Most Riverside County agencies will close the current fiscal year in the black and the reserve pool is larger than originally anticipated, but outlying financial obligations — including ballooning pension expenses — will require spending discipline in the years ahead, the Board of Supervisors was told Tuesday.
“County departments are embracing operational efficiencies,” county Chief Executive Officer George Johnson told the board during a hearing on the third-quarter 2017-18 budget report. “But there are pending cost increases on the horizon that we can’t ignore. We have to find a way to absorb those increases.”
The report indicated that Riverside County agencies previously battling significant red ink have managed to reduce it, most prominently the Sheriff’s Department, which had predicted a year-end shortfall of $30 million only five months ago and is now on track to close the year in balance.
The District Attorney’s Office was struggling with a $9 million overage in expenses, but that figure has been trimmed to $3.76 million, according to the report.
The Riverside University Health System was $15 million in the hole only a month ago, but according to the Executive Office, RUHS, the centerpiece of which is the county hospital in Moreno Valley, is in a position to erase that deficit.
The Office of the Public Defender remains about $1.5 million over budget, and smaller gaps were identified in other units.
Johnson and county Chief Financial Officer Don Kent touted the roughly $200 million in county reserves as a major accomplishment, given that the reserve pool was expected to be drawn down to $160 million.
Johnson and Kent attributed savings to a targeted hiring freeze implemented last fall, as well as departments’ work holding the line on spending and operational improvements.
One of the biggest variables threatening to siphon county resources and push expenditures to unsustainable levels is pension expenses.
From the current fiscal year to 2022-23, the county will be on the hook for nearly $1 billion in additional pension obligations, according to the report. The California Public Employees Retirement System is requiring steadily rising contributions to cover unfunded liabilities.
Johnson and Kent noted that many county agencies will be forced to cover the escalating costs, translating to “de facto” cuts to their individual budgets. However, the county will also have to draw down general fund discretionary revenue to satisfy the obligations.
The phased opening of the John J. Benoit Detention Center in Indio will be another tax on resources, especially for the sheriff’s department. Over the next three years, roughly $43 million in additional revenue will be required to fund new jail operations. A portion of the facility will open in July.
Supervisor Kevin Jeffries found the most concerning aspect of the budget the apparent lack of available funding in the next fiscal year to boost the number of deputies dedicated to patrol operations in the county’s unincorporated communities.
The deputy-to-residents patrol ratio is now .75 per 1,000 in the unincorporated areas, where “residents are coming unhinged” over the amount of property and other crimes to which too few deputies are available to respond, Jeffries said.
“We have got to reach some sort of agreement to restore staffing levels,” the supervisor said.
He said one of the best options may be to reduce the number of sworn gun-carrying deputies assigned to correctional operations and deploy them to communities where they’re most needed.
Board Chairman Chuck Washington opined that the issue may be administrative, and that Sheriff Stan Sniff was not taking an appropriate approach to the issue. However, Washington and Supervisor Marion Ashley generally agreed with Jeffries’ idea.
The budget report pointed to the need for an additional $10 million to pay Netherlands-based professional services firm KPMG for services rendered in the current fiscal year.
KPMG’s work has come under fire from Sheriff Stan Sniff, several unions and a number of office-seekers this election year. The county locked in a $40 million agreement with the firm in 2016 to net out efficiencies and achieve lower costs in multiple agencies, but particularly public safety.
Critics insist the efforts have achieved little, but Ashley was quick to defend the firm, saying its data-driven modifications to workflow cycles and resource utilization have resulted in “accumulated” savings of $93 million.
“That will likely be $100 million by the end of the calendar year,” the supervisor said.
The 2018-19 budget hearings will begin on June 11, and the board is expected to formally adopt a budget a month later.