RETURN TO THE PDF DOCUMENT VERSION OF THE 2014-2015 ANNUAL BUDGET
INTRODUCTION
The County Executive Office (CEO) is pleased to provide you with the FY 2014-15 Annual Budget. The CEO budget adopted by the Board of Supervisors on June 24, 2014 continues to reflect Orange County’s disciplined approach to fiscal management and is consistent with the County’s Strategic Financial Planning process.
The FY 2014-15 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 adjust to the effects of a slowly recovering economy with a focus on stabilizing the budget along with a renewed emphasis on infrastructure needs. The recessionary period was declared to have officially ended in 2009; however, growth has been muted when compared to prior recoveries from economic downturns. 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 2014 and 2015, with potential for stronger growth in 2015. The County anticipates that there will be moderate growth going forward into FY 2014-15; 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:
I. Public Protection
II. Community Services
III. Infrastructure and Environmental Resources
IV. General Government Services
V. Capital Improvements
VI. Debt Service
VII. 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 2014-15 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.
II. organizational overview
Orange County’s FY 2014-15 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 (please see the following Table A):
Table A
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VISION STATEMENT FOR BUSINESS VALUES
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VISION STATEMENT FOR CULTURAL VALUES
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We strive to be a high quality model governmental agency that delivers services to the community in ways that demonstrate:
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We commit to creating a positive, service-oriented culture which:
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- 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
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- 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
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Business plans are published separately by County departments and are available on the County’s website. 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
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).
III. Economic Outlook for FY 2014-15
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 Indicators). In terms of the external indicators, Orange County’s economy routinely out-performs local surrounding counties, the State, and National economies. External indicators for 2014 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 and the State of California. June 2014 unemployment rates were:
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COMPARATIVE EMPLOYMENT STATISTICS (June 2014)
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Total Labor Force
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No. of Employed
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% Unemployment
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United States
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155,694,000
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146,221,000
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6.1%
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California
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18,619,300
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17,240,000
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7.4%
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Los Angeles County
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4,971,500
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4,565,000
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8.2%
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Orange County
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1,603,200
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1,520,100
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5.2%
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Riverside County
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946,600
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866,900
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8.4%
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San Bernardino County
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861,000
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788,600
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8.4%
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San Diego County
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1,588,500
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1,491,600
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6.1%
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Sources: Bureau of Labor Statistics; State of California Employment Development Department; seasonally adjusted
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ORANGE COUNTY HISTORICAL EMPLOYMENT STATISTICS
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Year
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% Unemployment
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June 2010
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9.5%
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June 2011
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9.1%
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June 2012
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8.0%
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June 2013
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6.7%
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June 2014
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5.2%
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Overall, Orange County’s unemployment rate continues to be better than the rates of peer counties, the State, and the Nation. Thus far, Orange County’s unemployment rates for calendar year 2014 are 5.2% in June, 4.9% in May, 5.0% in April, 5.8% in March, 5.9% in February, and 5.8% in January. In California, initial claims for unemployment increased by 11.8% and weeks paid increased by 3.6% from June 2013 to June 2014.
Although the unemployment rate trend is positive, the recovery in the job market is still below the pre-recession highs in California and Orange County. Between June 2013 and June 2014, changes in employment are as follows:
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ORANGE COUNTY YEAR-OVER-YEAR EMPLOYMENT STATISTICS
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Labor Force Sector
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Number of Jobs Increase/(Decrease)
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Percent Change Year-Over-Year
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Non-Farm Employment
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25,400
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1.74%
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Professional & Business Services
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7,400
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2.81%
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Educational & Health Services
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7,300
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4.04%
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Construction
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5,700
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7.34%
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Leisure & Hospitality
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4,100
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2.15%
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Financial Activities
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(4,300)
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(3.78%)
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Source: State of California Employment Development Department
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According to Chapman University (June 2014 projections), Orange County’s job growth is expected to increase moderately by 2.6% in 2014.
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ORANGE COUNTY HISTORICAL JOB GROWTH
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Year
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% Payroll Employment
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2010
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-1.2%
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2011
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1.1%
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2012
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2.7%
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2013
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2.5%
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2014 Forecast
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2.6%
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2015 Forecast
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2.9%
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Source: Chapman University Economic & Business Review, June 2014
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Inflation, as measured by the Consumer Price Index (CPI), is expected to be slightly lower for Orange County relative to the State and National levels in 2014, but slightly higher than State and National levels in 2015.
