Transcript Cuyahoga County: A government of action, accountability

Cuyahoga County
2010 Budget Highlights
Cuyahoga County:
A government of action,
accountability, opportunity, and
innovation
July 14, 2010
1
Summary of 2010 Budget
2
Maintaining Stability of County Finances

The 2010 Budget is balanced and remains at current service
levels.

Financial health has been reaffirmed by rating agencies
(December 2009) W have the 2nd highest bond ratings of all
Ohio counties (Aa1, AA+).

5th largest employer in the County.
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Major force for economic development in the region.

Continuation of Budget Incentive Plan in 2010.
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Provide quality services with a comparatively low millage rate
to help support operations.
3
Comparison – Effective Voted Millage Rates
Cu
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ilt
m
Ha
on
M
on
to
y
er
gm
F
in
kl
n
ra
12.56
12.68
14.90
12.33
13.18
a
og
h
ya
14.67
Total Effective Millage for Operations 2010
s
ca
u
L
m
m
u
S
it
Based on 2009 (TY) residential rates.
Effective rates do not include Metroparks, Port Authority, Library
or Community College levies.
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How We Compare With our Peers
 Also have
second lowest per capita spending than other
urban county peers.
Per Capita Spending by Urban Counties
County
Summit
Cuyahoga
Hamilton
Lucas
Franklin
Montgomery
2010 County
Budget
($ millions)
$537.1
$1,404.9
$1,169.7
$649.8
$1,742.9
$959.7
Est. 2010
Population
542,562
1,283,925
851,494
440,281
1,118,107
534,626
Budget Per
Resident
$990
$1,094
$1,374
$1,476
$1,559
$1,795
Based on approved 2010 budgets.
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2010 Budget Guidelines – Reflect Our Mission
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Encourage opportunity and strengthen our economy;
Be excellent stewards of county assets;
Improve operations and promote innovation
Citizens, especially seniors, unable to help themselves will
receive help;
Citizens will have access to resources needed to be skilled and
productive;
Our citizens will be healthy;
Our children will be well cared for and safe;
Our County will be a safe place to live and raise a family;
We will sustain our natural resources; and
Enforcement of laws will be fair and timely.
Provide total administrative support to the Government
Reform Transition Team;
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A Summary of 2010 Budget Parameters

The 2010 budget was based on the 2nd quarter expenditure projection for
fiscal year 2009.

Personnel allocations were adjusted to reflect the actual Early Retirement
Incentive Program participation ($39 million in savings).

County agencies with self supporting revenues were to limit their budgets
to their available resources.

The 2010 budget does not provide for any cost of living increases or other
salary adjustments for either bargaining or non-bargaining unit employees
unless the existing bargaining unit agreement called for a salary
adjustment.

The budget does incorporate the savings from five 2010 furlough days
during the first half of the year.
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A Summary of 2010 Budget Parameters (continued)

The 2010 budget incorporated a 5% increase in hospitalization costs.

The 2010 budget provides a 2% inflationary increase in commodities,
contractual services (operating only) and other operating expenditures.

Additional funding requests were not included in the recommended
budget unless agencies were able to reallocate existing allocations to
meet the additional funding requests.

The 2010 budget provides for a Budget Savings Incentive Plan, where
county agencies funded by the General Fund or Health and Human
Services Funds will be recognized for their efforts to come in under their
2009 original budget.
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2010 Budget Summary
2010 Recommended Budget
General Fund and All Funds Summary
General Fund
Operating
Health & Human
Service Fund
Total
General Fund
Revenue Estimate
$ 357.5 million
$ 232.8 million
$ 590.3 million
$ 1,441.1 million
Operating Expenditures
$ 317.9 million
$ 232.8 million
$ 550.7 million
$ 1,404.9 million
Exhibition Hall Reserve
$
39.1 million
$
-
million
$
39.1 million
$
39.1 million
Operating Surplus
$
0.5 million
$
-
million
$
0.5 million
$
(2.9) million
Ending Balance
$
93.6 million
$
$ 126.6 million
$
303.8 million
Balance to Expenditure %

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29.4%
33.1 million
14.2%
23.0%
All
Funds
21.6%
The Exhibition Hall reserve represents the increase in sales tax revenue that is specifically
set aside to support the Medical Mart project, which is anticipated to spur economic
development in the region.
The All Funds deficit is due to utilizing cash balances for debt service and for Board of
Developmental Disabilities’ needs.
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Where County $’s Come From – All Funds $1.44Bn
2010 Budget - All Funds Revenue
(millions)
Other Tax
2.0%
Licenses &
Permits
0.1%
Fines &
Forfeitures
0.9%
Intergovernmental
37.1%
Sales & Use Tax
13.6%
Property Tax
23.5%
Miscellaneous
2.3%

Investment
Earnings
1.4%
Charges for
Services
19.1%
All Funds includes General
Fund,
Levy Funds
and
other
special
2008
2009
2010
'09 - '10
'09 - '10
revenue
funds
of the County
Revenue
Source
Actual budget.
Actual
Budget Change % Change
Property Tax
Sales & Use Tax
Other Tax
$344.3
215.8
28.1
$354.2
193.3
33.8
$338.5
195.5
28.4
-$15.7
2.2
-5.4
-4.4%
1.2%
-16.1%
10
How County $’s Are Spent – All Funds $1.40Bn
2010 Budget - All Funds Expenditures
(millions)
Development
1.2%
Social Services
45.7%
Judicial
21.6%
Health & Safety
5.9%
General
Government
10.9%
Miscellaneous
7.6%
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Debt Service
3.3%
Public Works
3.8%
2008
2009
2010
'09 - '10
'09 - '10
All County funds consolidated.
Expenditures
Actual
Actual
Budget Change % Change
Does not
include
multi-year
budgets
for
grants
and capital
General Government
$170.0
$153.8
152.6
-$1.2 projects
-0.8% .
Judicial
Development
336.0
25.6
$312.5
$38.9
303.7
16.0
-8.8
-22.9
-2.8%
-58.8%
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Where County $’s Come From – General Fund /Levy $590.3M
2010 Budget - General Fund Revenue
(millions)
Property Tax
35.7%
Sales & Use Tax
33.1%
Licenses & Permits
0.1%
Miscellaneous
2.5%
Investment
Earnings
3.1%
Fines & Forfeitures
1.5%
Charges for
Services
8.4%
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Intergovernmental
15.6%
General Fund includes the main operating fund as well as HHS Levy funds.
2008
2009
2010
'09 - '10 '09 - '10
Revenue
Sourceconsidered
Actualto be
Actual
Budget
Change operating
% Change
Total pool
of funds
part of
the general
budget.
Property Tax
$205.6
$217.5
$211.0
-$6.5
-3.0%
Includes Sales
$39.1M
of
sales
tax
collected
for
Med
Mart
Project
& Use Tax
215.8
193.3
195.6
2.3
1.2%
Licenses & Permits
Fines & Forfeitures
0.1
10.8
0.1
9.0
0.1
8.9
0.0
-0.1
0.0%
-0.9%
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Where County $’s Come From – GF Operating $357.4M
2010 Budget - General Fund Operating Revenue
(millions)
Sales & Use Tax
54.7%
Licenses &
Permits
0.1%
Property Tax
6.3%
Fines &
Forfeitures
2.5%
Miscellaneous
4.1%
Investment
Earnings
5.2%
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Charges for
Services
13.8%
Intergovt Transfer
Pmts
13.4%
2008
2009
2010
'09 - '10
'09 - '10
General Fund
Operating
levy dollars.
flexibility
on how funds
Revenue
Source excluding
ActualHHSActual
Budget Most
Change
% Change
$19.4
$18.9
$22.4
$3.5
18.3%
are spent. Property Tax
Sales & Use Tax
215.8
193.3
195.6
2.3
1.2%
A shared pool
of
resources,
representative
of
the
County’s
financial
condition.
Licenses & Permits
0.1
0.1
0.1
0.0
0.0%
Fines & Forfeitures
10.7
9.0
8.9
-0.1
-0.7%
Intergovernmental
50.7
50.9
47.8
-3.1
-6.1%
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Charges for Services
60.1
46.4
49.5
3.1
6.6%
How County $’s Are Spent – General Fund $550.7
2010 Budget - General Fund Expenditures
(millions)
General
Government
10.1%
Development
1.2%
Judicial
45.9%
Social Services
25.2%
Miscellaneous
1.8%
Debt Service
1.4%
Public Works
0.3%
2008
Actual
2009
Actual
Health & Safety
14.1%
2010
Budget
'09 - '10
Change
Expenditures
 Includes
Operating
fund of $317.9M and HHS
General Fund
Operating
General Government of $232.8M.
$69.0
$59.7
$55.8
-$3.9
expenditures
Judicial
267.4
238.9
228.2
-10.7
Development
7.8
8.0
6.6
-1.4
Social Services
6.4
6.5
7.2
0.7
'09 - '10
% Change
Levy
-6.5%
-4.5%
-17.5%
10.8%
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County Has Continued to Reduce the Budget.
General Fund Expenditures 2008 -2010
Change from Prior Year
$ millions
Program Budget Area
General Government
Judicial
Development
Social Services
Health & Safety
Public Works
Debt Service
Miscellaneous
Total
2008
Actual
$69.0
$267.4
$7.8
$6.4
$1.7
$1.6
$4.3
$2.6
$360.8
2009
Actual
$59.7
$238.9
$8.0
$6.5
$1.4
$1.6
$4.5
$2.8
$323.5
% Chg
08 - 09
-13.4%
-10.7%
2.3%
1.6%
-15.8%
3.8%
4.2%
7.0%
-10.3%
2010
Budget
% Chg
09 - 10
$55.8
-6.6%
$228.2
-4.5%
$6.7 -15.9%
$7.2 10.9%
$1.1 -24.7%
$1.4 -17.1%
$7.5 65.5%
$3.1 10.6%
$310.9
-3.9%

A variety of programs were cut in 2009 along with institution of a three day
furlough program. A five day furlough was instituted in 2010.
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An early retirement program was instituted in 2009 and has provided additional
savings of $39 million County wide.

Most cuts made in 2009 were carried into the 2010 budget.
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Reductions of County Programs In 2009 - 2010
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Continuation of hiring freeze for all BOCC agencies.
ERIP - personnel costs $10.5 million in 2009 and $39 million in 2010.
Reducing children residential placement contracts by 2.75% cut costs by
$1.6 million.
Reducing overtime for the Kids Hotline saved $1.0 million in 2009 and 2010.
Reducing Help Me Grow core services will cut costs $629,500.
Reducing Early Start’s literacy program and prenatal services will cut costs
$722,780.
Eliminating the Work Release Program will save $250,000.
Reducing Ohio Works First contracts will cut costs $800,000.
Reducing voting precincts will save $3.0 million by 2010.
Energy efficiency measures will reduce costs $4.5 million starting in 2010.
Court procedure notifications via mail to e-mail will save $500,000.
Eliminating Coroner’s grief counseling program will save $107,500.
5% cut to ADAMHS Board Subsidy in 2010.
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Summary of 2010 HHS Levy Expenditures
HHS Funded Programs
2009
2010
$ Millions
Services for Children & Families
Services to Seniors
Mental Health & Alcohol & Drug Addictions Services
Community Health Care/MetroHealth
Other Human Services Programs
$132.20
16.7
36.6
39.6
19.0
$114.50
13.9
35.7
40
28.7
TOTAL
$244.1
$232.8
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In 2010 the $232.8 million generated by the two HHS levies will help pay for these programs.

Levy dollars serve as a local match to draw down approximately $300 million in State and
Federal revenue for reimbursement of HHS program expenditures.

The next State budget cycle will most likely result in a drop in State funding for County HHS
programs.
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HHS Levy dollars are restricted to social services and health & safety purposes and must be
balanced amongst mandatory and discretionary programs annually.
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Changes in Staff Levels 2002 to 2011
10,000
9,479
8,909
9,000
9,025
9,045
9,267
9,502
9,523
8,706
8,036
8,000
8,203
8,192
2011
2012
7,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
The 2010 estimate includes cost/savings associated the Early Retirement
Incentive Program (ERIP) and non ERIP attrition.
2010 FTE levels are 22.4% or 2,317 FTEs less than in 2001; and 1,487 FTEs or
15.6% less than in 2008. Personnel costs dropped by 15% or $63 million from
2008 to 2010.
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Where We Are Today
19
Recent Economic Events
Great Recession – largest economic decline in the U.S.
since the Great Depression.
Government rescue of the financial system (Fall 2008).
Massive intervention by federal government.
American Recovery & Reinvestment Act
Measures by Federal Reserve to shore up banking system
Collapse of housing market followed by wave of
foreclosures nationwide and Cuyahoga County.
Highest levels of unemployment in almost thirty years.
GDP and consumer confidence and retail sales drop
starting in 2008.
Local Sales Tax collections were really bad last year, we
saw a 10.9% drop in 2009.
Limited signs of a weak recovery in Cuyahoga County.
LeBron James leaves for Miami.
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Economic Indicators Dashboard
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Inflation Adjusted Revenue – Decline in Real Terms
General Fund Operating Revenue 2001-2011 Adjusted for Inflation (millions)
2010 - 2011 Based on 2010 Budget Estimate
$450.0
$425.0
417.9
392.3
$400.0
386.4
385.6
$375.0
369.5
362.0
381.3
357.2
320.2
$350.0
$325.0
321.5
305.0
2010
2011
$300.0
$275.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
Prior Year Revenue based on 2010 dollars using Consumer Price Index Inflation Calculator.

Revenue adjusted for inflation highlights the decline in real dollars available for
programs.
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In real terms revenue has declined by over $96 million dollars or 23% since 2001.
The decline in 2011 is 27%. Over one quarter of our purchasing power.
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2010 Budget Summary
2010 1st Quarter Estimate
General Fund and All Funds Summary
General Fund
Operating
Health & Human
Service Funds
Total
General Fund
All
Funds
Revenue Estimate
$ 360.6 million
$ 231.9 million
$ 592.5 million
$
1,382.6 million
Operating Expenditures
$ 321.5 million
$ 235.1 million
$ 556.6 million
$
1,324.4 million
Surplus (Deficit)
$ 39.1 million
$
(3.2) million
$ 35.9 million
$
58.2 million
Exhibition Hall Reserve
$ 39.0 million
$
-
$ 39.0 million
$
39.0 million
Surplus (Deficit)
$
$
(3.2) million
$
(3.1) million
$
19.2 million
Ending Balance
$ 100.2 million
$ 130.1 million
$
381.9 million
Balance to Expenditure %
0.1 million
31.2%
million
$ 29.9 million
12.7%
23.4%
28.8%
•The Exhibition Hall reserve represents revenue from the 0.25% increase in sales tax
that is specifically set aside to support the Medical Mart project.
•Those dollars are NOT useable for operations.
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Near Term Budget Estimates – More Challenges
Combined General and HHS Levy Funds
2010 Estimate
Revenue
Expenditures *
Operating
Surplus/(Deficit)
Ending Balance
Balance to
Expenditure %
$
$
$
$
553.5 million
556.6 million
(3.1) million
130.1 million
23.4%
2011 Estimate
2012 Estimate
$
$
536.3 million
555.6 million
$ 536.8 million
$ 557.6 million
$
(19.3) million
$ (20.8) million
$
108.8 million
$
19.6%
86.2 million
15.5%
Excludes .25% sales tax increase for Medical Mart and Exhibition Hall
No salary increases in 2009 through 2012

2011 and 2012 budget estimates currently reflect large operating deficits if
revenue does not pick up in the near future. This is a HUGE problem for
the County to contend with in 2011.
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The projected decline in revenue will continue to deplete County General
Fund resources beyond the 20% reserve requirement within the next two
years.
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Deficits Continue to Persist
Total General Fund Operating Surplus/Deficit 2002- 2012 *
($ millions)
$38.2
$40.0
$20.5
$18.7
$8.6
$10.0
$0.6
-$20.0
$(15.0)
$(7.5)
$(6.8)
2008
2009
$(24.3)
$(14.3)
$(11.6)
2011
2012
-$50.0
2002
2003
2004
2005
2006
2007
2010
Not adjusted for inflation
 In 2011 and 2012 the County will take in less dollars than it is projected to
spend. Even though we are spending less and less.
 The main cause is the severe decline in revenue – remember that
recession?
 The critical gauge of fiscal strength is the ability to contain or avoid the
continual draw down of cash reserves. General Fund and Levy Funds.
 2011 Budget Process will have to address this imbalance.
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Why Is The Ending Cash Balance Important?

Over sixty percent of General Fund Operating revenues (Sales Tax and
Investment Earnings) are tied to resources that are sensitive to economic
swings.

State and federal budgets, which the County has minimal influence over,
govern how much the County receives each year in intergovernmental
revenue which is the County’s largest revenue source.
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Unexpected catastrophes or situations (lawsuits, fires, etc.)

Cash flow needs since the state reimburses expenses and advances are not
received in a timely manner.

Achieve the lowest possible interest rates on long-term bond issues to
support capital needs of the county.
 One basis point (.01%) on a $350 million year bond issue would cost the
County about $35,000 per year in additional debt service.
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Preparing for 2011 and
Beyond
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Top Concerns

Status of future outlook in the County budget for 2011-2012.
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Deficits in GF and HHS Levy Fund will have to be addressed.
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Sales Tax growth / economic growth- where and when will a recovery
take root in Cuyahoga County?
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Will fiscal austerity at the federal level derail a local recovery or worsen
the State’s budget problems?
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Condition of State Budget. (The estimated $7 billion shortfall)
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Impacts of Health Care Reform and potential reforms to OPERS.

Transition to charter government and 2011 budget process, maintaining
bond rating, major projects, etc.
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These concerns will have to be addressed based on the fact that County
operations are funded by shared resources.
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Condition of State Budget

How do you fill an $7 billion budget deficit?
Cuts to HHS program will strain our local match from voted levies.
Cuts to Local Government Fund – currently provides $31+ million to
General Fund. There is a possibility that this shared pool of funding will be
cut in the next State budget.
Additional cuts that will impact all levels of local government in other
program areas related to corrections, justice, development and education.
Inability to find replacement revenue for phased out personal property
tax.
Ohio Budget Planning and Management Commission - bipartisan budget
panel created to address looming budget crisis.
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Good News on the Horizon
HHS Levy was renewed by voters in May.
Major Local projects that can make a difference:
Medical Mart Convention Center
Downtown Casino
Major Highway Construction
Flats East Bank Development
Continued use of ARRA dollars and RZ bonding provisions.
Possible end of the recession in Cuyahoga County – getting
worse at a slower pace.
County has weathered the worst of the “Great Recession” while
maintaining healthy cash reserves and exceptional bond ratings.
Potential release of 2007 and 2008 audits will relieve some
pressure on the County.
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2011 Budget Objectives
Stabilizing the General Fund and HHS Levy Fund in 2011 and
beyond.
Balancing revenues and expenditures in a manner that best
serves the interest of all county residents.
Sustain the most critical core service priorities for our
community.
Continual search for creative solutions and increasing efficiency
in service delivery.
Defining priorities based on a strategic planning objectives that
each County agency is expected to develop and maintain.
Collaborate, collaborate, collaborate.
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Where Will We Look for Savings?
The past three budget cycles have required budget reductions.
Where else can we cut?
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Big Picture – look at ways the County operates in general.
Administrative overhead
Physical space and information technology
Employee benefits programs
Programmatic Focus– How do individual agencies prioritize programs
and where are the opportunities to find more efficiencies?
County Transition – leverage the organizational changes mandated in
charter to realize savings in the next several years.
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County Transition – Budget Impacts
What are the near term budget implications
related to the transition to charter government?
Mandates to create new County entities (Internal Audit).
Consolidation of organizational structure.
Specific changes to budget reporting (section 2.03).
Required changes are not reflected in most recent
projections (Q1).
Major governance changes will be included in 2011
budget development process.
Some charter changes may be addressed in a revised 2011
budget early next year.
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2011 Budget Process – What’s Next?

OBM is currently completing work on the 2nd Quarter Projection.

The estimates for 2011 will serve as a “building block’ or the base
budget in 2011.

2011 Budget would adhere to the aforementioned objectives.

2011 budget will be an annual budget plan and will address the
structural deficits in the General Fund and HHS Levy Fund.

Final recommended budget will be presented for approval in the final
quarter of 2010.

Additional transition changes could be incorporated as a revisions to
approved budget per final recommendations in early 2011.
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Additional Budget Information
Budget & financial reporting is available
on our website: www.obm.cuyahogacounty.us
Suggested Reading:
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2010 Budget Plan
Annual Information Statement
Quarterly Reports – Q2 Due out Early August
Thinking The Unthinkable – Finding Common Ground For
Ohio’s Fiscal Crisis (Center for Community Solutions)
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