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The County of Orange FY 2002-03 Budget Workbook is being presented in PDF format. The following pages were created directly from the budget book document used in the printed version. Please ignore the page numbers as the web version of the FY 2002-03 Budget Workbook was divided into several portions in order to reduce the size of the PDF files. Budget information as presented in the seven(7) program sections is provided at a summary level. For more detailed financial information, please refer to the Appendix section.

In order to view the PDF files, you will need the Acrobat Reader installed in your system. Click here to download the FREE COPY of Acrobat Reader if you do not have it installed in your system.

For those who would like a CD version (Windows/PC Format) of the FY 2002-03 Budget Workbook, please email or call Mitch Tevlin at (714)834-6748. Please allow 2-3 weeks for delivery.

The FY 2002-03 Budget Workbook was prepared by the County Executive Office. Your comments are greatly appreciated. Thank you.

DISCLAIMER: This website contains the Fiscal Year 2002-03 Budget Workbook for Orange County, California. The County of Orange reserves the right to make changes to the content of the data presented in this website at any time, without notice. The County of Orange assumes no liability for damages, direct, indirect, consequential or otherwise resulting from the use of this website, or the result of any errors, omissions, discrepancies, changes, amendments or alterations in the data contained herein.













































The following information represents the Introduction section of the County of Orange FY 2002-03 Budget Workbook. If you need additional budget information please contact Mitch Tevlin via email at mitch.tevlin@ocgov.com or via telephone at 714-834-6748.


INTRODUCTION

The County Executive Office presents the Proposed Budget for FY 2002-03. This budget reflects Orange County's disciplined approach to fiscal management and is consistent with the priorities set forth in the County's 2002 Strategic Financial Plan. This Budget will be discussed at a public hearing beginning June 11, 2002, and may be amended by the Board of Supervisors during the hearings. The budget is scheduled for adoption on June 25, 2002.

The FY 2002-03 Proposed Budget reflects the impacts on the local, state and national economies including the recent recession and the events of September 11, 2001. Although impacted by external factors, the strength and diversity of the local economy has mitigated the downturn to some extent. The FY 2002-03 State Budget, under consideration by the legislature at the time this document went to print may have significant adverse impacts on the County's ability to provide services to its residents.

This introduction contains a guide to reading the budget document, a brief description of the County's form of government, Supervisorial Districts, mission statement and the County's Corporate Management System. This report reviews the State budget and economic factors influencing the County budget, provides summary budget information and issues in various program areas of the budget.

I. A CITIZEN'S GUIDE TO READING THE BUDGET DOCUMENT

This document includes information that provides readers with a greater understanding of each department's mission, organizational structure, and performance results as a narrative context for the budget amounts. The introduction section contains several charts and tables which provide an overview of issues affecting the budget, sources and uses of funds and budgeted positions. Following the introduction are sections that present each department and fund in the County's seven program areas. The seven program areas are:

1. Public Protection

2. Community Services

3. Infrastructure and Environmental Resources

4. General Government Services

5. Capital Improvements

6. Debt Service

7. Insurance, Reserves and Miscellaneous

When applicable, the presentation for each department within the seven program areas includes:

An Operational Summary including:

  • Mission
  • Budget at a Glance
  • Strategic Goals
  • Key Outcome (Performance) Measures
  • Key Accomplishments of the past year

An Organizational Summary including:

  • Overview Organization Chart with three levels of detail for most departments
  • Description of each major activity
  • Ten year staffing trend chart with highlights of staffing changes

A FY 2002-03 Budget Summary including:

  • Department's plan for support of the County's strategic priorities
  • Major changes in the base budget
  • Recap of the department total budget
  • Highlights of the key budget trends
  • A matrix that shows all of the budget units under the department's control

Readers looking for budget information for a specific department can use the Index near the end of the book. Departments are listed in alphabetical order with the page number of that department's budget information.

All County departments prepare annual business plans. A business plan sets forth objectives for the coming year and identifies a means of measuring success in achieving the objectives: key outcome (performance) measures. Many of the key outcome measures have changed this year because during the 2002 business plan process, there was thorough review to ensure their consistency with the departmental mission and goals. In the future, changes to the key performance measures will be minimized so the reader of the business plans and this budget document can consistently observe trends and progress in meeting objectives.

Following the seven program areas is an appendix for readers who desire an additional level of budget detail including each department's total budget by major revenue and expense category and a recap of appropriations by activity.

 

II. ORGANIZATIONAL OVERVIEW

The Orange County FY 2002-03 Proposed Budget presents the County's financial capacity and priorities in providing social, environmental, public health, safety and regional planning services for its residents. The County provides the public with a comprehensive array of public services through its 23 departments and through comprehensive community partnerships with public, private and non-profit agencies. In FY 2002-03, the District Attorney's Family Support division becomes the County's 24th department, the Department of Child Support Services.

FORM OF GOVERNMENT

The County is a charter County as a result of the March 5, 2002 voter approval of Measure V, which provides for an electoral process to fill mid-term vacancies on the Board of Supervisors. Before Measure V, mid-term vacancies would otherwise be filled by gubernatorial appointment. In all other respects, the County is like a general law County. The County is governed by a five-member Board of Supervisors each of whom serve four-year terms and annually elect a Chairman and Vice Chairman. The supervisors represent districts that are each equal in population. The members of the Board of Supervisors by district are as follows:

CYNTHIA P. COAD , Chair , from the Fourth District, representing the communities of Buena Park, Fullerton, La Habra, Placentia and portions of Anaheim.

JAMES W. SILVA , from the Second District, representing the communities of Costa Mesa, Cypress, Fountain Valley, Huntington Beach, La Palma, Los Alamitos, Newport Beach, Seal Beach, Stanton, and portions of Garden Grove.

CHARLES V. SMITH , from the First District, representing the communities of Santa Ana, Westminster, and portions of Garden Grove.

TODD SPITZER , from the Third District, representing the communities of Brea, Irvine, Orange, Villa Park, Yorba Linda, Tustin and portions of Anaheim.

THOMAS W. WILSON , VICE CHAIR, from the Fifth District representing the communities of Aliso Viejo, Dana Point, Laguna Beach, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Mission Viejo, San Clemente, San Juan Capistrano and Rancho Santa Margarita.

COUNTY MISSION STATEMENT

In 1996, the County adopted its first mission statement to define Orange County government, its organizational focus and core businesses. Since that time, the mission statement has annually been reaffirmed by the Board of Supervisors based on input and suggestions from staff and other stakeholders. The County's mission statement reads:

The County of Orange is a collection of dedicated, public-spirited individuals, who together comprise a regional service provider and planning agency committed to maximizing resources and improving the quality of life for residents in Orange County. Our core businesses are public safety, public health, environmental protection, regional planning, public assistance, social services and aviation.

The County is committed to providing Orange County residents with the highest quality programs and services as articulated in its mission statement. Supporting this mission statement is a series of guiding principles that frame how the County operates and prioritizes its resources:

  • RELY ON THE STRATEGIC FINANCIAL PLAN to make day-to-day decisions that consistently move the County toward its long-term goals.
  • VALUE OUR WORKFORCE to ensure that citizens are served by a professional and dedicated workforce.
  • ENHANCE TECHNOLOGY for productivity and service delivery to use modern methods to reduce costs and improve services.
  • COMMUNICATE COUNTY PRIORITIES to ensure that our employees and partners understand how the County is achieving its long-term goals.

INNOVATIVE GOVERNMENT

Beginning in 1996, the Board of Supervisors adopted various initiatives in an effort to improve the accountability, efficiency and responsiveness of County government. This effort is referred to as the Corporate Management System and includes a series of related, but independent initiatives to improve how the County plans and prioritizes its resources to achieve its organizational goals. The initiatives consist of:

  • County Mission Statement
  • Ongoing Organizational Evaluation
  • Annual Departmental Business Plans
  • Strategic Financial Plan
  • Performance Measurement

Beginning with the first restructuring effort in 1996, the County adopted a corporate culture of continuous improvement which challenges managers throughout the organization to continually evaluate how services are provided to determine whether they can better meet customer needs or be provided more efficiently. Ongoing organizational evaluation refers to the process of continually reevaluating services to improve customer service, increase cost-effectiveness, and/or enhance service delivery. Through the development of annual departmental business plans, departments identify their mission and goals, discuss the value their organization brings to the community and how they measure their progress.

The Strategic Financial Plan process provides the framework for implementing new programs and facilities as well as serving as the foundation for the annual budget. This framework enables the Board to make annual funding decisions within the constraints of a comprehensive, long-term perspective. Since 1998, the Strategic Financial Plan has been annually updated to review revenue and expense forecasts. New priorities are identified and considered every two years as part of a comprehensive re-adoption of the plan.

