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Receive the FY2025/26 Midyear Financial Report and consider taking action on the recommendations contained in the Report
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Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
The County Administrator’s Office recommends that the Board of Supervisors:
1. Receive and accept the FY2025/26 Midyear Financial Report (Attachments A, B, C, D, and E);
2. Approve the attached Appropriation Transfer Requests (ATRs) (Attachment F) recognizing revenues and transfers in various departments requiring 4/5 vote and approve adjustments to existing appropriations in various departments requiring majority vote;
3. Adopt a resolution amending the List of Numbers and Classifications of Positions within Solano County for a net decrease of 0.25 positions (Attachment G);
4. Approve fixed asset purchases in the amount of $453,345 for the Library, $151,287 for Probation, $23,463 for the Sheriff, $178,332 for Fleet Management (details in Attachment A);
5. Affirm initial budget assumptions for FY2026/27 (Attachment H);
6. Receive State and Federal Budget Update (Attachment I); and
7. Confirm the FY2026/27 Budget Hearing dates from Thursday June 25, 2026 through Tuesday June 30, 2026.
SUMMARY:
The County Administrator’s Office (CAO) has reviewed and compiled the FY2025/26 Midyear Financial estimates.
At this time, the Board is asked to accept the Midyear Report for FY2025/26 and variance explanations. Each County department has reviewed their first 6 months of transactions (July 1, 2025 - December 31, 2025) and has prepared projections for their revenues and expenditures through Fiscal Year-End June 30, 2026 with explanations (Attachment A) for any significant variances between their Working Budget and their projections. Tables comparing total Working Budget to Midyear projection for County departments in the General Fund, Other Funds, and Internal Service and Enterprise Funds are provided as Attachments B, C, and D. The projection for Fiscal Year-End Fund Balance for the General Fund is shown in Attachment E.
As a result of the Midyear review, departments have identified and are seeking Board approval of changes to their budgets including operations, fixed assets, and position allocations at this time. The CAO and Department of Human Resources (HR) are recommending Board approval of a resolution (Attachment G) of changes, additions, and deletions to position allocations. Explanations and department justifications for position allocation changes at this time are provided in Attachment A. The recommendation includes a net decrease of 0.25 FTE positions.
Several departments are requesting approval for fixed asset purchases including $453,345 for the Library, $151,287 for Probation, $23,463 for the Sheriff, and $178,332 for Fleet Management. Explanations and justifications are discussed in Attachment A.
The Board is asked to consider and approve Appropriation Transfer Requests (ATRs) listed in Attachment F. The ATRs recommended in this Midyear Report are intended to address known budget shortfalls that impact a department’s ability to pay other obligations as well as recognize unanticipated revenue where expenditure of the new revenue is requested.
FINANCIAL IMPACT:
The current projected General Fund ending balance for June 30, 2026 (FY2025/26) is $32.4 million (Attachment E). The projection includes $14 million in unspent General Fund contingencies, a Net Change of $18.4 million in additional fund balance based on Midyear projections. The net change is primarily the result of increased revenues, the majority of which are attributable to a net increase in property tax revenues from assessed real estate values from the final tax roll, and year-to-date adjustments and decreases in projected department expenditures for the current fiscal year when compared to the FY2025/26 Working Budget.
The FY2025/26 Adopted Budget reflected a Beginning Fund Balance on June 30, 2025 of $62.4 million. Of this amount $14 million was designated as General Fund Contingency, $34 million was used to balance FY2025/26 Adopted Budget (revenues versus expenses) and a net $14.4 million was transferred to Reserves - $2.16M to General Reserve; $2.13M to the Capital Renewal Reserve; $5M to the CalPERS Reserve; $118,900 to GVOSMD (Green Valley Open Space Maintenance District); and $5M to the Technology and Communications Reserve.
Several Appropriation Transfer Requests (ATRs) have been prepared and included in the FY2025/26 Midyear Report that recognize unanticipated revenue in various department budgets and funds. Explanations for variances are provided in Attachment A. Attachments B, C, and D are tables showing the comparisons of FY2025/26 Working Budget to projected year-end balance at June 30, 2026.
The table of Other County Funds shows that all County operating funds are within budget or using available fund balance (Attachment C).
DISCUSSION:
Midyear Forecast Overview:
The Midyear FY2025/26 forecast reflects predictable revenues and existing patterns of expenditures for the General Fund and all other Funds including Public Safety, Health and Social Services, Library, Road Fund, and Child Support Services. Based on Midyear forecasts most departments were able to absorb increased operating costs largely due to timing in filling vacancies of allocated positions.
Midyear Assumptions
The Midyear FY2025/26 forecast was developed by departments based on revenues and expenditures through December 2025, reflecting the fiscal conditions and information available at the time of its preparation. As the fiscal year progresses, conditions may change, and actual results may differ from these projections due to evolving economic conditions, policy decisions, and operational factors.
At the time the forecast was developed, the County was engaged in ongoing labor negotiations, and many bargaining units had not yet reached agreement. While departments prepared their projections using the best available public information, final negotiated terms may result in additional cost impacts.
Other variables, while smaller in scale, may still have meaningful budgetary effects. For example, fuel costs declined during the first half of FY2025/26, leading many departments to project savings. However, recent increases in fuel prices may offset those anticipated savings.
Finally, revenue projections are inherently subject to variability and may be affected by factors outside the County’s control, including changes to, or cancellations of, federal contracts and other external funding sources.
Accordingly, this forecast should be considered a point-in-time estimate, and ongoing monitoring will be necessary to assess and respond to emerging fiscal impacts throughout the remainder of the fiscal year.
General Fund - Fund 001
The FY2025/26 Midyear projections for the General Fund anticipated expenditures are $405.2 million and $385.1 million in revenues and will require the County to continue to utilize prior year Fund Balance for FY2025/26.
The decrease in expenditures in the General Fund of $2.0 million represents operational savings attributed largely to the timing in filling of vacant positions and decreases in Services and Supplies expenditures. These savings are partially offset by the increased costs associated with current labor negotiations that are funded with General Fund contributions across County departments. The General Fund also experienced a significant increase in costs related to the November 2025 special election. Overall, the net decrease in expenditures will reduce the amount of fund balance needed in FY2025/26.
Net increases in General Fund revenues include $9.5 million in additional property tax revenue, driven by higher assessed values as verified by the County Assessor and one-time revenues associated with the County’s transition to a new property tax system; a $4.1 million increase related to a one-time reimbursement to the General Fund for eligible project and related costs previously incurred in connection with a completed bridge construction project; and approximately $2.7 million in reimbursements related to the November 2025 special election.
Public Safety Fund - Fund 900
The Public Safety Fund, Fund 900, includes the budgets for the departments of the Sheriff, District Attorney, Public Defender, Alternate Defender, Probation, and Other Public Defense. The FY2025/26 Midyear projection reflects a net decrease of $9.8 million in revenues and expenditures and a $7.1 million decrease in Net County Cost to the General Fund when compared to the Working Budget. The decrease in expenditures is primarily due to reductions in Salary and Employee Benefits due to the timing of filling vacancies in Public Safety departments. Revenues reflect a net decrease in General Fund contribution and a projected decrease in charges for services when compared to the Working Budget.
Based on the individual Public Safety department projections, it is anticipated that there will be a net decrease in General Fund support needed of approximately $7.1 million at FY2025/26 year-end closing when compared to the Working Budget for the Public Safety Fund. Please refer to Attachment A for additional detail by department.
Health and Social Services Fund - Fund 902
The Department of Health and Social Services (H&SS) is comprised of eight divisions: Administration, Behavioral Health, Social Services, In-Home Supportive Services (IHSS) -Public Authority, AAA Administration, Health Services, Family Health Services, and Public Assistance Programs. H&SS has a Working Budget in the amount of $537.4 million. The FY2025/26 Midyear projection reflects a net decrease of $20.5 million in revenues and a decrease of $17.8 million in expenditures for a potential net cost increase of $2.7 million. This increase is the net of changes in several divisions included in Fund 902 detailed in Attachment A and summarized as follows:
• An increase of $621,000 in Administration primarily due to higher interest expense for the County’s investment pool.
• An increase of $1.8 million in Family Health Services primarily due a decrease in Federally Qualified Health Center (FQHC) patient-related revenues resulting from reduced patient encounters.
• An increase of $1.6 million in Social Services primarily due to decreases in federal and State allocations compared to estimates at the beginning of the fiscal year.
• An increase of $143,000 in Behavioral Heath as a result of lower expenditures and revenues related to reduced contracted services, salary savings from vacancies, and fewer utilized bed days for Institutions of Mental Disease facilities.
• A decrease of $1.2 million in Health Services primarily due to salary savings, offset by a net reduction in federal and State revenues.
• A decrease of $348,000 in Public Assistance primarily due to revenue and expenditures based on actual caseloads compared with the projections from the beginning of the fiscal year.
Initial FY2026/27 Budget Assumptions
Based on Midyear Projections for Fiscal Year 2025/26, the County Administrator is recommending a set of initial budget assumptions and affirmation of standing Board budget policies and guidelines to be incorporated in the preparation of the Recommended Budget for FY2026/27 Budget. Please refer to Attachment H for detail.
Set Budget Hearing Dates for FY2026/27
The Board is being asked to set Budget Hearings to consider the FY2026/27 Recommended Budget. Staff recommends that Budget Hearings begin on Thursday June 25, 2025, at 9 a.m.
ALTERNATIVES:
There are a number of recommendations included in the FY2025/26 Midyear Financial Report for Board consideration at this time. The Board may choose to adopt none, some, or all of those listed. The Board may also choose to delay action on the recommended appropriation transfers or position allocation changes. These options are not recommended, as the changes reflected in this FY2025/26 Midyear Report are intended to support department operations and their ability to deliver the best possible service within available resources.
OTHER AGENCY INVOLVEMENT:
All County departments were involved in developing the information included in the FY2025/26 Midyear Financial Report.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION