Wednesday, December 19, 2018
Budget and Financial Information

Budget and Financial Information

FY 18/19 BUDGET SUMMARY

EXECUTIVE SUMMARY

The budget establishes $5.6 billion in appropriations for Riverside County, an increase of 1.7 percent from previous budgeted spending levels. Overall estimated revenue is projected to increase to $5.4 billion, an increase of 3.3 percent. The difference is backed with use of fund balance, net assets, and reserves.

The budget includes $3.3 billion in general fund appropriations, comprising 60 percent of the overall budget. General fund discretionary revenue continues to show modest growth. Estimated discretionary revenue is projected to increase $26.4 million over the current forecast to $781 million. This 4 percent increase is due primarily to modestly rising property-related tax revenues and interest income. Discretionary spending increased to $799.5 million. Of that, an appropriation for general fund contingency is budgeted at $20 million, or 2.5 percent of discretionary revenue.

The gap between discretionary revenue and discretionary spending is covered by departmental reserves and anticipated draw from the reserve for budget stabilization.

To keep discretionary spending within the reserve limits set by the Board, the Executive Office implemented targeted net county cost cuts by approximately 4 percent to achieve the $10 million in savings. Departments achieved these cuts largely through a combination of draws on departmental reserves and deletion of primarily vacant positions. Overall, this budget includes deletion of 780 currently authorized positions, a reduction of 3 percent from the authorized level as of July 2017.

 

Total Budgeted Appropriations

Overall, the budget contains $5.6 billion in total appropriations across all funds, a 1.7 percent net increase of $93 million from the previously budgeted levels. Broken out by function, the largest sector of overall county appropriations is $1.7 billion for public protection at 30 percent, reflecting a 2.5 percent increase, followed closely by $1.5 billion for health and sanitation at 27 percent, reflecting an increase of 3.2 percent, and $1.1 billion for public assistance at 20 percent, reflecting a decrease of 1.2 percent. These three functions comprise 77 percent of total appropriations. General government comprises only 15 percent of all appropriations at $822 million, a net decrease of 1.4 percent, while all others combined comprise only 4 percent.

 

Broken out by spending category, 40 percent of overall appropriations are for salaries and benefits, with 28 percent for services and supplies, and 24 percent for other charges, such as public aid and debt service. Just 4 percent of overall appropriations are for acquisition of fixed assets, and 0.3 percent of the overall budget is set aside for general fund contingency.

 

Personnel Summary

The county uses Budget Schedule 20 to amend the authorized position levels in Ordinance No. 440 in conjunction with annual appropriations. The budget authorizes a total of 24,591 positions, a 3 percent net decrease of 780 positions from the level authorized as of May 2018. This net reduction is principally due to departments shedding vacant positions as expected in response to funding cutbacks. Additional summary analyses are provided below. Further details  regarding  requested and adopted position authorization are  summarized in the  departmental narratives, and provided by budget unit and job classification in Schedule 20.

As of May 2018, 19,479 regular, full-time positions were filled and 5,892 were vacant. On a percentage basis, 77 percent of regular positions authorized were filled, and 23 percent remained vacant, a decrease in vacancy of 1 percent from the previous year. Of those vacant, 37 percent are in public protection, 29 percent in health and sanitation, 22 percent are in public assistance, and, while only 10 percent are in general government. Vacant positions may not need funding for a full fiscal year, if at all.

Total Estimated Revenue

The budget includes $5.4 billion in estimated revenues across all funds, a 3.3 percent net increase of $170 million from the prior budget estimates. By function, general government is projected to collect $1.5 billion, or 29 percent of estimated revenues, an increase of 3.1 percent. It should be noted that general government departments are responsible for collecting the bulk of the county’s general-purpose revenue, which causes the amount of revenue attributed to that functional group to be disproportionate to their appropriations, which are minor by comparison. Such revenues include property taxes, sales and use taxes, and public safety sales tax. Health and sanitation is projected to collect $1.3 billion, or 25 percent of the total, for a net increase of 3.9 percent, public protection is projected to collect $1.1 billion, or 20 percent, a net increase of 3.2 percent, and public assistance is projected to receive $1.1 billion, or 20 percent, a net increase of just 0.1 percent. The other functional areas together comprise only 6 percent of all estimated revenue.

