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
RECOMMENDATION
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Adopt a Resolution to modify the Policy for Budgetary Controls and Annual Budget Policy Guidelines. (No Fiscal Impact; Discretionary)
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BACKGROUND
As the Fiscal Year 2025-26 budget process begins, the CEO proposes revisions to the Policy for Budgetary Controls and Annual Budget Policy Guidelines. The proposed Policy for Budgetary Controls and Annual Budget Policy Guidelines builds on prior budget policies, while being updated to reflect the current conditions of the organization. Staff will return in late February with the Five-Year Forecast of Revenues and Expenditures for the General Fund and the Five-Year Capital Improvement Plan.
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. The only monetary figure remaining is the County’s Maintenance of Effort obligation for Roads. Removing the exact monetary figures and replacing them with a direction to increase by the Cost-of-Living Adjustment allows the document to not require editing for minor updates.
The Annual Budget Policy Guidelines works with the Five-Year Forecast to inform the annual Recommended Budget. The Annual Budget Policy Guidelines provide long-term strategies to allow the County to provide services through periods of uncertainty and provide consistently sound financial principles. The document primarily focuses on the General Fund and certain related operating funds. As a long-term plan, the Annual Budget Policy Guidelines does not attempt to lay out a detailed blueprint for every scenario. It guides the organization to maintain fiscal stability while continuing essential services and meeting the Board’s priorities and has been updated with minor changes.
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. The Policy for Budgetary Controls is 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 fees) to the department operational funds will no longer require board authorization if the transfer does not increase the bottom-line board-approved department 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 not 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. Previously a capital asset was defined at $5,000. This change adjusts for inflation and aligns with state and federal guidelines. The amount that may be spent on a capital asset (its appropriation) can be adjusted by the Auditor Controllers Office if the expenditure has exceeded its authorization amount of no more than $2,000 dollars. The previous amount was $500 dollars. The change was also needed to adjust for inflation.
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.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
No |
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Is it currently budgeted? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
The Policy for Budgetary Controls and Annual Budget Policy Guidelines provide guidance to staff on developing and managing the upcoming budget process. |
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.