TO: Board of Supervisors
FROM: Ryan J. Alsop, County Executive Officer
REPORT BY: Becky Craig, Assistant County Executive Officer
SUBJECT: Year-End Fund Balance Allocation
RECOMMENDATION
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Approve a Budget Amendment to increase appropriations and assignments detailed below with use of available fund balance; decrease assignment of fund balance for Tobacco Settlement; and increase assignment of fund balance in Library Fund. (Fiscal Impact: General Fund $14,129,500 expense; $615,000 expense HHSA Fund; $400,000 expense Roads Fund; $45,000 expense Fire Fund; and $9,400,000 Library Fund; Discretionary).
[4/5 vote required]
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BACKGROUND
The County Executive’s Office estimated approximately $30 million in General Fund available fund balance for the Annual Budget in Spring 2023. The actual available fund balance is provided by the Auditor-Controller upon closing the books several months after fiscal year end. Available fund balance for FY 2022-23 was more than the estimated due to recognition of approximately $16 million in unspent appropriations and receipt of Excess Educational Revenue Augmentation Fund (ERAF) income.
The County’s FY 2023-24 Financial Strategic Plan and FY 2023-24 Budget Policy identify uses for one-time monies to include payment of debt, advance on unfunded liabilities, and reserve for future capital outlay. Staff does not recommend prepayment of remaining debt outstanding as the administrative processing costs would exceed the realized savings; nor does staff recommend funding the OPEB or pension liabilities since prior investments are performing well and the actuarial return would be marginal. Staff recommends allocating $10 million of the available fund balance for Capital Improvements-Accumulated Capital Outlay for forthcoming facilities and infrastructure projects.
The County administers general liability, property, and other insurance premiums and claims in an internal service fund that allocates charges to the departments. The fund must adjust its reserves from time to time to meet the actuarial estimates and to account for drawdowns of prior years’ activity. A budget adjustment totaling $2,225,000 will bring the fund’s reserves to the needed confidence level this fiscal year. The transfer is allocated to major operating funds in the same proportion as this year’s charges.
During FY 2022-23, the Board awarded nearly $4 million state and federal grant monies to three local entities for projects. When preparing the current year’s recommended budget, the entities anticipated spending approximately $3 million last fiscal year and $1 million was appropriated this fiscal year. Staff recommends appropriating an additional $2,964,500 for the three entities’ projects using $2,464,500 restricted fund balance and $500,000 available fund balance.
Staff recommends the Board release $2 million of the Tobacco Settlement assigned fund balance related to prior commitments, resulting in an assigned fund balance of $9.3 million.
Staff reviewed assignment of fund balance for capital replacement for each Library facility in accordance with the policy adopted in 2019 and determined the reserves were not reflective of current property valuation. Therefore, staff recommends assigning $9.4 million available fund balance resulting in capital reserves totaling $21 million.
Requested Action:
Approve a budget amendment to complete the following:
1. Increase appropriations in the General Fund, Transfer-out to ACO account (1050000-56110) with a corresponding transfer-in for $10,000,000 to Capital Improvement Fund - Accumulated Capital Outlay Division (3000000-48210), using the General Fund available fund balance;
2. Increase appropriations in General Fund Non-Departmental Community Grants (1050000-54805) by $2,964,500 using available fund balance of $500,000 and releasing restricted fund balance, once the funds are drawn down for the grant restricted funds, of $2,464,500;
3. Decrease the General Fund Assignment for Tobacco Settlement (1055000) by $2,000,000, thereby increasing the General Fund available fund balance;
4. Increase appropriations for liability insurance account (52700) in General Fund Non-Departmental Division (1050000) by $1,165.000; HHSA Agency Administration Division (2001000) by $615,000; Roads Operations Division (2040000) by $400,000; and Fire Protection Operations Division (2100000) by $45,000 using each fund’s available fund balance respectively; and recognize charges for services revenue in the Liability Insurance Fund, Property and Other Division (4500001-46800) for a total of $2,225,000; and
5. Increase appropriations in the Library Operations transfer-out account (2020000-57900) for $9,400,000 with a corresponding transfer-in (49900) to increase the Assignment for Capital Reserves for each library branch as follows: Napa (2020501) by $7,000,000; American Canyon (2020502) by $600,000; Yountville (2020503) by $600,000; and Calistoga (2020504) by $1,200,000 using the Library Fund available fund balance.
The above actions result in a net use of the General Fund’s available fund balance of $9,665,000.
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? |
n/a |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Allocate available funds to priority programs in Property Insurance, Community Grants, Fire Prevention, and Library. |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
One time allocation of available funds |
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Consequences if not approved: |
Programs will be restricted to current allocations. |
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.