OC Annual Budget FY 2011-12 - ADA

Return to the PDF Document Version of the 2011-2012 Annual Budget.

Introduction

The County Executive Office (CEO) is pleased to provide you with the FY 2011-12 Adopted Budget. The budget adopted by the County Board of Supervisors on June 28, 2011, continues to reflect Orange County's disciplined approach to fiscal management and is consistent with the County's Strategic Financial Planning process.

The FY 2011-12 Adopted Budget continues to reflect the impacts of the local, State and National economies, declining revenue growth and the rising cost of doing business. The recessionary period that began in 2007, continues to impact the County's economy. Impacts to County Departments have been significant beginning with the FY 2008-09 Budget and continuing into FY 2011-12. There have been recent signs of improvement in the economy, indicating that we may be moving into a period of economic recovery. Most economists agree that any recovery will be protracted over the next few years. The County does not expect trends of accelerated growth as experienced in prior downturns. It is anticipated that there will be potentially modest growth going forward into FY 2011-12 and beyond; however, it is anticipated that any growth in general purpose revenues will not be enough to offset costs which are anticipated to grow at a higher rate.

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 strategic planning initiative. This introduction also reviews the state budget and economic factors influencing the County budget, provides summary budget information, and budget highlights 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 of Volume I contains several charts and tables that 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 listed below:

  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

The presentation for each department within each program area includes:

  • An Operational Summary including:
    • Mission
    • Budget at a Glance
    • Strategic Goals
    • Key Outcome Indicators (Performance Measures)
    • Key Accomplishments of the current year
  • An Organizational Summary including:
    • Organization Chart
    • Description of each major activity
    • Ten-year staffing trend chart with highlights of staffing changes
  • A FY 2011-12 Budget Summary including:
    • Department's plan for support of the County's strategic priorities
    • Changes included in the base budget
    • Approved budget augmentations and related performance plan
    • Recap of the department budget
    • Highlights of key budget trends
    • A matrix of the budget units under the department's control

Volume II contains additional budget detail. Readers looking for more detailed budget information for a specific department can use the Index at the end of Volume II. Departments are listed in alphabetical order with the page number of that department's budget information.

In addition to the departmental information available in the County budget book, all County departments prepare biennial business plans. These plans serve two key purposes:

  • Communicate the value that the department brings to the community
  • Report how the department is doing using outcome indicators

Business plans are published separately by the Departments and are available on the County's website. A business plan sets forth long-term goals, discusses operational and budget challenges, identifies strategies for overcoming the challenges and making progress on those goals during the coming year and identifies how success will be measured by using outcome indicators (key performance measures). Occasionally, key performance measures change because of an ongoing review to ensure consistency with the departmental mission and goals. It is the intent that changes to performance measures will be minimized over time so the reader of the business plans and this budget document can consistently observe trends and progress in meeting objectives.

II. Organizational Overview

Orange County's FY 2011-12 Adopted Budget presents the County's financial capacity and priorities in providing public safety and health, social services, environmental, and regional planning services for its residents. The County provides the public with a comprehensive array of public services through its departments and through comprehensive community partnerships with public, private and non-profit agencies.

Form of Government

The County is a charter county as a result of the March 5, 2002 voter approval of Measure V that provides for an electoral process to fill mid-term vacancies on the Board of Supervisors. Before Measure V, as a general law County, mid-term vacancies would otherwise be filled by gubernatorial appointment. In all other respects, the County is like a general law county. A fivemember Board of Supervisors, each of who serve four-year terms and annually elect a Chair and Vice Chair, governs the County. Each district varies in geographical size; however, the populations are relatively equal at approximately 600,000 residents.

The members of the Board of Supervisors by district are as follows:

Bill Campbell, Vice Chairman, from the Third District, representing the communities of Anaheim (portions of), Brea, Irvine, Orange, Tustin, Villa Park and Yorba Linda.

