TO: Board of Supervisors
FROM: Ryan J Alsop, County Executive Officer
REPORT BY: Daniel Sanchez, Senior Management Analyst
SUBJECT: Policy for Budgetary Controls and Annual Budget Policy Guidelines and Mid- Year Budget Review and Amendments
RECOMMENDATION
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Adopt a Resolution to modify the Policy for Budgetary Controls, approve the Annual Budget Policy Guidelines and approve the Mid-Year Budget Amendments. (Fiscal Impact: Varies by Fund; Multiple Funds; Not Budgeted; Discretionary)
[4/5 vote required]
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BACKGROUND
Policy for Budgetary Controls and Annual Budget Policy Guidelines:
The proposed Annual Budget Policy Guidelines contain minor administrative changes. The changes include removing dates and monetary figures, so annual clerical updates are not needed. The current document specifies amounts the General Fund should contribute to various operations. An additional change is language clarifying what the General Reserves are and its purpose. The General Reserves may be accessed by adopting a Resolution by the Board of Supervisors declaring an emergency at any Regular or Special Meeting of the Board of Supervisors and a 4/5 vote.
The Annual Budget Policy Guidelines are adopted by the Board annually at the beginning of the budget cycle and provide specific direction to staff on developing the Recommended Budget for the coming fiscal year. They provide enough detail to allow staff to adjust the expenditures in the Recommended Budget to the resources that are projected to be available. In 2024 the Board adopted Annual Budget Policy Guidelines contained a change that combined the Assignment for Fiscal Uncertainty into the General Reserves. Previously the Assignment for Fiscal Uncertainty was 10% of the General Fund operational appropriations while also maintaining a General Reserve of 13% of the General Fund operational appropriations. The General Reserves were updated to be 15% of the General Fund appropriations. This change provides Napa County with sufficient reserves, while allowing greater flexibility during the budget process to present a recommended budget that meets Board priorities.
Additionally, in 2024 the Board adopted Annual Budget Policy Guidelines contained a change that allowed revenues which have been received for multiple consecutive years to be treated as on-going revenues. This allowed Excess ERAF revenues to be incorporated into the budget as part of the annual Recommended Budget. Previously Excess ERAF revenues were recognized within the fiscal year and were not available as part of the annual Recommended Budget.
The Policy for Budgetary Controls are not modified regularly. The previous time the Policy for Budgetary Controls was modified was in 2012. This document provides technical details on how the budget will be managed and amended. The Policy for Budgetary Controls is modified by resolution. The Policy for Budgetary Controls includes several changes. Transfers that are within a Division totaling over $20,000 will require County Executive Officer (CEO) approval. Previously transfers within a Division required CEO approval when exceeding $10,000.
Transfers out from non-operating revenue funds (generally state grants and restricted funds) to department operational funds will no longer require board authorization if the transfer does not increase the bottom-line board-approved document operating appropriation. These transfers will still need to follow the process of approval through the County Executive Office and the Auditor Controller Office.
The Policy for Budgetary Controls is increasing the threshold for the definition of capital assets. Capital assets are defined as real or personal property acquired for use in normal operations and no for resale, with a value equal to or greater than the capitalization threshold for its classification. For equipment the value is $10,000 and a useful life of more than a year. This change adjusts for inflation and aligns with the state and federal guidelines. The amount that may be spent on capital assets (its appropriation) can be adjusted by the Auditor Controller’s Office if the expenditure has exceeded its authorization amount of no more than $2,000 dollars.
The previous amount was $500.
The changes to the Annual Budget Policy Guidelines will be effective immediately. The changes to the Policy for Budgetary Controls will be effective July 1, 2025.
Mid-Year Budget Amendments:
An important part of the County’s continuous fiscal monitoring process is a review of the County’s budget status throughout the fiscal year, focusing particularly on the General Fund. County Executive office staff work with department staff to forecast year end revenues, expenses and use of available fund balance. This fiscal review enables staff to request funds to address any current year budget concerns in a timeline manner. Using the most current information available the General Fund will likely end Fiscal Year 2024-25 with an unassigned ending Available Fund Balance of approximately $24 million which is $17 million more than projected.
The attached report provides further overview, and the exhibits provide detail of the requested budget amendments. The budget amendments will provide sufficient authority to cover anticipated expenditures throughout the end of the fiscal year.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Where is it budgeted? |
Multiple Departments |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
This allows departments to adjust their budgets within the fiscal year. |
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Is the general fund affected? |
Yes |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.