FY 2013-14 Annual Budget ADA

RETURN TO THE PDF DOCUMENT VERSION OF THE 2013-2014 ANNUAL BUDGET 

INTRODUCTION

The County Executive Office (CEO) is pleased to provide you with the FY 2013-14 Annual Budget. The CEO budget adopted by the Board of Supervisors on June 25, 2013 continues to reflect Orange County's disciplined approach to fiscal management and is consistent with the County's Strategic Financial Planning process.

The FY 2013-14 Annual Budget continues to reflect the impacts of the local, State and National economies, minimal revenue growth, and the rising cost of doing business. The County continues to react to the effects of a sluggish economy. These impacts have been significant to County Departments beginning with the FY 2008-09 Budget and continuing into FY 2013-14. The recessionary period was declared to have officially ended in 2009; however, growth has lagged in the ensuing years. Beginning in late 2011 and into 2012, economic activity reflected modest improvement over the prior year as evidenced by declines in unemployment, and increases in housing prices, manufacturing production, and commercial and retail sales. Most economists are forecasting modest to moderate growth to continue in 2013 and 2014, with potential for stronger growth in 2014. The County anticipates that there will be moderate growth going forward into FY 2013-14; however, it is anticipated that any growth in General Purpose Revenues will not be sufficient to offset costs which are anticipated to grow at a higher rate.

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. This 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 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 2013-14 Budget Summary including:

• Department's plan for support of the County's strategic priorities
• Changes included in the base budget
• Approved budget augmentations and related performance plan
• 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.

In addition to the departmental information available in the County budget book, all County departments prepare biennial business plans. These plans serve two key purposes:

• Communicate the value that the department brings to the community
• Report how the department is doing using outcome indicators

Business plans are published separately by County departments and are available on the County's website. 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).

Departments are currently developing a balanced scorecard, a strategic planning document designed as a framework to achieve balance between vision and strategy, to monitor performance and maintain accountability, and to improve internal and external communications as to how well programs are performing and meeting strategic goals. The balanced scorecard intent is to align performance with funding and establish budgets consistent with performance trends.

II. ORGANIZATIONAL OVERVIEW

Orange County's FY 2013-14 Annual Budget presents the County's financial capacity and priorities in providing public safety and health, social services, environmental, and regional planning services for its residents. The County provides the public with a comprehensive array of public services through its departments and through comprehensive community partnerships with public, private and non-profit agencies.

FORM OF GOVERNMENT

The County is a charter county as a result of the March 5, 2002 voter approval of Measure V that provides for an electoral process to fill mid-term vacancies on the Board of Supervisors. Before Measure V, as a general law County, mid-term vacancies would otherwise be filled by gubernatorial appointment. In all other respects, the County is like a general law county. 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:

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

PATRICIA BATES , 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, community of Newport Coast, Rancho Santa Margarita, San Clemente and San Juan Capistrano.

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

JOHN M. W. MOORLACH , SUPERVISOR , from the Second District, representing the communities of Costa Mesa, Cypress, Fountain Valley (portions of), Huntington Beach, La Palma, Los Alamitos, Newport Beach, Seal Beach, and Stanton.

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

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 shown in ( Table A ):

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 2013-14

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 2013 reflect that the local economy is experiencing a modest 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 but steady. 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 and the state of California. June 2013 unemployment rates were: Orange County 6.1%, compared to 8.9% for the State and 7.6% for the U.S. In contrast, the June 2012 rate for Orange County was 7.1% and rates for surrounding counties in Southern California were 10.2% for Los Angeles County, 10.2% for Riverside County, 10.4% for San Bernardino County and 7.4% for San Diego County. Thus far, Orange County's unemployment rates for calendar year 2013 are 7.1% in January, 6.6% in February, 6.3% in March, 5.7% in April, 5.5% in May, and 6.1% in June. The prior five-year point-in-time unemployment rates for the month of June in Orange County were 5.2% for 2008, 9.3% for 2009, 9.5% for 2010, 9.1% for 2011, and 8.0% for 2012.

Although California has experienced steady job growth in the last three and a half years, the labor markets are still not back to where they were before the recession. Between 2012 and 2013 Orange County's total nonfarm employment is expected to increase by 36,210 jobs, representing a 2.6% increase (The California Economic Forecast: California County-Level Economic Forecast 2013-2040, October 2013). The largest relative growth is expected to be in the information sector with an increase of 1,500 jobs, representing an increase of 6.2%. In terms of absolute growth (as opposed to relative growth as presented above), the largest increase is expected to be in professional services with an increase of 10,900 jobs, representing 4.3% growth. The California Economic Forecast does not project decreases in any industry sector. If the 2013 forecast holds true, the County will still have a net loss of 45,040 jobs in total nonfarm employment between 2008 and 2013 (-3.0%). In addition, hiring at lower salary levels (underemployment), and workforce additions outpacing job creation may continue to negatively impact income and consumer spending.

According to Chapman University (June 2013 projections), Orange County's job growth is expected to increase 2.3% in 2013, and reflects three consecutive years of slight but steady growth after declines which began in 2007 and lasted through 2010. From 2008 to 2010 job growth in Orange County was -2.2% in 2008, -7.4% in 2009, and -1.3% in 2010. In 2011 and 2012, job growth was 1.1% and 2.3%, respectively. Job growth and personal income (forecasted to increase to 5.3% in 2013; up from 4.1% in 2012) continue to be closely monitored.

Inflation , as measured by the Consumer Price Index (CPI), is expected to be slightly higher for Orange County relative to the national level in 2012 and 2013, but slightly lower than increases at the State level. Chapman University projects CPI at the national level to increase by 1.7% in 2013 and 2.1% in 2014. Increases forecasted for California are 2.7% in 2013 and 2.9% in 2014. And increases in Orange County are forecasted at 2.0% in 2013 and 2.5% in 2014. Comparisons of Orange County's historical and projected CPI trends since 2008 to 2012 are inconsistent, with increases of 3.5% in 2008, -0.8% in 2009, 1.2% in 2010, 2.7% in 2011, and 2.0% in 2012.

The real estate housing market continues to be mixed with record year-over-year gains in home prices, but declining sales volume. According to DataQuick Information Systems in a report issued on July 17, 2013, "Southern California home sales fell in June amid a still-tight supply of homes for sale, rising mortgage rates and a letup in investor buying. The median sale price rose at a record year-over-year pace to the highest level - $385,000 - in more than five years, a real estate information service reported." DataQuick also reported that "Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable."

In June 2013, the number of unit sales in Southern California was down (at -2.10%) relative to June 2012, but gains in terms of median sales price were substantial (at 28.30%).

In Orange County, the median sales price was $545,000 in June 2013, representing a 20.30% year-over-year increase from June 2012 when the median sales price was $453,000. Changes in median price among peer Counties during the same period was varied but positive for all surrounding counties with 30.80% in Los Angeles County, 30.40% in Riverside County, 29.10% in San Bernardino County, 24.10% in San Diego County and 23.10% in Ventura County.

With respect to number of sales, 3,350 homes were sold in Orange County in June 2013 compared to 3,351 in June 2012. The year-over-year percentage change in sales during the same period for surrounding counties was -3.60% in Los Angeles County, -7.70% in Riverside County, -5.00% in San Bernardino County, and -5.90% in Ventura County. San Diego County was the only Southern California county to record a year-over-year increase in sales volume at 7.80%

In terms of numbers of homes in default (the first step in the foreclosure process) during second quarter (April, May and June) Orange County experienced a decrease of -54.1%, from 3,599 during the second quarter of 2012 to 1,651 during the second quarter of 2013. This compares to similar decreases in rates of default of -47.7% for Los Angeles County, -55.6% for Riverside County, -51.6% for San Bernardino County, -51.0% for San Diego County, and -52.6% for Ventura County. The actual number of trustee deeds recorded (actual homes foreclosed on) also reflected year-over-year substantial declines as follows: -58.3% for Orange County, -53.7% for Los Angeles County, -55.4% for Riverside County, -51.8% for San Bernardino County, -56.4% for San Diego County and -54.2% for Ventura County.

