AUDITOR-CONTROLLER

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AUDITOR-CONTROLLERS GENERAL FUNDMID-YEARFINANC
IAL UPDATE

• SIX MONTHS ENDED
• DECEMBER 31, 2010
• February 8, 2011

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General Fund Mid-YearFinancial Update

• General Fund Revenues Budget vs. Actual
• General Fund Expenditures Budget vs. Actual
• Historical Trends
• Revenues and Expenditures
• Population and Employees
• GF Budget Adjusted for CPI and Population
• Fund Balance

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General Fund Mid-YearFinancial Update

• NOT reviewing revenue or expenditure projections
  for this year or next year.
• County budget process is underway by CAO.

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General Fund Mid-YearFinancial Update

• Why focus on the General Fund?

Appropriations (Uses) Adopted FY 2010-11 Budget Adjusted FY 2010-11 Budget
General Fund 370,117,887 373,005,860
Special Purpose Funds 47,972,017 48,467,710
Subtotal County Funds 418,089,904 421,473,570
Special Districts-Bd Governed 132,891,920 133,699,241
Total All Funds 550,981,824 555,172,811
Adjusted Budget is the Adopted Budget plus
mid-year changes adopted by the Board.
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• Revenues

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General Fund Revenues- Taxes -
Adjusted FY 2010-11 Budget YTD July-Dec Revenues Prior YTD July-Dec Revenues
Property Taxes 49,073,256 24,382,315 49.7 24,282,079
Vehicle License Fee In-Lieu 24,374,086 12,187,244 50.0 12,262,043
Sales Tax In-Lieu 1,931,549 946,481 49.0 870,707
Sales Tax 5,312,896 2,298,674 43.3 1,943,258
Deed Transfer Tax 1,136,000 468,219 41.2 507,241
Deed Transfer Recovery 414,000 127,975 30.9 110,205
Transient Occupancy Tax 3,577,109 2,320,655 64.9 2,049,095
Other Taxes 72,540 51,757 71.3 51,757
Total Taxes 85,891,436 42,783,320 49.8 42,076,385
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General Fund Revenues- Total Revenues -
Adjusted FY 2010-11 Budget YTD July-Dec Revenues Prior YTD July-Dec Revenues
Total Taxes 85,891,436 42,783,320 49.8 42,076,385
Licenses, Permits, Franchises 9,130,432 3,503,398 38.4 3,660,256
Fines, Forfeitures, Assessment 5,595,647 1,702,814 30.4 2,106,773
Use of Money and Property 1,461,262 540,407 37.0 756,183
Intergovernmental Aid 187,468,304 51,188,533 27.3 52,185,097
Charges for Services 50,515,702 16,627,208 32.9 16,497,568
Miscellaneous 3,495,459 1,360,013 38.9 697,818
Operating Transfers In 26,810,830 9,189,860 34.3 10,421,109
Total GF Revenues 370,369,072 126,895,553 34.3 128,401,189
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General Fund Revenues- Total Revenues -
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General Fund Revenues- Total General Purpose
Revenues -
Adjusted FY 2010-11 Budget YTD July-Dec Revenues Prior YTD July-Dec Revenues
Total Taxes 85,891,436 42,783,320 49.8 42,076,385
Licenses, Permits, Franchises 3,871,000 880,691 22.8 905,504
Fines, Forfeitures, Assessment 1,000,000 382,198 38.2 564,014
Use of Money and Property 366,311 134,082 36.6 278,500
Intergovernmental Aid 2,618,429 143,466 5.5 421,065
Charges for Services 397,568 519,727 130.7 486,145
Miscellaneous 0 203,087 40
Operating Transfers In 0 0 0
Total GF Revenues 94,144,744 45,046,571 47.8 44,731,653
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General Fund Revenues- Total General Purpose
Revenues -
11

• Specific
• Revenues
• Property Tax
• Sales and Use Tax
• Interest Rates
• Intergovernmental Aid

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Property TaxesProperty Tax Pie Before RDA and
ERAF
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Property TaxesProperty Tax Pie After RDA Before
ERAF
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Property TaxesProperty Tax Pie After ERAF
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Assessed Value of Real Property20 Years Percent
Growth
-0.6
-3.0
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Assessed Value of Real Property The Impact of
the Cal CPI

• Per Prop 13, assessed values on an individual
  property may increase by up to 2 annually, based
  on statewide Cal CPI.
• Cal CPI factor for FY 2010-11 was .237, the
  first time it has been negative since Prop 13.
• This contributed to the Countys overall drop in
  assessed value in FY 2010-11 of 0.61.
• The State Board of Equalization has announced the
  Cal CPI for FY 2011-12 will be .753.
• Increase in CPI may be offset by other reductions.

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Property Tax Revenue

• Countywide Assessed Value 33,189,161,052
• Property Taxes - 1 of AV 331,891,610
• Special Levies, etc 66,645,900
• Total Tax Roll 398,537,510
• The County General Fund receives about 13 of the
  basic 1 property tax, or about 44 million,
• plus supplemental and other property taxes, for a
  total of about 49 million in property taxes.

