APRIL 17, 2000
Thank you for coming to the release of the 2000-01 Proposed Budget for Los Angeles County. We've prepared some electronic charts to help illustrate some of the major elements of the presentation this morning, and as the 2000-01 PROPOSED COUNTY BUDGET chart indicates, the Proposed Budget is just over $15.0 billion and includes funding for over 90,000 employees.
I should point out that, in overall dollars, the Proposed Budget of $15.0 billion represents a decrease of just over $200.0 million from the current year budget. This reduction is almost entirely due to technical changes in special funds and districts and does not involve any service reductions. With regard to general County funds, when viewed exclusive of special funds and districts, the budget shows an increase of $324.0 million, which is predominately attributable to salaries and employee benefit increases, and appropriation increases significantly offset with State and Federal funds.
Before proceeding to highlight the budget and our specific recommendations, and since we're celebrating the County's 150th Birthday this year, I thought it would be interesting to reflect on LA County at the dawn of 21st Century as compared to its beginnings.
In terms of an overview, the budget reflects continued recovery from the fiscal crisis of the mid-1990s, and a continuation of the Board of Supervisors' very conservative approach to use of additional resources. By and large, programs funded with net County cost are provided only those resources necessary to address years of caseload and other unavoidable cost increases which they have had to absorb.
More importantly, the budget reflects continued investment in infrastructure, professional development, information technology, and other long-range stabilization strategies - many consistent with the County Strategic Vision and Goals, recently adopted by the Board.
The next series of charts will help illustrate the major components of the County budget.
• MANDATED VS. DISCRETIONARY COSTS
To provide further elaboration on proposed use of our limited "discretionary monies," which I referenced on one of the previous charts, we forecast nearly $48.0 million of surplus General Fund dollars in February of this year, and the budget still reflects this. As indicated on the USE OF FORECASTED $48 MILLION SURPLUS chart, our recommendations for use of this additional funding can be characterized as follows:
- Nearly $32.0 million for "stabilization of departmental operations" including $8.4 million for Family Preservation and assistance payments in Children and Family Services; $8.9 million in Public Social Services for General Relief, CalWORKs and In-Home Supportive Services; and $3.0 million to potentially address shortfalls in Parks and Recreation;
- Just under $3.0 million for selected "program expansions" including $200,000 for improved Animal Care and Control services in the unincorporated areas, $275,000 for automation audits by the Auditor-Controller, and $525,000 for various community planning efforts by the Department of Regional Planning; and
- Almost $13.0 million for "one-time infrastructure and operational requirements" including $5.4 million to fund new technology initiatives through the Information Technology Infrastructure Fund, $3.0 million to replace aging County vehicles, and $1.5 million for safety improvements at the Natural History Museum and service centers run by the Department of Community and Senior Services.
To further illustrate funding priorities, the LOS ANGELES COUNTY STRATEGIC PLAN chart lists the County's four Strategic Goals; these were approved by the Board in November 1999, along with the County Vision and the first-ever countywide strategic planning and management process. These goals will increasingly drive the County budget, and future funding recommendations will be measured for their consistency with these goals. As initial, selected examples of our effort to align recommendations with the strategic goals, I would point out:
-- Under Goal No. 1, Service Excellence (seamless services), nearly $32.7 million in additional funding for the Departments of Health Services, Probation, Children and Family Services and Community and Senior Services for their inter-related roles in carrying out the Board-approved Long Term Family Self Sufficiency Plan. Other departments have key service roles in this Plan, as well.
- Under Goal No. 2, Workforce Excellence (investment in staff), $1.0 million for Human Resources to expand and enhance its countywide manager and staff development and training program.
- Under Goal No. 3, Organizational Effectiveness (improving internal operations), $1.0 million for the Auditor-Controller, primarily to promote and support countywide system improvements.
- Under Goal No. 4, Fiscal Responsibility, another $30.0 million to continue the multi-year effort to buy down our reliance on excess earnings in our retirement system. I'll elaborate on this effort further in a moment.
Beyond the funding priorities I indicated earlier, the budget also includes significant, largely State and Federally-funded changes, including:
• 2000-01 BUDGET INCLUDES STATE & FEDERALLY-FUNDED CHANGES chart
• in DPSS (excluding the assistance budget), $76.0 million and 562 positions primarily related to supporting projected caseloads in the Welfare-to-Work/Greater Avenues for Independence (GAIN) program and the new Community Services program, increased case management in the General Relief Opportunities for Work (GROW) program, and a 9.9 percent caseload growth for In-Home Supportive Services;
• in Mental Health, $39.3 million and 65 positions for new or expanded services including programs for children, the homeless, and substance-abusing mentally ill children and adults;
• in Children and Family Services (again excluding assistance costs), additional funding of $15.4 million, primarily for a Long-Term Self Sufficiency Project to enhance Family Preservation services, and
• in DA/Family Support, $5.3 million, of which $3.1 million and 63 positions are to enhance collection of child support.
