Strategic Financial Plan Workshop June 10, 2016

Transcription

1 Strategic Financial Plan Workshop June 10, 2016 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.

2 Welcome Frank Kim County Executive Officer 2

3 Strategic Financial Plan Overview Michelle Aguirre Chief Financial Officer 3

4 Proposition 172 Revenues 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% 8.6% 10.7% 5.0% 1.3% -1.9% Annual Percentage Change -5.5% 4.1% 9.7% 6.8% SFP Forecast % 4.8% 2.9% 4.0% 3.5% 3.0% 0.0% 1.5% 2.0% Actual = 0.5% $7.9M below budget -10.0% -15.0% -12.8% 4

5 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY Millions Proposition 172 Reserves $120 $100 $80 $60 Fund 14B Board Policy Change Directed proportional use of Prop 172 & GF $40 $20 $0 FUND 14B - July 1 Balance Fund 14J FUND 14J - July 1 Balance Prior policy allowed for GF to be spent first allowing 100% of unspent revenue to be allocated to Fund 14B 5

6 HdL Companies Brice Russell Principal 6

7 Proposition 172 Revenues 15.0% 10.0% 5.0% 0.0% Orange County Sales Tax Trends vs. California Year-Over-Year Sales Tax Percent Growth -5.0% -10.0% California, excluding Orange County Orange County -15.0% -20.0% Pre- and post-recession Orange County sales tax growth has often trailed the state. 7

8 Proposition 172 Revenues 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% Autos & Transportation and Business & Industry Sales Year-Over-Year Percent Change Bradley-Burns Local Tax State Autos And Transportation State Business And Industry OC Autos And Transportation OC Business And Industry Compared to the state overall, changes in auto-related and business-tobusiness sales have had significant impact on countywide post-recession sales tax growth. 8

9 Millions Proposition 172 Revenues County Public Safety Benefits From Overall State Gains $350 $300 $250 $200 $150 $100 $50 $ % 10.30% 10.20% 10.10% 10.00% 9.90% 9.80% 9.70% 9.60% 9.50% 9.40% Public Safety Tax Revenue Public Safety % Share Statewide sales determines the size of the Public Safety pot, but Orange County s share continues to decline. 9

10 Proposition 172 Revenues Top 6 Changes in 2014 Public Safety Factors Affecting Revenues San Francisco City and County Riverside County Los Angeles County Kern County Orange County Imperial County

11 Proposition 172 Revenues Current Statewide Issues Regarding Public Safety Remittances State Controller Audited Board of Equalization 2015 Accounting and other deficiencies found Public Safety and Realignment over-allocated to counties since July 1, 2011 Corrective Action Plan prepared and submitted to SCO YTD Remittances appear to be short BOE Staff working on revising accounting methods Date of completion is uncertain No negative adjustments in FY

12 Proposition 172 & Measure M Revenues 10.0% REVENUE COMPARISON Year-Over-Year Percent Change 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% Countywide Local Sales Tax Measure M Revenues In recent years, destination-based Measure M revenues have grown more than point of salebased sales tax due, in part, to a major sales tax producer s move from Orange County. Businesses and government agencies in the County continue to buy from the company so Measure M tax unaffected. However, the County s Public Safety factor has been reduced. 12

13 Strategic Plan Priorities December 18, 2012 and Reaffirmed March 31, 2015 Stabilize budget and prepare for contingencies Develop a competent and cost-effective technology model Succession plan and invest in workforce development Simplify/increase flexibility of administrative policies and procedures Address and fund agency infrastructure 13

14 Strategic Plan Priorities Stabilize Budget & Prepare for Contingencies Higher reserve balance Improved credit rating Ongoing vs. one-time restorations Limited NCC growth allocation to departments Address & Fund Agency Infrastructure Civic Center Master Plan Central Utility Facility Upgrade 800 MHz Countywide Coordinated Communications System Year-Round Shelter 14

15 Strategic Plan Priorities Examples of Known & Unknown Future Costs Election System Upgrade/Replacement $20M Property Tax System Re-platform ($6.5M), Upgrade $56M Body Worn Cameras and Related Storage/Staffing Costs ($?) Strategic Priorities 10-Year projected cost of $838M 15

16 Millions General Fund Reserves $600 $500 $400 $300 $200 $100 $0 Total=$555.9M $61.3 $47.7 $21.2 $46.7 Includes $130M VLFAA $148.8 Target Reserve $230.2 $ Amount Contingency Capital Project Maintenance & Construction Teeter Loss Reserve Operations Reserve Target Target Reserve balance of $230.2M is $248.3M short of $478.5M two month General Fund Operating Revenue target 16

