OC Annual Budget FY 2015-16 - ADA

CLICK HERE TO VIEW THE DOCUMENT VERSION OF THE 2015-2016 ANNUAL BUDGET

INTRODUCTION

The County Executive Office (CEO) is pleased to present the FY 2015-16 Annual Budget. The CEO budget, adopted by the Board of Supervisors on June 23, 2015, continues to reflect Orange County’s disciplined approach to fiscal management and is consistent with the County’s Strategic Financial Planning process.

Over the last several years and continuing into FY 2015-16, the County has focused on stabilizing the budget, building reserves, and funding infrastructure needs that were deferred during the Great Recession. This has been and continues to be a challenge considering the rising cost of doing business, moderate revenue growth, and the large backlog of projects to be completed. Use of the County’s Five-Year Strategic Financial Planning process has proven invaluable in balancing and prioritizing all of the County’s needs.

Consistent with economic forecasts, the County anticipates moderate growth in General Purpose Revenues in FY 2015-16; however, if actual trends remain consistent with the County’s 2014 Strategic Financial Plan, it is anticipated that the growth in future years’ General Purpose Revenues will not be enough to offset costs which are anticipated to grow at a higher rate. While the FY 2015-16 Recommended Budget is balanced without the use of reserves for ongoing operating costs, future increases in the cost of doing business that surpass revenue growth could make it difficult to sustain any growth in service levels. Thus, while funding is provided in the FY 2015-16 Budget for increased one-time costs such as for capital projects, any allocation of new revenue for ongoing expanded levels of service is limited. The CEO looks forward to updating the County’s five-year forecast of revenue and expenditures in the 2015 Strategic Financial Plan to be presented to the Board of Supervisors in December 2015. Prior to that time, any necessary adjustments to the County’s FY 2015-16 Budget as a result of currently unknown State or Federal impacts will be presented for Board consideration in the FY 2015-16 First Quarter Budget Report in November 2015.

This introduction contains a guide to reading the budget document, a brief description of the County’s form of government, supervisorial districts, mission statement, and the County’s strategic planning initiative. The introduction also reviews the State budget and economic factors influencing the County budget, provides summary budget information, and budget highlights in various program areas.

I. A CITIZEN’S GUIDE TO READING THE BUDGET DOCUMENT

This document includes information that provides readers with a greater understanding of each department’s mission, organizational structure, and performance results as a narrative context for the budget amounts. The introduction section of Volume I contains several charts and tables that provide an overview of issues affecting the budget, sources and uses of funds, and budgeted positions. Following the introduction are sections that present each department and fund in the County’s seven program areas listed below:

1. Public Protection
2. Community Services
3. Infrastructure and Environmental Resources
4. General Government Services
5. Capital Improvements
6. Debt Service
7. Insurance, Reserves and Miscellaneous

The presentation for each department within each program area includes:

An Operational Summary including:

• Mission
• Budget at a Glance
• Strategic Goals
• Key Outcome Indicators (Performance Measures)
• Key Accomplishments of the current year

An Organizational Summary including:

• Organization Chart
• Description of each major activity
• Ten-year staffing trend chart with highlights of staffing changes

A FY 2015-16 Budget Summary including:

• Department’s plan for support of the County’s strategic priorities
• Changes included in the base budget
• Budget augmentations and related performance plans
• Recap of the department budget
• Highlights of key budget trends
• A matrix of the budget units under the department’s control

Volume II contains additional budget detail. Readers looking for more detailed budget information for a specific department can use the Index at the end of Volume II. Departments are listed in alphabetical order with the page number of that department’s budget information.

Department business plan information is incorporated into this document. A business plan sets forth long-term goals, discusses operational and budget challenges, identifies strategies for overcoming the challenges and making progress on those goals during the coming year, and identifies how success will be measured by using outcome indicators (key performance measures).

II. ORGANIZATIONAL OVERVIEW

Orange County’s FY 2015-16 Annual Budget presents the County’s financial capacity and priorities in providing public safety and health, social and community services, and environmental and regional planning services for its residents. The County provides the public with a wide-ranging array of public services through its departments and comprehensive community partnerships with public, private, and non-profit agencies.