John M. W. Moorlach, Vice Chairman, from the Second District, representing the communities of Costa Mesa, Cypress, Fountain Valley, Garden Grove (portions of), Huntington Beach, La Palma, Los Alamitos, Newport Beach, Seal Beach and Stanton.

Janet Nguyen, Supervisor, from the First District, representing the communities of Garden Grove (portions of), Santa Ana and Westminster.

Shawn Nelson, Supervisor, from the Fourth District, representing the communities of Anaheim (portions of), Buena Park, Fullerton, La Habra and Placentia.

Patricia Bates, Supervisor, from the Fifth District, representing the communities of Aliso Viejo, Dana Point, Laguna Beach, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Mission Viejo, community of Newport Coast, Rancho Santa Margarita, San Clemente and San Juan Capistrano.

Strategic Planning Initiative

Initiated in 2006, the County's Strategic Focus project has become the key platform in ensuring that the County is a results oriented government, providing programs and services in the most effective and efficient manner. The annual budget is part of the strategic focus in which the County strives to fulfill its mission:

Making Orange County a safe, healthy and fulfilling place to live, work and play, today and for generations to come, by providing outstanding, cost-effective regional public services.

The County is committed to providing Orange County residents with the highest quality programs and services as articulated in its mission statement. Supporting the County's mission is a set of vision statements for business and cultural values (Table A):

Table A

Vision Statement for Business Values Vision Statement for Cultural Values
We strive to be a high quality model governmental agency that delivers services to the community in ways that demonstrate: We commit to creating a positive, service-oriented culture which:
Excellence - provide responsive and timely services Attracts and retains the best and the brightest
Leadership - leverage available resources as we partner with regional business and other governmental agencies Fosters a spirit of collaboration and partnership internally and externally
Stewardship - seek cost-effective and effective methods Supports creativity, innovation, and responsiveness
Innovation - use leading-edge, innovative technology Demonstrates a "can-do" attitude in accomplishing timely results

Creates a fun, fulfilling and rewarding working environment

Models the following core values in everything we do:
  • Respect
  • Integrity
  • Caring
  • Trust
  • Excellence


III. Economic Outlook for FY 2011-12

Key factors that influence the local Orange County economy include the unemployment rate, job growth, inflation, housing market, incomes and taxable sales. External and internal indicators provide information about the state of the Orange County economy. The County routinely monitors (a) how well the local economy performs relative to surrounding counties, the state and the nation (External Indicators) and (b) how well the local economy performs relative to its own historical trends (Internal Indicator). In terms of the external indicators, Orange County's economy routinely out-performs local surrounding counties, the state, and national economies. External indicators for 2011 project continued sluggishness in the local economy with respect to certain factors; however, most economic trends reflect that the local economy is showing signs of earlier recovery when compared to State and national economies. In terms of historical trends, current and projected indicators forecast that economic recovery at the local level will continue to be slow and moderate. Some indicators currently reflect potential for continued decline, but at a slower rate than experienced over the last three years. This section provides trend data for various external and internal indicators that summarize the current and projected outlook of the Orange County economy.

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 and the state of California. Orange County's unemployment rate was 9.2% in June 2011 per data released by the California Economic Development Department (EDD). This compares to 12.1% for the State and 9.2% for the U.S. In contrast, rates for surrounding counties in Southern California were 12.3% for Los Angeles County, 14.4% for Riverside County, 14.1% for San Bernardino County and 10.4% for San Diego County for the same time period. Thus far, Orange County's unemployment rates for calendar year 2011 are 9.2% in January, 8.9% in February, 9.1% in March, 8.6% in April, 8.5% in May and 9.2% in June. The five-year point-in-time unemployment rates for the month of June Orange County are 9.6% for 2010, 9.3% for 2009, 5.2% for 2008, 4.0% for 2007 and 3.6% for 2006. Although the number of new claims for unemployment has decreased and in some areas payroll employment has inched upward, the recovery in the job market is still below standard. In the 3rd quarter of 2009, Orange County's year-over-year payroll job loss was 8.5%, exceeding California's job losses by 1.6%. This is primarily due to the County's past reliance on the construction and finance industries for job growth, industries which have not experienced significant job growth at this stage of recovery. In Orange County, these industries tend to be higher than average wage sectors. Loss of jobs in these industries and hiring at lower salary levels (underemployment), continue to negatively impact income and consumer spending.