Of total revenues across all funds, 49 percent is intergovernmental state and federal revenues, charges for current services comprise 31 percent, and taxes comprise only 8 percent. Minor revenue sources comprising 4 percent of the balance include licenses, permits and franchises; use of money and property; and fines, penalties, and forfeitures projected.

COUNTY GENERAL FUND

Total General Fund Appropriations

The county general fund is the principal operational fund, comprising 58 percent of total appropriations. The budget includes $3.3 billion in general fund appropriations, an overall 3.0 percent increase of $94.4 million from the current budget. Public protection accounts for the largest portion, totaling $1.4 billion, or 44 percent, reflecting a spending increase of 2.2 percent. A total of $1 billion, or 30 percent, is for public assistance programs, which is up 0.5 percent, and another $679 million, or 21 percent, supports health and sanitation services, reflecting a net increase of 8.2 percent. General government services account for only 5 percent, at just over $161 million, a net increase of 1.9 percent.

Broken out by spending category, 48 percent of general fund appropriations are for salaries and benefits, with 24 percent for other charges, such as public aid and debt service and 23 percent for services and supplies. Just 0.2 percent of general fund appropriations are for acquisition of fixed assets, and 1 percent of the general fund budget is set aside for contingencies.

Total General Fund Estimated Revenue

The budget projects $3.3 billion in estimated general fund revenue, a 4.3 percent net increase of $137 million. By function, public assistance is projected to receive $958 million, or 29 percent of general fund revenue, a net revenue increase of 1.0 percent. Public protection is projected to collect $897 million, or 27 percent, a net revenue increase of
3.5 percent. General government is projected to collect $853 million, or 26 percent of estimated general fund revenues. As noted above, general government departments are responsible for collecting the bulk of the county’s general purpose revenue, causing the amount of revenue attributed to that functional group to be disproportionate to their appropriations. Such revenues include property taxes, sales and use taxes, and public safety sales tax. Health and sanitation is projected to collect $598 million, or 18 percent of general fund revenue, reflecting a net revenue increase of 10 percent. The other functional areas together comprise only 0.3 percent of all estimated general fund revenues.

Broken out by revenue category, $2.1 billion, or 65 percent, of estimated general fund revenue is from the state or federal governments, a net 3.9 percent revenue increase of $80 million. Charges for current services, such as fire and police services to contract cities, comprise $596 million or 18 percent, a net revenue increase of 4.3 percent. Taxes comprise $313 million, or 9 percent, a net increase of 4.2 percent over current estimates. All other revenues comprise just 8 percent of the general fund total.

Discretionary General Fund Estimated Revenue

Overall,  county  spending  is  dominated  by mandated core functions such as health, welfare, and criminal justice, which are heavily supported by purpose-restricted state and federal subventions. While having fiduciary responsibility for oversight of the entire county budget, the Board of Supervisors has discretionary spending authority over a limited amount of the county's overall financial resources.

The Board alone decides how general fund general-purpose revenue will be spent. Only 24 percent, or $781 million, of the county’s estimated general fund revenue is general- purpose, with the remaining 76 percent comprised of purpose-restricted sources such as state and federal revenues. General- purpose revenues  are estimated in part on internal projections based on revenue history, and on reports from independent economists
hired by the county to provide economic forecasts.

Property Taxes

Property  tax  revenue  comprises  47  percent  of  the county’s general purpose revenue, and is estimated at
$370.1 million, including $111.7 million in redevelopment tax increment pass-through revenue. As property values increase, this revenue increases. Property tax estimates assume 5 percent growth in assessed valuation.

Motor Vehicle In-lieu Fees

Motor vehicle in-lieu revenue is estimated at $255.8 million, and represents about 33 percent of the county’s discretionary revenue. When the state converted this revenue source to property tax revenue, it became tied to changes in assessed valuation. In essence, although tracked separately, it is now just another component of property tax revenue. When combined with traditional property taxes, property-driven revenue equates to 79 percent of the county’s general purpose revenue.