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Consumer Price Index
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Year
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Orange County
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California
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United States
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2010
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1.2%
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1.3%
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1.6%
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2011
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2.7%
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2.6%
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3.1%
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2012
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2.0%
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2.2%
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2.1%
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2013
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1.1%
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1.6%
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1.5%
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2014 Forecast
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1.4%
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1.9%
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1.7%
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2015 Forecast
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2.6%
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2.5%
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2.3%
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Source: Chapman University Economic & Business Review, June 2014
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The real estate housing market has slowed appreciably in Southern California with June 2014 sales volume exhibiting the slowest pace for the month of June over the last three years. On the other hand, median sales prices rose to the highest level in over six years. According to DataQuick Information Systems in a report issued July 15, 2014, June 2014 sales of new and resale houses and condos in the Southland were 23.7% below the average number of sales for June. DataQuick also reported that “The impact of distressed properties continued to fade in June” and “Indicators of market distress continue to decline.”
Orange County 2014 Median family income per the U.S. Department of Housing and Urban Development (HUD) was estimated at $85,100 up by 1.2% from the 2013 median family income estimate for Orange County of $84,100. According to the June 2014 Chapman University Economic & Business Review, home buyers with a median family income of $85,100 and using a conventional mortgage will need to allocate 38.4% of income to purchase a median priced home in 2015. This is lower than the 47.3% of income needed in 2006, but still higher than the 27.2% needed in 2012. Listless income growth coupled with recent rapid price appreciation is expected to negatively impact housing demand, especially for first-time homebuyers.
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Peer Counties - Comparative Housing Analysis
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County
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Median Home Price
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Unit Sales
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Median Family Income
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(as of June 30)
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2013
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2014
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% Change
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2013
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2014
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% Change
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2014
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Los Angeles
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$425,000
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$450,000
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5.90%
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7,342
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6,792
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-7.50%
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$62,600
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Orange County
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$545,000
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$600,000
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10.10%
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3,350
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3,309
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-1.20%
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$85,100
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Riverside
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$269,250
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$300,000
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11.40%
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3,536
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3,451
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-2.40%
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$64,000
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San Bernardino
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$204,000
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$240,000
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17.60%
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2,436
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2,431
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-0.20%
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$60,200
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San Diego
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$416,500
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$450,000
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8.00%
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4,048
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3,736
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-7.70%
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$74,000
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Ventura
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$450,000
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$470,000
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4.40%
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896
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935
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4.40%
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$86,600
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So. California
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$385,000
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$415,000
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7.80%
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21,608
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20,654
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-4.40%
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n/a
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Data Sources: DataQuick (Housing)-Median Home Price as of June 30, 2014; and U.S. Housing and Urban Development (Income); Median Family Income is forecasted for 2014 using 2012 America Community Survey 5-year median income estimates.
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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 1,330 Orange County homes received a foreclosure filing in August 2014. Among peer counties, Orange County had the lowest foreclosure rate in August (see following table). For the first six months of 2014, there were 2,503 notices of default issued, and 613 trustee’s deeds filed (completed and recorded). In calendar year 2013, there were a total of 5,575 notices of default and 1,736 trustee deeds issued. RealtyTrac reports that, to date, the average foreclosure sales price in Orange County was $485,750, approximately 19% lower than non-distressed home prices.
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Foreclosure Statistics
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Los Angeles County
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1 in 1,262
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Orange County
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1 in 1,330
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Riverside County
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1 in 606
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San Bernardino County
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1 in 619
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San Diego County
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1 in 1,275
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Source: RealtyTrac, Inc.
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Taxable sales in Orange County are forecast by Chapman University to increase by 6.6% in 2014 and 6.1% in 2015. This compares to a projected increase of 4.7% for the State included in the FY 2014-15 Budget Act. Board of Equalization reports taxable sales two years in arrears.
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Orange County Trends – Taxable Sales in the 2nd Quarter
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For the 2nd Quarter / Calendar Year
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Taxable Sales (Billions)
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Percent Chan
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2015 (f)
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$16.78
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6.1%
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2014 (f)
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$15.82
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6.8%
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2013
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$14.81
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7.3%
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2012
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$13.80
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6.3%
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2011
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$13.08
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8.1%
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2010
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$12.10
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4.6%
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2009
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$11.57
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-15.2%
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Source: Chapman University Economic & Business Review, November 2013
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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 to moderate.
State Legislation and Budget
The Governor signed the 2014-15 budget on June 20, 2014, adopting a budget projected to end with a $1.1 billion reserve. The 2014-15 Budget Act assumes an increase in revenue of $4.9 billion, a fund balance carryover of $3.9 billion, and $2.1 billion in total reserves. The State’s projected 2014-15 reserve is a combination of $450 million in the Special Fund for Economic Uncertainties and $1.6 billion in the Budget Stabilization Account. The budget outlines $152.3 billion in expenditures and pays down $1.6 billion in budgetary debt from prior years. Overall General Fund spending is projected to grow by 8.6% with the majority of the spending growth in education and supplemental bond payments.
One key liability of the State budget is outstanding mandate claims owed to local governments since 2004. The Budget includes approximately $73 million in appropriations to pay counties for these pre-2004 mandate reimbursements and also allows for additional mandate reimbursements if certain revenue targets are met. Orange County’s share of the budgeted allocation is $7.4 million.
The State budget includes a 5 percent grant increase for California Work Opportunity and Responsibility to Kids (CalWORKs), which will result in increased costs to the General Relief program funded entirely by the County since General Relief payments are tied to CalWORKs. The County continues to monitor State fiscal policy on an ongoing basis for potential funding impacts which 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 budget information.
- The current year Assessed Roll of Values was up by 3.36%. The change in assessed values for 2014-15 is projected at 2.0%.
- Health & Welfare Realignment revenue from the State allocated to Health, Mental Health, Social Services, and Probation is projected at $168.6 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 $67.4 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 2014-15 are projected to increase 3% 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 0.58%, reflecting an increase of 0.21% from FY 2013-14 revised projections of 0.37% (March 2014 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. 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.
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Retirement costs are expected to increase this year by an average of 10.7% when compared to costs included in the FY 2013-14 Adopted Budget. Base rates, depending on tier and bargaining group, may range from an increase of 9.6% to an increase of 15.3%.
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Employee health insurance costs are expected to increase on average by approximately 7.2%.
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Retiree medical cost is budgeted between 0.7% and 5.3% of payroll depending on bargaining group. Retiree medical rates will be updated mid-year once the results of the 2013 actuarial valuation are known.
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Inflation on other services and supplies is generally allowed at 2.3% with higher rates for fuel and medical supplies.
2013 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
On December 10, 2013, the Board of Supervisors adopted the County’s 2013 Strategic Financial Plan. 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 2% growth in departmental Net County Cost limits for FY 2014-15, followed by increases of 3% for FY 2015-16 through FY 2018-19. After factoring in the NCC Limit growth, departments still identified a 5-year cumulative budget gap of $177 million, or $286 million when partial reserve replenishment is taken into consideration. The $177 million cumulative gap includes $46 million in reductions that would be required to meet the FY 2014-15 Net County Cost (NCC) limits. 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. The annual update of the Strategic Financial Plan will begin in September 2014.
IV. OVERVIEW of the FY 2014-15 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.
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 2013 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 2013 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 are based on the current budget, adjusted for one-time items and annualized current year approved ongoing augmentations. The FY 2014-15 budget policy included 2% growth in the limits consistent with the 2013 SFP.
Obligated Fund Balances, Reserves, and Contingencies: The County General Fund currently contains obligated fund balances, appropriations for contingencies, appropriated reserve-type funds, and reserves and obligated fund balances 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 are 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 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 were ranked in order of the department’s priority for approval. Department heads certified that all potential alternatives for redirecting existing resources were examined and that lower priority items were 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 the budget submittal due date) of the performance expectations. Prior year augmentations are funded if the CEO and department agree that:
§ They meet performance expectations
§ They merit continuation
§ They are still relevant to the department’s business operations
§ 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 operations, 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 preview 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 2014-15 ADOPTED BUDGET
Total Budget:
§ Total County Base Budget is $5.4 billion, a 1.6% increase from the prior year adopted budget.
§ Total budgeted positions are 18,053, an increase of 425 positions from the prior year adopted budget.
§ Total General Fund Budget is $3.0 billion, a 3.5% decrease from the prior year adopted budget and below the FY 2013-14 modified budget of $3.4 billion.
§ General Purpose Revenues are $661.8 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 2013 Strategic Financial Plan. Departments continue to consistently maintain programs and minimize impacts on services.