Complementing strategic and business planning is a comprehensive County performance measurement system which includes three main elements:

  • Community Indicators - The Community Indicators Report provides a comprehensive assessment of Orange County using seven groups of indicators: economic and business climate, technology and innovation, education, health and human services, public safety, environment and civic engagement. Several new indicators were added within these groups including tourism, transit, world trade and physical fitness of children.
  • Performance Measurement - Measuring outcomes and focusing on results is increasingly becoming a way of doing business for the County. Since July 1998, the County has been working to develop meaningful measures of the outcomes specific to each department's mission and goals. This budget document contains reporting on key outcome measures of all departments.
  • Performance Incentive Program -In order to provide incentives that motivate and reward employees for achievement linked to County goals, employee performance incentive programs have been implemented. Under the leadership of the Orange County Labor Management Taskforce, the Performance Incentive Program (PIP) continues to strengthen the links between individual performance and goal achievement for represented employees. Similarly, the Management Performance Plan (MPP) has directly linked management performance rewards to the achievement of project and competency development goals linked to County and Agency/Department business goals and objectives.

Each year the County makes progress in further integrating these tools into the way the County operates, prioritizes its resources and makes decisions. Performance measures, for example, are being used to evaluate investments in programs and the community indicators report helps identify target areas for future collaborative initiatives. Augmentations to the FY 2001-02 budget contained performance plans, the outcomes of those performance plans have been reviewed and are reported on in this budget document. New augmentation requests for FY 2002-03 include, where applicable, performance plans and will undergo the same review next year.

During FY 2001-02, the County was assigned higher credit ratings by the two largest rating firms: A+ from Standard and Poors; and Aa2 from Moody's. These ratings, which place Orange County among the highest rated counties in California, are in large measure due to the corporate management system, particularly the Strategic Financial Plan. In FY 2002-03, the County will continue the progress made and strive for innovation in service delivery, strategic planning, and performance measurement. Orange County continues to be an example of innovative government.

III. FINANCIAL OUTLOOK FOR FY 2002-03

Orange County is blessed with a strong and diverse economy that routinely out-performs the state and national economies (in annual percentage growth), and ranks higher (in absolute dollars) than the economies of the majority of the countries in the world. While there has been increasing attention and concern regarding the current slowdown of the national economy, the current recession is expected to be mild relative to the previous 1990-91 recession. Moreover, despite the obvious slow down in the local economy, conditions in Orange County are expected to remain much more favorable than conditions at the state and national levels. This section provides various indicators that describe the projected outlook of the Orange County economy.

The growth in the Real Gross County Product (a measure of the value of goods and services produced in one year and an indicator of the strength of the local economy) was estimated by Chapman University to increase by 6% in 2001 and reach $133 billion. This compares to an increase in Gross State Product (for the state of California) of 4% and an increase in Gross Domestic Product of 5% at the national level during the same time period.

Orange County's unemployment rate continues to be one of the lowest in the State, and is below that of all surrounding Southern California counties, the state of California and the nation. In March 2002, unemployment rates for the U.S., California and Orange County were recorded at 5.7%, 6.5% and 3.7% respectively. In March 2002 rates for surrounding counties in Southern California were 6.5% (for Los Angeles County), 5.2% (for Riverside County), 5.1% (for San Bernardino County) and 3.8% (for San Diego County). According to Chapman University, Orange County's job growth in 2001 totaled 2.7% (approximately 40,000 jobs) and is projected to average 1.1% (approximately 15,700 jobs) through the end of 2002.

Inflation, as measured by the Consumer Price Index (CPI), is also expected to remain moderately low in Orange County, despite being higher than the CPI at the state and national levels. Chapman University projects the CPI at the national level to increase by 2.1%, in California by 2.7%, and in Orange County by 2.9% in 2002. Chapman University expects inflation in Orange County to remain moderately low (between 2.9 and 3.2%) through 2005.

According to DataQuick Information Systems, in March 2002 the median price for new and existing homes in Orange County increased by 13.7% (relative to March 2001), and reached $332,000. Housing appreciation in Orange County has been rapid in response to the high demand for housing caused by steady job growth, low interest rates and a tight supply of housing. For the future, Chapman University is projecting that while housing appreciation will slow down, due primarily to the expected slowdown of the local economy, housing affordability (compared to other parts of the country) will remain low.

Orange County's median family income is projected by the U.S. Department of Housing and Urban Development to increase by 2.6% in 2002, reaching $75,600. This compares to 4.1% (reaching $60,800) for the state of California and 3.6% (reaching $54,400) for the U.S in 2002. Taxable sales in Orange County are projected by Chapman University to increase by 5.2% in 2002, 5.7% in 2003, 6.1% in 2004 and 6.3% in 2005. Although current trends show signs of a slowing local economy, economic conditions should continue to have a positive impact on the receipt of general purpose and other revenue sources that the County depends upon to fund its operations. These generally favorable economic trends should also help reduce some of the service demands placed on County government. Current trends in income and taxable sales should also have a positive impact on the County budget.

STATE LEGISLATION AND BUDGET

Early projections of state revenues and expenditures indicated that there would be a shortfall in the amount of revenue needed to support the State's programs in the current (FY 2001-02) budget year as well as in the coming FY 2002-03. The shortfall results form the national recession and the impacts of the events of September 11, 2001 on the State's economy. A large element of the shortfall is a decline in receipts from the personal income tax on capital gains and stock options. The surplus of revenue accumulated from the two prior years was depleted making emergency energy purchases.

In January 2002, Governor Davis sent his proposed FY 2002-03 Budget to the legislature. The budget proposed in January 2002 addressed a $12.5 billion gap, about 30 percent of the general fund. On May 15, 2002 the governor sent a major revision to the legislature to address a gap projected to be about $23.6 billion, over 50% percent of the general fund. About 32% of the gap is to be closed by program reductions, 8% from increases to the cigarette tax and the vehicle license tax, and the remainder will be accomplished through fund shifts, loans, accelerations, transfers and deferrals. The strategy proposed by the governor is essentially a one year remedy and reflects the view by many economists that the current recession will be brief and indeed may already be over.

Unfortunately, the State budget submitted by the governor, has some very profound negative impacts on local government. The total estimated impact from State program reductions to Orange County is $57 million. Additionally the May revision contains a provision to pass on one-half of the $89.7 million federal penalty related to the Child Support Automation project. Orange County's share is about $3.5 million. The final impacts of the State budget were unknown at the time this budget document went to print. However, it would be unrealistic to assume that the FY 2002-03 State Budget, which is constitutionally mandated to be adopted no later-than-June 30, 2002, will have less of an impact on County services than the current version which is being reviewed by legislative committees. Accordingly, on May 24, 2002 the County Executive Officer implemented a hiring freeze for County General Fund departments and is recommending that the Board of Supervisors approve the following reductions to the proposed budget:

Public Safety

  • District Attorney, $1,186,449 - reduced funding for prosecuting serious crime including spousal abuse cases, welfare fraud, and vertical prosecution of methamphetamine abuse.
  • Probation, $248,240 - reduced grant funding for programs including war on methamphetamine and seriously disturbed juveniles gang intervention. If left unchanged, the May Revise will have an estimated $10 million impact in FY 03-04 through the proposed elimination of the Juvenile Justice Crime Prevention Act (AB 1913), which provide funding for such programs as Youth and Family Resource Centers, Early Intervention, Substance Abuse Education and Recognition, Gang Prevention, School Mobile Response Team and Juvenile Drug Court Expansion. Elimination of AB 1913 funding in 03-04 will have impacts on other County departments, as well.
  • Sheriff-Coroner, $453,000 - reduced reimbursement for mandated functions; reduction in technology grant funding.

Community Services

  • Community Services Agency, $5,331,020 - reduction in funding for programs that include Emancipated Youth, Adult Protective Services, general education and job training for incarcerated youth, employment services for clients in the welfare-to-work program, and non-custodial parent services.
  • Health Care Agency, $13,869,866 - reduced mental health services provided at the Juvenile Hall, eliminate contracted mental health services for wards of the court, eliminate contract outpatient services for supervised probationers and those involved with the Juvenile Drug Court, reduce Early and Periodic Screening Diagnosis and Testing Program for children and young adults, eliminate the Adult and Children's System of Care, reduce services for homeless adults, reduce breast cancer early detection program and comprehensive perinatal outreach services.
  • Social Services, $39,278,080 - reduction in services to clients in the CalWORKs program such as youth employment, family resource centers, emancipated youth services, educational services, delays in food stamp eligibility determination, delays in providing health care for children and adults under the Medi-Cal program, delays in eligibility determination for foster parents, delays in payments to caregivers, delays in adult protective services investigations, reduction to In-Home Supportive Services for eligible adults and reduction of adoptive placements of children.

Infrastructure & Environmental Resources

  • Orange County Public Library, $483,564 - reduction in books and/or titles available to the public.

Although appropriation reductions are recommended to reflect the probability of program reductions in the State budget, because of the uncertainty of the final outcome, no position deletions are recommended for the FY 2002-03 Proposed Budget. When the State budget becomes final, reconciling adjustments will be recommended in the appropriate FY 2002-03 Quarterly Budget Report.

MAJOR REVENUE AND EXPENSE ASSUMPTIONS

The County budget includes a wide variety of funding sources. State and Federal funding sources are estimated by departments based on established funding allocation formulas and caseload projections and State budget information. Basic secured and unsecured property taxes are projected to increase by 4%. Motor vehicle license fees are projected to decline by 1% based on the State's projections and trend analysis. These fees are net of $22 million set aside to pay the annual cost of the 1995 Recovery Bonds. State residents enjoy a reduction in their motor vehicle license bill and the State backfills the reduction to maintain local government financing at the pre-reduction level. The restoration of a portion of the fee to the car owner as proposed in the FY 2002-03 State Budget will not increase revenue to the counties. Base sales tax revenue is projected to remain level based on estimates by Chapman University; Hinderliter, De Llamas & Associates (sales tax consultant to the County) and the State Board of Equalization. Health & Welfare Realignment revenue from the State allocated to Health, Mental Health and Social Services is projected to increase by 5.8%.

The one-half cent Public Safety Sales Tax (allocated 80% to the Sheriff and 20% to the District Attorney) is projected to increase by 3.7%. The interest earning rate on cash balances in the County Investment Pool administered by the County Treasurer is expected to be 2.52%, which is about the same as the 2.49% rate earned in March 2002.

On the expense side, labor costs are centrally calculated based on approved positions, historical position vacancy rates and a 4% base building wage increase as approved by the Board of Supervisors in existing agreements with the various labor bargaining units. For the non-represented management employees, the budget assumes a 4% base building salary increase. Merit increases for certain represented employees are budgeted based on the incumbent salary step level with actual awards based on the employees annual performance review. Performance Incentive Pay (PIP) is budgeted at 2% of base pay and actual awards are based on the employees' achievement of specific, measurable goals and do not increase the employee's base salary. Retirement costs have increased significantly for general employees and the budget reflects the costs of the recently increased (3% of pay at 50 years of age) safety retirement benefit, which is effective June 28, 2002. Safety employees are contributing 1.78% of pay for 18 months, beginning in FY 2002-03 to help offset the increased cost to the County. The Board has also approved granting Probation Services employees (deputy probation officers) safety retirement status of 2% of pay at 50 years of age, effective June 28, 2002; however, there is no additional cost to the County in FY 2002-03. The probation services retirement rates in FY 2003-04 will reflect the new costs including the accumulated costs from FY 2002-03. The affected probation employees will be contributing 2% of pay for three years beginning in FY 2002-03. In total, retirement costs for the County in FY 2002-03 will exceed $100 million; more than double the costs in FY 2001-02. Additionally, Health insurance is expected to increase significantly. Inflation on other services and supplies is generally estimated at 3.0% with higher rates for medical supplies.

BASIS OF BUDGETING

The County's budget, as is its accounting system, is based on the modified accrual system. Revenues are budgeted as they are expected to be received or as they are applicable to the fiscal year. Fund balance available (FBA) is estimated and adjusted for increases or decreases to reserves. Revenues plus fund balance available equals total available financing. Consistent with the Governmental Accounting Standards Board (GASB) ruling 33, only revenues expected to be received within 60 days of the end of the fiscal year are included. Expenses are budgeted at an amount sufficient for 12 months if they are ongoing and in their full amount if they are one-time items. Expenses and increases to reserves may not exceed available financing.

BUDGET DEVELOPMENT

In January 2002, the CEO issued the following budget development policies and guidelines to all County departments as a starting point for the FY 2002-03 budget development:

  1. Consistency with Strategic Financial Plan and Business Plan Concepts : Base operating budget requests shall be consistent with the elements and concepts contained in the Strategic Financial Plan and the Business Plans. Department heads are responsible for using these planning processes and program performance measurements to evaluate existing programs and redirect existing resources as needed for greater efficiency and to reduce cost.
  2. Base Operating Budgets: Starting point is the June 26, 2001 adopted budget for FY 2001-02 as modified by year-to-date Board actions. Specific deletions and acceptable additions to these base budgets are outlined as guidance for the new base budgets.
  3. Salaries & Employee Benefits: The Salaries & Benefits Forecasting System results set the regular salary and employee benefits base budgets. The vacancy factor is set at the historical actual vacancy rate (12 months ending December 2001 per the bi-weekly Master Position Control reports) for each department. The CEO Budget Office may agree to exceptions to the calculation on a very limited basis for unusual circumstances. This methodology was introduced for the FY 1999-00 budget salary calculations and is effective in setting realistic salary appropriation amounts. Appropriations are monitored during the year. Should departments achieve a lower than budget vacancy rate and appropriations are needed, appropriation adjustments are recommended in the quarterly budget report process.
  4. Services & Supplies: Services and supplies shall be budgeted at a realistic level as compared to actual use during last fiscal year and current year-end projections, adjusted as outlined in the base budget section above and consistent with the Strategic Financial Plan guidelines.
  5. Billable Services, Fees and Revenue: Program revenues are to be used for caseload growth. One-time revenues shall be used for one-time expenses. Departmental fees are to be set at full cost recovery. Departments should be able to demonstrate that their fee studies are current. New revenue sources pending legislation or grant approval will be considered during the quarterly budget report process and should not be included in the base budget request (i.e., when legislation is passed or grants awarded).
  6. Net County Cost (NCC): The 2002 Strategic Financial Plan projected ongoing general purpose revenues growing at a modest rate (about 3% per year) and narrowly in balance with operating expenses. Therefore, there is a continued need to minimize the growth in the use of general purpose revenues. The combined total of base budget requests plus augmentation requests shall be equal to or less than the FY 2002-03 NCC targets.

    Departments are encouraged to continue the four-part plan introduced in January 2000 in order to submit NCC requests that are below target. The four-part plan:

  1. Reduce or eliminate lower priority or ineffective programs.
  2. Find efficiencies and savings by streamlining processes, overhead reduction and use of technology.
  3. Update fees to ensure full cost recovery and find new revenue sources.
  4. Identify legislative changes that can reduce costs or enhance revenues.

  1. Augmentations (requests for new resources): Augmentations are defined depending on the budget type:
  • For budgets within the General Fund, an augmentation request is any resource request that results in increased NCC, increased position totals (excluding extra-help) or new or enhanced non-mandated programs or services, even if they were included in the Strategic Financial Plan and/or the Business Plan.
  • For special revenue funds, Internal Service Funds and all other budgets outside the General Fund, an augmentation request is any resource request that results in an indirect NCC increase, increased position totals or major new programs not identified in the Strategic Financial Plan or the Business Plan.

    All augmentation requests must include performance measures that clearly outline the department's intended outcome(s) resulting from the receipt of the additional resources. The department head must certify that all potential alternatives for redirecting existing resources have been examined and that there are no lower priority items that can be reduced or eliminated in order to free up existing resources. Long-term vacant positions will be used in all departments before new positions are added.

    New for FY 2002-03: The Net County Cost Targets used for the proposed budget are the Net County Cost forecasts submitted by the departments in the 2002 Strategic Financial Plan with some modifications to reflect unanticipated retirement benefits and strategic priorities approved by the Board. Augmentations newly approved for FY 2002-03 will undergo a performance measurement review as a condition of continued funding. Departments will report on the first year results (as much as is available by budget submittal due date) of the performance expectations.

  1. Program Budgets Outside the General Fund: It is the department head's responsibility to ensure that the proposed use of program funds is consistent with the department's business plans, the County strategic priorities and has been coordinated with the appropriate stakeholder groups external to the County.

 

In context of these policies and guidelines, the Strategic Financial Plan and departmental business plans, departments prepare current year projections of expenses and revenues and requests for the next fiscal year. The CEO County Budget Office reviews the requests, meets and discusses the requests with the department and prepares final recommendations for the Board. These recommendations are presented to the public via a budget workshop before the Board of Supervisors holds its public budget hearings. Operating and capital budgets are prepared in this single process and presented together in this budget book.

CONSISTENCY WITH THE 2002 STRATEGIC FINANCIAL PLAN

On October 30, 2001, the Board adopted the 2002 Strategic Financial Plan. Based on the development of the County's mission statement and departmental business plans, this plan serves as a tool for identifying available resources, core business operating requirements and capital needs. The plan helps identify when resources are expected to become available for major projects and when those projects can be started. New programs and projects contemplated in the plan are recommended for Board approval during the budget process. Specific elements from the plan incorporated into the FY 2002-03 Recommended Budget are:

  • General purpose revenues and fund balance available in the recommended budget exceed the plan amounts by 6%.
  • Increase General Fund Contingencies from $22 to $23 million. Of this $23 million, $5 million is appropriated in Fund 099 and $18 million is reserved (not appropriated) in the General Fund. In addition and also consistent with the financial plan, the General fund has $2.4 million in reserve for future maintenance and construction plus $52.9 million in reserve for operational costs of future strategic priorities. The items total $55.3 million in funds potentially available for appropriation in future fiscal years.
  • Increase the Debt Prepayment Fund by $35.5 million: this includes $10 million approved in the 2002 Strategic Financial Plan and $24.5 million made available from reserves by the alternative funding of the Theo Lacy Phase III Jail Expansion; $32.7 million was set aside by the Board of Supervisors in the 2001 Strategic Financial Plan for jail expansion; $8.2 million was used to balance the FY 2002-03 General Fund Budget.
  • Allocate $8.8 million for affordable housing initiatives.
  • Allocate $4.0 million for additional 800 Megahertz communication system sites to improve reception throughout the County by emergency response agencies.
  • Allocate $3.1 million for enhancement of the Assessment Tax System funded from the State grant program, AB 589.
  • Increase funding for technology; CAPS and IBM mainframe upgrade; $4.3 million.
  • Theo Lacy Building B construction, $33 million funded largely from a temporary transfer of cash from the Special Designated Revenue Fund 15S; to be repaid over the next six years from the public safety share of Tobacco Settlement Revenue.
  • $2 million earmarked by the Board of Supervisors for sprinkler system/alarm improvements at the Mens Central Jail in Santa Ana in the 2002 Strategic Financial Plan, is not included in the FY 2002-03 budget, because the project is now estimated at $8 million. The Sheriff-Coroner is working on a plan for mitigation and the Board designation of $2 million will remain in the Strategic Priority reserve until the plan is completed.

There were significant over runs of 2002 Strategic Financial Plan Net County Cost forecasts for FY 2002-03. Because the 2002 Strategic Financial Plan Forecasts were used as the Net County Cost targets for the FY 2002-03 budgets, the department over runs exceeding $500,000 were treated as reductions in the recommended budget and augmentations are submitted for consideration by the Board for partial or complete restoration. The County Executive Office recommends that the Board use one-time money (budgeted in the miscellaneous fund) to fund the over runs that were beyond the managerial control of the departments (retirement and health insurance costs). The long term solution will be the subject of the 2003 Strategic Financial Plan process which commences in July 2002.

Because of the over runs, the planned increase to the Debt Prepayment Fund 14V was reduced by about $7 million and, therefore, the planned increase to the Strategic Priority Reserve of $44 million was reduced to the $30 million placed into reserve by the Board of Supervisors on October 30, 2001. The impact of this change to reserve will be addressed in the forthcoming 2003 Strategic Financial Plan process.

IV. FINANCIAL SUMMARY OF THE FY 2002-03 RECOMMENDED COUNTY BUDGET

HIGHLIGHTS OF THE FY 2002-03 ADOPTED BUDGET

In addition to the specific ways in which this budget is consistent with the 2001 Strategic Financial Plan, additional County budget highlights and issues include:

Total Budget:

  • Total County Budget is $4.9 billion, an increase of about 4% over the previously adopted budget.
  • Total budgeted positions (including recommended augmentations) are 17,637, an increase of 2% over the previously adopted budget.
  • Performance measures are used to evaluate continued funding of FY 2001-02 budget augmentations and as the basis for recommendations on FY 2002-03 augmentations regardless of funding source.

Specific Program Highlights:

The FY 2002-03 Recommended Budget:

  • Recommends additional resources for the District Attorney to replace administration support lost from the creation of the Child Support Services Department (formerly the DA/ Family Support Division) in FY 2002-03.
  • Pursuant to AB 196 and SB542, the District Attorney's Family Support Division will transition from the District Attorney to a new, independent County Agency known as the Department of Child Support Services.
  • CSA and HCA, in collaboration with OCTA, budget for a plan for Senior Non-Emergency Medical Transportation Program using Tobacco Settlement Revenue.
  • Provides for the phased opening of Theo Lacy Jail Building "A" ultimately providing 384 beds plus 125 medical beds.
  • Plans for the development of anti-terrorism and homeland security efforts in the Sheriff-Coroner and Health Care Agencies.
  • Implements 3% of pay @ age 50 Retirement Benefit for Sheriff-Coroner Safety personnel and 2% of pay @ age 50 safety retirement benefits for Probation Services employees.
  • Continues implementation of Mobile Data Computer (MDC) terminals in Sheriff's patrol vehicles
  • Allocates $2 million for improvements to the Manchester Office Building.
  • Includes provision for four additional 800 MHz remote sites to improve safety communications network.
  • Supports completion of multiple Sheriff-Coroner construction projects including the Coroner Training Facility.
  • The Probation Department budget includes $872,000 and eleven new positions to help meet the demands of a Proposition 36 (Substance Abuse Crime Prevention Act) supervision caseload that is expected to reach over 4,300 cases in just its first year of operation. New referrals in the Adult Assessment caseloads have increased 44% this past year alone.
  • Probation budget request includes $2.5 million and fourteen new positions to operate a sixth Youth and Family Resource Center to serve the South and Central regions of Orange County as part of the County's $10 million Comprehensive Multi-agency Juvenile Justice Plan under the Schiff-Cardenas Crime Prevention Act of 2000.
  • Budgets for the use of a State Board of Corrections awarded construction grant funding that will provide for a new 60-bed housing unit and support facilities at the existing Juvenile Hall site in Orange and the construction of the 90-bed Rancho Potrero Leadership Academy in Trabuco Canyon.
  • Consistent with the provisions of Measure H, the Tobacco Settlement Funds Initiative, approved by the voters in November 2000. Total funds for FY 2002-03 (including carryover from FY 2001-02) are estimated at $50.5 million and the money not previously committed in FY 2001-02 is allocated as follows:
  • 19% Health care services for seniors and persons with disabilities

