are primarily due to the need for outside legal services on the RJA matters (which are also impacting the District Attorney and Public Defender offices). The department had requested funding for promotions with a total expense increase of $31,000. Staff recommends not approving a budget augmentation for these promotion requests due to the County’s limited funding sources. As is standard practice, departments are still able to give promotions when warranted but will need to absorb any resulting cost increases.

Department of Financial Services (DFS): Net County Cost $4,071,320
The FY2025-26 Recommended Budget for DFS is projecting a revenue decrease of $55,000 primarily due to the loss of revenue received from HHSA for an Auditor II position in Internal Audit division. The position is not expected to be filled this fiscal year, and the division is requesting to un-fund the vacant position. Expenditures are increasing by $304,000, largely due to standard salary and benefit adjustments.

The department has requested four promotions for three Accounting Technicians to Senior Accounting Technicians and one Revenue Specialist II to Revenue Specialist III. Staff recommends not approving a budget augmentation for these promotions due to limited funding. As is standard practice, departments are still able to give promotions when warranted but will need to absorb any resulting cost increases. The department had also requested for the purchase of a new check scanner which staff recommends deferring to Adopted Budget until further funding sources have been identified.

To minimize net county cost impact, staff recommends unfunding a vacant Property Tax Supervisor position, reductions to overtime, training and travel, miscellaneous expense budgets, and increased cost recovery.

General Services: Net County Cost $7,379,823
The FY2025-26 Recommended Budget net county cost for the General Services Department is $7,379,823 which is an increase of $1,220,500 when compared to the FY2024-25 Adopted Budget.  This increase in net county cost exists primarily in the Facilities division of General Services and is due to reduced revenues and increased internal charges in the unit as detailed below.

Facilities:
Facilities has an expected net county cost of $4,226,822 for fiscal year 2025-26 which is an increase of approximately $1,134,800. The Facilities division budget includes $5.5 million in Accumulated Capital Outlay (ACO) Funding that includes multiple projects, outlined in the table below. Additional revenues in the unit include additional Facilities fees revenues, increases in rent and utilities expenses and increased interfund revenues due to a methodology change that shifted revenues from expense transfer reimbursement (ETR) to interfund revenues. Partially offsetting these increased revenues is removal of the City of Davis EV charging revenues of $298,593 due to the grant ending as of Dec 2024.

Expenditures in the division are also anticipated to increase $2.09 million. This includes increase to salaries and benefit expenses due to merit increases, cost of living adjustments, increased retirement costs and an increase of $349,000 in capital project expenses. Additional increases include janitorial charges due to increased supply costs and in preparation for an upcoming competitive bid for services that is estimated to result in a cost increase. Additionally, GSD internal charges saw an increase due to the previous year’s budget not including GSD’s portion of the expense ($139,000).

To balance the budget, a Project Manager, Building Craftsmechanic and Project Coordinator were unfunded resulting in savings of $551,000. Additional reductions used to balance the budget include a salary savings factor of $99,726 and adjustments to pension supplemental and OPEB charges. Augmentation requests for items such as equipment and capital projects have been deferred to the Adopted Budget for a better economic outlook.  Additional changes in Accumulated Capital Outlay (ACO) project funding are anticipated during the Adopted Budget process which include funds for the Monroe/Justice Well and the solar field repairs at the Grasslands Regional Park.
 

Procurement:
The Procurement division has an anticipated net county cost of $733,198 for FY2025-26. Revenues in the division are expected to increase $182,000 due to the addition of revenues from HHSA for their portion of the Procurement consulting agreement, which includes Extra Help expenses. Other notable revenue increases include Cal Card and Amazon user fees revenues increasing approximately $12,700 when compared to the FY2024-25 Adopted Budget.

Expenses within the division are expected to decrease $53,300 due to the elimination of a vacant limited term Contract and Procurement Services Officer position. Additional reductions in the unit include the removal of a previously budgeted expense for auditing purchase cards that will not be completed this fiscal year as originally intended ($26,400) and a reduction in extra help expenses funded by the general fund ($36,558).

Airport
The Airport’s budget has an anticipated net county cost of $299,522 for FY2025-26, of which $50,000 is in the Aviation Capital Projects budget unit due to the addition of the Mead and Hunt on-call contract in the unit. This contract will only be utilized if the department is able to obtain a grant. If a grant is obtained, the department will seek reimbursement of these funds directly from the grant.

Revenues in the Airport are expected to see an increase of approximately $99,000 due to an increase in the use of fund balance in the unit. Offsetting this increase are reductions in revenues due to the removal of revenues related to the Run Up Apron project ($153,860) and the reduction in state revenues ($21,748). As with revenues, expenditures in the unit are expected to decrease approximately $133,000. This is due to the removal of budgeted capital assets pertaining to the Run Up Apron project ($121,000) as well as a net reduction in professional services ($39,000).

Other balancing solutions in the Airport’s budget include a reduction to the Airport’s Maintenance and Improvements account of $32,000.

Parks
The Parks division of General Services is anticipating a net county cost of approximately $1,684,000.

Revenues in the Parks division are expected to see reductions related to conclusion of the Prop 68 grant ($317,600) as well as removal of the Cache Canyon River Trip contract of $10,000. Other notable reductions include the removal of the one-time Yolo Arts donation of $10,000 and removal of Measure K Cannabis and American Rescue Plan revenues. Expenses in the Parks Division are expected to decrease primarily due to the reduction in Capital improvements related to the Prop 68 grant ($631,377) and previously approved equipment purchases ($173,000). Partially offsetting these decreases are increases to salaries and benefits ($137,000) due to merits, cost of living adjustments and increased retirement costs. Additional increases include an additional $75,000 in internal charge increases such as Fleet, janitorial, and GSD internal charges.
Additional reductions made to balance the unit include reductions to Parks Extra Help and Overtime expenses of $21,200.

Tuli Mem: The Tuli Mem Park and Pool is anticipated to have a net county cost of $335,460 which is $61,678 higher when compared to the 2024-25 Adopted Budget.

Revenues at Tuli Mem Park and Pool are expected to decrease $81,800 primarily due to the removal of Measure K Cannabis revenues of $100,000. Expenditures in the unit are anticipated to decrease $100,000. These decreases are attributed to reduction in the Esparto Community Services District agreement of almost $100,000 and a reduction in utilities expenses of $13,400. With the reduction to the Esparto CSD agreement, the department requested a Parks and Facilities Worker position to manage Tuli Mem operational tasks in house.  Due to funding limitations, staff does not recommend funding of the position; however, workload impacts will continue to be assessed and may need to be addressed in the Adopted Budget.  To assist with these operational tasks, the Recommended budget includes $80,000 in Extra Help funding.

Human Resources: Net County Cost: $4,792,875
Human Resources is anticipating a revenue increase of approximately $283,000 in their budget. These revenue increases are attributed to the addition of payroll charges that were not included in the 2024-25 adopted budget. Expenditures in the main Human Resources operations budget are also anticipated to see an increase of $108,000. This is mostly due to increased salaries and benefit that are due to merits, cost of living adjustments, increased retirement and OPEB costs.

The Recommended budget for Risk Management reflects an increase in expenses of approximately $1.4 million. The $649,500 increase in General Liability and Workers Compensation premiums are the main drivers behind these increases in addition to budgeting for charges from the California Joint Powers Risk Management Authority (CJPMRA) totaling $598,000 that have not been previously budgeted for. Also budgeted are funds for the County’s Property/Boiler insurance payment of $778,222 which is an increase of $271,623 when compared to last years budgeted amounts. It is important to note that the CJPRMA and Property/Boiler payment are not currently a part of the departmental insurance charges and results in an increase to the department’s net county cost. The increases in expenditures are being partially offset by the revenues that will be collected from departments for General Liability and Workers Compensation during the 2025-26 fiscal year ($658,806).

To assist in balancing the budget, the Human Resources department is carrying a salary savings factor of $126,132. Additional cost saving measures include reductions to various accounts including employee engagement, food, professional services, and employee flu clinics. The department submitted augmentation requests for a new Senior Payroll Technician and an Executive Assistant position. Staff recommend deferring these requests to the Adopted Budget due to limited funding.

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

The ITS division is projecting revenues to increase approximately $5.36 million. This is primarily due to  an increase in interfund revenues for Department Systems, ERP and Connectivity charges totaling $5,910,940, however these increases in revenue are offset by increases in expense transfer reimbursement (ETR) as a new methodology for collecting revenues has been introduced.

Additional changes in revenue include the removal of previously budgeted Homeland Security Grant ($500,000). Other notable changes in the Information Technology budget include an increase in the ITS department Salaries and Benefits of $193,000. This increase can be attributed to merits, cost of living adjustments, removal of the departmental salary savings factor of $249,424 and increases to retirement costs. These increases in salaries and benefits are partially offset by the unfunding of two positions which include a Database Administrator and an Enterprise Resource Planning Analyst.

Other notable increases in the unit include a net increase in the professional services accounts of $167,000 due to higher subscription renewal costs. These increases are offset by reductions to maintenance and equipment of $55,000 due to the budgeted amounts for equipment coming in under budget when compared to last year. Additional expense reductions include IT internal departmental charges, capital expenses and removal of expenses related to the Homeland Security grant of $500,000.

One equipment request was included in the calculation of IT Fees the purchase of a new Layer 3 (L3) switch in the Connectivity unit. Staff recommended this for approval as it has been included in the IT internal charges for departments.

To balance the ITS budget, the department is eliminating two positions that include a Database Administrator and Enterprise Resource Planning Analyst, resulting in savings of $412,476.  These savings are partially offset by additional General Fund support needed to cover 50% of a dedicated Technical Support Specialist that was previously funded by the District Attorney's Office.  Lastly, two vacant HHSA dedicated positions have been unfunded as the department will no longer be utilizing these positions. The unfunded positions include a Systems Software Specialist and a Technical Support Specialist.

Telecom
The Telecom division is projecting a revenue decrease of approximately $31,406. This decrease is attributed to a reduction in Telecom work order revenue ($15,000) and a reduction in equipment lease revenues to the department ($16,406). Expenditures within the Telecom division also saw a decrease of approximately $31,000. This reduction is primarily due to reduced salary and benefit expenses of $98,000 due to the unfunding of an IT Security Manager position and an increase in the division salary allocation as a new methodology was introduced that increases the IT Managers allocation from 50% to 60%. The reduction in salaries and benefits is offset by increases in cost plan charges ($26,117) and depreciation expenses ($20,000).

Library: Net County Cost $376,431
The FY2025-26 Recommended Budget for the Library includes a net county cost of $376,000, an increase of $11,000 over the prior year. The department is projecting revenues to increase by $1.7 million primarily due to the approval of Measure T, which provides funding for the operation of the new Walnut Park Library in South Davis. There is an additional increase of $465,000 of funding from existing special tax funds to subsidize for the library operations in Davis. In contrast, expenditures are expected to increase by $1.1 million largely due to the increase in Salary and Benefits as well as the 15% increase in premiums, causing the rise in public liability insurance of $203,000. The department has no augmentation requests for FY2025-26.

To balance the budget, staff recommends reduction of the Archives travel budget, adjustments to the pension supplemental and OPEB, Library Operations to subsidize for IT costs and GSD Internal costs, and to allocate 10% of the Museum Curator position to Library Operations resulting in savings in net county cost.

Law and Justice

Regional Child Support Agency: Net County Cost $0
The Regional Child Support Agency (RCSA) FY2025-26 Recommended Budget includes about $400,000 in additional State and Federal revenue. This revenue is being used to offset some small operational increases and the addition of a Child Support Specialist position needed for the last of the regionalization employees, should they wish to transfer into the agency. Additionally, 3 employees will transition from the Sutter County location to the Yolo location as planned due to the regionalization of Child Support for Colusa, Sutter, and Yolo counties.

District Attorney: Net County Cost $12,346,678
This FY2025-26 Budget reflects a $405,000 increase in net county cost from the 2024-25 Adopted Budget.  Much of this increase is due to increases in Salaries and Benefits, due to both standard merits increases and cost-of-living-adjustments.  

In order to mitigate increased net county cost for the FY2025-26 Budget, the department was asked to absorb requested staff promotions of $140,000 in their existing salary appropriations and defer conversion of a limited term Paralegal to Regular to the Adopted Budget process. Asking the department to absorb net county cost promotions and conversions is consistent with other general fund departments. The department has also received a salary savings factor of 6% ($1,100,217) consistent with other departments of its size and historical trend. Additionally, staff recommend elimination of a vacant Senior Probation Officer position ($182,000) within the department as a cost-savings measure. Other cost savings measures recommended by staff include removal of budgeted leave buyout in programs receiving General Fund support ($34,000), and elimination of food ($2,500) and employee engagement ($2,000) budgets.

The District Attorney’s Office also requested $90,000 in vehicle replacement for its Criminal Prosecution division, $13,500 in food for the departments snack pantry, $166,000 in vacation buyback funding, along with a $406,000 increase to the departments Extra Help budget. Staff do not recommend approval of these requests at this time and would defer them to the Adopted Budget process.

Staff recommends approval of budget augmentations for a series of promotions outlined in Attachment F, which are funded by grants and external funding sources ($42,000) and have no impact on the General Fund.

Probation: Net County Cost: $3,124,963
The Probation Department’s Recommended Budget includes a net county cost of $3.1 million, an increase of $312,000 over prior year’s Adopted Budget.

The Probation Administrative unit is projecting a decrease in revenues of $148,000 in the division’s FY2025-26 Recommended budget. This reduction is due to the Community Corrections Partnership (CCP) Planning allocation being reduced to zero in Governor’s January State of California FY2025-26 budget.

Adult Probation Services is projecting an increase in revenues of $938,000 largely due to the Prop 47 Grant, which supports agencies that provide mental health services. Additionally, there is an increase of $135,000 in from SB678 and $170,000 of State funding from HHSA for 1 Deputy Probation Officer for a total of 5 years. In contrast, expenditures are projecting to increase due to the Cache Creek Lodge contract and program evaluator that will be funded by Prop 47 Grant. Furthermore, Salary and Benefits are increasing by $88,000 due to standard adjustments. The department is requesting to reclassify an Administrative Clerk II position to an Office Support Specialist to assist the management team with administrative tasks, however, that position was submitted for unfunding as part of the Departmental Reduction exercise and is recommended for unfunding as part of the 2025-26 Recommended Budget.

The Juvenile Detention Unit is projecting an increase of $245,000 in revenues primarily due to transfers from Youthful Offender Block Grant (YOBG), Juvenile Justice Crime Prevention Act (JJCPA), and Secure Youth Treatment Facility (SYTF). The expenditures are projecting an increase of $535,000 largely due to Salary and Benefits which includes the standard adjustments. Additionally, there is a significant increase in utility costs of $477,000 due to the Justice Campus solar array which supplies the Juvenile Detention Facility (JDF) with power being non-operable, and an increase in general liability insurance costs. The solar array is currently being repaired, which may allow for reexamination of this appropriation during the Adopted Budget process. The department is requesting to reclassify an Assistant Chief Probation Officer to Probation Program Manager to meet the management needs of the department. The position will be funded 50/50 with Cal-Aim funds and General Fund ($118,842 each).  Staff do not recommend this conversion at this time, and defer the request to the Adopted Budget.

The Juvenile Probation services Unit is projecting a revenue decrease of $200,000 due to the decline of several State and Federal funding sources including the Juvenile Justice Realignment Block Grant and lower Title IVE claims. Also included in the Recommended Budget is the use of fund balance of $953,000 from YOBG and JJCPA to balance the budget. In contrast, Probation Services is projecting a decrease of $311,000 in expenditures due to Salary Savings for two vacant Deputy Probation Officer II. Offsetting the decrease is an increase of $250,000 transfer out to Juvenile Detention to help cover costs including food, clothing, and supplies related to the population increase at the JDF.

