RETURN TO THE PDF DOCUMENT VERSION OF THE 2015-2016 RECOMMENDED BUDGET
INTRODUCTION
The County Executive Office (CEO) is pleased to present the FY 2015-16 Recommended Budget. The CEO budget proposal to the Board of Supervisors continues to reflect Orange County's disciplined approach to fiscal management and is consistent with the County's Strategic Financial Planning process. The budget recommendations will be presented and discussed at a Public Budget Hearing scheduled for June 9, 2015.
Over the last several years and continuing into FY 2015-16, the County has focused on stabilizing the budget, building reserves, and funding infrastructure needs that were deferred during the Great Recession. This has been and continues to be a challenge considering the rising cost of doing business, moderate revenue growth, and the large backlog of projects to be completed. Use of the County's Five-Year Strategic Financial Planning process has proven invaluable in balancing and prioritizing all of the County's needs. While the FY 2015-16 Budget does not include the $18 million General Fund bankruptcy debt payment, consistent with the 2014 Strategic Financial Plan, these funds are being used to balance the County's budget this year due to the increase in ongoing operating costs and the cost of one-time planned expenditures.
Consistent with economic forecasts, the County anticipates moderate growth in General Purpose Revenues in FY 2015-16; however, if actual trends remain consistent with the County's 2014 Strategic Financial Plan, it is anticipated that the growth in future years' General Purpose Revenues will not be enough to offset costs which are anticipated to grow at a higher rate. While the FY 2015-16 Recommended Budget is balanced without the use of reserves for ongoing operating costs, future increases in the cost of doing business that surpass revenue growth could make it difficult to sustain any growth in service levels. Thus, while funding is provided in the FY 2015-16 Budget for increased one-time costs such as for capital projects, any allocation of new revenue for ongoing expanded levels of service is limited. The CEO looks forward to updating the County's five-year forecast of revenue and expenditures in the 2015 Strategic Financial Plan to be presented to the Board of Supervisors in December 2015. Prior to that time, any necessary adjustments to the County's FY 2015-16 Budget as a result of currently unknown State or Federal impacts will be presented for Board consideration in the FY 2015-16 First Quarter Budget Report in November 2015.
This introduction contains a guide to reading the budget document, a brief description of the County's form of government, supervisorial districts, mission statement, and the County's strategic planning initiative. The introduction also reviews the State budget and economic factors influencing the County budget, and provides summary budget information and budget highlights in various program areas.
I. A CITIZEN'S GUIDE TO READING THE BUDGET DOCUMENT
This document includes information that provides readers with a greater understanding of each department's mission, organizational structure, and performance results as a narrative context for the budget amounts. The introduction section of Volume I contains several charts and tables that provide an overview of issues affecting the budget, sources and uses of funds, and budgeted positions. Following the introduction are sections that present each department and fund in the County's seven program areas listed below:
- Public Protection
- Community Services
- Infrastructure and Environmental Resources
- General Government Services
- Capital Improvements
- Debt Service
- Insurance, Reserves and Miscellaneous
The presentation for each department within each program area includes:
An Operational Summary including:
- Mission
- Budget at a Glance
- Strategic Goals
- Key Outcome Indicators (Performance Measures)
- Key Accomplishments of the current year
An Organizational Summary including:
- Organization Chart
- Description of each major activity
- Ten-year staffing trend chart with highlights of staffing changes
A FY 2015-16 Budget Summary including:
- Department's plan for support of the County's strategic priorities
- Changes included in the base budget
- Budget augmentations and related performance plans
- Recap of the department budget
- Highlights of key budget trends
- A matrix of the budget units under the department's control
Volume II contains additional budget detail. Readers looking for more detailed budget information for a specific department can use the Index at the end of Volume II. Departments are listed in alphabetical order with the page number of that department's budget information.
Department business plan information is incorporated into this document. A business plan sets forth long-term goals, discusses operational and budget challenges, identifies strategies for overcoming the challenges and making progress on those goals during the coming year, and identifies how success will be measured by using outcome indicators (key performance measures).