Orange County 2013 Median family income per the U.S. Department of Housing and Urban Development (HUD) is estimated at $84,100, down from $85,300 in 2013. This compares to $61,900 for Los Angeles County, $62,600 for Riverside County, $62,600 for San Bernardino County, $72,300 for San Diego County, $69,600 for the State of California and $64,400 for the U.S. in 2013.

Taxable sales in Orange County are forecast by Chapman University to increase by 5.9% in 2013 and 6.1% in 2014. This compares to a projected increases of 5.4% in 2013 and 5.6% in 2014 for the State of California. Comparisons of Orange County's historical and projected taxable sales trends since 2008 are sporadic, but promising since 2010; at -6.4% in 2008, -14.7% in 2009, 4.3% in 2010, 8.5% in 2011, and 6.3% in 2012.

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 recovery is anticipated in most economic sectors but growth is expected to be modest.

STATE LEGISLATION AND BUDGET

The Governor signed the 2013-14 budget package on June 27, 2013, adopting a budget projected to end with a $1.1 billion reserve. The 2013-14 Budget Act assumes a decrease in revenue of $1.1 billion offset by fund balance carryover of $872 million and a projected operating surplus of $199 million. In May 2013, the LAO projected higher revenue due to a greater assumed level of capital gains and personal income tax revenues in 2013-14. However, after negotiations with the Governor, the Legislature passed a budget package that relied on the administration's lower revenue estimates.

The FY 2013-14 budget projects long-term fiscal balance with operating surpluses. The adopted budget continues to pay down budgetary borrowing, referred to as the "Wall of Debt," directs additional resources to needy students, continues implementation of federal health care reform, and builds reserves. The budget introduction acknowledges that the balancing was accomplished by a narrow margin, and uncertainty in economic growth and revenue recovery remain. In addition, the State still has liabilities that will take many years to eliminate.

The Federal deficit may have an additional influence on the County. Projections for impacts have not been included in the FY 2013-14 budget as there is still a high degree of uncertainty as to how a final, adopted Federal budget will affect localities.

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 budget information.
• The current year Assessed Roll of Values was up by 1.92%. The change in assessed values for 2013-14 is projected at 2.0%.
• Health & Welfare Realignment revenue from the State allocated to Health, Mental Health, Social Services, and Probation is projected at $217.0 million based upon current program and revenue trends.
• Additional State Realignment revenue included in the County's budget for Sheriff, Probation, District Attorney, Public Defender, and Health Care Agency includes $66.4 million in State funding allocated to support the costs associated with realigned public safety responsibilities regarding adult felony offenders to counties under the 2011 Realignment legislation, AB 109.
• 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 2013-14 are projected to increase 4.5% 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 0.30%, reflecting a decrease of 0.10% from FY 2012-13 gross interest yield of 0.40%.

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. No base building wage increase appropriations are built into the departmental budgets as these are subject to negotiations and approval by the Board of Supervisors. As negotiated agreements are completed, current budget status will be reviewed and the need for budget adjustments will be determined.
• Retirement costs are expected to increase this year by an average of 11.5% when compared to costs included in the FY 2012-13 Modified Budget. Base rates, depending on tier and bargaining group, may range from an increase of 0.8% to an increase of 18.0%. Retirement rates are anticipated to increase through FY 2014-15 primarily due to the five-year actuarial smoothing of the 2008 investment portfolio losses.
• Employee health insurance costs are expected to increase on average by approximately 7.8%.
• Retiree medical cost is budgeted between 0.6% and 4.1% of payroll depending on bargaining group. This rate reflects the modified plan approved by the Board in June 2009. Retiree medical rates will be updated mid-year once the results of the 2013 actuarial valuation are known.
• Inflation on other services and supplies is generally allowed at 2.0% with higher rates for fuel and medical supplies.

2012 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 six elements:

• Economic Forecast
• General Purpose Revenue and Fund Balance Unassigned Forecast
• Strategic Financial Plan Summary
• Reserves Policy
• Capital Improvement Plan
• Strategic Priorities

On December 18, 2012, the Board of Supervisors adopted the County's 2012 Strategic Financial Plan. Due to a projected sluggish economic recovery and declining cash balances in the General Fund, no new strategic priorities were built into the plan. The Strategic Financial Plan included an assumption of zero General Fund Unassigned Fund Balance, modest General Purpose Revenue growth and continuation of the State's 15 year repayment of past mandated cost claims. The spending side included assumptions of 1% growth in departmental Net County Cost limits for FY 2013-14, followed by increases of 2% for FY 2014-15, and 3% for the remaining three fiscal years beginning with FY 2015-16 through FY 2017-18. After factoring in the NCC Limit growth, departments still identified a 5-year cumulative budget gap of $239.0 million. This cumulative budget gap includes $34.1 million in reductions that would be required to meet the FY 2013-14 Net County Cost (NCC) limits. The FY 2013-14 base budgets submitted by Departments balanced the funding gap by limiting funding requests and through anticipated improvements in budgeted revenue. The significance of rising retirement and health and benefits costs, coupled with the potential risks associated with continued deferral of capital maintenance projects, make it necessary to continue to place emphasis on cost reductions. The plan emphasizes that the County must remain diligent, and budgetary control is necessary to maintain balance and realize continued results from the actions Departments have already taken, beginning in 2007. Since that time, service cuts have been made and further reductions and/or new revenues will be necessary to achieve an operating plan that is sustainable over the long-term. The annual update of the Strategic Financial Plan will begin in September of 2013.

IV. OVERVIEW OF THE FY 2013-14 ADOPTED 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. Fund Balance Unassigned (FBU) is estimated and adjusted for increases or decreases to reserves. Revenues plus FBU equals total available financing.

In preparation of the FY 2013-14 Budget and to facilitate GASB 54 requirements, in January 2013, the Auditor-Controller established or renamed the Fund Balance Reserves and Designations in CAPS+ with one of the five new GASB 54 categories (Nonspendable, Restricted, Committed, Assigned, and Unassigned). These new categories will be referred to collectively as Obligated Fund Balances. GASB 54 does not apply to Internal Service and Enterprise funds. Fund Balance Unassigned is estimated and adjusted for increases or decreases to obligated fund balances.

Expenses are budgeted at an amount sufficient for 12 months if they are ongoing and in their full amount if they are one-time items. In each fund, expenses and increases to reserves 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 the 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 December 2012 Strategic Financial Plan and the approved 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 BRASS (the County's budget system) will set the regular salary and employee benefits base budgets. The vacancy factor will be set at the historical actual calendar year 2012 vacancy rates (through pay period 26).

Budgeted extra-help positions must comply with the MOU 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.

Fees and Charges for Services : Departments are responsible for identifying total cost for programs with fees and to set fees at full cost recovery for the entire fiscal year. Full cost recovery includes direct and indirect costs, overhead and depreciation for the period during which the fee will be in effect. If fees are set at less than full cost recovery, the reason for subsidy should be given. Fees that are set by State law shall be implemented in accordance with those laws.

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 including start-up costs, program or reserve stabilization, capital expenses and early debt retirement.

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

Net County Cost (NCC) : NCC limits for the next five years are based on the current budget, adjusted for one-time items and annualization of current year approved ongoing augmentations. The FY 2013-14 budget policy included 1% growth in the limits consistent with the 2012 SFP. Departments were directed to submit budget requests at or below the NCC limits. Due to impacts of the State sweeping the County's VLF revenue, $27 million in departmental NCC contingency reductions were implemented at the time the Board of Supervisors adopted the FY 2013-14 Budget.