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Property Tax Revenue Projection?FY 2011-12

• We wont know final growth/decline until July.
• Assessor has advised that Countywide assessed
  value could remain flat for FY 2011-12.
• Regional variations Watsonville and San Lorenzo
  Valley are traditionally lower growth.
• Reductions are occurring in the unsecured tax
  roll.

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Property Tax DelinquenciesFY 2004-05 through
2010-11 (projected)
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Sales and Use Tax Rates
Unincorporated County 9.00
Capitola 9.25
Santa Cruz 9.50
Scotts Valley 9.25
Watsonville 9.25
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Breakdown of Sales and Use Tax Rates
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Sales and Use Tax Rates
STATE RATE
General 4.75
General .25
General 1.00
Local Revenue (County Health and Welfare programs, 1991) .50
Public Safety (Proposition 172, 1993) .50
Fiscal Recovery (Triple Flip, July 2004) .25
Total State Rate 7.25
STATEWIDE RATE FOR LOCAL GOVERNMENT
Countywide Transportation .25
Local Agency .75
Base Statewide Rate 8.25
LOCALLY APPROVED
Metro Transit District (1979) .50
County Public Library System (1997 / 2008) .25
GRAND TOTAL SALES TAX PERCENT 9.00
PLUS CITY APPROVED RATES .25 - .50
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Sales Per Capita
City of Capitola currently about 9,000 sales per
capita each quarter. Dropped fast during
recession.
Cities of Watsonville, Santa Cruz, and Scotts
Valley all currently about 2,700 in sales per
capita each quarter.
Unincorporated County about 1,300 sales per
capita each quarter.
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Interest Rates on Treasury Pool
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Intergovernmental Aid
Adjusted FY 2010-11 Budget YTD July-Dec Revenues Prior YTD July-Dec Revenues
State Aid
Motor Vehicle Realignment 8,519,834 3,346,768 39.3 3,423,570
Prop 172 12,882,540 3,082,233 23.9 3,719,595
Public Assistance 31,190,922 8,483,188 27.2 8,184,782
Short Doyle 31,914,811 15,557,148 48.7 15,169,135
State Aid-Other 23,090,323 3,554,110 15.4 2,825,419
Federal Aid
Public Assist Admin (Welfare,GAIN,WIB,etc) 41,326,095 6,831,297 16.5 8,965,179
Public Assist (CalWorks,Adopt,IHSS) 19,607,120 6,482,990 33.1 6,526,336
Fed Health Admin 4,406,963 1,353,027 30.7 1,278,066
ARRA 4,724,583 840,001 17.8 302,144
Federal Aid-Other 7,298,591 1,210,086 16.6 1,360,701
Other Governmental Agencies 2,506,522 447,685 17.9 430,170
Total Intergovernmental Aid 187,468,304 51,188,533 27.3 52,185,097
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Intergovernmental Aid

• Tied to expenditures and paid on a reimbursement
  basis.
• State and federal governments are historically
  slow in paying.
• Most major categories of state and federal aid
  are lagging slightly behind last year receipts.

