Board of Supervisors — June 15, 2026

All right, ladies and gentlemen, I've been told that we are good to go. Wow, that sounds...

Nice echo.

Yeah, it sounds like Into a Dome. Let's bring out the Los Angeles Clippers! We are gonna call to order this meeting, this special meeting of the Ventura County Board of Supervisors budget hearing of June 15th. Roll call, Madam Clerk.

Yes, thank you Chair. Appreciate the opportunity that we can take this evening during this special meeting to recognize the 2025-26 5th District Youth Advisory Council. This is the second year that the cohort has been doing the work And wanted to share a little bit about them. We do have a PowerPoint presentation that will be rotating with some images over the past school year, the 5th District Youth Advisory Council, which is a council of students who live work or attend school in the 5th district. have been meeting. They had 16 meetings over the last couple of months at Wainimi High School, so I want to give a shout out to these Wainimi High School staff especially the principal Brenda Bravo for allowing us a space for the students to meet They have been engaged in a wide range of meetings with leaders, organizations and community issues learning about county governance.

They explored careers in public service, health care and community leadership through a wide range of presentations. The council worked closely with Kate English and Lucas Salcedo from the Youth Equity Initiative and the Ventura County Probation Agency on leadership development and civic engagement Discussing communication, working on skills related to leadership, personal identity, relationship building and collaboration. They examined important topics including environmental justice, sustainability, youth mental health and healthcare access.

And these discussions took place through Presentations with organizations that included the Gold Coast Health Plan, Coastal Keepers, Seafrog, Ventura County Behavioral Health, the Ventura County Office of Education, Nate's Place and the Coalition for Family Harmony among others. Council members also took on leadership roles that themselves moderating panel discussions and participating in statewide youth commissioner forums, as well as contributing to the Ventura County Extreme Heat Plan Community Survey. And successfully planning and hosting their own Youth Civic Engagement Fair that included participation of 26 organizations from throughout the county and attendance of over 150 students from the area.

Together these experiences have helped prepare this group of young leaders to make meaningful contributions to Ventura County and beyond. Through their dedication, curiosity and service they have helped strengthen the connection between youth and local government while developing the skills to become our future community leaders. And so with that, we do have a number of them who have been able to attend. And as you see some of the pictures is not only about their participation in the council but also their involvement outside with other organizations and participating in a number of activities. They are very active and engaged group of young people and I'm very proud of them.

So I want to invite a few of them to come and speak and share a little bit of what they learned, but also maybe provide some insight, especially as we head into the discussion about the county's budget. So I want to call up first the chair of the council, Yelani Velazquez, to share a few words.

Hello, does this work? Does it work? Yes. Okay so I was actually expecting to be last which is why this is the format of my speech but I would like still to stay in this format. Good afternoon supervisors. I will be the last council member speaking today so I would like to leave you with our vision for the future. For the past two years our group has had an incredible opportunity to learn about connect with and take action in our community From panels with the public works to connections with local advocates, to our own execution of a service project through the Youth Civic Engagement Fair.

But our vision is not one where we are the only youth doing this kind of work in our community. not even in our county. So we hope to continue building a platform for all youth of all races, of all genders, of all ages, of all legal statuses to continue to have their voices heard in our community. However, we are only one small group connected to one of five supervisors in our county and if we truly believe that youth voices matter then those opportunities should not be limited to only one district.

I encourage each of you supervisors as you go on today to consider creating youth councils of their own so that young people across the county can have a seat at the table, build connections with local government and help shape the futures of the communities that we call home. As I step away from this podium and as you move on to approve our county's budget, I hope you will think about what it means to invest in the next generation not just through programs and services but opportunities for young people to lead serve and be heard When those of us in this room here today have grown old, the impact of that investment will still be felt. Thank you.

Thank you, Yelani. Still a very good introduction as the first speaker. Next up I will call up Daisy Luna.

Good afternoon Board of Supervisors, my name is Daisy Luna. I am a rising senior at Oxnard Middle College High School. I have been part of Vianney Lopez Youth Advisory Council for two years now and this is actually not my first time speaking at one of these meetings. If you guys take anything away from today, I hope it's that you are realizing how passionate youth are in the community And I hope that you've heard about the amazing things we have done in our community and I hope that you all go and start a youth advisor of your own to create a caring space for youth to also do the same in your community. The youth are very passionate, and we are the next generation, and I'm looking forward to having more youth connected to the government. Thank you guys.