FORM OF GOVERNMENT

The County functions under a Charter adopted in 2002, including subsequent amendments. A five-member Board of Supervisors governs the County. Each elected member serves a four-year term, and the Board annually elects a Chair and Vice Chair. Each district varies in geographical size; however, the populations are relatively equal at approximately 600,000 residents.

The members of the Board of Supervisors by district are as follows:

TODD SPITZER , CHAIRMAN , from the Third District, representing the communities of Anaheim (portions of), Irvine (portions of), Orange, Tustin, Villa Park, and Yorba Linda.

LISA BARTLETT , VICE CHAIRMAN , from the Fifth District, representing the communities of Aliso Viejo, Dana Point, Irvine (portions of), Laguna Beach, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Mission Viejo, Rancho Santa Margarita, San Clemente and San Juan Capistrano.

ANDREW DO , SUPERVISOR , from the First District, representing the communities of Fountain Valley (portions of), Garden Grove, Santa Ana, and Westminster.

MICHELLE STEELE , SUPERVISOR , from the Second District, representing the communities of Buena Park (portions of), Costa Mesa, Cypress, Fountain Valley (portions of), Huntington Beach, La Palma, Los Alamitos, Newport Beach, Seal Beach, and Stanton.

SHAWN NELSON , SUPERVISOR , from the Fourth District, representing the communities of Anaheim (portions of), Irvine (portions of), Brea, Buena Park (portions of), Fullerton, La Habra, and Placentia.

STRATEGIC PLANNING INITIATIVE

The County strives to fulfill its mission :

Making Orange County a safe, healthy, and fulfilling place to live, work, and play, today and for generations to come, by providing outstanding, cost-effective regional public services.

The County is committed to providing Orange County residents with the highest quality programs and services as articulated in its mission statement. Supporting the County’s mission is a set of vision statements for business and cultural values (please see the following Table A ):

VISION STATEMENT FOR BUSINESS VALUES	VISION STATEMENT FOR CULTURAL VALUES
We strive to be a high quality model governmental agency that delivers services to the community in ways that demonstrate:	We commit to creating a positive, service-oriented culture which:
Excellence - Provide responsive and timely services Leadership - Leverage available resources as we partner with regional business and other governmental agencies Stewardship - Seek cost-effective and effective methods Innovation - Use leading-edge, innovative technology	Attracts and retains the best and the brightest Fosters a spirit of collaboration and partnership internally and externally Supports creativity, innovation, and responsiveness Demonstrates a “can-do” attitude in accomplishing timely results Creates a fun, fulfilling and rewarding working environment Models the following core values in everything we do: Respect Integrity Caring Trust Excellence

III. ECONOMIC OUTLOOK FOR FY 2015-16

Key factors that influence the local Orange County economy include the unemployment rate, job growth, inflation, housing market, incomes, and taxable sales. External and internal indicators provide information about the state of the Orange County economy. The County routinely monitors: (a) how well the local economy performs relative to surrounding counties, the State and the Nation (External Indicators); and (b) how well the local economy performs relative to its own historical trends (Internal Indicator). In terms of the external indicators, Orange County’s economy routinely out-performs local surrounding counties, the State, and National economies. External indicators for 2015 reflect that the local economy is experiencing a moderate recovery, trending more favorable when compared to State and National economies. In terms of internal (historical) trends, current and projected indicators forecast that economic recovery at the local level will continue to be slow and moderate. This section provides trend data for various external and internal indicators that summarize the current and projected outlook of the Orange County economy.

Orange County’s unemployment rate continues to be one of the lowest in the State, and is below that of all surrounding Southern California counties, the State and Nation. June 2015 unemployment rates were:

COMPARATIVE EMPLOYMENT STATISTICS (June 2015)

	Total Labor Force	No. of Employed	% Unemployment
United States	158,283,000	149,645,000	5.5%
California	19,055,900	17,876,700	6.2%
Los Angeles County	5,070,900	4,697,600	7.4%
Orange County	1,599,800	1,530,800	4.3%
Riverside County	1,021,500	954,400	6.6%
San Bernardino County	918,500	859,200	6.5%
San Diego County	1,565,900	1,487,900	5.0%

Sources: Bureau of Labor Statistics; State of California Employment Development Department; not seasonally adjusted

ORANGE COUNTY HISTORICAL EMPLOYMENT STATISTICS

Year	% Unemployment
June 2011	9.4%
June 2012	8.3%
June 2013	6.8%
June 2014	5.5%
June 2015	4.3%

• Thus far, Orange County’s unemployment rates for calendar year 2015 are 4.3% in June, 4.2% in May, 4.1% in April, 4.4% in March, 4.6% in February, and 5.0% in January. In California, initial claims for unemployment decreased by 18.8% and weeks paid decreased by 9.4% from June 2014 to June 2015.
• Year over year employment trends are positive across all industry sectors with the exception of Information. Between June 2014 and June 2015, changes in employment are as follows:

ORANGE COUNTY YEAR-OVER-YEAR EMPLOYMENT STATISTICS

Labor Force Sector	Number of Jobs Increase/ (Decrease)	Percent Change Year-Over-Year
Non-Farm Employment	53,000	3.55%
Professional & Business Services	8,000	2.92%
Educational & Health Services	12,700	6.74%
Leisure & Hospitality	3,400	1.73%
Construction	6,200	7.62%
Financial Activities	1,600	1.39%
Information	(200)	(0.83)%

Source: State of California Employment Development Department

According to Chapman University (June 2015 projections), Orange County’s job growth is expected to increase 3.1% in 2015, which is sharply higher than the growth rate of 2.5% in 2014.

ORANGE COUNTY HISTORICAL JOB GROWTH

Year	% Payroll Employment
2010	-1.2%
2011	1.1%
2012	2.7%
2013	2.8%
2014	2.5%
2015 Forecast	3.1%

Source: Chapman University Economic & Business Review, June 2015

• Personal income, which is forecasted to increase in the 4.8% to 5.1% range during the FY 2015-16 period, and job growth will continue to be closely monitored.
• Inflation , as measured by the Consumer Price Index (CPI), increased slightly less for Orange County relative to the State and the National levels in 2014; but is forecasted to increase slightly more than the State and National levels in 2015.

CONSUMER PRICE INDEX

Year	Orange County	California	United States
2010	1.2 %	1.3%	1.6%
2011	2.7 %	2.7%	3.1%
2012	2.0 %	2.2%	2.1%
2013	1.1 %	1.5%	1.5%
2014	1.3 %	1.8%	1.6%
2015 Forecast	1.0 %	0.9%	0.0%

Sources: Chapman University Economic & Business Review, June 2015;
The UCLA Anderson Forecast for the Nation and California, June2015 report

The real estate housing market has picked up somewhat in California with January 2015 through June 2015 sales volume up 6.8% and median sales prices up by 4.9% above those recorded for the January through June period in 2014.

Orange County 2015 Median family income per the U.S. Department of Housing and Urban Development (HUD) was estimated at $85,500, up by 0.5% from the 2014 median family income estimate for Orange County of $85,100. According to the Chapman University Economic & Business Review in December 2015, home buyers with a median family income of $89,000 will need approximately 37.9% of their gross income to pay for interest, principal and property taxes. This is lower than the 47.1% of gross income needed in 2006, but still higher than the 26.4% needed in 2012.

PEER COUNTIES - COMPARATIVE HOUSING ANALYSIS

County	Median Home Price (as of June 30)			Unit Sales (January through June)	Median Family Income
	2014	2015	% Change	2015	2015
Los Angeles	$460,000	$500,000	8.7%	38,232	$62,300
Orange County	$600,000	$629,500	4.9%	17,982	$85,500
Riverside	$298,500	$315,000	5.5%	19,387	$63,500
San Bernardino	$240,000	$268,750	12.0%	13,346	$59,600
San Diego	$450,000	$476,000	5.80%	20,586	$74,600
Ventura	$470,000	$517,800	10.2%	5,010	$85,300

Sources: CoreLogic (Housing)-Median Home Price as of June 30 each reported year and Unit Sales January 2015 through June 2015; and U.S. Housing and Urban Development (Income); Median Family Income is forecasted for 2015 using 2011 America Community Survey 5-year median income estimates and rounded to the nearest $100.

Foreclosure rates are calculated by dividing total County housing units per the U.S. Census Bureau by the total number of properties that received notices of default (new filings, foreclosure in process, not yet recorded) within the month. RealtyTrac, Inc. reports that 1 in 1,690 Orange County homes received a foreclosure filing in August 2015. Among peer counties, Orange County had the lowest foreclosure rate in August (see following table). For the first six months of 2015, there were 2,206 notices of default issued, and 616 trustee’s deeds filed (completed and recorded). In calendar year 2014, there were a total of 4,881 notices of default and 1,247 trustee deeds issued. RealtyTrac reports that the median foreclosure sales price in August 2015 in Orange County was $520,000, approximately 16.8% lower than non-distressed home prices during the same month.

FORECLOSURE STATISTICS

County	Foreclosures
Los Angeles County	1 in 1,612
Orange County	1 in 1,690
Riverside County	1 in 794
San Bernardino County	1 in 724
San Diego County	1 in 1,608

Source: RealtyTrac, Inc. as of August 2015

• Taxable sales in Orange County are forecast by Chapman University to increase by 5.2% in 2015 and 5.6% in 2016. This compares to a projected increase of 6.6% for the State included in the FY 2015-16 Enacted Budget. Board of Equalization reports taxable sales two years in arrears.

ORANGE COUNTY TRENDS - Taxable Sales in the 2nd Quarter

For the 2nd Quarter / Calendar Year	Taxable Sales (Billions)	Percent Change
2016 (f)	$16.85	5.6%
2015 (f)	$15.96	4.9%
2014	$15.22	5.6%
2013	$14.42	4.4%
2012	$13.80	6.3%
2011	$13.08	8.1%
2010	$12.10	4.6%

Source: Chapman University Economic & Business Review, June 2015

In summary, most indicators reflect that the economic condition of Orange County is better than or comparable to surrounding counties, the State, and the Nation. With respect to historical (internal County) trends, some level of growth is anticipated in most economic sectors but is expected to be modest to moderate.

STATE LEGISLATION AND BUDGET

On June 24, 2015 the Governor signed the FY 2015-16 State Budget which continues to pay down debt and saves for future needs in accordance with the newly implemented Proposition 2, Rainy Day Budget Stabilization Act (2014). The budget outlines $115 billion in General Fund expenditures, estimates a $4.6 billion reserve by the end of FY 2015-16, and pays down $1.9 billion in non-retirement budget debt. Spending was increased in several areas including education, health care, In-Home Supportive Services, workforce development, and drought assistance while increasing overall General Fund spending by approximately 0.8%. The Governor, in the budget introduction, cautioned that despite stronger revenues, the budget was “precariously balanced.”

The 2015-16 Budget Act includes one-time resources of $1.8 billion to continue the response to drought impacts including protecting and expanding local water supplies, conserving water and responding to emergency drought-response activities. In addition, the budget includes $125 million to address critical deferred infrastructure maintenance and creates a trust fund for the prefunding of retiree health benefits. The Governor did identify remaining fiscal issues to be addressed with the funding of (1) maintenance of roads, highways and other infrastructure; and (2) the state’s health care delivery system. These items are to be addressed during special sessions called by the Governor. The Budget Act also established the state’s new Earned Income Tax Credit (EITC) and a program to help residents pay past due court-ordered debt and regain their drivers’ licenses.

In June 2015, the State Legislative Analyst’s Office (LAO) released an overview of the FY 2015-16 Budget and concluded that the Governor’s revenue assumptions were conservative. The Governor and the LAO acknowledge that the budget potentially is at risk for economic downturns that could develop with little warning and that increasing budget reserves and repaying State debt remain important objectives.

The County continues to monitor State fiscal policy on an ongoing basis for possible funding impacts. The final payment of $765 million owed to local governments for pre-2004 mandate debt is included in the adopted budget of which the remaining amount due to Orange County is approximately $423 thousand. Any impacts as a result of the final State budget will be addressed during the fiscal year as they become known.

MAJOR REVENUE AND EXPENSE ASSUMPTIONS

The County budget includes a wide variety of funding sources. The budget recommendations are based on the following revenue assumptions:

• State and Federal funding sources are estimated by departments based on established funding allocation formulas, caseload projections, and the latest State and Federal budget information.
• The 2014-15 Assessed Roll of Values was up by 6.36%. The Assessor released the 2015-16 Local Assessment Roll of Values on June 29, 2015. The roll is up 5.89% or $27.7 billion more than 2014-15. The FY 2015-16 budget currently reflects a 4.87% increase in secured property tax revenue from FY 2014-15 actual receipts.
• 1991 Health & Welfare Realignment revenue from the State allocated to Health, Mental Health, Social Services, and Probation is projected at $190.6 million based upon current program and revenue trends.
• The Statewide allocation of AB109 (2011 Public Safety Realignment) revenue is up resulting in a $5.2 million combined increase in base and growth revenue for Orange County; $6.8 million in additional one-time funding is provided by the State in FY 2015-16 for costs associated with transition and stabilization.
• The one-half cent Public Safety Sales Tax (Proposition 172) funds are allocated 80% to the Sheriff’s Department and 20% to the District Attorney by Board policy. Receipts for FY 2015-16 are projected to increase 4.2% over the current year adopted budget based on State and economists’ projections and trend data.
• The interest rate on cash balances in the County Investment Pool administered by the County Treasurer is expected to average 0.55%, reflecting an increase of 0.14% from FY 2014-15 revised projections of 0.41% (March 2015 Treasurer’s Monthly Investment Report).

Assumptions for various categories of expenses include:

• Labor costs are centrally calculated based on approved positions and historical vacancy factors. One to two step merit increases are assumed for employees who are eligible. Actual merit awards are based on the employee’s performance evaluation.
• A 1% base building wage increase for projected growth in salaries is included, but does not represent a commitment for bargaining purposes. Salary increases are subject to negotiations and Board approval.
• Overall retirement costs are decreasing this year by approximately 2.5% when compared to costs included in the FY 2014-15 Adopted Budget. The decline in retirement costs is mainly attributable to the elimination of County pick-up of employee retirement contributions in the last round of negotiations, as well as an increase in the number of employees in the reduced retirement benefit plans governed by the Public Employees’ Pension Reform Act of 2013 (PEPRA). Base rates, depending on bargaining group, range from a decrease of -4% to an increase of 2%. Base rate growth has slowed as a result of the collective effects of: combining and re-amortizing the outstanding UAAL (Unfunded Actuarial Accrued Liability) balance over a single 20-year period; higher than expected investment returns (after smoothing); lower than expected salary increases; and lower than anticipated growth in total payroll.
• Health insurance rates are expected to increase by 12% to 14% above FY 2014-15 year-end projected expenditures depending on health plan type. FY 2015-16 budgeted health insurance costs are expected to increase from the FY 2014-15 budget by an average of approximately 1.4% due to health plan changes implemented in FY 2014-15 that have mitigated the increase of year-over-year budgeted costs.
• Retiree medical cost is budgeted at 0.6% to 4.8% of payroll depending on bargaining group. Retiree medical rates are based on a bi-annual valuation. FY 2015-16 Recommended Budget retiree medical rates are based on the June 30, 2013, valuation approved by the Board in February 2015.
• Services and supplies shall be budgeted at the same level as actual use during last fiscal year and current year projections to the extent they are necessary to support business plan and Strategic Financial Plan goals.

2014 STRATEGIC FINANCIAL PLAN

The Strategic Financial Plan (SFP) process provides the framework for aligning available resources with operating requirements, implementing new programs and facilities and serves as the foundation for the annual budget. This framework enables the Board to make annual funding decisions within the context of a comprehensive, long-term perspective. Since 1998, the Strategic Financial Plan has been updated annually to review the financing necessary to carry out programs and services. New priorities are identified and considered as part of a comprehensive update of the plan.

The Strategic Financial Plan contains five elements:

• Economic Forecast
• General Purpose Revenue and Fund Balance Unassigned Forecast
• Program Cost Forecast
• Strategic Priorities
• General Fund Reserves Policy

The County’s 2014 Strategic Financial Plan was presented to the Board of Supervisors on December 9, 2014. The Strategic Financial Plan included an assumption of zero General Fund Unassigned Fund Balance and modest General Purpose Revenue growth. The spending side included assumptions of 3% growth in departmental Net County Cost (NCC) limits for FY 2015-16 through FY 2019-20. After factoring in the NCC limit growth, departments still identified a 5-year cumulative budget gap of $118 million, or $226 million when partial reserve replenishment is taken into consideration. The $118 million cumulative gap includes $42 million in reductions that would be required to meet the FY 2015-16 NCC limits. Actual proposed reductions in the FY 2015-16 Budget to meet NCC limits are $43 million. The plan emphasizes that the County must ensure that resources and programs are aligned to countywide strategic priorities and values. Planning for the future should continue to include budget stabilization, preparation for contingencies, and funding of infrastructure needs deferred during the economic downturn.