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• Expenditures

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General Fund Adjusted Budget - By Expenditure
Character FY 2010-11
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General Fund Adjusted Budget - By Functional
Area -FY 2010-11
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General Fund Expenditures - General Government -
Adjusted FY 2010-11 Budget YTD July-Dec Expends Prior YTD July-Dec Expends
ASSESSOR 3,340,862 1,546,931 46.3 1,633,194
AUDITOR-CONTROLLER 2,607,162 1,061,565 40.7 1,072,208
BOARD OF SUPERVISORS 2,238,525 1,066,332 47.6 1,065,576
COUNTY ADMINISTRATIVE OFFICE 2,569,674 602,892 23.5 1,172,553
PLANT ACQUISITION 0 0 0.0 0
COUNTY CLERK-ELECTIONS 3,665,018 1,902,828 51.9 991,620
COUNTY COUNSEL 1,352,566 681,987 50.4 769,171
GENERAL SERVICES 3,739,469 2,606,742 69.7 3,069,322
TECHNICAL RADIO SERVICE 814,204 365,001 44.8 248,285
PERSONNEL 3,475,566 2,027,040 58.3 1,831,500
PUBLIC WORKS-GEN FUND ONLY 1,017,424 291,597 28.7 297,608
TREASURER-TAX COLLECTOR 1,928,241 829,659 43.0 848,247
OTHER-CONTRIB TO OTHER GOVT 785,626 537,725 68.4 409,471
TOTAL GENERAL GOVERNMENT 27,534,337 13,520,298 49.1 13,408,755
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General Fund Expenditures - Public Protection -
Adjusted FY 2010-11 Budget YTD July-Dec Expends Prior YTD July-Dec Expends
AGRICULTURAL COMMISSIONER 3,177,143 1,425,894 44.9 1,462,799
ANIMAL SERVICES - GF CONTRIB 1,139,121 797,385 70.0 840,314
COUNTY RECORDER 1,471,218 434,817 29.6 473,565
CHILD SUPPORT SERVICES 6,838,659 3,465,022 50.7 3,327,173
DISTRICT ATTORNEY/PUBL ADMSTR 11,662,585 5,962,175 51.1 5,845,553
EMERGENCY SERVICES 2,149,468 1,472,246 68.5 1,257,860
GRAND JURY 51,739 25,401 49.1 24,981
COURT - GF CONTRIBUTION 2,155,152 1,773,841 82.3 1,816,406
PLANNING 11,658,215 5,860,881 50.3 6,083,205
PROBATION 14,098,678 6,731,202 47.7 6,816,386
PUBLIC DEFENDER 8,558,234 4,528,856 52.9 4,492,875
SHERIFF-CORONER 48,184,524 22,852,795 47.4 23,420,250
TOTAL PUBLIC PROTECTION 111,144,736 55,330,514 49.8 55,861,367
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General Fund Expenditures - Other Departments -
Adjusted FY 2010-11 Budget YTD July-Dec Expends Prior YTD July-Dec Expends
HEALTH SERVICES AGENCY 117,112,626 50,001,056 42.7 52,833,205
HUMAN SERVICES DEPT 102,180,322 46,575,409 45.6 45,925,052
PARKS, OPEN SPACE CULTURAL 5,782,049 2,870,163 49.6 3,026,440
DEBT SERVICE 6,427,253 3,357,584 52.2 3,693,265
CONTINGENCIES 2,824,537 0 0.0 0

TOTAL GENERAL FUND 373,005,860 171,655,024 46.0 174,748,084
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• Net County Cost

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General Fund Net County Cost- General Government
-
Estimated Revenues Appropriations Net County Cost
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General Fund Net County Cost- Public Protection -
Estimated Revenues Appropriations Net County Cost
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General Fund Net County Cost- Other Departments -
Estimated Revenues Appropriations Net County Cost
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• Historical
• Trends

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10 Year Historical TrendGeneral Fund Revenues -
Taxes
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10 Year Historical TrendGeneral Fund Revenues -
Total
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10 Year Historical TrendGeneral Fund Revenues -
Total
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10 Year Historical TrendGeneral Fund Expends by
Department
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10 Year Historical TrendGeneral Fund Expends by
Category
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10 Year Historical TrendGeneral Fund Expends by
Category
Expenditures
Revenues
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General Fund Budget Adjusted for Consumer Price
Index and Population
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County Population and Number of Employees
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• Fund Balance

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Fund Balance Levels

• As of June 30, 2010, fund balance was 14.5
  million when we closed the books.
• All of it was reserved or designated, leaving no
  unreserved/undesignated fund balance.
• Unreserved / Undesignated Fund Balance is used to
  fund next years budget, or rebuild reserves or
  designations.
• Fund Balance was initially projected to decline
  again to 12.1 million this coming June 30. It
  could be even lower than this.

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10 Year Historical TrendGeneral Fund Total Fund
Balance
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Fund Balance Levels

• Fund balance is important to rating agencies when
  issuing bonds. Our small fund balance is a
  negative factor.
• Moodys notified us in November that they were
  concerned about our low fund balance, implying
  they might downgrade us.

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Fund Balance Levels

• This prompted us to implement a change in
  accounting practice for 14.2 million of fund
  balance previously recorded as deferred revenue
  in a Health Trust.
• The result of this change is that June 30 , 2010
  General Fund fund balance increased from 14.5
  million to 28.7 million.
• The funds are designated strictly for potential
  risks related to health services.

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Fund Balance Levels

• Hopefully, will relieve Moodys concerns
  somewhat, but really just a cosmetic change.
• 100 of fund balance is still reserved or
  designated, leaving no unreserved/undesignated
  fund balance.

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GASB 54

• Government Accounting Standards Board (GASB) 54
  changes the definition of fund balance
• Currently three categories
• Reserved
• Designated
• Undesignated

• Replaced with five new categories
• Nonspendable 4. Assigned
• Restricted 5. Unassigned
• Committed

• Effective June 30, 2011.

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GASB 54

• Also requires your Board to adopt a formal policy
  defining the purpose of various parts of fund
  balance.
• If no Board policy, fund balance will be
  classified as Unassigned.
• CAO and I are developing a recommended fund
  balance policy.
• Will bring this back to the Board in the spring.

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Summary

• General Fund revenues at 34.3 of budget.
• General Fund expenditures at 46.4 of budget.
• Similar to last year at the half way mark.
• Assessed property values / property taxes may
  remain flat next fiscal year.
• Property tax delinquencies hopefully will
  stabilize.
• Interest rates low but stable.
• Fund Balance too low.
• State budget will have negative impact on the
  County.