Thank you, Daisy. Next we have Denise Vargas Ventura.

Good afternoon, my name is Denise. This is my first time speaking I've been in the US Advisory Council for a year now and I think it's very important for funding to go to programs like this Another program similar to this that I'm in is TRIO and In both programs that I've been in one thing that I found in common in both of them It's just like it's a great place to get you involved especially because we're the upcoming generation. It's very important to inform the youth of rights and problems happening within our community.

I wanted to thank Supervisor Lopez for being open to having a Youth Advisory Council because I've met so much of my closest friends throughout the year, and I've had so much opportunities, and I've learned so much just because of you, so I just wanted to thank you.

Right next up we have Guadalupe Vega.

Good afternoon, everyone. Today I'd like to share my brief experience of everything I did throughout the program. This youth program has had a meaningful impact on my personal and professional growth. Throughout this program, I've developed valuable communication and public speaking skills. I learned how to confidently speak with different audiences, collaborate with others, and communicate professionally with organizations community partners.

These experiences have helped me become more comfortable expressing ideas and working as part of a team one of the most rewarding parts of the program was helping organize a student-led event for high school students our goal was to provide college and career exposure by connecting students with resources opportunities and professionals who could help them with future paths To end it off, I would love to add how I had the opportunity to connect with many bright individuals and have created long-lasting friendships and made the experience both more productive and enjoyable. Thank you to everyone who has helped me and encouraged me along the way. Thank you!

All right, two more speakers. I want to invite up Michael Segawa who is on his second year with the cohort as well.

Good evening Distinguished Board of Supervisors. Again, my name is Michael Segal. I'm a rising senior at Oxnard Middle College and as Supervisor Lopez said, I just had the honor of closing on my second year on her council. What I wanted to say is going to be a little bit similar to what everyone so far has said. I just want to encourage you all to please start your own Youth Advisory Council right? District 5 is not the only with a like-minded group of youth. I am sure you all have youth in your district that want to have an impact on the specific district you're in and make change within its own community right.

Our simple group is just a group of what are we 25 like-minded youth and this year I felt that if we'd not only had the same amount of effort, the same amount of collaboration and interest, we had more this year. I've been able to connect with my 12 plus new people and this this year we got the chance to not only learn more about how government operations work at the county level, we also made that impact. I'm sure you're all familiar the Civic Engagement Fair where we connected what was it 150 plus youth of not only high school level but also middle school level with different community organizations to hopefully get them involved and inspired to be the next generation like we are also. So please take this advice that we've all given, please start your own Youth Advisory Council I'm sure you have youth that are very interested in it thank you

All right, and the last speaker if I didn't miss anyone else is the Vice Chair of the Council Kelly Andrade.

Good evening, everyone. My name is Kelly Andrade and this year I had the honor of being the vice chair of the 5th District Youth Commissioner Council. I have been in the council for two years. This is my second time being here and through being in this council, I have connected with wonderful people that I wouldn't have known otherwise because we are mostly from different schools.

So first off, I want to thank Supervisor Lopez and her staff for giving us the opportunity to connect with each other. We all have different perspectives but we are also very passionate about similar issues that are occurring around our county. We have created the first ever Youth Civic Engagement Fair through collaboration with other organizations and these wonderful group of people I was honored to be a part of And we are only 25 of the people inside the 5th district.

There are tons of other students that are passionate about issues and so I want everyone here to foster connection within the people in their own district. Maybe that doesn't mean making a new council but still, I want more support for youth because we are all like Michael said, we're like-minded but we also have different perspectives on different issues So if we would be able to have that fostered connectivity and the collaboration even though we come from different parts, I know that the youth around our community will be able to do great things together. So this year I am glad to be a part of the council. I hope to join again but I thank everyone for being here and for giving us the opportunity to do what we did. Thank you!

Thank you chair and with that just want to call out some of the other members of the council who were able to join us here today. Some of them are graduating they've graduated, they are going to leave to college some of them are pursuing careers in nursing education. possibly entering military service. And so just again, really proud of the students for what they are doing and their involvement. They are the future of our county and I'm just so glad that they are so willing to put the time in to be prepared for the future. So with that some of the other members include Ali Chacon, Aileen San Juan, Yulisa Santiago, Andrew Ramos, Jacob Hercovitz, Jessica Vasquez, Lady Rosales, And Michelle Sandoval and Ashley Nicole Linus Barron who weren't able to join us today.

But if I may ask, Chair, if we could step down and take a picture with the youth? That concludes our presentation. Thank you all. Sorry, Chair. I didn't want to miss the opportunity to also acknowledge Mr. Javier Gomez or Dr. Gomez. One of the students in the cohort is also a member of the Inukesh Cultural Arts Center. So really appreciate his support and his presence here. Just want make sure we acknowledged him. Thank

you, Chair. That's a fantastic initiative. Thank you for presenting that we're going to move now to item agenda item number 5 and we will now conduct hearings on the adoption of the fiscal year 2026 27 budgets and receive public testimony I am now going to officially open the public hearing on these matters. This hearing may be continued daily if necessary, but must be completed within 14 calendar days. With this I'm going to turn it over to our CEO Dr. Johnson thank you.

Thank You Mr. Chair so this evening we're all gathered and I just want to set the tone this is a different budget year because we have a lot going on at the state. The State Senate just had their floor session at 2 o'clock that I was able to listen in on, and right now at 5 o'clock the Assembly is having their floor session so I'm missing that one but I'm encouraged that we will have a budget today So in California counties function as the primary administrative arm for the state and we are legally mandated to provide public protection, health and human services, and regional infrastructure.

The budget that will be presented today is a reflection of the strategic priorities stated by this board ensuring healthy safe and resilient communities fiscal responsibility and economic vitality reliable infrastructure and sustainability addressing homelessness and lifting up the most vulnerable and dedicated to a diverse and innovative workforce because we always want to focus on service excellence.

I want to take this time to thank your board for your attention to the budget presentations that are presented to your board earlier in this year, including the rates and fees that kicked off our budget process. I also want to thank all of the agency directors who are here as well as your executive teams, your fiscal and budget personnel. They have done amazing work looking at their operations and figuring out how to do more as funding streams become more constricted And I definitely want to thank and acknowledge the work of Scott Powers, Mark Sewell and Brian Friedman.

They are very passionate and they've been diligently working with all the analysts on the budget and finance team looking at operations and really just creative ways to fund things so that we're not tapping general fund and we're really exploring all the options which is something that we're going to have to do As we move forward and you know, we have a great team. They're extremely innovative looking at all the different options but I want to say that you know, you get so many cards you get so many tricks and we've played a lot of our cards. And so this year we have a balanced budget moving forward. We're going to have to do some things because we've played a lot of our cards pretty much all of them So we wouldn't be here without the work of everyone in this room being extremely diligent.

I'm looking forward to the presentation and Mister Brian Friedman is going to kick us off. Thank you.

Good evening members of the board. Chair Guerrero, CEO Dr. Johnson. My name is Brian Friedman. I am with the Budget and Finance Division. So on Tuesday got the preview of the budget today. I hope to talk about many of the same things that put a little twist on a lot of the presentation so you're not seeing exactly the same thing and then the real meat and potatoes of today is a five-year forecast of what our outlook is going forward and how that plays into the budget that we've developed for you today, so welcome to the FY 27 budget hearings Oh, there we go. All right so to kick it off, we developed this budget with the overarching strategic plan in mind. We had some guiding principles. We wanted that transparency. We shopped for a balanced budget.

We got there. We're preserving essential services and we're making responsible use of public funds and then the key one that we're emphasizing today is the economic stability with the long-term outlook And then capping that off with realistic projections really working with all of the different departments to make sure that their estimates are as refined as possible and as accurate as possible so that we don't keep resources on the table. We get them to where they need to be some of the highlights that we discussed on Tuesday We revised processes for the FY 27 budget. We enhanced the readability and the transparency of the overall budget book, we condensed it significantly. I don't know if you looked at prior year budgets but 1100 pages is a lot to get through so 400 little bit more manageable not quite tiny but still a lot of good information in there.

Secondary component, we took a step forward on emphasizing cash availability and recognizing the VCMS advance within our budgetary fund balance structure. This is in tandem with the directionality of the ACFIRM making sure that you guys have an understanding of what funds you actually have available and can spend and are not already out and deployed for usage.

And then the final component is looking at how we funded vacant positions based upon where we're looking at the vacancy rates and expectations. Those funds have been repurposed back into a general fund contingency so that we can react more nimbly, but that means that some departments had to work with fewer resources this year. And then some of the other highlights we went into this budget with some significant legislative challenges.