17 Millions Reserve Forecast Obligated Fund Balances Available to General Fund $600 $500 No Planned Increase to Reserves Until VLFAA Paid in Full $400 $300 $230 $230 $230 $200 $230 $240 $255 $100 $ Strategic Plan Capital Projects Maintenance & Construction Operations Reserve Target Contingencies Teeter Loss Reserve 17

18 Millions Fund Balance Unassigned Prior Year Budget Savings & One-Time Revenue $180 $160 $140 $166.8 $148.7 $129.6 $ Forecast ~$38M $128.1 $120 $100 $80 $60 $40 $20 $62.4 $41.6 $42.5 $45.4 $67.1 REALITY ~$30-45M $0 18

19 County-to-County Comparisons Total General Fund Balance as % of Revenue (in Thousands) * Major Metro Counties General Fund Revenue General Fund Balance General Fund Balance as % of Revenue Credit Rating (Standard & Poor s) San Diego $3,513,002 $1,888, % AAA San Bernardino $2,456,739 $929, % AA San Francisco $4,112,644 $1,145, % AA+ Orange $2,767,157 $664, % AA+ Contra Costa $1,364,369 $295, % AAA Santa Clara $2,400,531 $514, % AAA Los Angeles $15,454,733 $3,189, % AA+ Orange (FY Estimate) $3,315,091 ** $486,386 ** 14.7% Riverside $2,702,857 $395, % AA Sacramento $2,157,362 $249, % A * Source: FY CAFR ** Estimated June 30, 2016 Fund Balance less $130M State payback 19

20 Budget Balancing (Amounts in Millions) Year Total NCC Increase (2%, 3%, 1%) $ 10.9 $ 18.1 $ 6.0 $ 35.0 Ongoing Restores/Expands One-Time Funding Total $ 65.6 $ 73.2 $ 42.2 $

21 Position History 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, Total Positions 17,257 17,632 18,035 18,135 18,188 18,277 Vacant 1,483 1,777 1,972 2,008 1,867 1,967 Filled 15,774 15,855 16,063 16,127 16,321 16,310 Data as of Fourth Quarter Budget Report QBR QBR vacancies plus recommended expand positions 21

22 Salaries & Benefits General Fund Budget Controls w/positions 100.0% % to Base Appropriations 80.0% 60.0% 40.0% 70.8% 67.7% 69.5% 62.1% 57.8% 61.6% 62.6% 64.1% 64.2% 20.0% 0.0% Actual Actual Actual Adopted Recomm. Budget SFP Forecast 22

23 Approved Salary Increases FISCAL YEAR TOTAL % 8.50% 2.75% % 2.00% % 2.00% % 2.00% 7.00% % Total Compensation General Purpose Revenue -1.3% 3.1% 3.5% 3.0% Total Compensation 0.3% 5.0% 3.4% 1.9% Total Cost is $242M & $55M NCC Average Annual Cost Increase is $100M & $23M NCC 23

24 County Contribution Rates (Tier II) % of Payroll 80% 70% 60% 55.2% 55.7% 59.9% 71.2% 59.9% 61.9% 64.8% 66.7% 66.6% 67.0% 50% 40% 30% 20% 10% 0% 22.4% 23.3% 26.8% 30.1% 30.0% 28.2% 28.3% 27.9% 27.9% 28.0% Safety Non - Safety Fiscal Year Note: Excludes Retiree Medical 24

25 Millions Retirement & Health Cost Projections $800 $700 $600 $500 $400 $463 $478 $137 $147 $519 $157 $559 $593 $589 $159 $186 $194 $659 $691 $623 $241 $266 $217 5-Year Forecast $727 $295 $300 $200 $100 $326 $331 $362 $400 $407 $395 $406 $418 $425 $432 $ Actual Retirement Actual Actual Health Insurance Actual Budget Fiscal Year Recomm. Budget Note: All years exclude Pension Prepayment and Retiree Medical. 25

26 State Budget The surging tide of revenue has begun to turn. It is best to prepare for the days of necessity. 26

27 Five Year Forecast with Restore & Expand Augmentations $850 $829 $800 $788 $777 $791 $807 $804 $750 $744 $759 $774 $789 $708 $738 $700 $692 $682 $719 $650 $677 $ Adopted Forecast Recommended SFP SFP SFP SFP Available Sources Net Baseline Uses Uses Without VLFAA Payment 27

28 Real Estate Projects & Long Term Strategic Planning The County s Valuable Assets El Toro Parcels Prado Dam Securing the County s Financial Stability Greenspot Laguna Niguel REVENUE FY Civic Center Master Plan Future Strategic Priorities 28

29 General Purpose Revenue 29

30 E B P P P P Secured Assessed Valuation 12.00% % Change Orange County Secured Assessed Valuation 10.00% 8.00% 6.00% 4.00% 2015 SFP 4.0% to 2.0% 2.00% 0.00% -2.00% -4.00% 30 18

31 Millions 5% Reductions to NCC 5% Reduction + Mid-Year No Growth 1% Growth VLFAA Contingency 2% Growth + Teeter Reserves 3% Growth Forecasted Net County Cost Net County Cost $800 $700 $600 $639 $616 $635 $577 $603 $710 $707 $740 $747 $698 $701 $500 $400 $300 1% Growth $200 $100 $ Adopted B F F F F 31

32 Millions Augmentations Budget $760 Base Restore Expand $740 $720 $5 $19 +$17M $14 $36 $12 $26 $700 $706 $706 $706 $680 FY SFP FY Budget Request FY Budget CEO Rec 32

33 Strategic Priorities 2015 SFP (In millions) Total Requested Cost Total Projected Revenue Total Requested NCC FY $129.0 $ 13.2 $115.8 FY FY FY FY Yr Total $517.4 $117.2 $400.1 Note: Ten-year Net County Cost request is $838 million 33

34 Strategic Priorities 2015 SFP Dept. Program I Public Protection 10-Year NCC Request (in millions) Must Fund Began Funding Lack Funding DA Science & Technology that Enhances Public Safety $ 96.0 Probation Youth Guidance Center Classroom Facility 10.1 Probation SB81 Match - Juvenile Hall Gymnasium & Visitation Center $ 2.2 Probation South County Field Services Office 3.1 S-C/HCA James A. Musick Facility Expansion - Phase 1 & 2 Staffing Sheriff Jail Electronic Control Systems Upgrade/Replacement 14.4 Sheriff 800 MHz Handheld Radios 8.9 Sheriff Helicopter & Inmate Transportation Buses Replacement 8.8 Sheriff Sheriff-Coroner IT Initiatives Upgrades & Replacement $ Sheriff Cybercrime Investigation 17.2 Sheriff Closed Circuit Television (CCTV) System for Jails 8.9 Sheriff Sheriff-Coroner Facilities Capital Improvement Plan 36.7 Subtotal Public Protection $ 43.2 $ 29.5 $

35 Strategic Priorities 2015 SFP (Continued) Dept. Program II Community Services 10-Year NCC Request (in millions) Must Fund Began Funding Lack Funding OCCR Affordable Housing Initiative $ 5.0 HCA Crisis Stabilization Unit Expansion & Support Services 52.6 HCA Homeless Drop-In Services Center 16.6 HCA Triage Grant Program Continuation 35.5 SSA Program Expansion Adult Protective Services, SSA Commercially Sexually Exploited Children, Child/Family Serv. 0.0 Dept. Subtotal Community Services $ 0.0 $ 0.0 $ Program IV General Government A-C CAPS+ Financial/Human Resources/Budget System Upgrades $ 25.8 A-C eprocurement $ 6.3 A-C Property Tax System Replatforming/Upgrade 64.0 ROV Electronic Voting System $ 20.0 Subtotal General Government $ 20.0 $ 89.8 $

36 Strategic Priorities 2015 SFP (Continued) Dept. Program VI Capital Projects Began Funding 10-Year NCC Request (in millions) Must Fund Lack Funding Cap. Proj. Civic Center Deferred Maintenance $ 20.0 Cap. Proj. County Facilities Master Plan ($ 29.7) Subtotal Capital Projects ($ 29.7) $ 0.0 $ 20.0 GRAND TOTAL $ 33.5 $ $

37 Competing Needs for General Funds Salaries & Benefits Strategic Priorities NCC Capital Projects IT Projects 37

38 Conclusion Continued Focus on Board Priorities Stabilize budget Prepare for contingencies Infrastructure 38

39 Next Steps FY Public Budget Hearings June 14, 2016 FY Budget Adoption June 28, Strategic Financial Plan Kickoff Summer 2016 Implement Debt Management Policy Implement Information Technology Plan Update Position Policy Update Reserves Policy Update Capital Improvement Plan Update Strategic Priorities Continued Focus on Reducing Unfunded Liabilities 39