Public Protection
District Attorney
The District Attorney submitted $8.9 million in proposed reductions with a maximum potential of 74 positions to be reduced. The adopted restoration of $6.7 million in appropriations and NCC, and all positions will support core staffing for effective prosecution services. The remaining $2.2 million will be derived from vacant position savings. In addition, three Welfare Fraud Investigator positions are added to the budget, offset by revenue from the Social Services Agency, for In-Home Supportive Services fraud investigations; and ten limited-term Paralegal positions funded by excess Public Safety Sales Tax were added to address workload increases.
Probation
Probation submitted $1.9 million in proposed reductions with a maximum impact of 20 position reductions. Full restoration of the funding and positions was approved.
Public Defender
Public Defender submitted $6.4 million in proposed reductions with a maximum potential impact on 58 positions. Full restoration of the funding and positions was approved. In support of the Board-approved implementation of Laura’s Law, $475 thousand and four new positions are added to the budget to support the program.
Sheriff-Coroner
Due to increases in expenditures and County funding limitations, the Sheriff-Coroner submitted $32 million in proposed reductions with a potential maximum impact on 164 positions. All positions and $22 million in funding are included in the adopted budget. The Sheriff-Coroner and County Executive Office will work closely throughout the fiscal year to manage the $10 million funding gap to ensure no impacts on public safety or staffing.
Community Services
OC Community Resources
OC Community Resources requested, and the adopted budget includes, an additional $4.2 million in appropriations and $3.6 million in NCC to develop and operate two year-round emergency shelters. This is 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 $3 million from OCWR to fund costs associated with the James A. Musick jail expansion. All borrowed funds will be repaid within three years and upon receipt of reimbursement from the State.
General Government
Assessor
The adopted base budget for the Assessor includes a $2.9 million restoration of $6.2 million appropriation reductions to meet the Net County Cost limit. An additional $1.5 million in one-time Assessor information technology costs is included in the Data Systems Development Projects budget.
Auditor-Controller
Auditor-Controller submitted $1.1 million in proposed reductions to meet the NCC limit. Funding of $482 thousand is included in the adopted budget which will allow the department to fill some vacant positions.
CAPS Program
The adopted budget includes $1.2 million in appropriations and NCC for the purchase of new hardware to support the County’s financial and payroll systems.
County Counsel
In support of the Board-approved implementation of Laura’s Law, $193 thousand and one new position are added to the budget to support the program. An additional $1 million is included in the adopted budget for the cost of outside legal services.
Registrar of Voters
One-time service level expansion of $5.5 million in appropriations and $1.1 million in NCC is included in the adopted budget for the June 2014 Primary Election.
Treasurer-Tax Collector
Treasurer-Tax Collector proposed an $849 thousand reduction in appropriations to meet the NCC limit. Restoration of $424 thousand is included in the adopted budget.
Capital Improvements
Capital Projects
A reduction of $1.7 million in appropriations and NCC was proposed to meet the NCC limit. Restoration of the $1.7 million is included in the adopted budget to meet the debt service payment for the 2012 Juvenile Justice Bonds on the Lamoreaux Justice Center. An additional $1.9 million in appropriations and NCC is included in the adopted budget in support of the El Toro Development Project.
Data Systems Development Projects
An additional $1.5 million in one-time Assessor information technology costs is included in the Data Systems Development Projects budget to support equipment refresh, aerial images, and IT contract staff.
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. Debt related to the specific operations of John Wayne Airport is 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 2013-14 and will continue to monitor cash flow needs in FY 2014-15.
The County issued short term taxable Pension Obligation Bonds to prepay, at a discount, a portion of the County’s 2014-15 pension obligation. The bonds were issued on January 14, 2014 in the amount of $325 million at rates ranging from 0.65% to 0.83%.
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 and the Strategic Financial Plan. 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, 2014. 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, 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:
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
Jaime Martinez - 714.834.4104
Kathleen Long
Gina Dulong
Craig Fowler
Darlene Schnoor
Mar Taloma
Financial Planning
Kathleen Long, Manager - .834.7410
Public Protection & Community Services
Dana Schultz, Manager - 714.834.7487
Kim Olgren-Potter
Infrastructure and Environmental Resources, General Government,
Capital Projects and Debt Service
Anil Kukreja, Manager - 714.834.4146
Theresa Stanberry
Sheri Vukelick