According to Chapman University (June 2011 projections), Orange County's job growth is expected to increase slightly, 1.5% in 2011 and 2.2% in 2012, a welcome improvement from the declines which began in 2007, peaking at -7.4% in 2009 and ending with a decline of -1.48% in 2010. Chapman predicts that Orange County will add a net of 20,000 jobs in 2011 and add another 30,000 in 2012, primarily in the service sector. This compares favorably to 2011 forecasts for the State of California (1.2% increase) and at the national level (1.6% increase). Historically, job growth in Orange County has been sporadic since the early 2000's. During the past five years (2007 to 2010) there was continuing decline in job growth. From 2000 to 2010 job growth in Orange County was 3.2% in 2000, 1.8% in 2001, -0.7% in 2002, 1.8% in 2003, 1.9% in 2004, 2.3% in 2005, 1.9 in 2006, -0.2% in 2007, -2.0% in 2008, -7.4% in 2009 and another decrease in 2010 of -1.2%. Job growth and personal income (forecasted by Chapman to increase 3.6%) continue to be monitored closely.

Inflation, as measured by the Consumer Price Index (CPI), is expected to be slightly higher for Orange County relative to the State of California and to the CPI at the national level, forecasted at 2.6% in 2011 and 2.9% in 2012. Chapman University projects CPI at the national level to increase by 1.4% in 2011 and 2.1% in 2012. Increases forecasted for California are 2.3% in 2011 and 2.8% in 2012. Comparisons of Orange County's historical CPI trends from 2002 to 2010 are sporadic at 2.8% in 2002, 2.6% in 2003, 3.3% in 2004, 4.5% in 2005, 3.9% in 2006, 3.3% in 2007, 3.5% in 2008, decreasing by -0.3% in 2009 and increasing by 1.2% again in 2010.

The real estate housing market continues to be a drag on the local economy and throughout the State of California. Statistics published by DataQuick Information Systems indicated that median sales price, number of sales, and foreclosure rates continue to have significant impact on consumer uncertainty and market trends. Sales of distressed properties continue to push the median price downward. To put things in perspective, the June 2011 median sales price of $445,000 (see discussion below) compares to the median's low point for the current real estate cycle of $247,000 (April 2009) and the high point of $505,000 (mid-2007).

The median sales price in Orange County was $445,000 in June 2011, representing no change from June 2010. Orange County compares favorably to other Counties who experienced June decreases of -5.1% in Los Angeles County, -4.8% in Riverside County, -7..5% in San Bernardino County, -1.6% in San Diego County, and -5.9% in California during the same time period. Orange County $445,000 median home price remained higher in June 2011 relative to surrounding counties and the State; $318,000 for Los Angeles County, $2008,000 for Riverside County, $148,000 for San Bernardino County, $330,000 for San Diego County, and $295,300 for the State of California.

With respect to sales, 2,947 homes were sold in Orange County in June 2011 representing a decrease of -13.9% from the year before. The year-over-year decreases in sales for surrounding counties and the State were -13.3% in Los Angeles County, -14.7% in Riverside County, -18.3% in San Bernardino County, -11.4% in San Diego County, and -14.0% in California.

In terms of numbers of homes in default (the first step in the foreclosure process), relative to the first quarter of 2011 (January, February and March) Orange County experienced a decrease in homes lost to foreclosure of -11.07%, from 5,270 during the first quarter of 2010 to only 4,652 during the first quarter of 2011. In the second quarter of 2011 (April, May, June) Orange County experienced a year-over-year decrease of -14.1%. This compares to counterpart changes in year-over-year default rates of -13.8% for Los Angeles County, -23.8% for Riverside County, -27.1% for San Bernardino County, -23.8% for San Diego County, and -19.2% for the State of California. In effect, during 2010 and moving into 2011, Orange County defaults continue to compare favorably, relative to the trends of all surrounding Counties and the State. Statewide, year-over-year trustees deeds recorded (signals homes lost to foreclosure) decreased by -15.6% and in Orange County decreased -15.1%. Year-over-year declines in foreclosures in the surrounding counties ranged from -7.8% to -21.0%.

Dr. Esmael Adibi, of Chapman University is projecting that “weak job and income growth, as well as higher underwriting standards, will continue to impact housing demand and pricing, and that “the median price of a single-family home will decline 4.0% to 4.5% in 2011, and show virtually no appreciation in 2012.” In general, economists project that market trends may not change for one to two years.

Median family incomes were adjusted (“Re-benched”) in 2003 by the U.S. Department of Housing and Urban Development (HUD) to comply with actual data collected during the 2000 Census. HUD estimated 2011 median family income for Orange County was $84,200, a decrease from the 2010 adjusted (HUD) median family income estimate of $87,200 (which was up from $86,100 in 2009). This compares to $74,900 for San Diego County, $64,000 for Los Angeles County, $62,500 for Riverside County, $62,500 for San Bernardino County, $70,400 for the State of California and $64,200 for the U.S during the same time period. It is important to note that all localities realized a decrease in median income from 2010 estimates which creates a level of concern as earnings impact consumer spending on housing and durable goods.

Taxable sales in Orange County are forecast by Chapman University to increase by 6.6% in 2011 and 6.4% in 2012. This compares to a projected increase of 4.5% and 5.3% for the State of California. Per the State Board of Equalization (BOE), taxable sales in Orange County increased by 0.3% in 2001, 0.6% in 2002, 5.9% in 2003, 8.8% in 2004, 6.5% in 2005, 3.9% in 2006, 0.2% in 2007 and realized decreases of -6.4% in 2008 and -14.7% in 2009. BOE reports taxable sales two years in arrears. Chapman estimated that Orange County's taxable sales when posted by the BOE will reflect a 3.2% increase in 2010.

In summary, most indicators reflect that the economic condition of Orange County is better than or comparable to surrounding counties, the state and the nation. With respect to historical (internal County) trends, some level of recovery is anticipated in most economic sectors but growth is expected to continue at modest rates.

State Legislation and Budget

The Governor signed the FY 2011-12 State Budget Act on June 30th, balancing a $26.7 billion shortfall with $11.1 billion in cuts, an assumption that improved economic activity will increase baseline revenues by $4 billion, an additional revenue increase of $9 million, $3.1 billion in borrowing and transfers with a reserve balance of $0.5 billion. The budget also established “trigger reductions” which were tiered based on revenue performance relative to the budget. Such reductions would occur mid-year if revenues are $1.0 billion or more short of the established budget. July revenues fell short of State projections and it appears that August will also fall below targets. There is potential that some trigger cuts could impact localities.

The final State budget also included $5.6 billion in funding to realign certain public safety and health and human service programs to counties. Funding for realignment will be from dedicated revenue from state sales tax and vehicle license fees; however the lack of a dedicated funding stream increases the long-term risk to counties. Current and long-term impacts of State program realignment are still being evaluated.

Also included in the State Budget is a $48 million re-allocation of Vehicle License Fees currently allocated to the County. This re-allocation, if not reversed, will have a significant impact on the General Fund's ability to finance current services and will create a severe impact across all Net County Cost supported programs. The County has developed a reduction plan to address this re-allocation of revenue. The County continues to work with the State with a goal of developing a solution that will restore funding to the County. In addition, the County's legal options are being evaluated.

Major Revenue and Expense Assumptions

The County budget includes a wide variety of funding sources. The budget recommendations are based on the following revenue assumptions:

  • State and Federal funding sources are estimated by departments based on established funding allocation formulas and caseload projections and the latest State budget information.
  • The current year Assessed Roll of Values was down 0.48%. The assessed values for FY 2011-12 was projected for budgeting purposes to remain level. The final roll reflected a net increase of 0.87%.
  • State legislation authored by Senator Correa (SB 8) and adopted with the State's FY 2009-10 Budget Act, increased the County's annual property tax allocation by $35 million per year starting in FY 2009-10. The allocation grows to $50 million per year beginning in FY 2011-12. Even with SB 8 funding, total property tax revenue is projected to remain relatively flat in FY 2011-12, primarily due to continued impact of depressed median home prices and sluggish sales in the housing market.
  • Vehicle license fees (VLF) were projected to increase by 5.0% based on State projections and trend data.
  • Health & Welfare Realignment revenue from the State allocated to Health, Mental Health, Social Services and Probation is projected to remain flat based on current trends.
  • The one-half cent Public Safety Sales Tax (Proposition 172) funds are allocated 80% to the Sheriff 's Department and 20% to the District Attorney by Board policy. Receipts for FY 2011-12 are projected to increase 2.5% based on State and economists' projections and trend data.
  • The interest rate on cash balances in the County Investment Pool administered by the County Treasurer is expected to average 0.75%, reflecting an increase of 0.15% from FY 2010-11 revised projections of 0.60%.

Assumptions for various categories of expenses include:

  • Labor costs are centrally calculated based on approved positions and historical vacancy factors. One to two step merit increases are assumed for employees who are eligible. Actual merit awards are based on the employee's performance evaluation. No base building wage increase appropriations are built into the departmental budgets as these are subject to negotiations and approval by the Board of Supervisors. As negotiated agreements are completed, current budget status will be reviewed and the need for budget adjustments will be determined.
  • Retirement costs are expected to increase this year by an average of 7.75% (base rates, depending on tier and bargaining group, may increase 6 to 20%).
  • Employee health insurance costs are expected to increase on average by approximately 13.0%.
  • Retiree medical cost for most bargaining units is budgeted at 2.6% of payroll. This rate reflects the modified plan approved by the Board in June 2009. The FY 2011-12 Budget fully funds the annual required contribution.
  • Inflation on other services and supplies is generally allowed at 1.2% with higher rates for fuel and medical supplies.

December 2010 Strategic Financial Plan

The Strategic Financial Plan (SFP) process provides the framework for balancing available resources with operating requirements, implementing new programs and facilities and serves as the foundation for the annual budget. This framework enables the Board to make annual funding decisions within the context of a comprehensive, long-term perspective. Since 1998, the Strategic Financial Plan has been updated annually to review the financing necessary to carry out programs and services. New priorities are identified and considered as part of a comprehensive update of the plan.

The Strategic Financial Plan contains five elements:

  • Economic Forecast
  • General Purpose Revenue and Fund Balance Available Forecast
  • Program Cost Forecast
  • Strategic Priorities
  • General Fund Reserves Policy

On December 14, 2010, the Board of Supervisors adopted the County's 2010 Strategic Financial Plan. Due to the current economic situation and the declining cash balance in the General Fund, no new strategic priorities were built into the plan. The Strategic Financial Plan included an assumption of a gradual decline and leveling of General Fund Balance Available, modest general purpose revenue growth and continuation of the State's 15 year repayment of past mandated cost claims. The spending side included assumptions of -2% growth in departmental Net County Cost limits for FY 2011-12, followed by consecutive 2% increases in the four fiscal years beginning with FY 2012-13 through FY 2015-16. The plan identified cumulative funding surplus of $87.3 million over the five years, not nearly enough to fund the $304.8 million in service reductions that Departments identified as necessary to bring their individual financial plans into balance.

The significance of rising retirement and health and benefits costs, coupled with the potential risks associated with continued deferral of capital maintenance projects, make it necessary to place a higher emphasis on cost reductions. The plan forces the County to acknowledge that continued diligence and control is necessary to maintain balance and realize continued results from the difficult actions Departments have already taken, beginning in 2007. The difficult reality is that service cuts have been made and further reductions and/or new revenues will be necessary to achieve an operating plan that is sustainable over the long-term. In response to this and subsequent to adoption of the Strategic Financial Plan, Net County Cost budgeted limits were reduced by 5% for the FY 2011-12 budget rather than the 2% per the plan. This cut is in addition to 15% across the board reductions made over the three prior fiscal years, beginning mid-year in FY 2008-09, and deeper cuts in targeted areas such as capital projections and information technology. The annual update of the Strategic Financial Plan will begin in September of 2011.

IV. Overview of the FY 2011-12 Adopted County Budget

Basis of Budgeting

The County's budget and its accounting system are based on the modified accrual system. The fiscal year begins on July 1. Revenues are budgeted as they are expected to be received or as they are applicable to the fiscal year. Consistent with generally accepted accounting principles, revenues are recognized when they are measurable and available. The County's availability criterion is 60 days after the end of the fiscal year. Fund Balance Available (FBA) is estimated and adjusted for increases or decreases to reserves. Revenues plus FBA equals total available financing.

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. In each fund, expenses and increases to reserves must be balanced with available financing.

Budget Development

The following budget development policies and guidelines used by all County departments as a starting point for the budget development:

Consistency with Strategic Financial Plan and Business Plan Concepts: Base operating budget requests shall be consistent with the priorities and operational plans contained in the December 2010 Strategic Financial Plan and the approved departmental business plans as resources are available. Department heads are responsible for using these planning processes along with program outcome indicators to evaluate existing programs and redirect existing resources as needed for greater efficiency, to reduce cost and minimize the requests for additional resources. A certification regarding the evaluation of existing resources is required as part of the budget request submittal.

Salaries & Employee Benefits: The Salary and Benefits Forecasting System (SBFS) in BRASS (the County's budget system) will set the regular salary and employee benefits base budgets. The vacancy factor will be set at the historical actual calendar year 2010 vacancy rates (through pay period 25).

Budgeted extra-help positions must comply with the MOU provisions. Those that do not are to be deleted with a corresponding reduction in the extra-help account.

Services & Supplies: Services and supplies shall be budgeted at the same level as actual use during last fiscal year and current year projections to the extent they are necessary to support business plan and Strategic Financial Plan goals.

Fees and Charges for Services: Departments are responsible for identifying total cost for programs with fees and to set fees at full cost recovery for the entire fiscal year. Full cost recovery includes direct and indirect costs, overhead and depreciation for the period during which the fee will be in effect. If fees are set at less than full cost recovery, the reason for subsidy should be given. Fees that are set by State law shall be implemented in accordance with those laws.

Revenue and Grants: Program revenues (e.g. State and Federal programs revenues) are to be used to offset the department's proportional share of operating costs to the full extent of the program regulations. Local matching funds should normally be at the legal minimum so that the General Fund subsidy (backfill) is minimized. Program revenues are to be used for caseload growth.

One-time revenues shall be limited for use on non-recurring items including start-up costs, program or reserve stabilization, capital expenses and early debt retirement.

New revenue sources pending legislation or grant approval should not be included in the base budget request. They should be considered during the quarterly budget report process (i.e. when legislation is passed or grants awarded).

Net County Cost (NCC): NCC limits for the next five years are based on the current budget, adjusted for one-time items and annualization of current year approved ongoing augmentations. Due to the slowing economy, the FY 2011-12 budget policy included a -5% reduction in the limits (an increased reduction from the 2010 SFP planned reduction of -2%). There is a continued need to carefully manage the growth in the use of General Purpose Revenues.

Departments shall submit budget requests at or below the NCC limits. The CEO/Budget Office is authorized to automatically reduce, if necessary, the appropriation requests of any budget that exceeds the established NCC limit.

Reserves and Contingencies: The County General Fund currently contains formal reserves, appropriations for contingencies, appropriated reserve-type funds and reserves held by others. The purpose of these reserves is to protect community programs and services from temporary revenue shortfalls and provide for unpredicted, sudden and unavoidable one-time expenditures. Certain departments and non-General Funds have other reserves dedicated to specific programs and uses.

Balanced Budget: The General Fund requirements will be balanced to available resources. Budgets for funds outside the General Fund are to be balanced to Available Financing without General Fund subsidy unless previously approved by the Board or CEO. Available Financing shall be determined by an accurate projection of June 30 Fund Balance Available (FBA) and realistic estimates of budget year revenues and any planned decreases to reserves. If available financing exceeds requirements, the difference should be put into reserves for future use.

Augmentations (Requests for New or Restored Resources): All augmentation requests must include outcome indicators that clearly outline the department's intended outcome(s) resulting from the additional resources. They must be ranked in order of the department's priority for approval. 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. This certification will be contained in the budget cover letter from the department head to the CEO.

Approved augmentations will undergo an outcome indicator review for two subsequent years as a condition of continued funding. Departments will report on outcome indicator results (to the extent data is available by budget submittal due date) of the performance expectations in a format that will be provided as a separate package. Augmentations will be funded if the CEO and department agree that:

  • They meet the performance expectations
  • They merit continuation
  • They are still relevant to the department's business plan
  • Sufficient funding exists

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 available financing and legal restrictions on funds, the department's business plan, the County's strategic priorities and has been coordinated with the appropriate stakeholder groups external to the County.

In context of these policies and guidelines, 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 and then to the Board of Supervisors during public budget hearings. Operating and capital budgets are prepared in this single process and presented together in this budget book.

Preceding the budget program sections, the following charts and schedules are provided as an overview of the budget:

  1. Total County Revenue Budget
  2. Total County Financing
  3. Total County Revenues by Source
  4. Total County Appropriations by Program
  5. General Fund Sources & Uses of Funds
  6. General Fund Appropriations by Program
  7. General Purpose Revenue
  8. General Fund Net County Cost by Program
  9. Public Safety Sales Tax
  10. Health & Welfare Realignment
  11. Total County Budget Comparison by Agency / Department
  12. Provision for Reserves Summary
  13. Position Summary
  14. Summary of Net County Costs
  15. County of Orange Organization Chart

Highlights of the FY 2011-12 Adopted Budget

Total Budget

  • Total County Base Budget is $5.6 billion, a 2.4% increase over the prior year adopted budget.
  • Total budgeted positions are 17,321 a decrease of 334 positions or a 1.9% decrease from the prior year adopted budget.
  • Total General Fund Budget is $3.1 billion, a 9.2% increase over the prior year adopted budget and level with the current modified budget.
  • General Purpose Revenues (excluding General Fund Balance Available and changes to reserves) are $638 million.
  • General Fund Balance Available (FBA) is budgeted at $20 million as shown in the following table (Table B):

Table B

(Millions) Actual @ 6-30-09 Actual @ 6-30-10 Projected @ 6-30-11
Changes in Encumbrances $ 17.1 $ 9.1 $ 10.0
Fund Level Revenues (GPR Variance) - 8.4 - 1.7 4.2
Departmental NCC Savings 34.7 34.2 5.8
Other Additional Savings - - -
Ending FBA June 30 $ 43.4 $ 41.6 $ 20.0

Specific Program Highlights

This section provides highlights of the base budgets and approved augmentations for the County budget programs and departments. Due to the continuing decline in County-wide revenues and trending down of programs, many Departments have proposed significant cuts in the current year proposed budget. Departments have worked diligently maintain programs and minimize impacts on services.

Public Protection

District Attorney

  • In order to maintain a balanced budget, the District Attorney submitted potential cuts of $8.1 million. All programs within the District Attorney's office will be impacted at some level by the proposed cuts with a maximum potential of 66 positions to be reduced. A one-time, $7.0 million restoration was approved in the adopted budget with the Department to determine priority of need and allocation. The restorations are targeted to support core staffing that is required to provide effective prosecution services and all 66 positions are retained. Additional detail of service impacts are provided in the Budget Augmentation Book.