IV. OVERVIEW OF THE FY 2015-16 APPROVED COUNTY BUDGET

BASIS OF BUDGETING

The County’s budget and its accounting system are based on the modified accrual system. The fiscal year begins on July 1. Revenues are budgeted as they are expected to be received or as they are applicable to the fiscal year. Consistent with generally accepted accounting principles, revenues are recognized when they are measurable and available.  The County’s availability criterion is 60 days after the end of the fiscal year.

Expenses are budgeted at an amount sufficient for 12 months if they are ongoing, and as needed in either partial or full amounts if they are one-time items. In each fund, expenses and increases to obligated fund balances must be balanced with available financing.

BUDGET DEVELOPMENT

The following budget development policies and guidelines are used by all County departments as a starting point for budget development:

Consistency with Strategic Financial Plan and Business Plan Concepts : Base operating budget requests shall be consistent with the priorities and operational plans contained in the 2014 Strategic Financial Plan and the departmental business plans as resources are available. Department heads are responsible for using these planning processes along with program outcome indicators to evaluate existing programs and redirect existing resources as needed for greater efficiency, to reduce cost and minimize the requests for additional resources. A certification regarding the evaluation of existing resources is required as part of the budget request submittal.

Salaries & Employee Benefits : The Salary and Benefits Forecasting System (SBFS) in the County’s budget system, Performance Budgeting (PB), sets the regular salary and employee benefits base budgets. Salary and employee benefits are reduced to account for vacant positions based on the average number of vacant positions during calendar year 2014 (through pay period 26).

Budgeted extra-help positions must comply with Memorandum of Understanding provisions. Those that do not are to be deleted with a corresponding reduction in the extra-help account.

Services & Supplies : Services and supplies shall be budgeted at the same level as actual use during last fiscal year and current year projections to the extent they are necessary to support business plan and Strategic Financial Plan goals.

Program Revenue and Grants : Program revenues (e.g. State and Federal programs revenues) are to be used to offset the department’s proportional share of operating costs to the full extent of the program regulations. Local matching funds should normally be at the legal minimum so that the General Fund subsidy (backfill) is minimized. Program revenues are to be used for caseload growth.

One-time revenues shall be limited for use on non-recurring items such as start-up costs, program or reserve stabilization, and capital expenses.

New revenue sources pending legislation or grant approval are not included in the base budget request. They will be considered during the quarterly budget report process (i.e. when legislation is passed or grants awarded).

Net County Cost (NCC) : NCC limits are based on the current budget, adjusted for one-time items and annualization of current year approved ongoing augmentations. The FY 2015-16 budget policy includes 3% growth in the limits consistent with the 2014 SFP.

Obligated Fund Balances, Net Position and Contingencies : The County General Fund currently contains obligated fund balances (reserves) and appropriations for contingencies. The purpose of these obligated fund balances is to protect County mandated programs and services from temporary revenue shortfalls and provide for unpredicted, sudden, and unavoidable one-time expenditures. Certain departments and non-General Funds have other obligated fund balances, or net position (similar to retained earnings), dedicated to specific programs and uses.

Balanced Budget : The General Fund requirements will be balanced to available resources. Budgets for funds outside the General Fund are balanced to Available Financing without General Fund subsidy unless previously approved by the Board or CEO. Available Financing shall be determined by realistic estimates of budget year revenues and any planned changes to obligated fund balances.

Augmentations (requests for new or restored resources) : All augmentation requests require outcome indicators (performance measures) that outline the department’s intended outcome(s) resulting from the additional resources. Department heads have certified that all potential alternatives for redirecting existing resources have been examined and that lower priority items have been reduced or eliminated in order to free up existing resources.

Previously approved augmentations undergo an outcome indicator review for two subsequent years as a condition for continued funding. Departments report on outcome indicator results of the performance expectations. Prior year augmentations are funded if the CEO and department agree that:

• They meet the performance expectations
• They merit continuation
• They are still relevant to the department’s business plan
• Sufficient funding exists

Program Budgets Outside the General Fund : It is the department head’s responsibility to ensure that the proposed use of program funds is consistent with the available financing and legal restrictions on funds, the department’s business plan, and the County’s strategic priorities; and has been coordinated with the appropriate stakeholder groups external to the County.

In context of these policies and guidelines, departments prepared current year projections of expenses and revenues and requests for the next fiscal year. The County Budget Office reviewed the requests, met and discussed the requests with the department, and prepared final recommendations for the Board. These recommendations are presented to the Board of Supervisors and public during public budget hearings. Operating and capital budgets are prepared in this single process and presented together in this budget book.

Preceding the budget program sections, the following charts and schedules are provided as an overview of the budget:

1. Total County Revenue Budget
2. Total County Financing
3. Total County Revenues by Source
4. Total County Appropriations by Program
5. General Fund Sources & Uses of Funds
6. General Fund Appropriations by Program
7. General Purpose Revenue
8. General Fund Net County Cost by Program
9. Public Safety Sales Tax
10. Health & Welfare Realignment (1991)
11. Total County Budget Comparison by Department
12. Provision for Obligated Fund Balances, Reserves & Designations Summary
13. Position Summary
14. Summary of Net County Costs
15. County of Orange Organization Chart

HIGHLIGHTS OF THE FY 2015-16 RECOMMENDED BUDGET

Total Budget:

• Total County Budget is $5.8 billion, a 6% increase from the prior year adopted budget due primarily to inclusion of appropriations for planned one-time capital expenditures.
• Total budgeted positions are 18,148, an increase of 95 positions from the prior year adopted budget.
• Total General Fund Budget is $3.2 billion, a 4.8% increase from the prior year adopted budget due primarily to property tax revenue growth and appropriations for one-time capital expenditures.
• General Purpose Revenue (GPR) is $723.1 million, which is $51.1 million (12.5%) increase from prior year adopted budget.

Specific Program Highlights:

This section provides highlights of the base budgets and recommended augmentations for the County budget programs and departments. Due to increases in costs which continue to outpace growth in sources, some Departments have proposed reductions included in the recommended budget and which are recommended for full or partial restoration. Departments have worked diligently to manage their budgets to consistently maintain programs and minimize impacts on services.

Public Protection

District Attorney

• The District Attorney submitted $6.9 million in proposed reductions with a maximum potential of 51 positions to be reduced. The adopted restoration of $5.8 million ($5.6 million ongoing and $210 thousand for one-time costs) and all positions will support core staffing for effective prosecution services. The District Attorney and County Executive Office will work closely throughout the fiscal year to manage the funding gap to ensure no impacts on public safety or staffing.

District Attorney-Public Administrator

• District Attorney-Public Administrator submitted $1.2 million in proposed reductions with a maximum impact of four position reductions. Full restoration of the funding and positions was approved to sustain core mandated functions and address backlog of cases. Ongoing funding was approved at 50% of the restoration request with the remaining 50% approved for one-time costs.

Public Defender

• Public Defender submitted $1.6 million in proposed reductions with a maximum potential impact on 18 positions. Full restoration of the funding and positions was approved.

Sheriff’s Department

• Due to increases in expenditures and County funding limitations, the Sheriff’s Department (Sheriff) submitted $23.8 million in proposed reductions with a potential maximum impact on 71 positions. All positions and $21 million in funding were approved for restoration. The Sheriff and County Executive Office will work closely throughout the fiscal year to manage the $2.8 million funding gap to ensure no impacts on public safety or staffing.
  
  In addition, Sheriff requested $7 million in expand augmentations to add one position for the OC Crime Lab; one position for emergency management; and two positions for the Closed-Circuit Television System (CCTV) upgrade and expansion. The adopted budget included $3.3 million to fund the additional positions and equipment replacement and upgrades. Additional one-time funding may be provided through the quarterly budget report process pending notification of receipt of grant funding and/or receipt of SB90 reimbursement monies from the State.

Community Services

OC Community Resources

• OC Community Resources requested $6.95 million for acquisition, rehabilitation and/or construction of two year-round emergency shelters. The approved budget included a total of $6.5 million in funding with $3.1 million coming from FY 2014-15 unspent money and $3.4 million redirected from ongoing operating costs included in the FY 2015-16 base budget not anticipated to be needed during the fiscal year. The approved recommendations are consistent with the County’s ten-year plan to end homelessness.