Sales and Use Taxes

Sales and use taxes are estimated at $29.1 million and represent about 4 percent of the county’s discretionary revenue. The county lost a significant share of sales tax to incorporations in FY 09/10. This was partially offset briefly from FY 12/13 to FY 15/16 while major solar projects were under construction.

Since completion of these projects, the trend has normalized at just under 1 percent growth.

Teeter Overflow

In 1993, the county adopted the Teeter Plan to secure participating taxing entities’ property tax apportionments against delinquencies. Debt service on the Teeter financing is paid off as delinquent properties are redeemed. State law requires a tax loss reserve fund with a balance equal to 1 percent of the Teeter roll. Any delinquent collections exceeding the 1 percent, called the Teeter overflow, may be transferred to the general fund. As local housing and employment markets continue to strengthen, property tax delinquency rates continue to decline, this will continue to erode this revenue in future years. Due to declining delinquency rates, the

Interest Earnings

The Treasurer’s estimates for interest earnings include several factors: general fund balances in the Treasurer’s pooled investment fund, current interest rates, and the continuation of accommodative U.S. Federal Reserve monetary policy. This positively impacts interest earned by investors such as the Treasurer’s pooled investment fund. Due to recent activity by the Federal Reserve, the County Treasurer expects short-term rates to move incrementally higher in the future. The Treasurer projects interest earnings at $18 million, a 58 percent increase of $6.6 million.

Court Fines and Penalties

Court fines and penalties are estimated to increase 5 percent to $19.2 million. Representing 2 percent of the county’s discretionary revenue, fines and penalties are tied to funding the county’s obligation to the trial courts, and subject to state maintenance-of-effort requirements. The county continues to shift fines and fees resulting from trial court reform to the state.

Documentary Transfer Tax

Documentary transfer tax revenue is generated by recordation of transfers of real property ownership and is up 5 percent to $15.2 million.

Franchise Fees

Franchise fee revenue is collected as part of franchise agreements executed between the county and utility, waste, and cable franchisees. Franchise revenues are typically calculated as a percentage of the franchise revenue from services and sales to customers within the county. Franchise revenue is estimated to decline again 4 percent to $6.9 million. Previously, cable franchise fees were administered by the Clerk of the Board and applied to their budget as departmental revenue. However, since cable franchise fees are declining due to increased obsolescence, this revenue was realigned to discretionary revenue to stabilize the Clerk of the Board’s budget. Franchise revenues tracked here do not include franchise revenue from solar power plant projects, which are deposited to a separate fund per Board policy.

Tobacco Settlement Revenue

In 1998, when the master tobacco litigation settlement was finalized, tobacco companies agreed to pay for causing tobacco-related problems across the nation. California cities and counties entered into an agreement with the state establishing allocation of the proceeds. In 2007, the county sold a portion of its tobacco-settlement income to generate a one-time lump-sum amount, reducing the annual payment to $10 million per year, which the general fund contributes to the county medical center to use for debt service payments.

Federal, State, and Other Miscellaneous

A small portion of the general fund revenue received from federal and state sources is unrestricted and available for discretionary use. Miscellaneous revenue includes other revenue not readily classified in other categories.

General Fund Obligated Fund Balance and Designations

In FY 16/17, the reserves for disaster relief and economic uncertainty were consolidated into a single reserve for budget stabilization. In line with prudent practices for building structurally balanced budgets, projections assume no unassigned fund balance will carry over for use in ongoing operations. Due to a projected general fund operating deficit, the budget anticipates release of $18.5 million from the reserve for budget stabilization.

Discretionary General Fund Appropriations

The discretionary general fund portion of the budget includes $799.5 million in net county cost allocations. These net cost allocations included 4 percent targeted cuts to scale. The tables below list the net county cost allocations summarized by functional area and department within the general fund, with the breakout following of individual contributions to other county funds and outside agencies with which the county has obligations.