Obligated Fund Balances, Reserves, and Contingencies : The County General Fund currently contains obligated fund balances, appropriations for contingencies, appropriated reserve-type funds, and reserves held by others. The purpose of these obligated fund balances is to protect community 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 reserves 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 to be balanced to Available Financing without General Fund subsidy unless previously approved by the Board or CEO. Available Financing shall be determined by a projection of June 30 Fund Balance Unassigned (FBU) and 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 that outline the department's intended outcome(s) resulting from the additional resources. They have been ranked in order of the department's priority for approval. 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 of continued funding. Departments report on outcome indicator results (to the extent data is available by budget submittal due date) 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 CEO/County Budget Office reviewed the requests, met and discussed the requests with the departments, and prepared final recommendations for the Board. These recommendations were presented to the public via a budget workshop and then to the Board of Supervisors 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
11. Total County Budget Comparison by Agency/Department
12. Provision for Reserves & Designations Summary
13. Position Summary
14. Summary of Net County Costs
15. County of Orange Organization Chart

HIGHLIGHTS OF THE FY 2013-14 ADOPTED BUDGET

Total Budget:

• Total County Base Budget is $5.4 billion, a 4.7% decrease from the prior year adopted budget.
• Total budgeted positions are 17,628, an increase of 371 positions from the prior year adopted budget.
• Total General Fund Budget is $2.9 billion, a 5.7% decrease from the prior year adopted budget and below the current modified budget of $3.5 billion.
• General Purpose Revenues are $617.8 million.

Specific Program Highlights:

This section provides highlights of the base budgets and adopted augmentations for the County budget programs and departments. Due to increases in costs which continue to outpace growth in sources, many Departments proposed reductions which are included in the current year adopted budget. Departments have worked diligently to manage their budgets and have significantly reduced funding gaps identified in the 2012 Strategic Financial Plan. Departments continue to consistently maintain programs and minimize impacts on services.

Due to the impact of the State sweeping the County's Vehicle License Fee (VLF) revenue, a total of $27.0 million in departmental contingency reductions were recommended for implementation.

Public Protection

District Attorney

• The District Attorney submitted $4.6 million in proposed appropriation and NCC reductions with a maximum potential of 38 positions to be reduced. All programs within the District Attorney's office will be impacted at some level by the proposed reduction. The adopted restoration was $2.2 million in appropriations, $1.8 million in NCC, and all positions, with the remaining funding derived from savings and revenues not known at the time of budget submittal. Restoration is targeted to support core staffing that is required to provide effective prosecution services. An additional contingency reduction of $2.0 million appropriations and NCC was recommended for implementation.

Probation

• A contingency reduction of $1.4 million in appropriations and $3.0 million NCC was recommended for implementation.

Public Defender

• Public Defender submitted $3.7 million in proposed appropriations and NCC reductions with a maximum potential of 37 positions to be reduced. The reduction in funding would require that the Department begin reducing caseloads immediately. Restoration of $1.9 million appropriations and NCC, and all positions were approved. An additional NCC contingency reduction of $665 thousand was recommended for implementation.

Sheriff-Coroner

• Due to increases in expenditures and County funding limitations, the Sheriff-Coroner submitted $15.8 million in proposed appropriations and NCC reductions with no reduction in positions. Due to funding limitations and additional Tobacco Settlement Revenue (TSR) of $1.9 million, only $10.1 million appropriations and NCC was recommended for restoration. An additional $3.3 million NCC contingency reduction was recommended for implementation.

Community Services

Health Care Agency

• One-time appropriations and NCC of $2.0 million was approved to cover increased enrollment in the Low Income Health Program (LIHP). Contingency reductions of $2.9 million in appropriations, $4.0 million NCC, and deletion of three vacant positions were recommended for implementation.

Social Services Agency

• A contingency reduction of $2.4 million in appropriations and NCC was recommended for implementation.

Infrastructure and Environmental Resources

OC Public Works

• OC Public Works included a $196,096 reduction to meet Net County Cost (NCC) Limits which was recommended for restoration and ongoing funding. A $775,170 NCC contingency reduction and a reduction of $479,674 NCC funded by charges for services revenues were also recommended.
• The Utilities adopted budget included $883,470 recommended for the NCC contingency reduction and a reduction of $160,590 NCC funded by charges for services revenues.