Infrastructure and Environmental Resources

OC Waste & Recycling (OCWR)

• The adopted budget includes the ability to borrow up to $31.8 million from OCWR to fund costs associated with the James A. Musick jail expansion ($9 million), Property Tax System upgrade ($3.5 million), and La Pata Gap Closure ($19.3 million) projects. All borrowed funds will be repaid within three years from various funding sources.

General Government

CAPS Program

• The Auditor-Controller requested, and the adopted budget includes, funding of $6.5 million for the CAPS+ Financial, Purchasing, and Human Resources/Payroll system upgrade. One-time funding from fund balance set aside in FY 2014-15 and previous fiscal years is recommended for approval.

County Counsel

• County Counsel requested, and the adopted budget includes an additional $3 million, which is recommended for approval to cover the cost of outside legal services.

Registrar of Voters

• A one-time service level expansion of $4.5 million Net County Cost is included in the adopted budget for the June 2016 Primary Election.

Treasurer-Tax Collector

• The adopted budget includes a $949 thousand reduction in appropriations to meet the Net County Cost limit. Restoration of $799 thousand ($593 thousand ongoing and $206 thousand for one-time costs) is included in the adopted budget.

Capital Projects

Capital Projects

• The adopted budget includes funding of $4.1 million for the following projects: El Toro Development Project ($1.4 million); Joplin Pond repair ($550 thousand); and Juvenile Hall Multipurpose Rehabilitation Center ($2.1 million).

Debt

The adopted budget funds all debt obligation payments. Budgets displayed in Program VI include amounts for annual payments on the County’s refunded debt financing of the Juvenile Justice Center, Manchester parking facilities, and debt financing of infrastructure improvements in the County’s Assessment Districts and Community Facilities Districts. Although the County’s former 1996 and 1997 Pension Obligation Bonds were economically defeased, this budget reflects the payments made by the trustee from escrow. This program also includes the debt associated with the County’s Teeter program. The 2005 Refunding Recovery Bonds were retired on June 1, 2015, therefore appropriations are no longer budgeted for the debt service related to those bonds. Debt related to the specific operations of John Wayne Airport is included in Program III where the operational budgets for that department are also found. Based on the County’s Strategic Financial Plan and at current funding levels, the County is able to fulfill these debt obligations and sustain current and future services and operations.

Cash Flow Management

The County issued short term taxable Pension Obligation Bonds to prepay, at a discount, a portion of the County’s FY 2015-16 pension obligation. The bonds were issued on January 13, 2015 in the amount of $339.6 million at rates ranging from 0.425% to 0.800%.

IV. SUMMARY

This budget serves as a realistic plan of resources available to carry out the County’s core businesses and priorities. It is consistent with the County’s mission statement, the Strategic Financial Plan and departmental business plans. It follows the CEO budget policy guidelines, meets most of the departmental augmentation requests, incorporates impacts of the State budget proposals known at this time, addresses important capital needs and provides adequate reserves.

V. NEXT STEPS

The new fiscal year begins on July 1, 2015. During the next fiscal year, the CEO will present the Board with quarterly budget status reports and recommend appropriate changes as needed, including changes which may arise from final County fund balances,
new legislation, new grants awards, and other circumstances or conditions that may affect the budget.

Contacts regarding information in this report:

COUNTY EXECUTIVE OFFICE:

Frank Kim, County Executive Officer
714.834.6200

Michelle Aguirre, Chief Financial Officer
714.834.4304

COUNTY BUDGET OFFICE:

Lisa Bohan-Johnston, County Budget Director
714.834.3530

Budget Planning and Coordination

• Jaime Martinez 714.834.4104
• Craig Fowler
• Mar Taloma

Strategic & Financial Planning

• Kathleen Long, Manager 714.834.7410
• Darlene Schnoor

Public Protection & Community Services

• Kim Engleby, Manager 714.834.7487
• Kim Olgren-Potter
• Scott Price

Infrastructure and Environmental Resources, General Government, Capital Projects and Debt Service

• Anil Kukreja, Manager 714.834.4146
• Theresa Stanberry
• Sheri Vukelich

This County budget document is available on-line at:

• http://www.oc.ca.gov/ceo/finance/

The County also invites you “Inside OC Financials” to explore additional financial information including the OpenGov data tool, Strategic Financial Plan, and quarterly budget reports.

• http://ocgov.com/about/openoc/