Public Defender

  • Public Defender submitted $9.3 million in proposed reductions with a maximum potential of 85 of which full restoration was included in the adopted budget. Additional detail of service impacts Budget Augmentation Book.

Sheriff-Coroner

  • Due to the decline in Proposition 172 revenue and County funding limitations, the Sheriff-Coroner in proposed reductions with no reduction in positions. A one-time $6.0 million restoration was budget. Additional detail of service impacts are provided in the Budget Augmentation Book.

Community Services

  • Significant Community Service impacts were realized in FY 2008-09, FY 2009-10 and again in FY 2010-11 due to State funding shortfalls. There are no FY 2011-12 requests for restoration of reductions made.
  • The Health Care Agency requested an additional $2.0 million to cover increased enrollment in the Medical Services Initiative (MSI) program and $3.0 million to enhance Indigent health Care Services. Full funding of $5.0 million was included in the adopted budget for these two programs.

Infrastructure and Environmental Resources

  • There are no requests for restoration or expansion in this Program.

General Government

County Accounting & Payroll System (CAPS)

  • The adopted budget includes $7.3 million in appropriations offset by revenue from financing proceeds for the implementation of the CAPS Human Resources/Payroll System upgrade. The Base Budget also includes the debt service payment of $3.1 million drawn from the General Fund to cover annual financing costs.

Capital Improvements

Data Systems Development Projects

  • There are no requests for restoration or expansion in this Program.

Debt

The adopted budget funds all debt obligation payments. Budgets displayed in Program VI include amounts for annual payments on the County's 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. Although the County's former 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 OC Waste and Recycling is included in Program III where the operational budgets for those operations are also found. 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.

Cash Flow Management

In July 2011, the County of Orange issued $150 million in Tax and Revenue Anticipation Notes (TRANs) to finance seasonal cash flow requirements during Fiscal Year 2011-12. The issuance closed July 1, 2011 and will be fully repaid by June 2012 from available cash balances within the General Fund. The proceeds from the TRANs cover anticipated cash deficits resulting from the uneven flow of revenues, such as State payment deferrals of reimbursement of many health and human service programs administered by the County. County General Fund expenditures occur in relatively level amounts throughout the year, while receipts follow an uneven pattern. Secured property tax installments, which represent the largest component of general purpose revenues, are primarily received in December and April of each year.

V. Summary

This 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 statement, the Strategic Financial Plan and departmental business plans. It follows the CEO budget policy guidelines, meets some of the departmental augmentation requests, incorporates impacts of the state budget proposals as known at this time, addresses important capital needs and provides adequate reserves.

VI. Next Steps

The new fiscal year begins on July 1, 2012. 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, final state budget impacts, new legislation, new grants awards, and other circumstances or conditions that may affect the budget.

Contacts regarding information in this report:

County Executive Office

Thomas G. Mauk
County Executive Officer
714.834.6200

Robert J. Franz
Chief Financial Officer
714.834.4304

County Budget Office

Frank Kim
County Budget Director
714.834.3530

Budget Planning and Coordination

  • Mitch Tevlin, Manager 714.834.6748
  • Margaret Cady
  • Gina Dulong
  • Craig Fowler
  • Darlene Schnoor
  • Mar Taloma

Strategic Financial Planning

  • Margaret Cady 714.834.3646

Public Protection & Community Services

  • Michelle Aguirre, Manager 714.834.4104
  • Kathleen Long
  • Theresa Stanberry

Infrastructure and Environmental Resources, General Government, Capital Projects and Debt Service

  • Anil Kukreja, Manager 714.834.4146
  • An Tran
  • Sheri Vukelich
  • Michelle Zink

This County budget document is available on-line at http://ocgov.com/gov/ceo/deputy/finance/.