Other major changes reflect:
• OTHER MAJOR CHANGES chart
• $10.1 million in Health Services to fund expanded enrollment in the Healthy Families program;
• Funding to maintain MacLaren's Children's Center at approximately 125 children (this is largely attributable to the continued success of the 10-Child Pilot which provides intensive community-based Wraparound services to children with severe emotional problems);
• $3.0 million in the Fire Department, primarily related to compliance with Federal and State "2-in/2-out" requirements and Emergency Medical Services;
• $4.6 million in the Sheriff's Department to maintain the Community-Oriented Policing Services (COPS) program in the County's unincorporated area; and
• Partially revenue-offset funding of $286,000 for Agricultural Commissioner/Director of Weights and Measures efforts to eradicate the Red Imported Fire Ant.
The Health Department continues to be our greatest financial challenge. The HEALTH SERVICES chart summarizes the major funding allocations within the $2.7 billion recommended for the Department. To a significant degree the Health Department's budget is balanced with the use of one-time funds, including $211.0 million in fund balance. The health budget also assumes $255.4 million in 1115 Waiver revenues and maximization of SB 1255 funding, resulting in an additional $79.0 million in fund balance for the current year and $37.7 million in revenue for the budget year.
The Department has taken significant steps to restructure its health services system to a more cost-efficient model; for example, the Proposed Budget reflects $82.4 million in reengineering savings - an increase of $11.5 million over the current year. However, the Federal and State revenue structure and the pressures of unmet demand continue to strain the County's health care system. In addition to the County's continued independent efforts to reform its health system, collaboration between the Federal and State governments and the County will remain key to fully solving these challenges. A major element is extension of the 1115 Waiver through 2005. We are currently awaiting response from the Feds on our extension request.
(No tobacco settlement revenues are included in the budget.)
It's important to look at more than budget figures to understand the County budget - it's instructive to focus on the various front-line, essential services that these dollars buy and which the residents of this County rely on every day. The next series of charts list some of these key public services which are funded in the Proposed Budget.
• THE PROPOSED BUDGET PROVIDES THE FOLLOWING PUBLIC SERVICES
• Enhanced Mental Health Services
• Social Services (2 charts) chart 2
• Public Protection (2 charts) chart 2
• General Services (2 charts) chart 2
In summary, notwithstanding the significant funding issues remaining in the health budget, the overall County budget is experiencing its third year of recovery and stabilization. Strong evidence of this fact is reflected in the graduated improvement in our bond ratings, as illustrated on the IMPROVEMENT IN COUNTY DEBT RATING chart. Similarly, the REDUCED RELIANCE ON TAX & REVENUE ANTICIPATION NOTES chart indicates how the County's reliance on issuance of tax and revenue anticipation notes to finance operations - in other words, borrowing - has been drastically reduced since fiscal year 1995-96. Finally, the USE OF LACERA SURPLUS EARNINGS chart depicts our multi-year plan, referenced earlier, to reduce use of excess retirement system earnings to support operations; fiscally responsible initiatives such as this are a key element in our improved fiscal posture and ratings.
Notably, these improved circumstances have not led to complacency, nor generated vast program expansions or other spending. The Board has been, and continues to be fiscally conservative in its approach to allocating new local dollars. We have embarked on a prudent program of committing one-time resources to investments in infrastructure, technology, and enhancing the skills of our workforce - investments which will bolster our future stability and effectiveness, and the Proposed Budget furthers these efforts.
The newly-approved County Vision and Strategic Goals, which will be further developed and refined as we pursue implementation, provide a cohesive framework to guide our funding strategies and services. Finally, significant efforts are being pursued at the State level to address longstanding inequities and inefficiencies in the State/local finance structure, including proposals to cap, reduce, and/or return property taxes which were transferred to the State.
These are promising circumstances to reflect on as we observe the County's 150 years of providing essential public service. But inherent in these improvements are challenges to continue pursuing fiscal policies and funding priorities that will better ensure the long-term viability of critical County operations - good times and bad - thereby improving the chances that those who follow us will celebrate a healthy and effective County government and community in 50 years, 100 years and beyond. This budget represents a solid downpayment toward this objective.