2008 Strategic Financial Plan

County of Orange

FY 2009-10 First Quarter BudgetReport

Slide 2

Economic Conditions• Mixed Signals

– Home Values Stabilizing– Residential New Construction Permits Up– Commercial Real Estate Down– Earnings Down– Increased Levels of Federal & State Debt– Retail Sales Continue to Decline

• Employment and Unemployment Rates– Key indicator for County revenues

• Property Tax• Sales Tax

Slide 3

Unemployment Rate

9.8%

7.5%

5.8%

4.9%

6.8%

9.5%

12.0%

3.4%

5.0%

2.7%3.5%

9.4%

0%

2%

4%

6%

8%

10%

12%

14%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sep

09

United States

California

Orange County

Slide 4

Assessed Value Change vs. Unemployment Rate

11.6%

-1.1%

6.8%

11.2%

3.7%

-1.2%

9.7%

3.5%2.8%4.6%

7.0%

5.0%

9.6%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

90-91

91-92

92-93

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

Assessed Valuation Change

O.C. Unemployment Rate

Note: Fiscal Year Average Unemployment Rates

Slide 5

Real Estate Bottom?

Slide 6

County Assessed Valuation• Forecast of FY 2010-11 Assessed Valuation is -2.5%

• Property tax = 78% of NCC

0.3%

5.7%

3.9%

-1.4%

-2.5%

10.4%

12.9%

8.3%

9.9%

7.5%

-0.1%

2.8%

9.3%

11.2%

0.1%

-1.0%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

'87-88 '88-89 '89-90 '90-91 '91-92 '92-93 '93-94 '94-95 '95-96 '96-97 '97-98 '98-99 '99-00 '00-01 '01-02 '02-03 '03-04 '04-05 '05-06 '06-07 '07-08 '08-09 '09-10 '10-11

Fiscal Year

Percent

Slide 7

Economic Conditions

• Federal• $1.42 trillion deficit

• Could reach $9.1 trillion over the

next decade

• State• General Fund Revenues Below

Projections by $1 billion (-2.6%)

• $21 Billion State Budget Shortfall for FY 2010/11

• Cash flow shortfall is projected

Slide 8

State General Fund Revenue

Source: Department of Finance

Slide 9

County Cash & Reserves

• Cash• Overall, 7.8% above level 12 months ago

• General Fund cash down (-17.8%) but tracking close to projections

• $150M TRANs issue July 2009

• Reserves• General Fund Reserve draw of $31.5M (approved

in 2009/10 Budget)

Slide 10

Monthly Cash Balance

-

50

100

150

200

250

300

350

400

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Mil

lio

ns

FY 2005/06 FY 2006/07 FY 2007/08 FY 2008/09 FY 2009/10

Slide 11

County Budget – At-a-Glance

• Net County Cost• $109.7M (15.5%) below projections

• Variance due to timing

• 3% Net County Cost reductions

• Total County Revenue• 61.5% above projections

• Variance due to timing and earlier draws on reserves

Slide 12

Proposition 172 Revenue

Annual Percentage Change

5.26%

14.02%

8.44%

-3.94%

1.51%

6.89%

9.76%7.81%

1.53%

-2.22%

-12.98%

-7.90%

-15%

-10%

-5%

0%

5%

10%

15%

20%

98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10

Slide 13

Realignment Revenue

Annual Percentage Change

-2.4%

8.1%

-4.1%

1.0%

5.9%

1.6%

-9.3%

-3.7%

-12%

-10%-8%

-6%

-4%-2%

0%2%

4%

6%8%

10%

02

-03

03

-04

04

-05

05

-06

06

-07

07

-08

08

-09

09

-10

Slide 14

County Budget – At-a-Glance

• Total County Expense

• County expenses in line with budget

• Salary and Employee Benefits are 3.4% below budget

• Services and Supplies are 25.5% below budget

Slide 15

Budget Reduction Measures

• Continuation of PY Measures• Deletion of vacant & limited term positions

• Deletion of extra help & retiree extra help

• Position cap – Hiring freeze

• Cont’d capital project and IT budget reductions

• Revised contract guidelines for multi-year contracts

• Spending monitoring & deferrals

Slide 16

FBA Balancing

• Final FBA at $43.4M, greater than $25M budgeted

• General Fund FBA $18.4M allocated to:

• $114K to Fund 127 to correct duplicate transfer to COB

• $731K return to PTMS reserves

• Balance used to offset projected GF revenue shortfall

Slide 17

Fund Balance Available (FBA)

$43

$130

$149$162

$145

$164$153

$62

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10

Year

In M

illio

ns

Slide 18

Reserves Available to General Fund

$71 $55$95 $102 $106 $126

$97

$18$18

$23$39 $39

$61

$61

$147$152

$159

$173$163 $101

$90

$0

$50

$100

$150

$200

$250

$300

$350

$400

03/04 04/05 05/06 06/07 07/08 08/09 09/10

Strategic Plan Contingencies Capital Projects OCERS

Slide 19

Position Actions

• Mid-Quarter Board Actions• Delete 10 vacant & ltd. term HCA positions

• Sheriff-Coroner Revised Reduction Plan , 111 positions restored (technical adjustment)

• 1st Quarter Action• Net position deletes, -271

• Extension of 6 Court Facility Maintenance Positions to June 2009

Slide 20

Departmental Issues

• Program I – Public Protection• District Attorney

• $2.9M final grant awards

• Sheriff-Coroner

• Contract cities budget adjustment of $1.1M

• $8.9M grant award reconciliations

• Alternate Defense • $930K net Increase NCC

• Trial Courts

• Realign appropriations, revenues with a $1.3M net increase in NCC

Slide 21

Departmental Issues

• Program II – Community Services• OC Community Resources

• $1.6M final & reconciled grant awards

• PA/PG

• $350K draw down of final reserve balances

• Social Services Agency

• $1.0M Early Childhood System of Care program

• $1.3M net realignment of appropriations, revenues and NCC between controlled funds

Slide 22

Departmental Issues• Program II – Community Services

• OC Public Libraries & OCPL Capital• $900K Decrease transfers from Libraries to Capital Fund

due to positive year-end FBA

• Substance Abuse & Crime Prevention Act (13X)

• $5.9M reduction in Proposition 36 State funding

• Workforce Investment Act

• $9.2M in Community Investment Division grant awards

Slide 23

Departmental Issues

• Program II – Community Services• OC Parks CSA26

• $1.6M year-end reconciliation of maintenance contracts & budget for unanticipated operating expenses

• OC Parks Capital

• $1.1M to re-budget projects & reconcile to negative year-end FBA

• OC Housing

• $3.2M CDBG funding for Neighborhood Stabilization Program

Slide 24

Departmental Issues

• Program III – Infrastructure

• OC Public Works (OCPW)• Transfer Purchasing & Contract Services positions &

related budget between OCPW & controlled funds

• OC Building & Safety Fund

• Delete 5 Building Inspector IV positions & related budget

Slide 25

Departmental Issues

• Program IV - General Government• Assessor

• $341K for ARK Technology & Modern e-Concepts related to ATS upgrade

• $320K from Fund 12P for ACS State & Local Solutions contract related to ATS upgrade

• CAPS Program

• $1.2M decrease in NCC to reverse budgeted debt service payments which will not occur until FY 2010-11

Slide 26

Departmental Issues

• Program V - Capital Improvements• Data Systems Development

• $1.2M decrease in NCC to reverse budgeted debt service payments which will not occur until FY 2010-11

Slide 27

Board Directives

• MSI Program

• Teeter Penalty Revenues

• Sheriff Budget Status

Slide 28

Next Steps

• Additional State Reconciliations – SSA

• December 15th Strategic Financial Plan

• Mid January 2010 – State Proposed Budget

• February 16th Second Quarter Budget Report

Slide 29

Recommended Actions

1. Revise Appropriations and Revenues (4/5 vote) –Quarter 1 Adjustments

2. Final Fund Balance Available Adjustments and Reserve Adjustments (4/5 vote)

3. Close Fund 14B Public Safety Sales Tax Excess Revenues and transfer residual balances

4. Close Trust Fund 362 Intercept Refunds and transfer residual balances

5. Amend Master Position Control

6. Delete obsolete job classifications