General Government

Assessor

• The adopted base budget for the Assessor includes a $3.7 million reduction in appropriations to meet Net County Cost Limits of which $1.5 million was approved for restoration.
• A one-time service level expansion of $862,051 in appropriations and NCC was approved in support of Assessment Tax System (ATS) costs ($582,051), and equipment refresh ($280,000).
• A contingency reduction of $830,000 in appropriations and $1.0 million NCC was recommended for implementation.

Registrar of Voters

• One-time service level expansion of $2.4 million in appropriations and NCC was approved for the June 2014 Primary Election.
• A contingency reduction of $462,104 in appropriations and NCC was recommended for implementation.

Human Resource Services

• A $150,000 reallocation of Net County Cost from the County Executive Office to Human Resource Services was recommended to reconcile to actions taken in the FY 2012-13 2nd Quarter Budget Report.
• Additional one-time service level expansions of $830,000 in appropriations and NCC were recommended in support of Information Technology projects ($200,000); online Equal Opportunity Employment Training ($110,000); labor negotiation services ($350,000); and investigative personnel services ($170,000).
• A contingency reduction of $189,938 in appropriations and NCC was recommended for implementation.

Treasurer-Tax Collector

• The recommended base budget included a $909,572 reduction in appropriations to meet Net County Cost Limits; a one-time restoration of $500,000 in appropriations and NCC was recommended while a fee study is conducted. A contingency reduction of $96,405 in appropriations and NCC was recommended for implementation.

Other General Government Services

• NCC contingency reductions for other General Government Services departments of $2.3 million were approved as follows: Auditor-Controller ($408,396); Clerk of the Board ($162,368); CAPS Operations and Maintenance ($510,504); County Executive Office ($672,506); County Counsel ($378,064); and Internal Audit ($132,375).

Capital Improvements

Capital Projects

• A contingency reduction of $1.0 million in appropriations and NCC was recommended for implementation. An additional contingency reduction of $6.0 million in appropriations and NCC was also approved.

Data Systems Development Projects

• A contingency reduction of $4.0 million in appropriations and NCC was approved in the final budget adoption.

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 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. Debt related to specific operations such as John Wayne Airport and OC Waste & Recycling are included in Program III where the operational budgets for those operations 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 did not issue Tax and Revenue Anticipation Notes (TRANs) in FY 2012-13 and will continue to monitor cash flow needs in FY 2013-14. The County issued short term taxable Pension Obligation Bonds to prepay, at a discount, a portion of the County's 2013-14 pension obligation. The bonds were issued on January 14, 2013 in the amount of $268 million at rates ranging from .58% to .76%.

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 some of the departmental augmentation requests, incorporates impacts of the state budget proposals as known at this time, addresses important capital needs, and provides adequate reserves.

V. NEXT STEPS

The new fiscal year begins on July 1, 2013. During the 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, final state budget impacts, new legislation, new grants awards, and other circumstances or conditions that may affect the budget.

Please see the following page for contacts regarding information in this report.

Contacts regarding information in this report:

 
COUNTY EXECUTIVE OFFICE:

Michael B. Giancola, County Executive Officer
714.834.6200

Frank Kim, Chief Financial Officer
714.834.4304

COUNTY BUDGET OFFICE:

Michelle Aguirre, County Budget Director
714.834.3530

Budget Planning and Coordination

• Mitch Tevlin, Manager 714.834.6748
• Kathleen Long
• Gina Dulong
• Craig Fowler
• Darlene Schnoor
• Mar Taloma

Financial Planning

• Kathleen Long, Manager 714.834.7410

Public Protection & Community Services

• Margaret Cady, Manager 714.834.3646
• Jaime Martinez
• Dana Schultz

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

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

This County budget document is available on-line at:

• http://www.oc.ca.gov/ceo/finance/