II. ORGANIZATIONAL OVERVIEW
Orange County's FY 2015-16 Recommended Budget presents the County's financial capacity and priorities in providing public safety and health, social and community services, and environmental and regional planning services for its residents. The County provides the public with a wide-ranging array of public services through its departments and comprehensive community partnerships with public, private, and non-profit agencies.
FORM OF GOVERNMENT
The County functions under a Charter adopted in 2002, including subsequent amendments. A five-member Board of Supervisors governs the County. Each elected member serves a four-year term, and the Board annually elects a Chair and Vice Chair. Each district varies in geographical size; however, the populations are relatively equal at approximately 600,000 residents.
The members of the Board of Supervisors by district are as follows:
TODD SPITZER, CHAIRMAN , from the Third District, representing the communities of Anaheim (portions of), Irvine (portions of), Orange, Tustin, Villa Park, and Yorba Linda.
LISA BARTLETT, VICE CHAIRMAN , from the Fifth District, representing the communities of Aliso Viejo, Dana Point, Irvine (portions of), Laguna Beach, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Mission Viejo, Rancho Santa Margarita, San Clemente and San Juan Capistrano.
ANDREW DO, SUPERVISOR , from the First District, representing the communities of Fountain Valley (portions of), Garden Grove, Santa Ana, and Westminster.
MICHELLE STEEL, SUPERVISOR , from the Second District, representing the communities of Buena Park (portions of), Costa Mesa, Cypress, Fountain Valley (portions of), Huntington Beach, La Palma, Los Alamitos, Newport Beach, Seal Beach, and Stanton.
SHAWN NELSON, SUPERVISOR , from the Fourth District, representing the communities of Anaheim (portions of), Irvine (portions of), Brea, Buena Park (portions of), Fullerton, La Habra, and Placentia.
STRATEGIC PLANNING INITIATIVE
The County strives to fulfill its mission :
Making Orange County a safe, healthy, and fulfilling place to live, work, and play, today and for generations to come, by providing outstanding, cost-effective regional public services.
The County is committed to providing Orange County residents with the highest quality programs and services as articulated in its mission statement. Supporting the County's mission is a set of vision statements for business and cultural values (please see the following Table A ):
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VISION STATEMENT FOR
BUSINESS VALUE
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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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III. ECONOMIC OUTLOOK FOR FY 2015-16
Key factors that influence the local Orange County economy include the unemployment rate, job growth, inflation, housing market, incomes, and taxable sales. External and internal indicators provide information about the state of the Orange County economy. The County routinely monitors: (a) how well the local economy performs relative to surrounding counties, the State and the Nation (External Indicators); and (b) how well the local economy performs relative to its own historical trends (Internal Indicator). In terms of the external indicators, Orange County's economy routinely out-performs local surrounding counties, the State, and National economies. External indicators for 2015 reflect that the local economy is experiencing a moderate recovery, trending more favorable when compared to State and National economies. In terms of internal (historical) trends, current and projected indicators forecast that economic recovery at the local level will continue to be slow and moderate. This section provides trend data for various external and internal indicators that summarize the current and projected outlook of the Orange County economy.
Orange County's unemployment rate continues to be one of the lowest in the State, and is below that of all surrounding Southern California counties, the State and Nation. Preliminary March 2015 unemployment rates were:
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COMPARATIVE EMPLOYMENT STATISTICS
(March 2015 preliminary)
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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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156,318,000
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147,635,000
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5.5%
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California
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18,879,200
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17,656,100
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6.5%
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Los Angeles County
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5,044,400
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4,679,300
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7.2%
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Orange County
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1,590,900
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1,521,300
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4.4%
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Riverside County
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1,019,500
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952,500
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6.6%
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San Bernardino County
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916,700
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858,200
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6.4%
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San Diego County
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1,551,900
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1,472,900
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5.1%
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Sources: Bureau of Labor Statistics; State of California Employment Development Department; not 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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March 2011
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8.9%
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March 2012
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8.0%
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March 2013
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6.4%
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March 2014
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5.8%
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March 2015
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4.4%
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Thus far, Orange County's unemployment rates for calendar year 2015 are 4.4% in March (preliminary), 4.6% in February, and 5.0% in January. In California, initial claims for unemployment decreased by 22.7% and weeks paid decreased by 9.3% from March 2014 to March 2015.
Year over year employment trends are positive across all industry sectors with the exception of Information. Between March 2014 and March 2015, 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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55,200
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3.73%
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Professional & Business Services
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11,600
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4.28%
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Educational & Health Services
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10,800
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5.70%
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Leisure & Hospitality
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6,300
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3.32%
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Construction
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4,800
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5.99%
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Financial Activities
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4,300
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3.83%
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Information
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(400)
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(1.65%)
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Source: State of California Employment Development Department
According to Chapman University (December 2014 projections), Orange County's job growth is expected to increase moderately by 2.6% in 2015.
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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*
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2.5%
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2015 Forecast
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2.6%
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Sources: Chapman University Economic & Business Review, December 2014;
State of California Employment Development Department
Job growth and personal income (forecasted to increase 5.5%) continue to be closely monitored.
Inflation, as measured by the Consumer Price Index (CPI), was slightly lower for Orange County relative to the State but higher than the National level in 2014. CPI is expected to be equal to the State level and slightly higher than the National level 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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1.5%
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1.5%
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2014*
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1.3%
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1.9%
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0.8%
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2015 Forecast
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2.4%
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2.4%
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2.3%
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Source: Chapman University Economic & Business Review, December 2014; *Bureau of Labor Statistics
The real estate housing market has picked up somewhat in California with March 2015 sales volume up 7.3% and median sales prices up by 7.2% above those recorded in March 2014.
Orange County 2015 Median family income per the U.S. Department of Housing and Urban Development (HUD) was estimated at $85,900, up by 1.2% from the 2014 median family income estimate for Orange County of $84,900. According to the Chapman University Economic & Business Review in December 2014, home buyers with a median family income of $84,500 needed approximately 33% of their gross income to pay for interest, principal and property taxes. This is lower than the 47.3% of gross income needed in 2006, but still higher than the 27.2% needed in 2012.
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Peer Counties – Comparative Housing Analysis
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County
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Median Home Price (as of February)
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Unit Sales (as of February)
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Median Family Income
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2014
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2015
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% Change
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2015
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2015
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Los Angeles
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$434,000
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$469,000
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8.1%
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4,608
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$63,000
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Orange County
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$565,000
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$591,500
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4.7%
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2,093
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$85,900
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Riverside
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$285,000
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$305,000
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7.0%
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2,349
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$60,500
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San Bernardino
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$225,000
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$250,000
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11.1%
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1,631
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$60,500
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San Diego
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$410,000
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$440,000
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7.3%
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2,573
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$73,000
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Ventura
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$435,000
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$460,000
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5.7%
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550
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$85,300
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Data Sources: CoreLogic (Housing)-Median Home Price as of February 2015; and U.S. Housing and Urban Development (Income);
Median Family Income is forecasted for 2015 using 2011 America Community Survey 5-year median income estimates.
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. forecasts that 1 in 1,358 Orange County homes received a foreclosure filing in March 2015. Among peer counties, Orange County had the lowest foreclosure rate in March (see following table). For the first two months of 2015, there were 748 notices of default issued, and 182 trustee's deeds filed (completed and recorded). In calendar year 2014, there were a total of 4,881 notices of default and 1,247 trustee deeds issued. RealtyTrac reports that the average foreclosure sales price in February 2015 in Orange County was $480,000, approximately 19% lower than non-distressed home prices during the same month.
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Foreclosure Statistics
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County
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Foreclosures
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Los Angeles County
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1 in 1,129
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Orange County
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1 in 1,358
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Riverside County
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1 in 670
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San Bernardino County
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1 in 629
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San Diego County
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1 in 1,189
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Source: RealtyTrac, Inc.