SB 525 health care minimum wage that was a significant impact when we look at the personnel that we have that work in the health care facilities but also with how we deployed it essentially all of the classifications that were below that 24 or 23 dollar threshold In June of twenty twenty eight we're going to be looking at twenty five dollars threshold. We look at prop one in the Behavioral Health Services Act. We had a huge amount of movement within all of the budgetary items associated with that crossing over from the Mental Health Services Act. So you have two new divisions based out of that. You have two new funds based out of that. There was a significant amount of legwork that went into that.

And there's there's implications there because of the B chip projects. So going forward, there's gonna be some estimates that have been embedded within the five year on funding those projects once they go live and construction is all done in the ongoing maintenance and personnel associated with those. And then everybody's favorite, HR one. Lots of challenges there, lots of things moving forward.

There are certain elements that we understand and know as of this point and there's a lot of assumptions that were made but for all intents and purposes these legislative impacts were factored in to the best of our abilities but further acknowledging that many of these have multi-year impacts and it's not just FY 27 where they're going to play a significant role All right. So we get into the countywide budget slightly different perspective from last time. So rather than talking about salary and benefits and services and supplies, you have the breakdown of general fund versus non-general funds. Forty five percent of our overall county budget embedded within the general fund, non-general fund taking up This is a significant deviation from some of the prior years.

If you go back maybe four or five years, it was almost 50-50 so there's been a fair amount of growth on the non-general fund side and some of that is related to Prop 1 in the Behavioral Health Services Act. Just reiterating for FY27 we're talking about $3.4 billion in appropriations overall up about 5.8% from the prior year Revenues at that $3.29 billion, up 6.2%. So luckily we're talking about lower net cost from an overall county perspective, countywide. Now keep in mind the ISFs are not presented in that because a lot of those expenditures and revenue streams are already captured in the operating funds. We won't want to duplicate those.

All right. General fund everybody's favorite so rather than talking about salaries and benefits being the vast majority of general funds one to look at how the pies cut up by the different programmatic areas. So in prior years administrative justice and health and human services were almost one for one this year administration All slated for administration of justice, but then on the Health and Human Services side you're only about 38 percent.

And then the remaining components with general government other general fund things like special accounts and contributions debt service capital renewal and environmental balance are rounding out the difference

Something I want to call to your attention as you look at this slide, we are mandated as a county to provide a myriad of services. Almost everything on the slide under general government health and human services administration of justice environmental balance are required things most of those things almost everything except for one that I'm looking at but just because it's mandated and required does not mean it has to be at the level that is provided at this time And so that's something that as we move forward with the next fiscal years. We're going to be really looking at because as you'll see when we get to the 5 year projection, we're going to have to ensure that our service and program delivery matches the funding streams that we have coming in So that our expenditures do not exceed our revenue, our incoming funding.

And right now we're looking out of balance in future years with that and so this is a really great slide that I love the team put together because it shows you where we're at and you can imagine some of the things that we're going to have to decrease in order to balance the budget just with those things that are absolutely mandated for county government to provide. Thank you.

So in tandem with general funds talking about the fund balance we went into this in detail on Tuesday, but just calling out the non spendable at over 200 million as being the vast majority of your general fund anticipated fund balance. There are a handful of different accounts that we really emphasize this year in terms As well as the disaster response, those are new accounts that we put in place to make sure that we have at least some level of coverage embedded in knowing what's coming forward. And then the continuation of things like capital renewal and the Family Justice Center were replenishing those to make sure that family justice centers all three of them can be on online and operational with the monies that are set aside And then capital renewal, making sure that our ongoing maintenance efforts for all of our facilities have coverage.

Now that fundamentally means that many of the other accounts had to be reduced so program mitigation dropping from over 100 million to just 22. Program mitigation is the general account that we use for coverage on things that come up as throughout the year that were not aware of or had not previously funded And then you can also see that fixed assets has dropped significantly down to about 15 million. Now, we have some coverage for specific fixed assets down below but this is the more generalized bucket and then pension mitigation dropping from about 40 million to 10.

You'll see in some of the later slides we talk about the HRA and that might be a strategic fund balance that we want to tap to get to a 15 year amortization cycle sooner than later. And then in the concert of the overall general fund appropriations and our assigned reserve, the coverage ratio for that is at 11%. Our admin manual puts a base of that at 10. GFOA puts the target of that around 16% in terms of a rainy day reserve looking at two months of operating.

impacts so we have a long way to go and then as as previously discussed. We would be looking to in future years, you know ending your fund balance to increase that non spendable so that it's closer in tandem with where the loan is actually at.

All right,

and then just final summary the anticipated fund balance at the 480 million full amount for the specifically to General Fund All right, to talk talking about the fund balance wouldn't be complete without the advance on average. The advance constitutes 60 ish percent of the overall general fund balance. The primary element that I wanted to discuss on this today was actually the Gold Coast health plan advanced a 30 million advance that was brought up on Tuesday There was an indication that the concept of that was to be additive. But in actuality, the anticipation is when those funds come in at the general fund advance could be paid back. So if you notice the estimated range of 300 to 325 ending at 630 As long as everything goes according to plan and funds are received by 6.30, we're looking at the lower end of that range rather than the higher end of that range.

There's also an item on the year-end adjustment that would factor in how much of this advance is covered or so the balance may actually come in below $300 million subject to your board's action on that item. And then looking at non-general fund in totality, we're looking at a $1.87 billion budget up 8.2%. You can see 44% of that is the medical system. 15% is the fire protection district and then when you put all the public works operating funds together constitutes 11%, and then you see that Behavioral Health Services Act So not as large as some of the other ones, but still a significant legislative impact. And then all of the other non-general funds things like airports and harbor and health care plan and child support services that constitutes your other non general funds rounding out at about 20% or so.

And then just for the qualification that excludes the ISFs, the ISF's being listed there just from a perspective of non-duplication. All right. When we get to countywide trends this is a similar slide that was presented last time but this is just pure FTES total FTES in the last chart that we presented on Tuesday you couldn't quite see the downturn for FY 27, the reduction and overall FTES So we're talking about, you know, an FY23 10179 FTEs coming all the way to a peak of 10540 FTEs and now we're dropping down to 10456.

FTEs and then subject to the action that is taken next week on the 23rd in the year end item, that may actually proceed lower. That is not an item that we integrated into the budget but would be factored in subject to your board's decision on that item.

I appreciate you mentioning that, Brian. And I think the key to this slide is saying that we need to stay stable or decrease FTEs as we move forward in this presentation that Brian's going to bring you to there are a lot of assumptions that are made but they're made on the assumptions That FTEs do not grow. If we continue to grow FTEs, that makes our gap that we have to close every year significantly wider and you'll see it's already significantly wide starting next year.

So our FTE is how do we pace look at the pace and look at our measures of success as it comes to future planning? Is that line either declines or stays static? Thank you.

All right. So we're getting into the general fund forecast. So in previous years, we brought this at different times of the year. This year it just felt much more relevant to bring it as part Given the different legislative impacts given what we're seeing wanted you to be aware of that at this point in time so talking through. What the general fund forecast is so it's a strategic planning initiative that our office leads we're looking to identify structural imbalances and pressures and revenue and expenditure streams well in advance so that we can be prepared for them we can have plans in place so that they are not detrimental to the services We're going to be looking at some of the basic elements that are provided and then we're reinforcing the balanced and sustainable financial plan.

The primary elements that are going into this or data driven decision making models one of the biggest elements of our county's budget is labor so looking at the labor cost and visibility highlighting The GSI and MBA is consistent with what they are right now in the embedded agreements rather than dropping them back down to what they were in say previous agreement. So that's a significant deviation but based upon what we're seeing from an inflationary standpoint very relevant in this day and age.

looking for fiscal preservation. So by maintaining proper fund balances, we're looking to avoid operational shortfalls and then this is all in all it's really meant to be a really risk mitigation document understanding what's coming in advance the best of to the best of our abilities and then highlighting some of the items that we don't know but understand are still out there allows us to be proactive and so that we can weather economic downturns better Some of the embedded assumptions in this forecast so so we have some very significant revenue streams between property tax and prop 172 and realignment that grouping right there constitutes 50% or approximately 50% of your general fund revenue. And you can see from the assumptions even though we use 4% for property tax in FY 27 going forward, And then looking at sales tax growth, these are estimates that came from HDL.

