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Receive the FY2024/25 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 FY2024/25 Midyear Financial Report. (Attachments A, B, C, D, 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 increase of 1.0 positions. (Attachment G)
4. Approve fixed asset purchases in the amount of $1,586,500 for the Library, $1,275,586 for Probation, $75,500 for the Sheriff, $1,000 in the Sheriff Boating Safety Enforcement and Equipment (BSEE) Grant Fund, $30,000 for Health and Social Services (H&SS), and $178,000 for Fleet Management. See Attachment A for details.
5. Affirm initial budget assumptions for FY2025/26. (Attachment H)
6. Receive State and Federal Budget Update. (Attachment I)
7. Confirm the FY2025/26 Budget Hearing dates from Monday June 23, 2025 through Tuesday June 24, 2025.
SUMMARY:
The County Administrator’s Office (CAO) has reviewed and compiled the FY2024/25 Midyear Financial estimates.
At this time, the Board is asked to accept the Midyear Report for FY2024/25 and variance explanations. Each County department has reviewed their first 6 months of transactions (July 1, 2024 - December 31, 2024) and has prepared projections for their revenues and expenditures through Fiscal Year-End June 30, 2025 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 for a net increase of 1.0 FTE are provided in Attachment A.
Several departments are requesting approval for fixed asset purchases including; $1,586,500 for the Library, $1,275,586 for Probation, $75,500 for the Sheriff, $1,000 in the Sheriff Boating Safety Enforcement and Equipment (BSEE) Grant Fund, $30,000 for Health and Social Services (H&SS), and $178,000 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, 2025 (FY2024/25) is $37.7 million (Attachment E). By comparison, the projected General Fund ending balance at Midyear FY2023/24 was $36.7 million. The FY2024/25 projection includes $14 million in unspent General Fund contingencies, a Net Change of $23.7 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, interest income due to a higher than anticipated yield on investments, and year-to-date adjustments and decreases in projected department expenditures for the current fiscal year when compared to the FY2024/25 Working Budget.
The FY2024/25 Adopted Budget reflected a Beginning Fund Balance on June 30, 2024 of $51.7 million. Of this amount $14 million was designated as General Fund Contingency, $37 million was used to balance FY2024/25 Adopted Budget (revenues versus expenses) and a net $0.8 million was transferred to Reserves.
Several ATRs have been prepared and included in the FY2024/25 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 FY2024/25 Working Budget to projected year-end balance at June 30, 2025.
The table of Other County Funds shows that all County operating funds are within budget, using available fund balance, reflect operating projections based on previous Board action, and/or reflect recommended adjustments included as part of the Midyear Financial Report (Attachment C).
DISCUSSION:
Midyear Forecast Overview:
The Midyear FY2024/25 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.
General Fund - Fund 001
The FY2024/25 Midyear projections for the General Fund anticipated expenditures are $379.2 million and $362.5 million in revenues and will require the County to continue to utilize prior year Fund Balance for FY2024/25.
The decrease in expenditures in the General Fund of $8.9 million represents operational savings attributed largely to the timing in filling of vacant positions funded with General Fund contributions throughout the County departments. The combined impact of decreased expenditures will reduce the amount of fund balance utilized in FY2024/25.
Net increases in revenue to the General Fund include: $12.0 million in revenues primarily due to increases in Property Tax revenues attributed to an increase in assessed values as verified by the County Assessor, and increases in interest income due to higher than anticipated yield on investments and an increase in average daily cash balance for the County’s investment pool.
Public Safety Fund - Fund 900
The Public Safety Fund, Fund 900, consists of the budgets from the departments of the Sheriff, District Attorney, Public Defender, Alternate Defender, Probation, and Other Public Defense. The FY2024/25 Midyear projection reflects a net decrease of $3.8 million in revenues and expenditures 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 Proposition 172 (sales tax based) revenue when compared to the Working Budget. The projected decrease in Proposition 172 revenue is due to lower statewide taxable sales and County share of sales tax. Staff is working with HdL, the County’s Sales Tax consultant, to monitor the statewide trend in Proposition 172 funding and will provide updates to the Board as part of FY2025/26 Budget Hearings.
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 $962,000 at FY2024/25 year-end closing when compared to the Working Budget for the Public Safety Fund. This net decrease in General Fund support includes a decrease of $3.3 million in institutional care revenues resulting from Sonoma County removing their inmates housed at the Claybank Detention Facility. 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) Fund 902 is comprised of 7 divisions: Administration, Behavioral Health, Social Services, In-Home Supportive Services (IHSS) -Public Authority, Health Services, Family Health Services, and Public Assistance Programs. H&SS has a Working Budget in the amount of $528.4 million. The Midyear projection reflects a net decrease of $29 million in revenues and a decrease of $36.5 million in expenditures for a net cost decrease of $7.5 million. This decrease is the net of changes in several divisions included in Fund 902 detailed in Attachment A and summarized as follows:
1. A decrease of $163,000 in Administration primarily due to low utilization of contract with Home Base for consulting services related to homelessness issues.
2. A decrease of $2.8 million in Social Services primarily representing County General Fund savings in E&ES due to increase in actual allocation compared to estimates at the beginning of the year and lower allocated program costs.
3. A decrease of $52,000 in Behavioral Heath primarily represents increase in revenue surplus projected for Department of State Hospitals (DSH) grant that will be deferred to support the program in future years.
4. A decrease of $3.5 million in Health Services primarily representing shortfall in revenues funded with Public Health Intergovernmental Transfers (IGT).
5. A decrease of $1.1 million in Public Assistance primarily representing the County’s proportionate reduction in the share of cost for the projected decreases in Foster Care and General Assistance expenditures.
Initial FY2025/26 Budget Assumptions
Based on Midyear Projections for Fiscal Year 2024/25, 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 FY2025/26 Budget. Please refer to Attachment H for detail.
Board of Supervisors’ Priorities
On April 18, 2023, the Board conducted a priority-setting workshop. Board members identified several topics which were grouped into five major categories: Economic Development, Agriculture Preservation and Development, Housing, County Workforce Development, and County Services - Regulations and Policies.
On October 8, 2024, the Board held a second session to provide additional feedback and direction. Staff continue to make progress and will be providing an update on department workplans and continuing efforts related to the implementation of Board priorities in the coming months. Departments will continue to evaluate funding needs related to the implementation of Board priorities and any additional funding for the implementation of specific action items related to Board priorities will be addressed as part of the FY2025/26 Recommended Budget.
Set Budget Hearing Dates for FY2025/26
The Board is asked to set Budget Hearings to consider the FY2025/26 Recommended Budget. Staff recommends that Budget Hearings begin on Monday June 23, 2025, at 9 a.m.
ALTERNATIVES:
There are a number of recommendations included in the FY2024/25 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 FY2024/25 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 Report.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION