CAP Review of the 2019-20 San Bernardino County Budget

San Bernardino County Logo

San Bernardino County's 2019-20 Recommended Budget, as presented in the Recommended Budget Book was changed quite a bit in the weeks leading up to the June 25th Board of Supervisors meeting. The changes from the 2019-20 Recommended Budget Book are detailed in attachments linked in the footnotes of the meeting and this document. California Partnership generally reviews county budgets soon after they adopted but the large changes on June 25th made it difficult to respond based on the now irrelevant 2019-20 Recommended Budget Book. The county has adopted a $6.9 billion 2019-20 budget with a total of $3.5 billion from county revenue. Below is the overview of the budget the county adopted on June 25th. 

San Bernardino County's Chief Executive Officer June 11, 2019 Board Presentation 

The nearly $1 billion dollar revision between May and June makes it difficult to track the changes as they are not yet reported. The information in this response is cobbled together from the many resolutions and attachments from the June 11th and 25th Board of Supervisors meetings. The rushed process to include the $900 million dollars and the differences between the 2018-19 adopted and revised budgets make the budget book itself a bit of a dead letter so the focus will be more on the Comprehensive Annual Financial Reports and meeting attachments for the bulk of this response. As for the 2019-20 budget book, I will pull more from the attachments and the CEO’s June 11th slide show.

San Bernardino County's Chief Executive Officer June 11, 2019 Board Presentation 

San Bernardino County looks to be continuing an ongoing strategy of budgeting but not spending about $250 million dollars a year and transferring the amount to the following budget. Transfers from unspent contingency funds and reserves are not uncommon. The recurring transfers of unspent funds from Health and Sanitation, Public Protection, General Government and Public Assistance are more troubling, as those resources budgeted to provide services that were not used. Over the last three Comprehensive Annual Financial Reports (CAFR) these variances (the budgeted but unspent amounts) were: 

        Health and Sanitation     Public Protection     Public Assistance

2017-18    $156,549,000            $58,823,000          $54,807,000

2016-17    $188,920,000            $27,546,000          $41,344,000

2015-16    $135,978,000            $66,586,000          $55,157,000 

This money is rolled back into the next year’s budget and not spent on housing, healthcare, mental health, homelessness or many other services that the county’s residents need. The money that is spent on the social service programs is overwhelmingly from state and federal funds. The 2017-18 CAFR states,

"The Health and Sanitation variance is primarily the result of the matching reimbursement received by the Health Administration budget unit for intergovernmental transfers to cover the required local match for various healthcare programs from the State on behalf of the Medical Center. The General Government variance is primarily the result of the establishment of contingency accounts and the actual salary expenditures that were less than final budgeted amounts. The Public Assistance variance is primarily due to the County taking a conservative approach in budgeting for the highest potential expenditures in the Human Services Department’s budget across many social services programs. The Public Protection variance is primarily the result of the actual salary expenditures and contracted services that were less than final budgeted amounts. The total difference of $165,566,000 between estimated revenues and actual revenues was caused by the receipts of aid from other governments and taxes exceeding estimates; offset by a negative variance in charges for current services primarily due to the reclassification of the matching reimbursement received by the Health Administration budget unit for intergovernmental transfers to cover the required local match for various healthcare programs from the State on behalf of the Medical Center. The differences of the receipts are primarily due to increases in the following: 1991 and 2011 Realignment revenues, Proposition 172 half-cent sales tax revenue, and property Taxes" (San Bernardino County 2017-18 CAFR).

These transfers are repeated in the CAFRs going back many more years. The county spends federal and state dollars on General Government, Public Ways, Health and Sanitation and Public Assistance and overwhelmingly uses local county money in Public Protection. This is a recurring pattern.

 

San Bernardino County 2017-18 CAFR

San Bernardino County 2016-17 CAFR

“The Health and Sanitation variance is primarily the result of the matching reimbursement received by the Health Administration budget unit for intergovernmental transfers to cover the required local match for various healthcare programs” (San Bernardino County 2017-18 CAFR).

“Health and Sanitation, Public Protection and Public Assistance functions accounted for the largest expenditure variances of $156,549,000 $58,823,000 and $54,807,000 respectively between the final budget and actual expenditures” (San Bernardino County 2016-17 CAFR). 

 

San Bernardino County 2015-16 CAFR

“Public Protection, Health and Sanitation, and Public Assistance functions accounted for the largest expenditure variances of $66,586,000,  $135,978,000 and $55,157,000 respectively between the final budget and actual expenditures” (San Bernardino County 2015-16 CAFR)

The county rolls the money over year after year while asserting that there are no resources to address the chronic issues driving people into poverty. The “unfunded pensions” are often cited as the cause of the lack of resources but San Bernardino (and the state of California) have paid down the  “unfunded pensions” to a point where they use that as a revolving reserve account now. “As of June 30, 2018, the net pension liability of participating employers in the multiple-employer defined benefit pension plan administered by the Retirement Association (the “Plan”) was $2.5 billion, the Plan fiduciary net position as a percentage of the total pension liability was 79.89%, and the net pension liability as a percentage of covered payroll was 180.14%. The total unrecognized investment gain as of June 30, 2018 is $46.1 million as compared to an unrecognized loss of $98 million in the June 30, 2017 valuation. The County’s portion of these gains is estimated to be $39.6 million, based on the County's valuation of the assets. Of the total unrecognized market gain attributable to the County, $70.6 million of unrecognized market loss is scheduled to become recognized for actuarial purposes  as of June 30, 2019, with the remaining unrecognized market gain of $110.3 million scheduled to be recognized over the following three fiscal years.” (COUNTY OF SAN BERNARDINO Certificates of Participation  (2019 Arrowhead Refunding Project).

Many of the county’s social service agencies will be getting more state funding in the new state budget. CalWORKs Stage One Child Care includes $56.4 million for 2019-20 and $70.5 million ongoing. This will support child care services for people transitioning from CalWORKs to a job. The state has also passed a $331.5 million CalWORKs Maximum Aid Payment (MAP) Increase and increases the Earned Income Threshold and Asset Tests. There is also a $441.8 million ongoing increase for Temporary Assistance for Needy Families (TANF). It would be advisable, if the county wants more resources to address issues of poverty in San Bernardino county, to invest county resources to draw down more of the state’s record surplus. The practice of “a conservative approach in budgeting for the highest potential expenditures in the Human Services Department’s budget across many social services programs” (San Bernardino County 2017-18 CAFR) will roll over more for future budgets but also cost the county a larger share of the state funding and the added costs associated with pushing more San Bernardino county residents into poverty. 

The county's IHSS workers have been working without a contract for several years. The California state budget includes the IHSS Restoration, $357.6 million to restore the reduction to IHSS service hours. The increased funding continues through 2021. The change to the IHSS MOE (Maintenance of Effort) inflation factor (i.e., reducing it from 7% to 4%), in the 2019-20 State Budget, is expected to result in a significant reduction in the county’s costs. The state has included provisions related to IHSS provider collective bargaining agreements which require that counties have in place collective bargaining agreements that pay IHSS providers an amount that exceeds the State minimum wage. Without the collective bargaining agreements in place, San Bernardino county would be subject to a withholding amounting to 1% of the county’s Fiscal Year 2018-19 IHSS MOE. The state’s 2019-20 budget is increasing the County IHSS Maintenance-of-Effort and extends the commitment to 2023. The state budget also includes $357.6 million General Fund to restore the 7-percent reduction to IHSS service hours and includes an increase of $296.8 million General Fund in 2019-20 to rebench the County IHSS MOE, growing to $615.3 million General Fund in 2022-23. As IHSS is overwhelmingly federal and state money, it would be a good idea for the county to meet the collective bargaining agreement to better position themselves for long term planning for their small share of the program. 

The state budget also includes $260 million to expand Medi-Cal coverage to eligible young adults ages 19–25 regardless of immigration status. This will support the county’s medical system by reimbursing services that have fallen to other charity care resources. Their is also $65 million ongoing support for that provide an array of legal services and remedies related to immigration status for individuals and families. The state budget allows for up to $5 million to be available for the provision of legal services to unaccompanied undocumented minors and Temporary Protected Status beneficiaries, and $7 million will be used to support persons on California State University campuses. Additionally, the Budget includes $25 million one-time General Fund for the Rapid Response Program to support entities that provide critical assistance/services to immigrants. Much of these funds are tied to the county (or cities) committing local resources.

Those living on SSI or those who may qualify (homeless people living with mental illnesses) could also benefit from more state resources as well. The Supplemental Security Income (SSI) Cash-Out Policy Reversal is funding for county administration and benefits for newly eligible CalFresh recipients, Supplemental Nutrition Benefit program recipients, Transitional Nutrition Benefit program recipients, and California Assistance Program for Immigrants program recipients as a result of expanding CalFresh eligibility to SSI recipients. The Budget includes $120 million and approximately $115 million annually thereafter to fund these programs on an ongoing basis.  San Bernardino county would have many more people living with mental and physical disabilities positioned to receive the increased state and federal monies had they invested county resources in the Housing and Disability Advocacy Program three years ago. But alas, “The Public Assistance variance is primarily due to the County taking a conservative approach in budgeting for the highest potential expenditures in the Human Services Department’s budget across many social services programs” (San Bernardino County 2016-17 CAFR). Fortunately, the state budget includes $25 million in ongoing funding for the Housing and Disability Advocacy Program, to assist homeless, disabled individuals in applying for disability benefit programs.

Like all California counties, San Bernardino county has not developed enough housing. The 2019 Point In Time count found 2,607 homeless people. There were 387 in emergency shelter beds reported,  county wide. The county’s definition of homeless excludes the vast majority of homeless people from receiving any county services. The classification and surveying to ‘prioritize’ those ‘most in need’ are expensive and serving as a barrier to services. The Office of Homeless Services has determined that they do not have the resources to meet HUD’s definition of “chronically homeless”  (homeless for more than one year) so they are “prioritizing” San Brnardino’s homeless who have been homeless for three years. The county’s “conservative approach in budgeting for the highest potential expenditures in the Human Services Department’s” (San Bernardino County 2017-18 CAFR and San Bernardino County 2016-17 CAFR take your pick) has exacerbated the county's failure to address the crisis with more state dollars. Five years ago, the county had an opportunity to define the homeless as a “vulnerable population” in their MediCal Waiver 2020 Whole Person Care Pilot. Insead, they restricted the “vulnerable population” to people on probation. The The Whole Person Care Pilots allow MediCal resources to be used for housing. The state’s new budget includes another one-time $100 million General Fund for county pilots that coordinate health, behavioral health, and social services focused on individuals who are experiencing homelessness, or who are at risk of becoming homeless, and have a demonstrated medical need for housing and/or supportive services. In addition, the Budget includes one-time $20 million General Fund for counties that currently do not operate pilots. The pilots that were successful in other counties where they included homeless people in their definition and that success is reflected in the structure of the new round of Whole Person Care funding. The county, again, could have saved a lot of money in the county’s medical system by investing in a broader population five years ago. 

The new state budget has funding for housing but it will take investment from the county to draw down these resources. Local Government Planning Support Grants Program allocates $250 million in planning grants to support local governments and regions in meeting housing goals. There is the Moderate-Income Housing Production that allocates $500 million to CalHFA to develop new low and moderate income housing. This loan program expands on the Mixed Income Loan Program funded through ongoing SB 2 revenues (California State Department of Business, Consumer Services, Housing). The state is also allocating $1.3 billion in one-time funds to spur low- and moderate-income housing development via local government grants and developer loans. The plan includes $500 million for local governments to build emergency shelters, navigation centers, and supportive housing for the homeless. There is also an increase in the CalWORKs temporary homeless assistance. 

California partnership applauds the state’s shift of juvenile justice out of the adult corrections bureaucracy and into the Department of Social Services (The Department of Youth and Community Restoration). The State of California has undertaken numerous corrections reforms in the past decade, including public safety realignment in 2011 and Proposition 47, in hopes of reducing the prison population, maintaining public safety, and improving persistently high recidivism rates. This makes the  increase in the Department of Corrections budget baffling. The Department of Corrections predicts the adult institution population will decrease 1.3 percent (1,627 inmates) from the 129,417 inmates on June 30, 2018. The further projection to 2023, of a decreased population of 6,571 fewer inmates, raises the expectation of a decrease in the Corrections budget. The state’s Corrections budget of $15.9 billion dollars is embarrassingly close to the $18.5 billion the state is spending on higher education. Many of our partners and allies have worked many years in reducing the population of prisoners in hopes that the savings would go to reentry and restorative services that further reduce recidivism. Housing and education are the primary drivers of a reduction in recidivism. California Partnership urges Governor Gavin Newsom and the state’s legislators to end the unconstitutional money bail system in California that leaves tens of thousands of people languishing in jails each year before they are convicted of any crime and simply because they cannot afford to buy their way out of jail. Punishment of people for being poor must end. We urge them to provide social services, healthcare (including mental health), emergency housing, bridge housing, and permanent supportive housing for California's homeless. Policing homeless people has failed to end homelessness. With the government reports of historic lows in unemployment and record highs in the stock market, California’s lawmakers need to make further investments in California’s health and human services to strengthen our safety net. 20% of Californians continue to be pushed into poverty by the high costs of housing and health care. 

 


Citations

 


San Bernardino County 2017-18 CAFR

http://www.sbcounty.gov/atc/DBMFiles/County_of_San_Bernardino_CAFR_-_2018_41279230219.pdf

San Bernardino County 2016-17 CAFR 

http://www.sbcounty.gov/atc/DBMFiles/2016-2017_Comprehensive_Annual_Financial_Report_25122311218.pdf

San Bernardino County 2015-16 CAFR

http://www.sbcounty.gov/atc/DBMFiles/2016_CAFR_40413242916.pdf

COUNTY OF SAN BERNARDINO Certificates of Participation (2019 Arrowhead Refunding Project) PRELIMINARY OFFICIAL STATEMENT DATED JUNE 13, 2019

http://prospectus.bondtraderpro.com/$CA3200BR7.PDF

California State Department of Social Services 2019-20 Budget

http://www.ebudget.ca.gov/2019-20/pdf/Enacted/GovernorsBudget/4000/5180.pdf

California State Department of Business, Consumer Services, Housing

http://www.ebudget.ca.gov/2019-20/pdf/Enacted/GovernorsBudget/1000.pdf

June 11th and 25th Budget changes from the reported Recommended Budget Book:


County’s 2019-20 R - ADD-ATT A-CAO-06-11-19-2019-20 County Budget

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237914407122019121618994.PDF

County’s 2019-20 R - R2-MIN-CAO-06-11-19-2019-20 Budget revised (Final)

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237914307122019121432187.PDFhttp://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237914307122019121432187.PDF

County’s 2019-20 R - ADD-ATT B2-CAO-06-11-19-2019-20 County Budget - Schedule of Adjustments

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237914507122019121815708.PDF

County’s 2019-20 R - ADD-ATT D-CAO-06-11-19-County Staffing Changes

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237914607122019121943325.PDF

County’s 2019-20 R - ADD-RES-CAO-06-11-19-2019-20 Budget (Final)

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237914907122019122100379.PDF

County’s 2019-20 R - #106 - Attachment with Revisions - R3-ATT B1-CAO-06-11-19-2019-20 Recommended Changes to Recommended Budget_MARKUP

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237915107122019122325206.PDF

County’s 2019-20 R - #106 - Attachment with Revisions - R3-ATT C-CAO-06-11-19-2019-20 Recommended Reserves_MARKUP

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237915207122019122408999.PDF

County’s 2019-20 R - R2-MIN-CAO-06-11-19-2019-20 Budget_MARKUP

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237915507122019122603638.PDF

County’s 2019-20 R - 106 -ADD-ATT-CAO-6-11-19-2019-20 Recommended Budget Presentation

http://cob-sire.sbcounty.gov/sirepub/cache/2/iiamup30kq4cbrtv0kc00qjl/237915607122019122605962.PDF

 

NewsCAP PartnersCampaignsEventsNews

Contact