STRATEGIC OBJECTIVES & BUDGET POLICIES

The budget was developed with the following Boardapproved strategic objectives in mind.

Strategic Objectives

Data-Driven, Performance-Focused

In 2017, the county established the County Performance Unit (CPU), to strengthen performance assessment and accountability through objectives andmetrics. More specifically, it was established to provide advisory and analytic support to the Executive Office across the areas of policy, strategy, performance, and finance to create a performancedriven, outcomes-focused culture. The CPU designed a Performance Accountability Review (PAR) process,which involved identifying and tracking key performance indicators (KPI). The CPU will facilitate monitoring and reporting on-going strategic transformation initiatives, and guide continual improvement.This process included creation of a Strategic Alignment Framework (SAF) to ensure all levels of the county are marching in the same direction. The Strategic Alignment Framework is composed of three tiers (County, Portfolio, and Department), and provides a network of KPIs to assess progress towards desired strategic outcomes. The framework acknowledges interconnected roles in achieving countywide outcomes. Each tier has a unique set of objectives and KPIs that align to the level above. To reinforce this strategic alignment and performance management mindset, the budget leverages this framework as the basis for the departmental objectives and performance measures contained in the narratives.

Department Objectives

Department budget narratives leverage this groundbreaking Strategic Alignment Framework. It provides drill-down capability on core KPIs, will enable evidenced-based decision-making and more effective deployment of public resources. Department objectives are aligned to corresponding portfolio objectives, which in turn align to county strategic outcomes. In addition, insights provide relevant context to departments’ operating environments, the nature of their KPIs, and KPI trends.

Key Performance Indicators

To gain performance visibility and acountability, many organizations suffer “death by metrics,” overwhelming themselves with too much data. While it is important to measure, not all measures are important.

Therefore, the CPU collaborated with each portfolio to identify only the true “vital signs” that illustrate whether they are meeting their strategic objectives and moving the county toward achieving its strategic outcomes. These vital signs are the first indication that something may be “off” and requiring further root cause analysis by evaluating underlying metrics.

Carefully selected KPIs help steer an organization towards a specified outcome. Distinguishing between KPIs and supporting metrics is helpful in enabling true strategic management and focusing executivelevel discussion. Measuring outcomes achieved is a major departure from past practice, so this is a big step forward for all county departments.

Financial Objectives

The Executive Office focuses multi-year fiscal planning on fiscally sustainable operations that support the county’s long-term strategic vision. These financial objectives include:  Achieving a structurally balanced budget in which ongoing expenditures do not exceed ongoing revenues.  Achieving and maintaining prudent reserves and working capital.  Limiting use of one-time resources only to onetime expenditures and rebuilding reserves.

SHORT & LONG-TERM FACTORS

INFLUENCING OBJECTIVES

Several factors constrain the county’s strategic
financial objectives.

Revenue Growth

Assessed valuation, the basis for property tax and motor vehicle in-lieu, is assumed to grow by 5 percent during the budget year. Optimistically foreseeing continued near-term economic strength, but prudently cautious about the potential for out-year downturn, the Executive Office is now assuming a more graduated cooling to valuation growth that steps down to 3 percent over the next few years. Based on softening growth in taxable sales, assumed sales and use tax and Prop. 172 public safety sales tax estimates remain tempered. However, due to recent actions by the Federal Reserve, the Treasurer’s interest earnings forecast is up substantially. Overall, general-purpose revenue growth is estimated rise 4 percent over the next several years. Unfortunately, revenue growth at this rate will continue to be substantially outpaced by increasing costs.

Labor and Pension Costs

Provisions of past labor agreements and steeply rising pension obligations continue to increase costs for salaries and benefits across departments.

New Detention Center

Phased opening of the new detention center continues to factor substantially into long-term operational planning. The Sheriff’s Corrections budget is increased $7.4 million to address partial year funding for the first phase of operations anticipated to occur in FY 18/19. An additional $12 million for the second phase is currently factored into the multi-year forecast for FY 19/20, $9 million in FY 20/21, and another $15 million in FY 21/22. However, discussions with the Sheriff’s Department are ongoing, with the potential to more gradually ramp up to full operations over a longer period. This single factor will influence most the continued duration of deficit spending and the point at which reserves will be replenished and revenue growth can be focused more fully on ongoing operations.