    23% Emergency room physicians and on-call specialists

    12% Tobacco related disease prevention and control

    20% Nonprofit community clinics

    6% Proportional reimbursement to hospitals for charity care

    20% Public safety including a drug/alcohol rehabilitation program at Theo Lacy jail (64 secure beds)

Use of all Measure H Tobacco Settlement Funds is monitored for strict adherence to the provisions of the initiative. All Tobacco Settlement Funds will be allocated by the above percentages, whether they fall below budget amounts or meet or exceed budget amounts.

  • Continues the second full year funding of Proposition 36, the Substance Abuse and Crime Prevention Act. The County will receive nearly $8 million annually for five years to provide assessment, treatment and monitoring.
  • Includes a Watershed Management budget of $21 million to facilitate the Board's leadership in partnership with local agencies and organizations to address watershed issues. Water quality issues will be addressed in conjunction with flood protection, environmental enhancement and recreation.
  • Funds the Local Redevelopment Authority Program Office (MCAS El Toro Reuse) with $1 million to provide for "wind-down" expenses now that the City of Irvine will be the lead in reuse planning. This amount is still under review and may change by the time of the public budget hearing.
  • Provides funding for the Orange County Film Commission ($100,000), the Art Commission ($150,000), international business and trade development ($250,000) and tourism ($350,000).
  • Funds all debt obligation payments. Budgets displayed in Program VI include amounts for annual payments on the County's 1996 Recovery Certificates of Participation (COPS), 1995 Recovery Bonds, refunded debt financing of the Juvenile Justice Center, Manchester parking facilities and debt financing of infrastructure improvements in the County's Assessment Districts, Community Facilities Districts and the Orange County Development Agency. This program also includes budgets for the debt prepayment fund. Although the County's Pension Obligation Bonds were economically defeased, this budget reflects the payments made by the trustee from escrow. This program also includes the debt associated with the County's Teeter program. Debt related to specific operations such as John Wayne Airport and Integrated Waste Management is included in Program III where the operational budgets for those operations are also found. The County currently does not anticipate any temporary cash-flow borrowing because there are sufficient general fund cash balances and reserves. Based on the County's Strategic Financial Plan and at current funding levels, the County is able to fulfill these debt obligations and sustain current and future services and operations.
  • Funds major capital items including:
    1. Construction of Theo Lacy Jail Building B (576 beds; $33 million)
    2. Property acquisition related to the Prado Dam on the Santa Ana River
    3. Final closure of the Santiago Landfill
    4. Construction of various Americans with Disabilities Act retrofit and deferred maintenance projects at various County facilities
    5. New fund for Newport Coast Assessment District improvements ($27 million)

V. SUMMARY

This Recommended Budget serves as a realistic plan of resources available to carry out the County's core businesses and priorities. It is consistent with the County's mission and corporate management system including the strategic financial plan and departmental business plans. It follows the CEO budget policy guidelines, meets the majority of departmental requests, incorporates impacts of the State budget as currently known, increases resources for critical capital needs and meets important contingency fund and debt reduction goals.

VI. NEXT STEPS

The Board of Supervisors will hold public hearings regarding this budget on June 11 and 12, 2002. Results of those hearings will be incorporated into this budget document. The Board is scheduled to adopt the final budget on June 25, 2002 and the new fiscal year begins on July 1, 2002. During the fiscal year, the CEO will present the Board with quarterly budget status reports and recommend appropriate changes as needed including changes which may arise from final County fund balances, adoption of the State budget, and new legislation.

 

CONTACTS REGARDING INFORMATION IN THIS REPORT:


COUNTY BUDGET OFFICE:

Stephen Dunivent, County Budget Manager 714.834.3530

BUDGET PROGRAM AREAS:

Budget Planning and Coordination

  • Mitch Tevlin, Manager 714.834.6748
  • Michelle Aguirre
  • Gina Angcaco

Public Protection, Community & Social Services

  • Rick Dostal, Manager 714.834.5827
  • Frank Kim

Financial Planning, Health Services & Debt Service

  • Tom Sacco, Manager 714.834.4775
  • Connie Chang

Infrastructure and Environmental Resources, General Government, & Capital Projects

  • Shunna Austin, Manager 714.834.4146
  • Astrid Gritton
  • Thuy Vu-Le
 

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