The Probation Department’s CCP unit is projecting a decrease in expenditures of $370,000 primarily due to a decrease in Salary and Benefits ($476,000) related to an increase in Salary Savings ($141,000) and a reduction in Salary Allocation ($379,000) due to moving all administrative allocation charges to Expense Transfer Reimbursement. Offsetting these decreases are the gradual increases in health insurance, worker’s comp insurance, and other employee benefits.

In order to further reduce Net County Cost, staff recommends unfunding  a vacant Legal Secretary as the department submitted in their 7% Departmental Reduction exercise. Additionally, staff recommends the reduction of costs across multiple units such as office expenses, overtime, extra help, food expense, and employee engagement expense. Staff also recommends adjustments in funding for Pension Supplemental and OPEB, saving $192,000. There were also adjustments to the work program revenue, resulting in an increase of $130,540 along with a correction to increase HHSA – mental health services of $80,000.

Public Defender:  Net County Cost $11,109,913
The Public Defender’s FY2025-26 net county cost increase of $1.2 million is driven almost exclusively by increases in Salary and Benefit expenses. It also includes increases in both Community Corrections Partnership and Revocation funding. Revenues in the Public Defender’s office are anticipated to reduce due to the conclusion of the Public Defender Pilot Defense Grant ($205,000).

In order to further mitigate net county cost, the department has eliminated a vacant LT Paralegal position ($127,729) previously funded with grant dollars. The department has also accepted a series of reductions in its Services and Supply budget ($8,140) and received approval of additional funding from CCP to offset staff costs for Deputy Public Defenders assigned to projects funded by CCP.

The department requested multiple augmentations, including four new Deputy Public Defenders, a new Paralegal, a new Mitigation Specialist, and new Public Defender Investigator. The department also requested a replacement vehicle for a total cost of $1,311,733. Staff recommend deferral of all augmentation requests to the Adopted budget process.

Sheriff:  Net County Cost $33,243,464
The Sheriff’s FY2025-26 Recommended Budget includes a net county cost of $33.2 million, an increase of $2.33 million from the FY2024-25 Adopted Budget. The Sheriff’s FY2025-26 base budget expenditures increased by $4 million, driven largely by increases in Salaries and Benefits, with base revenues staying relatively flat, despite small, anticipated growth in Prop 172 ($320,000).

In order to reduce the Sheriff’s Office net county cost, $2 million in augmentations requests are recommended to be deferred to the Adopted Budget. Included in the deferral are nine (9) vehicle replacements, including replacement of a SWAT vehicle, increases in building maintenance budgets, and minor employee engagement efforts. The department also submitted an augmentation request for a mixed reality use of force training system ($680,000).

In order to further reduce the net county cost, salary savings has been budgeted in the following units:
 

This salary savings factor is based on an average of 26 vacancies in Corrections and five in Patrol at any given time during the fiscal year. The factor and amount are the same as in the 2024-25 fiscal year.

Other cost-saving measures were applied to the department in order to mitigate net county cost include use of COPS Detention ($50,000) and COPS Patrol ($100,000) fund balance to offset the cost of operations in those units Public Safety units, additional CCP funding ($45,000) to fully fund staff working on CCP initiatives, reductions to Services and Supplies, and reductions to overtime and extra help funding in non-institutional and non-first-responder divisions.

Staff recommends approval of the purchase of three (3) replacement Tahoe Patrol vehicles, along with outfitting, radios and watchguard for the Capay Patrol Division. The Yocha Dehe Wintun Nation will reimburse these expenses as part of their agreement to provide dedicated patrol services within the valley. Staff further recommends the use of Small and Rural ($2 million) COPS Detention ($500,000) and COPS Patrol ($500,000) in order for the department to begin the process to upgrade and implement a new system to electronically record, track, and store law enforcement data and manage day to day jail processes. The Sheriff’s Office will be releasing a Request for Proposals (RFP) in the coming months to procure a new Record Management System/Jail Management System (RMS/JMS) solution that fully meets operational and compliance requirements. The department estimates the cost for the new system to be between $2-3 million.

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

Community Corrections Partnership (CCP): 

The proposed FY2025-26 Recommended Budget for CCP is reflected in the following table:
 

In the 2021-2022 fiscal year, the Community Correction Partnership (CCP) transitioned their budget model to a percentage-based budget in order to increase the percentage of funding dedicated to treatment and innovative programs to better align to the CCP Strategic Plan. The FY2025-26 budget includes a $200,000 Innovation contribution to Woodland Police Department in support of the Advance Peace program.

At the April 14 meeting, the CCP voted to defer all departmental funding requests for program expansions and new positions to the Adopted Budget process.

Capital Improvement Program (CIP)

The FY2025-26 Recommended Budget includes a Capital Improvement Program (CIP) budget of $34.9 million. This budget includes continued funding of the Knights Landing Levee Repair and Flood Management projects and South Davis (Walnut Park) Library Projects, along with the addition of the Tuli Mem Improvement Project and the Ag Shop Project.

Funding for the Knights Landing Levee repairs was secured through $15.9 million in grant funds from the State Department of Water Resources. This multi-year project is intended to increase flood protection from 25 to 100-year flood levels to reduce flood risk for the Knights Landing Basin area. The local match is 10%, or approximately $1.6 million. Funding for the local match has been set aside during the FY2019-20 and the FY2020-21 Adopted Budgets from Cannabis Tax revenues and the general fund.

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

Funding for the Walnut Park Library has been secured through various sources including a State Library Grant, County Library Measure A funds, and use of the County Capital Improvement Reserve.  

Funding for the Tuli Mem Improvement project was secured through American Rescue Plan, Development Impact Fees and Capital Improvement Plan reserves. Funding for the Ag Shop was secured through use of the Ag Building Replacement Fund, Development Impact Fees, residual CIP bond proceeds, and the Accumulated Capital Outlay Fund.

The table below provides a summary of the FY2025-26 CIP budget.

FY2025-26 Recommended CIP Budget
 

Other Budget Assumptions and Issues

Cannabis Tax Expenditure Plan: The FY2025-26 Recommended Budget includes $674,000 in cannabis tax expenditures. The Cannabis Tax Expenditure Plan Framework, approved by the Board in January 2019, stipulates that cannabis tax revenues should only be programmed for expenditure once received. Through the first three quarters of fiscal year 2024-25, the County received approximately $483,000 in cannabis tax revenues. In addition, approximately $41,000 in interest earning is available, and staff are projecting an additional $150,000 in cannabis tax receipts in the final quarter of 2024-25. Any additional revenues collected in the current year or available fund balance will be appropriated with the Adopted Budget in September.
 
The 2025-26 Cannabis Tax Expenditure Plan (Attachment N) includes funding for the second of a three-year commitment to First 5 Yolo, which was approved by the Board of Supervisors on February 27, 2024. In addition, minor amounts are recommended for continuation of California Cannabis Authority participation fees and for servicing of a portable restroom in Guinda.   Consistent with the proposed budget balancing solutions presented to the Board on April 29, 2025, staff recommend a one-time transfer of $450,000 to the General Fund to assist in balancing the County’s budget. Finally, the residual amount of $47,250 is recommended to be set aside in a reserve. Staff will continue to consider other funding proposals at the adopted budget depending on revenues available.
 
The proposed Cannabis Tax Expenditure Plan was presented to the Cannabis Ad-Hoc Subcommittee (Supervisors Barajas and Allen) on May 19th and subsequently to the Cannabis Tax Citizen's Oversight Committee on May 30th. The Oversight Committee recognized the County's difficult fiscal situation and generally agreed with the recommendation to use Cannabis Tax funding to support balancing the budget, but reiterated their desire for a more formal and transparent process for organizations to request Cannabis Tax funds and for additional policy clarification on how Cannabis Tax funds are intended to be used. 

Health & Human Services Emerging Needs Contingency: In 2002, Yolo County participated in the Pooled Tobacco Securitization Program, which resulted in creation of the Ceres endowment fund that is held by a trustee as collateral for the outstanding tobacco bonds. Under investment strategies approved by the Board in 2002, 2013, and 2018, funds are deallocated annually from the Ceres endowment fund and made available for appropriation as a Health & Human Services Emerging Needs Contingency that may be allocated by the Board throughout the fiscal year to programs and organizations that support emerging health and human service needs.  There is no funding set aside for this contingency in the Recommended Budget.  These funds are instead being utilized to balance the budget.  Staff will reassess the balance of this fund for the Adopted Budget.  

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. 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 Attorneys, Deputy County Counsel Association and Correctional Officers. 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 FY2025-26 Recommended Budget includes $66.8 million in employer pension contributions, an increase of $1.5 million from the FY2024-25 Adopted Budget. Employer contributions for FY2025-26 were determined in the CalPERS Annual Valuation Report as of June 30, 2023. 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, CalPERS Board of Administration completed their Asset Liability Management (ALM) process during calendar year 2021. The ALM Process resulted in CalPERS lowering their discount rate to 6.80% from 7.00% which means a lower target for future investment earnings which potentially increases employer contributions in future years.
 
In May 2018, the Board approved a Pension Funding policy to establish best practices and guide the County’s effort to stabilize pension funding and address the unfunded pension liability. This action was a continuation of the effort to stabilize pension funding, following several prior actions including establishment of a pension accounting reserve, evaluation of discretionary contributions, and prepaying annual contributions. Notably, the Pension Funding policy established a Section 115 Trust to accumulate assets for pension obligations and provides for a supplemental charge on payroll expenditures for building the Trust balance to a minimum target level. As part of the budget balancing strategy in both 2024-25 and 2025-26, the supplemental pension charge has been temporarily paused and will be revisited in future years in conjunction with potential revisions to the Pension Funding Policy.
 
Other Post-Employment Benefits (OPEB): The FY2025-26 Recommended Budget includes $12.5 million in OPEB charges to departments, a decrease of $400,000 from the FY24-2 Adopted Budget. The OPEB actuarially determined contribution rate of 6.9% of payroll was included with the Recommended Budget, however, staff was notified well into the budget process that the rate was reduced to 5.1% following the results of the June 30, 2024, Valuation report. As part of the budget balancing process, staff assumed a General Fund savings of $1,150,000 based up on the 1.8% rate reduction. An updated salary and benefit projection will be completed before the Adopted Budget process.

In May 2011, the Board approved the creation of an irrevocable trust to accumulate assets for the purpose of reducing the OPEB liability. The initial policy had a funding ramp up over 15 years; however, the County achieved that ramp-up sooner than anticipated and in November 2019 updated the policy to fund the trust at the actuarially determined contribution level. The OPEB trust is expected to have a balance of approximately $56.3 million at June 2025. An updated projected for the year ending June 2026 will be available with the Adopted Budget.
 
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 $14.2 million in the June 2024 valuation. The table below shows the OPEB unfunded liability in each of the last three valuation reports.


OPEB Unfunded Liability
 

Contingency and Reserves:  In accordance with the Board Policy on Fund Balances and Reserves, the FY2025-26 Recommended Budget includes the following reserve balances (Attachment O):
 

*An updated projection for the year ending June 30, 2026, will be included with the Adopted Budget.
** No planned contribution during FY2025-26 as part of the budget balancing strategy.  

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

The FY2025-26 Recommended Budget also provides appropriations for the following contingencies: 
 

The General Fund Contingency represents approximately 1.3% of general fund expenditures and is crucial in safeguarding against known risks and uncertainties that are identified for the FY2025-26 Recommended Budget, including potential impacts of equity adjustments from required compensation studies and upcoming labor negotiations.

Given the difficulties in balancing the Recommended Budget, there are no other contingencies recommended at this time.  In recent years, the County has set aside funds for both Public Safety and HHSA Contingencies.  Staff intends to revisit all contingencies as part of the Adopted Budget process. Funding of all contingencies will be revisited at Adopted budget.

Additional Items for Consideration in Adopted Budget

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

     · Insurance Increases – Projections for Workers Compensation, General Liability and Property insurances were estimated during the Recommended Budget process. There still may be an additional budget gap to resolve during the Adopted Budget, as the premiums included in the Recommended Budget are based on estimates from YCPARMIA, and actuals may vary.
     · Reserve Contribution – As previously discussed, staff have not included a reserve contribution to maintain the current balance at 8.5%. The County is still working toward its 10% target reserve and will revisit an additional contribution during the Adopted Budget. This reserve is important to safeguard the County against an economic downturn or other unanticipated events such as natural disasters or severe state or federal impacts. 
     · Additional Contingency Contributions – The General contingency represents approximately 1.3%, and no Public Safety and HHSA contingencies were included in the Recommended budget. Budgeting for and increasing these contingencies to 1%-3% of total budgeted expenditures should be prioritized during the Adopted Budget process.
     · State/Federal Mandates – The County continues to monitor the State and Federal budgets for programmatic mandates that the County should prepare for. The State has added significant new requirements for counties in recent years. The Health and Human Services Agency continues conducting analysis on the impacts of the passing of Proposition 1 and how that will affect funding within the Mental Health Services Act. The Governor’s May Revise did not include any funding for implementation of Prop 36, signifying the ongoing expectation that County HHS and Public Safety officials will be responsible for bearing the costs for these services.

Looking Forward

The Recommended Budget for FY2025-26 is balanced and meets statutory requirements. However, as outlined in the April 29th presentation to the Board, the 2025-26 Recommended Budget was the immediate focus of the two-pronged approach in the strategic process to address the structural deficit the County is facing.

Approval of the Recommended Budget has not resolved the County’s structural deficit; that process will likely take several years and much additional work on the part of departments and leadership. The Recommended Budget continues to rely heavily on fund balance to cover ongoing costs, and while we have begun to make progress in eliminating vacant positions, the budget continues to utilize salary savings in an unsustainable fashion. As staff has noted for the past several fiscal years, this continued and increasing use of salary savings will continue to erode available fund balance in the future, making balancing the Recommended Budget increasingly difficult. As the County continues to grapple with the increasing costs of both labor and contracted services, combined with revenues growing at a slower rate, and as we observed balancing the budget for the 2025-26 fiscal year, the strategies and solutions staff have consistently used to balance the budget in recent years are no longer sufficient.

As staff worked to finalize the Recommended Budget, information regarding the Governor’s May Revise was provided to counties on May 14. Initial reviews of this proposed revision to the State's FY2025-26 budget indicated additional reductions to various programs and funding streams that will negatively affect the County’s FY2025-26 budget and will need to be considered during the Adopted Budget process. Staff anticipate additional reductions in CalWORKs, 1991 and 2011 Realignment and various grant programs. Again, as outlined in the April 29th presentation to the Board, staff were already preparing for the likelihood of additional reductions from departments leading into the Adopted Budget process. These additional funding reductions only reinforce the necessity of the work staff will be completing in the coming months, and the need for the County to move towards a structurally balanced budget.  While some of the following strategies have already been utilized to balance the 2025-26 Recommended Budget, staff believe it is reasonable to anticipate they will need to be utilized again to balance the 2025-26 Adopted Budget and the 2026-27 Recommended Budget:
     · Elimination of positions
     · Hiring Review
     · Hiring Freeze
     · Department Reduction Plans
     · Mandatory/Discretionary Program analysis
     · Reduce/eliminate discretionary programs
     · Use of Reserves
     · Revenue Enhancements

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 FY2025-26 Department of Financial Services (DFS) staff reviewed and analyzed budget requests and budget discussions were held between the County Administrator's Office and each department.  DFS first updated the Board of Supervisors on January 14 and again on January 28, where the Board received a preliminary assessment of the FY2025-26 Budget and adopted the Budget Principles.  The Board of Supervisors received additional updates from DFS on March 11 and April 29, 2025.  County Counsel has reviewed and approved the budget resolutions as to form.