They're only ranging between 2.7 and 3.4%. So what that means is fundamentally in tandem with a lot of our labor agreements things are fundamentally constrained just that 50% of your overall revenue base is only growing at that factor. When we look at the salary and benefit parameters, we have a couple of different items that are playing into that. So as I mentioned prior, the MOAs, we retain those inflationary factors of the GSIs and the MBAs, not the SB 525 element but everything else post those expirations. So looking into the periods of time within this five-year where we don't have a defined amount We are using those higher values of that rather than reverting back to elements that were previously lower in that 2% range. We're still looking in that three to 3 1⁄2% range for purposes of this presentation, we did fund vacancies at 10% to be consistent with prior years looking at the action that we took for FY 27 initially, at least as one time obviously that's a tool on the tool belt Potentially have to do it again based upon what you'll be seeing shortly.

And then the third item, retirement. So there was a unique element with the glide path Viscera smoothing provision that went into place. The long and short of it is that regardless of how well we do or if we get to a full 100% actuarial funding, the employer rate will at a maximum reduced by one percentage point That is different than was originally in place and had to modify how we planned to fund the health reimbursement arrangement. So you'll see in the next item, we're elongating the self-pay structure or the pay as you go structure so that the increases are 20% year over year Until we get to a 15-year amortization cycle, the thought was that once the Alameda decision was factored into the Viscera rates that they would be switched out one for one.

But with that 1% cap on the reduction in the employer rate, that's going to make things a lot more difficult. We'll know significantly more in November, December when we get the next actuarial and see what that fundamentally means. But for right now that's something that is high on our radar and trying to figure out how to fund as I mentioned the fund balance allotment that might help us get there faster but it then buys down fund balance And then the other general parameters in here so for other elements like services and supplies and some of the internal service funds as you recall at the budget development manual meeting.

Some several of those came in significantly below estimates for the current year. The thought is that that might be a one time and that they might revert back to that three, three and a half four percent range. And so we're being conservative in making sure that those are factored in at that higher degree. And then the final component that really doesn't get discussed a lot. So our budget is set up on a basis of ongoing services and programs But we never really talk about the capital asset or rainy day reserve funding. And that's because we, for all intents and purposes have year end savings that we use to fund those. But in the event that those don't materialize, that could be problematic and a future consideration. But I'm just calling out that this does not explicitly fund for those because the expectation is that will be consistent with prior years.

Some forecasting challenges obviously inflation it's higher than anticipated. It's been trending higher. It's down from its peak certainly but it still causing certain problem problematic areas. Fuel right now being a hot topic and then obviously slower growth revenue with certain impacts of H.R. one you're seeing increasing demands on the safety net services potentially but that the revenue may be constrained specifically on H. R. one. You know there's new medical requirements that may fundamentally require more personnel to review Those are still being scoped out and we'll understand that better shortly.

Potential there's reductions in there that are associated with the supplemental funding for county hospitals. So in that right now, the general fund does have a contributionary element that is relatively significant towards the hospital. This forecast is not factoring in additional coverage, even though there are out specifically stated supplemental funding reductions. So just calling that out as a potential and then obviously the Medi-Cal enrollment reduction and then the May revise did not net nearly the benefits that one was hoping for.

And then and then just a few more unfunded risks as part of HR one indigent care, scoping out what the size of that is what the plan looks like. And then the increasing demand that's associated with that. As you recall, during the medical rate setting for plan year 26 there was a $10 million contribution that was redirected from BCMS to the health care plan that is being considered as one time this five-year forecast does not embed ongoing general fund contributions but Subject to the decline in enrollment that may need to be an additional consideration.

If your board wants to see that continue. And then so that had previously addressed this but on the personnel growth, this fundamental analysis includes no growth on FTE's now we are understanding that there is potential as an outcome of AB 339 and some of those interactions with our labor unions But for purposes of this, the assumption is that whatever comes on in personnel is going to be quote unquote saved from a contractual standpoint. So there's no additional elements embedded.

And if I can just say, so people hear that and say well we need to function and we need to do this. And I hear that one of the things is that many agencies have vacant positions right or they have positions with classifications that they either don't use or haven't used in a while. And so what we're encouraging as a first step is to look at your vacants and look at those classifications You're not utilizing and reclassify them. Because our first option cannot be to add FTEs, and that's for every department. We've got to look at our coffers and say what do we have that's vacant? What do we have that we're not utilizing? And let's Recreate it into what actually is needed and use that. Because that is a better option than adding more FTE's to our budget any day of the week.