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Taxable sales in Orange County are forecast by Chapman University to increase by 6.3% in 2014 and 6.1% in 2015. This compares to a projected increase of 7.4% for the State included in the Governor's FY 2015-16 Proposed Budget. 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 Change
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2015 (f)
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$16.26
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6.1%
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2014 (f)
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$15.33
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6.3%
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2013
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$14.42
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4.4%
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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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Source: Chapman University Economic & Business Review, December 2014
In summary, most indicators reflect that the economic condition of Orange County is better than or comparable to surrounding counties, the State, and the Nation. With respect to historical (internal County) trends, some level of growth is anticipated in most economic sectors but is expected to be modest to moderate.
STATE LEGISLATION AND BUDGET
The Governor released the FY 2015-16 State Budget Proposal on January 9, 2015, which restores the State's funding of education and safety net; expands health care coverage to California residents; and pays down budgetary borrowing with the use of Proposition 30 revenues. The budget outlines $159 billion in expenditures, proposes a $3.4 billion reserve by the end of FY 2015-16, and pays down $1.2 billion in non-retirement budget debts. Overall General Fund spending is projected to grow by 1.4% with the majority of the spending growth in education and health and human services.
The Governor, in the budget introduction, stresses that maintaining a stable budget will require fiscal control and prudence. Two potential major risks include the changes in federal immigration policy which could escalate state program costs; and rising health care costs that continue to use a greater proportion of State budget dollars. In addition, Proposition 30 provides a temporary revenue stream, with the sales tax component expiring at the end of 2016, and the income tax increases expiring at the end of 2018.
In January 2015, the State Legislative Analyst's Office (LAO) released an overview of the Governor's budget proposal and concluded that the Governor's priorities are generally prudent. The Governor and the LAO acknowledge that the budget potentially is at risk for economic downturns that could develop with little warning and that increasing budget reserves and repaying State debts remain important objectives.
In November 2014, a budget reserve and debt payment measure (Proposition 2) was approved by the voters. This proposition alters how the State saves money in its budget reserves and pays down existing debts and unfunded liabilities.
The County continues to monitor State fiscal policy on an ongoing basis for possible funding impacts. Potential payment of $533 million owed to local governments for pre-2004 mandate debt will be evaluated during the Governor's May Revise. The current State estimate for FY 2014-15 has General Fund revenues $2 billion above the June 2014 projection, so we are cautiously optimistic that the State will make one-time SB90 payments to local government. The amount identified by the State as the Orange County share is $39 million. Any impacts as a result of the final State budget will be addressed during the fiscal year as they become known.
MAJOR REVENUE AND EXPENSE ASSUMPTIONS
The County budget includes a wide variety of funding sources. The budget recommendations are based on the following revenue assumptions:
- State and Federal funding sources are estimated by departments based on established funding allocation formulas, caseload projections, and the latest State and Federal budget information.
- The 2014-15 Assessed Roll of Values was up by 6.36%. The change in assessed values for FY 2015-16 is projected at 4.0%.
- 1991 Health & Welfare Realignment revenue from the State allocated to Health, Mental Health, Social Services, and Probation is projected at $190.6 million based upon current program and revenue trends.
- The Statewide allocation of AB109 (2011 Public Safety Realignment) revenue is up resulting in a $5.2 million combined increase in base and growth revenue for Orange County; $6.8 million in additional one-time funding is provided by the State in FY 2015-16 for costs associated with transition and stabilization.
- The one-half cent Public Safety Sales Tax (Proposition 172) funds are allocated 80% to the Sheriff's Department and 20% to the District Attorney by Board policy. Receipts for FY 2015-16 are projected to increase 4.2% over the current year adopted budget based on State and economists' projections and trend data.
- The interest rate on cash balances in the County Investment Pool administered by the County Treasurer is expected to average 0.55%, reflecting an increase of 0.14% from FY 2014-15 revised projections of 0.41% (March 2015 Treasurer's Monthly Investment Report).
Assumptions for various categories of expenses include:
- Labor costs are centrally calculated based on approved positions and historical vacancy factors. One to two step merit increases are assumed for employees who are eligible. Actual merit awards are based on the employee's performance evaluation.
- A 1% base building wage increase for projected growth in salaries is included, but does not represent a commitment for bargaining purposes. Salary increases are subject to negotiations and Board approval.
- Overall retirement costs are decreasing this year by approximately 2.5% when compared to costs included in the FY 2014-15 Adopted Budget. The decline in retirement costs is mainly attributable to the elimination of County pick-up of employee retirement contributions in the last round of negotiations, as well as an increase in the number of employees in the reduced retirement benefit plans governed by the Public Employees' Pension Reform Act of 2013 (PEPRA). Base rates, depending on bargaining group, range from a decrease of -4% to an increase of 2%. Base rate growth has slowed as a result of the collective effects of: combining and re-amortizing the outstanding UAAL (Unfunded Actuarial Accrued Liability) balance over a single 20-year period; higher than expected investment returns (after smoothing); lower than expected salary increases; and lower than anticipated growth in total payroll.
- Health insurance rates are expected to increase by 12% to 14% above FY 2014-15 year-end projected expenditures depending on health plan type. FY 2015-16 budgeted health insurance costs are expected to increase from the FY 2014-15 budget by an average of approximately 1.4% due to health plan changes implemented in FY 2014-15 that have mitigated the increase of year-over-year budgeted costs.
- Retiree medical cost is budgeted at 0.6% to 4.8% of payroll depending on bargaining group. Retiree medical rates are based on a bi-annual valuation. FY 2015-16 Recommended Budget retiree medical rates are based on the June 30, 2013, valuation approved by the Board in February 2015.
- Services and supplies shall be budgeted at the same level as actual use during last fiscal year and current year projections to the extent they are necessary to support business plan and Strategic Financial Plan goals.
2014 STRATEGIC FINANCIAL PLAN
The Strategic Financial Plan (SFP) process provides the framework for aligning available resources with operating requirements, implementing new programs and facilities and serves as the foundation for the annual budget. This framework enables the Board to make annual funding decisions within the context of a comprehensive, long-term perspective. Since 1998, the Strategic Financial Plan has been updated annually to review the financing necessary to carry out programs and services. New priorities are identified and considered as part of a comprehensive update of the plan.
The Strategic Financial Plan contains five elements:
- Economic Forecast
- General Purpose Revenue and Fund Balance Unassigned Forecast
- Program Cost Forecast
- Strategic Priorities
- General Fund Reserves Policy
On December 9, 2014, the Board of Supervisors adopted the County's 2014 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 3% growth in departmental Net County Cost (NCC) limits for FY 2015-16 through FY 2019-20. After factoring in the NCC limit growth, departments still identified a 5-year cumulative budget gap of $118 million, or $226 million when partial reserve replenishment is taken into consideration. The $118 million cumulative gap includes $42 million in reductions that would be required to meet the FY 2015-16 NCC limits. Actual proposed reductions in the FY 2015-16 Budget to meet NCC limits are $43 million. The plan emphasizes that the County must ensure that resources and programs are aligned to countywide strategic priorities and values. Planning for the future should continue to include budget stabilization, preparation for contingencies, and funding of infrastructure needs deferred during the economic downturn.
IV. OVERVIEW OF THE FY 2015-16 RECOMMENDED COUNTY BUDGET
BASIS OF BUDGETING
The County's budget and its accounting system are based on the modified accrual system. The fiscal year begins on July 1. Revenues are budgeted as they are expected to be received or as they are applicable to the fiscal year. Consistent with generally accepted accounting principles, revenues are recognized when they are measurable and available. The County's availability criterion is 60 days after the end of the fiscal year.
Expenses are budgeted at an amount sufficient for 12 months if they are ongoing, and as needed in either partial or full amounts if they are one-time items. In each fund, expenses and increases to obligated fund balances must be balanced with available financing.
BUDGET DEVELOPMENT
The following budget development policies and guidelines are used by all County departments as a starting point for budget development:
Consistency with Strategic Financial Plan and Business Plan Concepts: Base operating budget requests shall be consistent with the priorities and operational plans contained in the 2014 Strategic Financial Plan and the departmental business plans as resources are available. Department heads are responsible for using these planning processes along with program outcome indicators to evaluate existing programs and redirect existing resources as needed for greater efficiency, to reduce cost and minimize the requests for additional resources. A certification regarding the evaluation of existing resources is required as part of the budget request submittal.
Salaries & Employee Benefits: The Salary and Benefits Forecasting System (SBFS) in the County's budget system, Performance Budgeting (PB), sets the regular salary and employee benefits base budgets. Salary and employee benefits are reduced to account for vacant positions based on the average number of vacant positions during calendar year 2014 (through pay period 26).
Budgeted extra-help positions must comply with Memorandum of Understanding provisions. Those that do not are to be deleted with a corresponding reduction in the extra-help account.
Services & Supplies: Services and supplies shall be budgeted at the same level as actual use during last fiscal year and current year projections to the extent they are necessary to support business plan and Strategic Financial Plan goals.
Program Revenue and Grants: Program revenues (e.g. State and Federal programs revenues) are to be used to offset the department's proportional share of operating costs to the full extent of the program regulations. Local matching funds should normally be at the legal minimum so that the General Fund subsidy (backfill) is minimized. Program revenues are to be used for caseload growth.
One-time revenues shall be limited for use on non-recurring items such as start-up costs, program or reserve stabilization, and capital expenses.
New revenue sources pending legislation or grant approval are not included in the base budget request. They will be considered during the quarterly budget report process (i.e. when legislation is passed or grants awarded).
Net County Cost (NCC): NCC limits are based on the current budget, adjusted for one-time items and annualization of current year approved ongoing augmentations. The FY 2015-16 budget policy includes 3% growth in the limits consistent with the 2014 SFP.
Obligated Fund Balances, Net Position and Contingencies: The County General Fund currently contains obligated fund balances (reserves) and appropriations for contingencies. The purpose of these obligated fund balances is to protect County mandated programs and services from temporary revenue shortfalls and provide for unpredicted, sudden, and unavoidable one-time expenditures. Certain departments and non-General Funds have other obligated fund balances, or net position (similar to retained earnings), dedicated to specific programs and uses.
Balanced Budget: The General Fund requirements will be balanced to available resources. Budgets for funds outside the General Fund are balanced to Available Financing without General Fund subsidy unless previously approved by the Board or CEO. Available Financing shall be determined by realistic estimates of budget year revenues and any planned changes to obligated fund balances.
Augmentations (requests for new or restored resources): All augmentation requests require outcome indicators (performance measures) that outline the department's intended outcome(s) resulting from the additional resources. Department heads have certified that all potential alternatives for redirecting existing resources have been examined and that lower priority items have been reduced or eliminated in order to free up existing resources.
Previously approved augmentations undergo an outcome indicator review for two subsequent years as a condition for continued funding. Departments report on outcome indicator results of the performance expectations. Prior year augmentations are funded if the CEO and department agree that:
- They meet the performance expectations
- They merit continuation
- They are still relevant to the department's business plan
- Sufficient funding exists
Program Budgets Outside the General Fund: It is the department head's responsibility to ensure that the proposed use of program funds is consistent with the available financing and legal restrictions on funds, the department's business plan, and the County's strategic priorities; and has been coordinated with the appropriate stakeholder groups external to the County.
In context of these policies and guidelines, departments prepared current year projections of expenses and revenues and requests for the next fiscal year. The County Budget Office reviewed the requests, met and discussed the requests with the department, and prepared final recommendations for the Board. These recommendations are presented to the Board of Supervisors and public during public budget hearings. Operating and capital budgets are prepared in this single process and presented together in this budget book.
Preceding the budget program sections, the following charts and schedules are provided as an overview of the budget:
- Total County Revenue Budget
- Total County Financing
- Total County Revenues by Source
- Total County Appropriations by Program
- General Fund Sources & Uses of Funds
- General Fund Appropriations by Program
- General Purpose Revenue
- General Fund Net County Cost by Program
- Public Safety Sales Tax
- Health & Welfare Realignment (1991)
- Total County Budget Comparison by Department
- Provision for Obligated Fund Balances, Reserves & Designations Summary
- Position Summary
- Summary of Net County Costs
- County of Orange Organization Chart
HIGHLIGHTS OF THE FY 2015-16 RECOMMENDED BUDGET
Total Budget:
- Total County Budget is $5.8 billion, a 6% increase from the prior year adopted budget due primarily to inclusion of appropriations for planned one-time capital expenditures.
- Total budgeted positions are 17,988, a decrease of 65 positions from the prior year adopted budget.
- Total General Fund Budget is $3.2 billion, a 4.2% increase from the prior year adopted budget due primarily to property tax revenue growth and appropriations for one-time capital expenditures.
- General Purpose Revenues (GPR) are $723.1 million, which is $35.9 million more than the Auditor-Controller's Second Available Financing estimate due to inclusion of prior year fund balance for the $15 million payment to the State - the second of five required payments, inclusion of $15.9 million fund balance previously set aside for planned capital expenditures, and an increase in property tax revenue, offset by removal of one-time Teeter (delinquent property tax penalty and interest revenue) funding. GPR is $17.4 million more than the current year-end estimate of $705.7 million due to the reasons described above.
Specific Program Highlights:
This section provides highlights of the base budgets and recommended augmentations for the County budget programs and departments. Due to increases in costs which continue to outpace growth in sources, some Departments have proposed reductions included in the recommended budget and which are recommended for full or partial restoration. Departments have worked diligently to manage their budgets to consistently maintain programs and minimize impacts on services.
Public Protection
District Attorney
- The District Attorney submitted $6.9 million in proposed reductions with a maximum potential of 51 positions to be reduced. The recommended restoration of $5.8 million ($5.6 million ongoing and $210 thousand one-time for one-time costs) and all positions is required to support core staffing for effective prosecution services. The District Attorney and County Executive Office will work closely throughout the fiscal year to manage the funding gap to ensure no impacts on public safety or staffing.
District Attorney-Public Administrator
- District Attorney-Public Administrator submitted $1.2 million in proposed reductions with a maximum impact of 4 position reductions. Full restoration of the funding and positions is recommended for approval with 50% of the funding restoration for one-time costs.
Public Defender
- Public Defender submitted $1.6 million in proposed reductions with a maximum potential impact on 18 positions. Full restoration of the funding and positions is recommended.
Sheriff's Department
- Due to increases in expenditures and County funding limitations, the Sheriff's Department (Sheriff) submitted $23.8 million in proposed reductions with a potential maximum impact on 71 positions. All positions and $21 million in funding are recommended for restoration. The Sheriff and County Executive Office will work closely throughout the fiscal year to manage the $2.8 million funding gap to ensure no impacts on public safety or staffing.
- In addition, Sheriff requested $7 million in expand augmentations to add one position for the OC Crime Lab; one position for emergency management; and two positions for the Closed-Circuit Television System (CCTV) upgrade and expansion. The $3.3 million recommended for approval funds the additional positions and equipment replacement and upgrades. Additional one-time funding may be provided through the quarterly budget report process pending notification of receipt of grant funding and/or receipt of SB90 reimbursement monies from the State.
Community Services
OC Community Resources
- OC Community Resources is requesting $6.95 million for acquisition, rehabilitation and/or construction of two year-round emergency shelters. The CEO is recommending $6.7 million in funding with $3.1 million coming from FY 2014-15 unspent money and $3.6 million redirected from ongoing operating costs included in the FY 2015-16 base budget not anticipated to be needed during the fiscal year. This recommendation is consistent with the County's ten-year plan to end homelessness.
Social Services Agency
- The recommended budget includes a request of $6.9 million for the General Relief program, which is not recommended at this time. Caseloads will be monitored throughout the fiscal year to determine if a mid-year adjustment for funding is required.