Inmate Legal Settlement

The county continues working diligently to meet the settlement terms of a federal suit filed on behalf of inmates in the county’s jails. Not part of the settlement terms per se, but triggered by it, are costs to provide security for these added health care workers and their patients. The budget provides an additional $7.6 million to Sheriff Corrections to further address staffing costs associated with satisfying the settlement.

In-Home Supportive Service Costs

In January 2017, the Governor proposed shifting back to counties a significant share of In-Home Supportive Services costs. Based on increased county workload, cost estimates were expected to severely impact county budgets. Fortunately, 1991 realignment growth was sufficient to cover the majority of increased costs in FY 17/18. Further, the Governor is reporting in the May 2018 Revise that projected 1991 realignment revenues are anticipated to continue offsetting fiscal impact to counties through FY 19/20. Although revenue projections are favorable, the potential impact of out-year costs remain unclear due to continued program growth and a revenue stream directly linked to Sales Tax revenue.

Insurance Costs

During the downturn, the county held self-insurance rates low to lighten the burden on departments. However, due to high claim levels in general liability and workers compensation, it was necessary to raise those rates to cover claims and higher reinsurance premiums. Departments have been asked to absorb increases in these costs, the charges for which correlate directly each department’s claims and judgement history.

Internal Service Costs

While most internal service rates were held flat, the distribution of costs for certain internal services has been restructured to more accurately reflect actual usage of those services. This may result in higher charges for some departments, depending on their service usage. These cost increases should be recoverable through claiming and contract rates in most circumstances, although some departments are not able to recover these costs.

MULTI-YEAR FORECAST

The Executive Office prepares multi-year discretionary funding forecasts to set the context for major policy decisions of an ongoing nature. This multi-year approach enables the long-range planning and fiscal discipline necessary to achieve and maintain a structurally balanced budget with adequate reserves (Board policy sets the reserve request

Financial Information

 

Financial Information

FY 2018-2019
FY 2018 - 2019 Adopted Budget
FY 2018 - 2019 Recommended Budget

FY 2017-2018
FY 2017 - 2018 Adopted Budget Volume1
FY 2017 - 2018 Adopted Budget Volume2
FY 2017 - 2018 Adopted Budget
FY 2017 - 2018 Recommended Budget
FY 2017 - 2018 First Quarter Budget Report
FY 2017 - 2018 Midyear Budget Report
FY 2017 - 2018 Third Quarter Budget Report

FY 2016-2017
FY 2016 - 2017 Adopted Budget
FY 2016 - 2017 First Quarter Budget Report
FY 2016 - 2017 Midyear Report
FY 2016 - 2017 Third Quarter Budget Report

FY 2015-2016
FY 2015 - 2016 Adopted Budget
FY 2015 - 2016 First Quarter Budget Report
FY 2015 - 2016 Midyear Budget Report
FY 2015 - 2016 Third Quarter Budget Report

FY 2014-2015
FY 2014 - 2015 First Quarter Budget Report
FY 2014 - 2015 Midyear Budget Report
FY 2014 - 2015 Third Quarter Budget Report

FY 2013-2014
FY 2013 - 2014 First Quarter Budget Report
FY 2013 - 2014 Mid-Year Budget Report
FY 2013 - 2014 Third Quarter Budget Report

FY2012-2013
FY 2012 - 2013 First Quarter Budget Report
FY 2012 - 2013 Second Quarter Budget Report
FY 2012-2013 Third Quarter Budget Report

FY2011 - 2012

FY2010 - 2011
FY 2010 - 2011 Adopted Budget

FY2009-2010
2009-2010 Final Budget

FY2008 - 2009

Comprehensive Annual Financial Report (CAFR)

Compliance Analysis and Investment Report
Statement of Investment Policy

 

Comprehensive Annual Financial Reports (CAFR)

FY 2014 Comprehensive Annual Financial Reports (CAFR)