Now, if someone has already done that, if their agency has done that and they have no vacants, they have no classifications that they're not using, we're going to look at their operations. We're going to look at their efficiencies. We'r egoing to look at the ratios and make a real data-driven decision about what do we need to do moving forward? So we're not saying we are never going to add anything, but we're saying first people have got to use those positions they have or reclassify them to make them work instead of adding FTEs as the first go-to. And then two, we're going to be digging in because we have to. We have to be extremely strategic and thoughtful in order to maintain our general fund so that we can provide these core critical services that we are absolutely mandated to as a county.

And then the final component on there is just a more detailed emphasis on the HRA, the Health Retirement Account. So as of FY27 only 6.4 countywide is embedded in the budget for us to get to a 15 year amortization cycle that takes $24 million countywide per year Approximately 50% of that is general fund specific. So just understanding that growth to get there and how that pairs up with the retirement expectation that was we previously had from a funding mechanism to what we're looking at now, just framing out what that looks like.

And then we finally get to the meat and potatoes with all the pretty numbers. So as referenced earlier, the FY27 preliminary budget we're presenting for general fund is balanced at $1.55 billion but as you'll see when we get into FY28 and FY29, you start to see a net cost so in FY28, $14 million growing to about 28 And then the growth becoming significantly lower, but still trending up in the out years. Now keep in mind all of these factors are compounding and so if you change something earlier on the impact later is significantly greater and vice versa.

But this fundamentally means that with all of these assumptions that are in play We're looking forward at a deficit that we have to handle in some way now. Structurally, that is less than 1%, but that is still $14 million that we have to strategize on how to get there. So we have a couple of other items in terms of key takeaways so any changes to the baseline assumptions are going to impact this projection compounding basis.

Those pride those primary revenue streams that were addressed earlier in terms Factor into 50% of the overall budget so that really that growth there between the 3 and three-and-a-half percent is really your primary constraining factor. H.R. 1 constraining a significant other component of the intergovernmental revenue things of that nature also keeping that in mind in terms of potential reductions This assumes the FTE stability, and then obviously as you saw just without any growth in FTEs we're looking at significant balances.

And then because they're outpacing it forward we have to either fund additional revenue streams that are available or we're going to have to strategically reduce expenditures so that they're in alignment with the funding streams that we have available. And then just as a summary bringing it back we're presenting a balanced budget but forward looking approach.

We integrated SB 525 HR 1 and Prop 1 to the best of our abilities in the information that we have. We fundamentally ensured cash management through the non-spendable fund balance, formally earmarking that. We preserved our reserves via strategy on the BCHIP and HR1 programs as well as disaster response. We continue to emphasize ongoing investment in the Reserves for Capital Renewal and Family Justice Center We improve the readability of the overall budget book.

But we're also utilizing operational flexibility via that contingency move for the vacant funding and then as categorized primarily by the five-year, we have some challenges ahead of us and I'm already working through some of the potentiality but there may be some significantly hard decisions ahead of us that have to be addressed. And with that if you have any questions?

Thank you, Mr. Friedman. Any questions from the members of the board?

I do. Thank you so much for this presentation, and I want to say thank you to everyone that's here who put your hard work into getting this budget to us today. One question that I'm asked is how does our budget if approved today will it come back to our board after the discussions from state as to what their budget is approved to? We have federal budgets always changing When would we be coming back to discuss the budget again?

Absolutely, so we routinely come back at Q1 mid-year and year end. In Q1 we would usually be returning to your board in the Novemberish time frame sometimes we come as late as as late October and sometimes it's early December a lot of that We take it takes a little time to really understand the implications of those changes and so that's around the earliest that we've ever come back to your board from a mid-year perspective. We collect information from the department's early January, and then I believe when you come back to their late February early March timeframe and then the year end letters that we come back to your board with were bringing next week.

Okay and the reason being is because the state is still figuring what they're going to do out and that hits a lot of our departments. And so I can understand um the stress that it puts on everybody in regards to did my funding get cut? Did the grants get cut? Are we gonna get grants this year are we not? And so, I think that's really good information for us to have We understand a little bit more. I would like to make sure that comes to our board so we can have those discussions. I think that's really, really important. So thank you very much.

I have a question. One of the issues we struggle with at the CSA 4, the Oak Park community's CSA4 are pressures. You had some external influences and pressures that were creating challenges, HR 1 being one of them. Another one that has created a challenge at CSA 4 is out of Sacramento there's been expanded We're going to be looking at different categories of contracts under which the prevailing wages required.