Infrastructure and Environmental Resources
OC Waste & Recycling (OCWR)
- The recommended budget includes the ability to borrow up to $31.8 million from OCWR to fund costs associated with the James A. Musick jail expansion ($9 million), Property Tax System upgrade ($3.5 million), and La Pata Gap Closure ($19.3 million) projects. All borrowed funds will be repaid within three years from various funding sources.
General Government
CAPS Program
- The Auditor-Controller is requesting funding of $6.5 million for the CAPS+ Financial, Purchasing, and Human Resources/Payroll system upgrade. One-time funding from fund balance set aside in FY 2014-15 and previous fiscal years is recommended for approval.
County Counsel
- County Counsel is requesting an additional $3 million, which is recommended for approval, to cover the cost of outside legal services.
Registrar of Voters
- A one-time service level expansion of $4.5 million Net County Cost is recommended for the June 2016 Primary Election.
Treasurer-Tax Collector
- The recommended base budget includes a $949 thousand reduction in appropriations to meet the Net County Cost limit. Restoration of $799 thousand ($593 thousand ongoing and $206 thousand for one-time costs) is recommended.
Capital Projects
Capital Projects
- Funding of $4.1 million is requested for the following projects: El Toro Development Project ($1.4 million); Joplin Pond repair ($550 thousand); and Juvenile Hall Multipurpose Rehabilitation Center ($2.1 million). Funding for all projects is recommended for approval.
Debt
The adopted budget funds all debt obligation payments. Budgets displayed in Program VI include amounts for annual payments on the County's refunded debt financing of the Juvenile Justice Center, Manchester parking facilities, and debt financing of infrastructure improvements in the County's Assessment Districts and Community Facilities Districts. Although the County's former 1996 and 1997 Pension Obligation Bonds were economically defeased, this budget reflects the payments made by the trustee from escrow. This program also includes the debt associated with the County's Teeter program. The 2005 Refunding Recovery Bonds will be retired on June 1, 2015, therefore appropriations are no longer budgeted for the debt service related to those bonds. Debt related to the specific operations of John Wayne Airport is included in Program III where the operational budgets for that department are also found. Based on the County's Strategic Financial Plan and at current funding levels, the County is able to fulfill these debt obligations and sustain current and future services and operations.
Cash Flow Management
The County did not issue Tax and Revenue Anticipation Notes (TRANs) in FY 2014-15 and will continue to monitor cash flow needs in FY 2015-16.
The County issued short term taxable Pension Obligation Bonds to prepay, at a discount, a portion of the County's FY 2015-16 pension obligation. The bonds were issued on January 13, 2015 in the amount of $339.6 million at rates ranging from 0.425% to 0.80%.
IV. SUMMARY
This budget serves as a realistic plan of resources available to carry out the County's core businesses and priorities. It is consistent with the County's mission statement, the Strategic Financial Plan and departmental business plans. It follows the CEO budget policy guidelines, meets most of the departmental augmentation requests, incorporates impacts of the State budget proposals known at this time, addresses important capital needs and provides adequate reserves.
V. NEXT STEPS
Public Budget Hearings will be held on June 9, 2015, with final Budget Adoption scheduled on June 23, 2015. The new fiscal year begins on July 1, 2015. 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.
CONTACTS REGARDING 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
- Jaime Martinez, Manager 714.834.4104
- Craig Fowler
- Mar Taloma
Financial Planning
- Kathleen Long, Manager 714.834.7410
- Gina Dulong
- Darlene Schnoor
Public Protection & Community Services
- Dana Schultz, Manager 714.834.7487
- Kim Olgren-Potter
- Christy Preble
Infrastructure and Environmental Resources, General Government, Capital Projects and Debt Service
- Anil Kukreja, Manager 714.834.4146
- Oana Cosma
- Theresa Stanberry
- Sheri Vukelich
The County also invites you "Inside OC Financials" to explore additional financial information including the OpenGov data tool, Strategic Financial Plan, and quarterly budget reports:
http://ocgov.com/about/openoc/
