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County of Santa Clara Board Approves Balanced Fiscal Year 2014 Budget

Positive Revenue Growth, Layoffs Avoided, Uncertainties Remain

Today, the County of Santa Clara Board of Supervisors approved a balanced Fiscal Year 2014 Budget, as required by County Charter.  The $4.6 billion budget includes all services, operations, capital improvements and reserves.  The General Fund Budget is $2.4 billion, and covers all discretionary and many mandated services for the fiscal year beginning July 1, 2013, including a 5 percent contingency reserve.

“I am pleased that we are passing a budget that preserves essential county services while protecting the safety net for our most vulnerable residents,” said President Ken Yeager, County of Santa Clara Board of Supervisors.  “This budget also expands public health services and gets the County prepared for implementation of the Affordable Care Act.”
The budget adopted by the Board of Supervisors: solves a $67 million General Fund deficit; uses ongoing resources for ongoing needs; begins the critical process of addressing the unfunded liability in the retiree health program; allocates nearly $2 million to address needs in areas of greatest concern for the Board that were not addressed in the County Executive’s Recommended Budget; and establishes reserves to address significant impacts from State Medi-Cal Expansion, as well as other potential State and federal decisions related to the Affordable Care Act.
When the County Executive initially presented his recommended budget in May, funding strategies were outlined to address a $67 million shortfall.  However, updated revenue projections show that $32.4 million additional ongoing funds, including $24 million related to growth in the property tax roll and $9 million related to improved projections of State sales tax revenues, are available to reduce the shortfall.  An additional $21 million in one-time funds, including $8 million from the Master Settlement Agreement for Tobacco, also will be available in 2014 to help offset costs.
“The growth in property tax roll reflects what is happening in the real estate market, including increased property sales and higher prices,” said County Executive Jeffrey V. Smith.  “We expected 3.8 percent growth, but the tax roll is actually growing at the rate of 7.8 percent, restoring value lost during the recession.  We are cautiously optimistic.  The economy is improving; however, we’ll have to wait to see if it is sustainable.”
After decades of budget shortfalls in the $100-$200 million range and strategic funding decisions to preserve County services, last year the County bit the bullet and began the process of reducing the unit cost of service.
"I am particularly pleased that the Board had taken steps to pay down the County's debt, and put the County on a more secure financial footing for the future,” said Supervisor Joe Simitian, District 5.
Accelerating payments to lower the County’s liabilities for retirees is a major strategic direction taken by the Board.  The annual contribution required to fully fund retiree health costs is an estimated $190 million in FY 2014.  During the past several years of declining revenues, the County has delayed making the full annual payments for retiree health benefits, spending the funds instead on services to the public.  This budget begins addressing the underfunding, setting the FY 2014 annual contribution at $101 million, and reserving an additional $15 million for allocation later in the fiscal year.
In addition, the Board intends to adopt an ordinance in August that would require the County to increase contribution amounts annually on an accelerated basis to reach the full annual contribution of $233.3 million (actual amount will be determined by actuarial reviews) by FY 2018.
Assuming positive resolution of the legal challenge to Measure A, the 1/8th cent sales tax approved by County voters, $20 million will be allocated to preserve existing service levels and $15.3 million allocated to a reserve to fund critical programs, including $4 million for Permanent Supportive Housing for the homeless with special needs, and funds for the Community Health Partnership, Healthy Kids, a Patient Advisory Task Force for Santa Clara Valley Medical Center, safety net services through Silicon Valley Council of Nonprofits, a Center for Population Health Improvement, Community Solutions, and the Domestic Violence Advocacy Consortium.
“The dissolution of the Redevelopment Agencies had a devastating impact on our community’s ability to provide affordable housing,” said Supervisor Dave Cortese, District 3. “This budget reflects our commitment to make up for that loss and invest again in building homes for struggling families.”
The County will add a net increase of 262.85 new FTE positions.  Eighty-five of the new positions will be in Social Services to determine the eligibility of clients for Medi-Cal under the Affordable Health Care Act.  The cost of these positions will be paid by the State.
Cautious Optimism in the Face of Uncertainties
The County has set aside additional reserves to address uncertainties, including impacts from Medi-Cal expansion.  The majority of the $18.2 million reserve is funded with one-time resources and can be used to mitigate the anticipated loss of ongoing State realignment sales tax revenue associated with Medi-Cal expansion to prevent staff or service reductions, or to invest in service delivery changes to implement healthcare reform.
Initially, the FY 2014 Recommended Budget was balanced using $21.7 million in available one-time funds for ongoing needs. Final actions to balance the FY 2014 budget reallocate those funds to one-time purposes and use $21.7 million of available ongoing funds to support ongoing needs instead. This action is an important step toward maintaining a structurally balanced budget.
“We adopted a balanced budget on time that takes significant steps towards addressing long-term liabilities, while continuing to provide vital public safety and health services,” said Supervisor Mike Wasserman, District 1.
County of Santa Clara 2014 Funded Board Priorities
One-time Funding
·         $250,000 to conduct health assessments for the African American and Lesbian, Gay, Bisexual, Transgender (LGBT) communities (similar studies have been conducted for Vietnamese and Hispanic communities).
·         $41,620 to create a HIV Home Test Kit pilot program in Santa Clara County.
·         50,000 for the Katherine and George Alexander Community Law Center for the Vulnerable Workers Program, through the County Executive’s Office of Women’s Policy.
·         $26,000 ($15,000 to the Mental Health Department and $11,000 to the Social Services Agency) for the UPLIFT Program. 
·         $30,000 General Fund subsidy to Santa Clara Valley Medical Center for increased participation in health fairs by the Valley Homeless Health Program. 
·         $18,100 for the purchase and installation of a new stove for Loaves and Fishes Family Kitchen.
·         $140,000 to implement a Santa Clara Commercially Sexually Exploited Children (CSEC) Service Response Team. 
·         $25,000 for Center for Training and Careers to provide employment services to clients in transitional and supportive housing programs who do not qualify for other County employment services.
·         $65,000 to expand funding for five student internships for students to work on social impact projects for County initiatives, through County and San Jose State University.
·         $100,000 to support the San Jose Silicon Valley Chamber of Commerce’s Greater Silicon Valley Economic Development Initiative, provided that the Chamber receives $250,000 in funding from other sources for total startup costs of $350,000 and provided that the final case study is submitted prior to receiving funding and meets County's goals in the area of economic development and job creation.
·         $98,440 to fund a grant to Asian Americans for Community Involvement for the Community Partnership Program. 
·         $10,000 to the Department of Agriculture and Environmental Management to increase code enforcement activities and compliance assistance for specific blighted properties in Garbage District 1 in Supervisorial District 2.
Ongoing Funding
·         $261,675 for additional staff resources for the Partnership for Patients (PfP) Initiative, including adding one Senior Healthcare Program Analyst and one Senior Mental Health Program Specialist in the Mental Health Department.
·         $373,000 for STD services, including adding one Communicable Disease Investigator in the Public Health Department.
·         $25,000 for the Traffic Safe Communities Network. 
·         $117,183 for a Hepatitis B Coordinator position in the Public Health Department. 
·         $174,000 to fund an ongoing increase for the Dependency Advocacy Center from $120,000 to $294,000 for the Mentor Parent Program in the Department of Alcohol and Drug Services.
·         $124,130 for additional staff resources for County-wide domestic violence coordination, including adding one Senior Management Analyst position in the Office of the County Executive. 
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Media Contact:   Gwendolyn Mitchell/Laurel Anderson,  Office of Public Affairs (408) 299-5119; Mary Stephens, Budget Director (408) 299-5174
Posted: June 21, 2013